no one expects any change on rates. what will he say about the future? french markets are closed today because that's the way they do it in france. it is a 33 hour workweek. nightent on twitter last about 1945. i cannot say enough about the rick atkinson book, the three volume. >> and then concentrate. >> put it down and think about it. >> i read this about six months ago. george will did a great review of it. >> he is the only person i've ever known who can speak in paragraphs. every time he opens his mouth -- moving on to economic data in the u.s., it 8:30 a.m. is the initial jobless claims, 9:45 a.m., bloomberg and so -- bloomberg comfort index and earnings before the bell, wendy's, dish, liberty media and after the bell, cbs, news a.m., janet-- 930 yellen testifying today in the senate and yesterday was in the house. >> we will talk about that as well. we say good morning to all of you in london particularly at the london city airport. congratulations to maureen maguire and all our team and bloomberg. i saw a photo of stephanie ruhle in front of all these people. trip towe need a road london. let's do a data check, thursday morning. there is no news, futures are flat. the vxx shows 13.40 and the blue chips are up in the dow is 16,500. >> target - tarjet - you have to fall 18% to get the french pronunciation. >> this is the ruble, a weaker ruble with fear. ruble but it is indeterminate right now just as the new flow out of ukraine. ise washington post" different than "the new york times." bloomberg says the troops have not moved. let's go to the front page. with the u.k.ting were barclays will cut 7000 jobs at its investment bank by 2016. people in4 of the that unit and job cuts will reach 19,000 and 2016. drop inorted an 49% first-quarter profits. this is what we heard from all the big banks. to reduce their reliance on investment banking. year, weruary of last let a clear direction for barclays. we wanted to become the goto bank and deliver superior returns for our shareholders. in the intervening time come there has been very significant changes to the regulation and economic environment. we have the same objectives but this is a different way to get there. i believe investors will have a high degree of confidence in our ability to execute the strategy change we have announced today. >> it is a strategy shift. it remind me of james orman at morgan stanley. -- james gorman. >> this is a significant announcement, the ramifications in the united states. >> scaling back on fixed income but isn't it amazing that they are still trying to figure out the crisis. >> the balance sheet goes from 50% down to 30%. difference divided by 50. that is truly profound. apparently investors seem to like them is because the stock is up almost five percent. >> the goal is to report -- is to improve the return on equity and that is their way is to cut. >> our second front-page story -- the u.s. and allies say there is no sign that russia is withdrawing troops from the border of ukraine. vladimir putin has shifted his tone on the crisis. he said he would pull back on troops. people say he is hitting the pause button and he has urged pro-russian separatist to delay a vote. this is not the presidential election. that is scheduled for may 25. >> this needs to be watched closely so look to bloomberg.com as their team tries to make sense -- amoroso innastasia that moment yesterday where she talked as a child of going to crimea was just extraordinary. made aboutpoint you the so-called pro-russian militants is that it is not necessarily that they want to be associated with russia. they are just not happy with the regime in kiev. >> there is a may 11 referendum. it is confusing. what else do we have? janet yellen is back on capitol hill testifying before the senate budget committee prayed in front of the house yesterday, she said was that the housing recovery seems to have flattened out. she said that weather may have played a part in the overall weakness in the first quarter and there should be improvement in the coming months. the housing remarks caught people off guard. >> she is supposed to say this. i would transpose that with what jeffrey gundlach said earlier this week where he is concerned about housing. >> that was your interview with him that was outstanding. housing sales are for cash which tells you that it is investors who are able to pay cash and are buying houses and not the end-user. >> are you sizing up this? are you going to five bedrooms? >> four is plenty. >> i think you're always looking. >> i am always on the market. >> those are the front page stories. >> it is insane on the island of manhattan looking at real estate. our guest house this hour is kate morris, chief investment strategist at j.p. morgan. there is a green line going up for blue chip stocks and a red line going down for the momentum stock. have you ever seen that divergence in the market? >> it feels like a different environment we have had particularly over the last five years. we were looking at some of these surveys are missed additional investors and everyone was saying this is the hardest start of the year they can remember. intoone has gotten lulled a sense of complacency that the market will go up and they have to think long and hard about which stocks to own. they are getting a little antsy. >> you see that with the hedge fund business as well. with the green line going up and the blue-chip stocks and the red line is like twitter and groupon and tesla -- >> and and a biotech you can name. >> does the green line come down ugly or does the red light stabilize? >> people who are nervous coming into 2014 and wanted to hold onto the quality anchors in their portfolio got very scared by the expansion in multiples in 2013. it came from the biotech and some of the social media stuff. >> you can say they are quality anchors? >> it is part of our portfolio. we like a lot of these secular themes that have been things like biotech amtech knowledge he. >> are you buying twitter this morning? let's get an exclusive. twitt-er is a new name for me. still holding onto our tech allocations and feel confident it will outperform this year. >> with us for the hour is kate moore. let's digress with momentum over two company news. talk of more consolidation and pay tv -- at&t is now in discussion to buy satellite television company directv. happening. shares of directv are up 43% and the last year and the company has a market value of 45 trillion dollars. -- $45 billion. toyota says there is rising competition in the u.s. and a stronger yen and toyota is expecting weaker sales in japan because of an increase in their sales tax. the fedex pricing rules are too good to pass up. alex will charge for package by size, not just wait. the promise of $350 million in at your revenue could be compelling enough for ups to do the same. -- said it is continually reviewing its policy. if you want to order something from amazon, better do it quickly. >> a couple of years ago, some of the regional airlines in asia started charging based upon your weight. >> that can be painful. >> it pays to be thin or ship small in this case. janet yellen tells congress that the u.s. economy still requires " a high degree of accommodation." it's amazing five years later -- we will discuss this after the break on "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. i am thinking about the nfl draft. ♪ >> good morning, everyone "bloomberg surveillance." this morning, sheldon abelson, chief executive officer of las vegas sands. he will be with betty liu in the 8:00 hour. somehow they will get politics into that discussion. this is "bloomberg surveillance," with adam johnson and scarlet fu. janet yellen mentioned how housing is a risk for the economy and elaborated on problems in the labor market but she predicted a strong spring rebound and the second quarter. easy monetary policy is not going away. we are joined by en shepardson on the phone. let's start with the housing risk that janet yellen highlighted. in contrast to a recent fmoc statement submission this in passing, it was interesting she could pointed out as a concern. how important is housing to the overall momentum in the economy? >> it ruggedly not quite as important as the fed seems to think. i sometimes say the fed is almost as obsessed with housing as the labor market. i'm not convinced it is absolutely essential that housing keeps charging upwards in order for the rest of the economy to grow. it's a relatively small share of gdp now in terms of housing construction and even when you add in the retail stuff related to housing. it is important to sentiment. homeowners are upset by house prices in the rebound in housing values has drastically improve the personal sector balance sheet. the fed is clearly no very concerned about it in a way that two or three months ago they were not. they were ready to dismiss it as something temporary and clearly the worries are more deeper. >> if the 10 year yield moves up and we see mortgage rates headed higher, could housing rollover? look atutely, if you the past year, the affordability index is down very sharply. it's had its biggest drop in 30 years. mortgage rates, if they rise further as the economy picks up, housing will be under further pressure. it is a paradox that the stronger the rest of the economy gets and the more worried the market gets about the fed raising rates, the higher 10 year yields will go and mortgage rates and potentially the housing market will get weaker. >> i spoke at length last night to nouriel roubini. we spent a good amount of the time talking about the confidence that people like you have that janet yellen can get this done. what is your confidence that janet yellen can bring us back to normal rates or even to a more restrictive stance two and three and four years out? the problem here is that there is an awful lot of ways this can go wrong or tighten too slowly or tighten to quickly. they could start early or late or mess up the balance sheet. relatively small number of ways in which it can go right. it is uncertain at to which scenario they will follow. what will drive them will be the state of the labor market. hopefully, that will put them on the right track. >> there is this idea of extending time. this is a three or four year process to get back to normal. counterpartrdson's at goldman sachs says the market has it wrong about rates will stay low into 2015. if that is the case, what do people do with their money who are looking for yield? investors crowd into high yield even in 2014 after a couple of amazing years of returns. they are very well invested in parts of the market that provide yield. there is probably not a tremendous amount more of spread tightening in that market. you will just be clipping the coupon for the next couple of years. we are all seeing this in clippers loans imploding rates, huge amount of interest and i don't know -- >> i have to rip up the script. no one knows watching what clipping the coupon means. of bill gross at pimco was to sit in the mailroom ad literally -- there was thing off the side and you clip the coupons. how quaint. >> don't admit that you know about it. >> thank you. view on rates? do you think rates need to necessarily stay low into 2016 as goldman sachs suggested? inno, i think they will move 2015 maybe as early as the spring. i think it will be a combination of continued rapid decline in unemployment and a bit of a cup and wages and some of the key components in the core cpi. housing unfortunately will be a necessary casualty. my guess is that that's the way the fed's thinking evolves great if we see the economy strengthening brother that housing is weakening, i think they will have to live with that and stand up and say it's a price we have to pay in order to get the rest of the economy moving. i think this will make it an unusual late stage recovery. the events that led us to this point were unusual. we are unwinding those things and housing is going to lag behind. >> thank you so much for your thoughts. we thank martin for watching in hong kong. it's a surveillance correction. tt-er but it's twitt-eh. thank you so much for watching this morning. we greatly appreciate it. the general, partner at sparta capital joins us and we will discuss obama and the tech selloff next hour. this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. ♪ >> good morning, everyone "bloomberg surveillance." the twitter question of the day -- what would you do to improve your nfl viewing experience? we are looking at the nfl draft. what would improve your nfl viewing experience? let's get to our morning must reads. we've got an important morning must read. >> we do, indeed. you have to bear with me a minute -- this is kind of complicated. we are looking at housing and food in a similar light. help us make sense of this -- is this a timing issue? it's seven years versus 30 years. what is the right way to look at housing? is it a perpetuity? >> for many investors, it's starting to become a perpetuity again. in one generation it was and then it was an investment vehicle in part of your overall asset allocation decisions and now people are thinking about holding onto their houses wishes a shift in mindset and it will drive how people invest in their homes going forward. >> and how people save money as well. >> absolutely, if you don't expect to get 10 or 15% per annum returns on your home and will be thinking investing differently. we think real estate loans as part of an investor portfolio. we also have to temper the expectations for how much you will appreciate. >> what is the real estate return at three or four percent versus dividend and share buyback return? i think you get a better return on cash in dividends and buyback. >> right, there is a liquidity component. these markets and real estate require great liquidity in order for you to consistently get three percent or more returns. we are talking about a slight slowdown in the housing market but that does not make us terribly nervous. we think the value is holding up even if you are not going to get big returns. >> bob shiller of the case schiller index said that if you go back to 1900, adjusted for inflation, you generally return about 0.5%. >> we will be right back and talk about tesla down seven percent in the market. ♪ >> good thursday morning, "bloomberg surveillance." quiet with futures flat and the vxx shows you the enthusiasm out there and nymex crude is over $100 per barrel. is electronic arts, up more than 21%. it posted fiscal fourth-quarter profits that beat estimates but you wonder if it can keep that momentum going. >> look at the losers. it's like a one-day bear market. >> whole foods is down 19% with profit that disappointed investors because of increasing competition with traditional supermarkets and walmart expanding into organic food. >> i just won't buy the organic kale. i go with a regular kale. >> you are a new age guy. >> a guy in brooklyn is growing organic kale. he's got it on his roof. >> i got a caesar salad the other day made with kaelin it was pretty good. >> did you pay $12? >> more than that. it's ridiculous. >> so much for old news. >> growing pains or growing problem, specifically tesla which sold fewer cars than forecast because it could not get enough batteries from panasonic and it is shipping 1000 cars to china meaning u.s. buyers will have to wait. joining us is a former tesla engineer. and craig irwin. on the surface it, it sounds like a supply issue. what does elon musk need to do? >> i want to make a quick correction. iny guided 262 400 units beat that by one percent so they did precisely what they expected. panasonic has a supply constraint until the third-quarter when they bring online the equivalent of 60-80,000 units of battery packs. elon musk needs to ramp production model s to meet potential strong demand out of china at the back end of the year. >> where will he do that? do you have a doubt he cannot compost that? >> it's going to happen in fremont. there is already significant investment underway. has been increased significantly for this year and it is moving quickly. --capex is moving quickly. >> you are convinced they can be a car company. >> they are a car company. >> you are one of the first engineers at the company. what about the battery issue? does elon musk have it right in wanting to produce batteries himself?? >> i think you have to increase production somewhere. you either have to do it with partners like panasonic or do it yourself. least ag control of at portion of supply, you need to give them more options down the line. some investors said they want to invest in the battery company but not necessarily tesla the car company. what is your take on battery vs car? >> i think they will do that over time but you have to work your way up and start meeting your on demand. that is enough of a challenge in itself. they will have to double or triple the world's production of lithium ion over the next five years. that is a big enough challenge and then you can think about supplying others. back to whether tesla is a car company or tech company? how would you view this? it is someplace in between and tesla is the example of something that makes us excited about the tech sector in that we are getting a lot of innovation and investment and a lot of excitement from investors and ideas and concepts that are homegrown which is different than other industries. >> you've got this beautifully laid out with operating income and you go to revenue where a lot of people look. i will state you have a jump condition in 2017. is it batteries? is it fancy factories? is it government support? >> that is absolutely correct. the gentry vehicle, the everyman car will not really be priced for every man but that's the car for the mass market and that should launch in 2017. that's when we see significant volumes. we have 20,000 units in our forecast and it is completely dependent on the battery and being able to deliver it at cost in 17. this goes to the conversation of linking the engineering and investment world. >> it is the promise versus the reality and you say they actually merge in 2015-2016. around $.50 per watt hour. tesla has happened cost of anything else out there and they will cut the cost in half again with this giga factory. you have visibility on leadership. time for ait's conversation on inorganic chemistry. >> it might be. volt and ttioned the he leaf. what other carmaker comes closest to a couple sharing what tesla has? >> from a battered perspective, tesla is in a world of its own. it is a step ahead of everyone. rangeev's are the ones that use chemistries that will be cheaper. you look at something like the bmw i3 is as close as a gets but no one is making a vehicle with a 200 mile range yet. until they decide to make a vehicle with that kind of range, they will not use exactly the same chemistry that tesla is using and will not get the cost down. >> when did matt miller become a test car driver for tesla? and athere is four wheels steering wheel, matt miller is on it. >> when you look at your jump condition in 2017, is that in the stock now? >> it is absolutely in the stock now. for this thing to be trading around $200, have to believe the generation three. >> do you have an outperform on the stock? >> yes we do. look at the demand for the model s. it will see 35,000 units forecast for maybe a couple of thousand more this year. we are seeing strong demand globally for this car. this is more than eight $100,000 car. as they offer cars at the $70,000 level and the $40,000 level, the opportunity, the market for them opens up significantly. sois their chemistry important within battery technology that they can sell it to other auto companies? chemistryt just the but also the design of the entire system and how you make that chemistry safe in electric vehicle. that is where the key is. buy them building their own giga factory, they will be able to push the chemistry further because rather than relying on their partners to innovate, they can start innovating on the chemistry themselves. they don't really do that yet. >> elon musk is a visionary. given your the only guy in the conversation who has actually worked with him, what is he like as a manager? >> he's great. he's got a big vision and he puts really talented people around himself. they drive the whole thing forward. i think you see it with tesla and spacex. they will absolutely build this giga factory in the next five years. >> gene, thank you for joining us. irwin, thank you. >> this is the first intelligent conversation i have heard about tesla. thank you. we got inorganic chemistry into the conversation. -- can we get a little caffeine on the break? >> coming up, the nfl draft begins tonight and we will tell you where the best pixar. this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. ♪ tune thursday, be sure to in later today to a bloomberg west special -- comcast everywhere. we will have complete coverage of the hearing into the comcast -time warner cable deal. >> it has been a real sea change. it is a mating. that's something marry of the belly would say. -- mario gabelli would say. >> good morning. >> the u.s. says there is no evidence that vladimir putin has pull back troops from the ukrainian border. he announced the withdrawal in moscow and called on pro-russian separatists in ukraine to postpone this weekend's vote demanding autonomy. the house of representatives have voted to hold former iris official lowest learner in contempt of congress. she was cited for failing to answer questions about her role in scrutinizing tea party groups in the house wants a special prosecutor to investigate the irs. asian buyers snapped up paintings by famous painters at an auction at sotheby's in new york. the sales totaled $290 million. these -- new sub of somebody's --sotheby's. why are we talking football in may? >> you cannot stop talking about it for the next three days as the nfl draft begins today. there was an analyzing of the draft from a behavioral perspective. you see the performance and the compensation of draft picks peak in the first round and then they taper off. >> that makes sense. >> are first-round draft picks the most valuable? they determined the surplus value and is equal to performance value minus salary pay in a measures the level of performance a draft he brings in his first five years compared to what he is actually paid. the surplus value is highest around the second round. >> is this like a freshman calculus problem? >> it's essential to anyone who plays fantasy football. >> kate moore is with us. bring back that chart. the maximum tangent of the blue line -- >> it's 45. is that the slope of the tangent? >> the blue line is highest. at about 45. >> it's the second round, not the first round. >> that will be essential for my fantasy team. now i know. >> do you have a fantasy team? >> i don't but i might this year with this information. >> this is like " moneyball." the draft is like two weeks delayed this year. it's so typical. >> louisville was the guy sounded and might not get drafted? >> bridgewater was the quarterback who had an 89 grade which puts him towards the bottom of the list. he was touted as the topic. clowney who is number one has a 98 grade. manziel.hnny >> he won the heisman as a freshman. >> overall rank in the draft is 22. >> let's go to our twitter question -- >> my husband wants to be able to watch the 49ers in new york. >> how may times last year were we watching the giants and the jets lose and that was the game we had to watch because it was regional? show me the winners. >> i'm watching bruins -- canadians. >> we've got much more coming up including hans schroeder. he is of the nfl and will be joining us on the first day of draft day. we are looking forward to that conversation. markets areback, sending mixed signals so where to invest. kate moore gives her take, we will be right back. ♪ >> good morning, everyone. week" is about your computer future. all on the pc industry and the garbage that is going out the door as we buy new toys. it's a big issue. it has to do with all the pc-correct stuff and computers in the reality that we have laying around. it is available today. download the free app. have a couple of monitors just sitting in the attic and i don't know what to do with them. >> you see them on the sidewalks of new york. >> recycle them. >> they don't, that's the point. is "bloomberg surveillance." let's get company news. public,baba goes softbank could be the biggest winner. their ceo bet $20 million in unknown company and they think it might be worth $58 billion. a shakeup at samsung because of falling phone sales. they have replaced the leader of their mobile device design team. they have been heard by cheaper chinese made models. nintendo has been struggling to win over consumers with this latest game consoles. a 13 yearntly lifted ban on selling videogame consoles. on your 201k that has been improving, risk on them at off and risk on again. there are pesky momentum stocks that are getting crushed. kate moorre is with jpmorgan. she suggests courage is in order. there is the idea of use of cash as religion. >> we have rewarded companies to build up their cash surplus over the last few years and everybody wanted to see more buybacks and dividends and this is the first year where you get investors talking about capex and m&a. we are not talking about taking down the cash levels that exist on balance sheets. i think that will continue to exist. it's more about the incremental cash flow. we were talking about rates staying low. companies need to think about smart uses of debt and leveraging up when it makes sense in thinking about the elegy more holistically. -- and thinking about their balance sheets more holistically. >> we have never seen spreads coming in like they are. how will chief financial officers manage this ever-growing debt to a better debt outcome? >> maybe debt is priced to perfection but we have never ever been this situation before where we are five years out of financial crisis and monetary policy is easy and a lot of liquidity in the market. it is hard to make a comparison to history when we have never been in this particular situation. we can have spread stay incredibly tight for the foreseeable future and companies that don't take advantage of this environment will find themselves losers in five years. >> the companies that don't take themselves advantage will have a ceo at of a job. up, willex picks investors reward companies that do not extend their ideas with cash buybacks? before, we seeed this in health care and tech in those sectors have not been the best-performing but that's where the deal flow has been. you see both sides respond in the u.s. and europe. we are seeing more cross-border companies arend looking for the best assets they can acquire or bring onto their own businesses regardless of geography. they are thinking investment and that's a real improvement. >> are they thinking of a bigger company, a bigger vision forward or are they emerging transnational he to cut costs? >> that's where i want to go. if we assume that spending money is a good thing because it suggests growth, do you go with a company that is spending company on buying other you invest t do in company's that are spending oncapex? soundliche but this is more of a stock picker's market. you have to do this smart. aspi thoughtful about the future and growth and not just because they sold out. >> where is the single best opportunity right now? i would say there are opportunities in technology as we talked about before. on a valuation basis, -- old tech and new tech, we are playing both sides from the capex perspective. we see the average length of equipment is relatively high and as companies feel more confident and think about being competitive, they have to invest in tech hardware. >> you look at equities globally. do you see this taking place in europe and asia as well? >> this is happening in health but, gigantic announcements one place we are watching closely internationally is what is happening in the japanese market. japan is at a weaker start to 2014 than other markets. we have seen a lot of interest move away. we don't think that is totally justified. ofre is a huge amount selloff in the consumption tax and people work about second quarter data. one investor is long on japan. what's the biggest risk right now for technology? >> it's that companies do not spend. tech, if we feel the fed will be on hold and the economic data is not as strong as we would have wanted, they feel cautious still and do not move into the next leg of the investment cycle. thank you so much. chief investment strategist. it is a bizarre time. >> we've never seen anything like it before. it's like one line up like this -- >> it is a bifurcated market. this?n have we last seen let's check at the foreign exchange-dollar-yen still showing bid on and a stronger yen with a weaker dollar. koypenhe next hour, mo will be joining us as her guest host. ♪ . >> this is bloomberg "surveillance." >> prudent blinks and suggests russian troops will retreat -- prudent blinks and suggests russian troops will retreat. beestment banking will slashed at barclays. 7000 bankers will go. can a shareholder trust alibaba ultimately its management? good morning, everyone. this is bloomberg "surveillance ." it is thursday, may 8. i'm tom keene. join amy, scarlet fu and adam johnson. mo koyfman.th us, an early investor in twitter and also led the company's investment in an eyeglass maker. the start.n gets >> overnight we had mixed global data. china's exports and in ports rose. in europe, the german industrial output unexpectedly declined. the bank of england rate decision is coming out momentarily. the ecb rate decision out at 7:45. you want to note the press conference at 8:30. >> boe maintains its benchmark interest rate and told us no change. >> no change, the forecast among economists tracked by bloomberg for the ecb. we will get that decision at 7:45. 8:30, the press conference. 9:45, the bloomberg consumer comes in -- consumer comfort index. after the bell, cbs news corp.. janet yellen will be testifying at 9:30 before the senate budget committee. >> that was a surprise in front of the house yesterday. focused onmuch more housing and concern about housing. >> big job cuts on the way at barclays. by 2016 barclays is to cut 7000 jobs at its investment bank, about one fourth of the total. that will -- that was because of a 49% drop in profits. the automaker ford wants to reduce dilution. that may beshares reduced to convertible debt. a team led by united technology that supports the unit has a $1.2 billion contract to build the next u.s. presidential helicopter. lockheed martin is also part of this team. >> they are expensive. " helicoptersance are sikorsky -- >> it is a little loud. >> the plane is air force one. what is the helicopter? >> marine one. but it is only called air force one and marine one when the president is on board. is force one only when he aboard board. and marine one. >> this is interesting. it is a contentious debate. this whole helicopter thing is a big deal for washington -- >> and the "surveillance" producers. >> on the markets, really front -- 960ter, there are seven, almost half in a bear market. innovation stocks lead the way. zynga is down 75%. boyd -- mo koyfman is our guest host today. he has observed euphoria and despair, including being an early investor in twitter. i know you cannot stop specifically -- you cannot talk specifically about twitter, but what does this phrase momentum mean? >> i think we have markets where people are investing based on hopes and dreams often as opposed to the reality of near-term performance. we have been in a moment market that has pushed stocks to be priced at perfection in some of these growth sectors. i don't think it is tech specific, i think it is specific to any growth sector where you get both institutional and retail exuberance, and we are seeing a bit of a come-to-jesus -- here the reality >> who do they blame for that exuberance? >> the reality is, i don't think they are dogs. the important thing to recognize is that most of the -- a good chunk of the innovation we are seeing in our economy is coming from the tech sector, and i think there is going to be continued strong performance among many of these companies for the foreseeable future. in the near term, if you are going to weather the storm, take a position on these businesses, you have to expect debate, you have to expect the ups and downs. the only written at the end of the day you have -- the only person at the end of the day you have to blame for making an investment is yourself. >> if we get to gamma, we will talk about -- >> alpha relay. >> alpha or beta in this market? news, not acial greek one. >> you mentioned hopes and dreams versus reality. these are real businesses with real term reality. amazon got caught up in the trading as well. >> amazon has really pushed off profitability at the expense of investment and growth. me ofnd of mine reminded a quote yesterday. i think we are seeing the voting machine effect right now, where momentum sentiment swings, and people get very nervous when they do not see the earnings or the sustainable profitability of some of these businesses. they returned to the exuberance of it will come, and the reality is amazon has taken a position for the future and not for delivering on present earnings. >> what happens with the venture capitalists in silicon valley and new york? do they change their way of looking at the market as well? >> we typically do not change the way we look at the market in the sense that we are still interested in the same areas, in the same sectors, the same disruptive trends. we tend to invest through thick and thin through the tough times and the good times. -- if i couldw predict when the market was going to go up and down, i would not be sitting here right now. what we know is that when we are investing in sectors where we believe in the long-term value is going to accrue to those sectors, we invest through good times and bad times. the one benefit of the correction in public markets is that valuations in the private markets tend to follow public markets, so we get more rational private market valuations that help us on new investments, hurts us on new investments, and that is why we encourage our companies to get great valuations in the market but not push themselves too far, where they get caught and cannot continue to raise at the step ups they are looking at in the markets. it is important to keep a rational head about these things and to have a long-term point of view while being cognizant of what is going on. >> is there any justification for all the big old tech names that we know? six co., oracle, microsoft, intel -- is there any compelling reason to own those names? >> to the extent you believe they will deliver on cash flow promises, and better than the , and thepects them to impending competition from the new entrants will happen slower than expected, in the short term those names can be owned. >> it is like a bond with maybe a call option embedded, but not much of one. >> the reality is it depends on what kind of investor you are, what kind of term you are looking at and the yield you are expecting to generate. there is stock for everybody. >> i want to get your take on something written up in "the wall street journal" today. immigration lawyers talking about the high skilled workers. microsoft has waited for congress -- has not waited to die for congress to authorize more visas. it set up the canadian company to employ foreign software engineers it would have brought to the u.s., and canada will now those."from pronounced inst terms of start ups, but the reality is it affect both. it is a personal issue as well. my father is an immigrant, came here in 1974 from moscow, and i would not be sitting in this chair if he did not have the opportunity to come here. he came with one thing, his education. he put it to good use in this country that he loves. ideaca was founded on the of immigration, and many of us sitting here today would not be where we are if not for that. i think immigration actually is one of the most important growth engines in this country. some of the great businesses that have been started in this country were started by immigrants, debt -- and to the extent we do not do more to foster talent coming into the united states, we will lose our competitive advantage. the s&pf companies on 500 were founded by an immigrant or a child of an immigrant. >> let's do a data check on thursday. a quiet market. i want to get through this quickly and move onto a busy hour. 1.3943. >> what will happen if u.s. pleacutors go for a guilty on credit suisse? ♪ >> good morning, everyone. bloomberg "surveillance." outguess toes is morally coffman -- moy coachman -- mo koyfman. to trend is recently with cloud computing. many suggest the certitude of cloud success is being tested. clout is perhaps 2012. why is there this new tension? >> i do not think this is a cloud specific issue. this is what we were talking about earlier in terms of being in a moment to market driven by sentiment, and the cloud companies are vulnerable because they had historically and continue to invest in sales and marketing at the expense of profitability to drive current revenue, and they tend to trade on high multiples of recurring revenue. in markets where sentiment pulls back and looks for the near-term cash flow stream, i think cloud companies get hurt. >> critically, and this is what you are so good at, digging into the process. start ups -- it starts with and cloud, and there is a raging debate of getting from raw electricity to investment. do we have a certitude that that work out? capex. theot even reality is what they are investing in his sales and marketing. so what investors i think really need to understand, if they want to understand the value of these companies, is a lifetime value of their customers. who are the customers, how long do they stick around for, what do the churn rates look like? -- if you can acquire the companies and have real confidence in that, then you aren't building valuable cash flow. >> is there a risk here of oversupply of cloud? >> i don't think so. i think every single software business, every software industry, is going to be -- you are either going to redefine themselves as a cloud company, or it is going to be replaced by one or a number of businesses that pick apart pieces of the stack can do it better in the cloud. can you buy damaged technology stocks this morning, or do you have to wait? stock-by-stock decision. i would be scared to jump into the sector overall. i don't like it in front of a moving bus, but if you believe in companies long-term, they are as good an opportunity as any. >> mo koyfman, we welcome all of you worldwide -- particularly from london. barclays, to be kind, are changing their strategic vision. good morning, everyone. it is bloomberg "surveillance." ♪ >> coming up later today, tune in to bloomberg west. comcast everywhere. look at whate a the deal could mean for the pay television industry. erlichman,n and jon with "comcast everywhere," only on bloomberg west. >> tom keene with scarlet fu and adam johnson. the ruble is doing better today out of ukraine. with our guest host, mo koyfman joins us on technology and cloud and this, that, and the other thing. adam johnson has top headlines. >> the u.s. says there is no evidence that russia's president >> vladimir putin, -- that russia's president, vladimir putin, has pulled troops back from the ukrainian border. the house of representatives has lois lerner in contempt of congress. she was cited with failing to answer questions about her role in scrutinizing tea party groups. the house also wants a special prosecutor to investigate the irs. -- asian sotheby's buyers drove a sotheby's auction. tom keene was -- >> i bid by telephone. chipotle having a margarita. right around the corner. ordering two doritos, and i put a call into sotheby's. burritos,g two and i put a call into sotheby's. he goes to the auctions but he buys what he likes. he is not in the frenzy of asian buyers buying expensive stuff . >> too big to fail? to jail necessarily. prosecutors may press terminal charges instead of posing fines against credit suisse. -- borofsky was the former new borofsky was the former special prosecutor for tarp. what is different in this particular case? >> the allegations are similar. we have seen this movie before where we have these investigations, and credit in taxis helping assist evasion, bmp, sanctions violations, and typically what we have seen before with the big banks, there is a deferred prosecution agreement, meaning the bank says i am not going to do this anymore, and they pay a big fine and maybe a monitor gets installed. criticismed a lot of for going after the big banks, particularly after attorney general holder went to congress and said we cannot indict these guys because we might bring down the entire financial system. to theseeing response criticism, and testing the water of a criminal charge potentially against a holding company of these institutions, which would be a major shift. so we have -- there is a huge cascade effect if you put a criminal charge on a bank. what would happen? >> if there was just a straight criminal charge in the too big to fail banks were treated in any other defendant, they would be charged and potentially lose their charter, potentially triggering a crisis. what the department is doing is not quite that. they are not peeling back so-called too big to fail, they are talking to regulators, trying to make sure there is a soft landing. making sure regulators will not pull their ticket in limiting the cascading effect. the bottom line is is is uncharted territory. although they might try to put the impact -- >> i love how you frame that about the criminal charges. let me frame this. is this republicans or democrats pressuring well-meaning prosecutors in new york, where bozos in washington are pushing the prosecutors to test the envelope just for press and star value at home? >> i think pr value has a lot to do with this for sure. it is written -- it is written in response -- it is in response to prosecutors. core not addressing the part of those complaints, which is big institutions should not be treated differently just because they have a hostagetaking ability to take down the entire economy. ofe it so you can indict one these organizations without having to do anything special to soften the blow will stop make them so they are not too big to fail, so they can be charged with consequences like a smaller organization. ahead with the criminal charges, which means you might actually pull back -- there is a legal term -- or cancel the charter of the bank. other companies would not be able to do business without because they are criminally charged, right? >> my view is they are too big to fail and jail. you cannot do something to these big companies without risking the financial system. we should recognize that and say to these institutions, you committed a crime and we are not going to do this because we might put the system at risk. but we are never going to let you do it again. you will make this argument to us, we will break you up, or you will volunteer to break up so you can never again come to us and say we committed a crime, but you cannot indict us because if you do you have to do the special conditions with regulators and make sure we do not feel the full runt. -- the full brunt. >> is there one we can use as a test case? >> we will see what happens. if it is not too bad, i would expect that u.s. banks would be next on the docket. >> neil borofsky >> thanks. >> how do you tune into football? our next guest wants to improve your experience. nfl would improve your viewing experience? i want to be able to watch west coast games live. bsurveillance. ♪ >> good morning, everyone. check out the latest edition of bloomberg "businessweek." huge deal, all that stuff out on the sidewalk, and how ignoble has figured out what to do with your computer garbage. out on newsstands tomorrow. bloomberg "businessweek." >> this is bloomberg "surveillance." i am scarlet fu with tom keene and adam johnson. company news now -- talk of war consolidation in the pay television industry. at&t is in talks to buy directv. shares of directv are up 43% in the last year, and the company $3.5 market value of billion. rising competition in the u.s. -- toyota expecting weaker sales in japan because of an increase in net sales tax. united parcel service may decide the new fedex pricing rules are too big to pass up. charging for packages by size, not just wait. a note from bb&t says a promise of 300 $50 million in after revenue could be compelling enough for ups to do the same. they are continually reviewing its policies. that is company news. >> they have a strategy. open.keeping their mind >> if you are not to continuing to review your policy, you have problems. if you are not replacing your arctic every two years, somebody -- we'll -- your docket barclays with a sharp turn in how it does its business. they will bring the total number of job cuts across the firm to 19,000 by 2016. 19,000. francine lacqua joins us from munson. -- from london. why should we believe ceo anthony jenkins this time around when we had a strategy overhaul from him last year that did not work out? >> that is the very first question i asked the ceo when he came on this morning. he said this is a much bolder plan, making barclays leaner, stronger, and a much more balanced bank. at the same time they are creating this -- he hopes that by being so bold, investors will see that he means business. >> we lead in february of last year a clear direction for barclays. we wanted barclays to become the go-to bank and deliver superior returns for our shareholders. in the intervening time, there have been significant changes to the economic environment, so we have the same objectives. this is a different way to get there, and i believe investors will have a higher degree of confidence in our ability to execute the strategy change. now we is key because can understand the regulatory environment that he is facing. he says this is a good indication of barclays, that he will be focused as an international bank operating in only areas where it has key capabilities. this is his strategy, the first on the job foren two years. it is his win or his fail. >> i am denying -- i am dying to know how this is playing in the city and how it is playing in america. will other banks follow the barclays model? >> when you talk about the barclays model, it means that it is the one bank but it is looking -- probably deutsche bank. barclays is trying to put themselves in a stronger position without raising capital. thatsure the executives deutsche bank are looking at barclays as a test case. can monitor their core business for once, which has been tricky to value over the last two to three years. mess this up?on could diamond of course barclays in a difficult position because of bar cap, right? is the investment bank that is doing so badly, but where he may be right, and he is now working on africa, is that africa is one of the big businesses that the new ceo wants to be in. weak.xed income is so and maybe he foresaw the next opportunity, which is banking in africa. sofrancine lacqua, thank you much, anchor of "the pulse." you can check out her interview on bloomberg.com. >> i think she is dead on. it is deutsche bank, and then you go over to u.s. banks. this was mailed 18 months ago. well, butsidy as meredith -- >> barclays is exactly where they were back in 2010. isn't that amazing? >> let's get you a data check. jobless claims coming up at 8:30 a.m. futures not doing much at the moment, the 10-year yield higher at 2.622%. good morning, everyone. ."oomberg "surveillance tom keene with scarlet fu and adam johnson. we are on bloomberg television, bloomberg radio, and are diligent will -- our digital product as well. i entire interview with jeff trulock is out on video right now, just as an example. digital, an earlier investor in bear market dog twitter right now. what will it do today echo ready, hike. >> football. >> i am going to call an article. >> football fans can whet their appetite tonight with a tv miniseries known as "the draft." media strategy is here now. , with hise that mo smart phone, can keep track of every single picked over the next three days and watch every moment, every conversation. the draft has really become a reality tv show that the nfl has made accessible to everyone. >> absolutely, and that is one of the big strides we have made in our business over the last few years, recognizing that our business -- that our fans want draft content wherever they are at. great andwith having deep access, and we are excited this year to do 75 hours, more content than we have ever done. >> 75 hours? >> 75 hours for the full week. starting today, we are doing 51 hours, behind-the-scenes, reporting live from 30 different clubs. that access, which are fans really crave -- >> can i ask a dumb question? could you right now predicted draft, or is there a lot of surprise as you go through the draft? >> it is a total wild card. you look at the store is happening, and we have some great storylines. there are some great quarterbacks. johnnie football is out there. there are a lot of different reports about where he may go. we really do think this is the greatest reality television. they are bringing the next generation of stars in the league today, and you do not know where they are going to go. >> i am waiting for the staff -- for the fashion spinoff. >> you will see a bit of that tonight. nike is unveiling the new jerseys. >> don't tell me -- you have the cheerleaders involved as well? >> i am not sure of that. draft, torast to the the games, cutting the cord is really not an option for football fans. they cannot watch it on their tablet or smartphone unless they have a $200 a month cable bill tethered to a cable operating system. how far are we from fans being able to watch on whatever device you want at whatever time? >> we think those two things are not necessarily tied. we are putting out this year that all of our game should be available, streamed on tablets and computers. >> in real time? >> that our broadcasters will do on their channels and apps and websites. all -- where all the games are on your phone or -- >> how are you going to take the iconic idea of sunday afternoon, 12:15 p.m., or the 4:00 p.m. game that goes over into "60 minutes"? how will you do that and not disrupt them over the experience? >> people are in more places. airlines are busier. we want somebody to have a screen in front of them no matter where they are at. >> are we going to pay for that? >> the stadium is a big piece. cloue question -- why is nie the number one pick? accounts aeen by all phenomenal prospect. you look at the track record of performance over three years, and it is remarkable. belichick's war room different? such a shameless plug. he was worse than major league baseball. >> he is good at his job. >> thank you so much. >> our twitter question of the day -- what would improve your nfl viewing experience? >> maybe if the new york jets play better. >> or show up. ♪ >> good morning, everyone. bloomberg "surveillance." tom keene with scarlet fu. we will go to london in a moment as we look at the ecb announcement. >> we go to betty liu with a her at what is coming up on program. you had one-on-one time with sheldon adelson. the kingmaker for the republicans. >> yes, kingmaker in las vegas and among republicans, wants to put a republican in the white house in 2016. he has built his fortune on gambling, right? that there is a line for sheldon adelson. he says the line is online gambling. he wants to put a stop to any kind of growth in that market. >> why don't we legalize prostitution? is happening all over the place anyway. why don't we legalize drug addiction? it is happening all over the place anyway. wherever we can control it, we should control it. i'm saying coming from the business, i want to make money from those who can't afford it. i cannot tell over the internet who is underage. i cannot tell who has financial difficulties. who is not gaming responsibly. money is beingf laundered. i can in the casino. >> how much are you willing to spend to stop online gambling? >> what ever it takes. said $100 point he million. he was basically saying whatever it takes, that is what i am going to do. part of it is he is trying to protect his own property. he denies that. he says people who go online gambling are too poor to go to my property. >> part of it is just sheer ignorance because with what you can do in terms of facebook connect and other identity services on the web, it will be increasingly easier to figure out who is who on the web than it is in real life. i just think that is not credible to say that i know who walks into my casino and i know they are rich people. >> he does not really. >> i have been to many can see and i -- many casinos and i have seen many non-rich people there gambling. at the end of the day, the blood self interested and that is what this is about. >> a lot more to come, and that will take place this morning. full rollout of sherilyn edelson -- of sheldon adelson's comments, too. >> we go to london in moments, i guessguy johnson -- not much news here. you will have the headlines for us in a moment. what will you be looking for in the 8:30 press conference this morning? >> whether or not we will see more liquidity to fix the banking system in europe. we rely on the banking system. you guys rely on the capital markets. we need to fix the banking system. that is what mario draghi is doing right now. is rate decision is what about to come up. then we will get to the press conference. i am waiting for that decision to come through, and we have a decision that is coming through, not showing up last night. ecb deposit facility remains unchanged. the benchmark rate remains unchanged at .25%. the beginning of next month, we get another rate decision, and at that point we get projections. that is when people are inspected -- >> i spoke at length last night to newroom beanie -- to ruby bini.-- rou when do you perceive in your reporting that the banks will get their act together to assist the president of the european central bank? >> the two are very much connected at the moment because the ecb is conducting a stress test. that is the thing that is going on right now, the thing that could potentially be a roadblock to the ecb taking action at the moment. that is to figure out exactly what kind of a hole the banks are in, a much capital they need if any. it is at that point that we understand better the relationship between the banking system, the ecb, and the sovereign states. i think fixing all that is part of the problem we will deal with over the next couple of months. ecb, a lot ofhe discussion and concern in this country about special criminal charges against bnp paribas and credit suisse. what do investors in london say to you about those potential charges? a link buthis is separate strand. we are waiting to find out exactly -- there are certainly these things going on right now. you have what is happening with libor, what is happening with the bank selling here in the united kingdom. you have all kinds of litigation charges, criminal risk out there as well. that is part and parcel of the problem we have the balance sheets, inasmuch as litigation charges. as is also tightly wrapped up. anythingt extrapolate at the moment because you do not understand what the separate pieces will be looking like. but that is part of the story, the problem with bad loans heart of the problem as well. --io draghi has to do with to deal with all of this. >> headlines streaming out at bloomberg at 8:30. adam, we have euro add new session highs. >> incredible. for all the concern about the european banks, you have the euro pushing highs. >> pushing towards 140, no less. the ecb had nothing to say on this latest announcement. this is bloomberg "surveillance ." scarlet fu with tom keene and adam johnson. our guest host of the hour is mo koyfman from spark capital. when alibaba goes public, the biggest winner will be japan's softbank.ompany now softbank is thinking alibaba may be worth 58 billion dollars. a shakeup at samsung because of falling phone sales. the leader ofd its mobile device design team. the company has been hurt by cheaper chinese made models. nintendo has been struggling to win over consumers with its game console. a 13-yearntly listed ban on selling videogame consoles. that is your company news from bloomberg west. >> good morning, everyone. the ali baba initial public offering -- one thing we know for certain going to the adam johnson dictionary, it is ginormous. enthusiasm reigns. i am kidding there -- it does not have anything to do with u.s. steel. accounting ande transparency. mo koyfman is at spark capital and look set trades of transparent -- shades of transparency. should they go along for the ride? we are beginning to see this percolation. stephen davitt of writing it up. do you trust the transparency of alibaba? do you know what is under the hood? >> not entirely, and i think -- i hope that that will evolve becomes a public company in the united states. i think what you're seeing is the reality of the chinese norms for how business is done and what is and what is not communicated coming to the fore. a is mulch -- it is as much cultural way of doing business as anything else. i am not sure we will ever get underneath the hood fully. first of all, ali baba is a great company, but investors betting on alibaba are betting on china as much as they are betting on anything else. >> here is my morning must-read. it gets to what we have seen. short blistering note for bloomberg -- "does the fcc have the guts -- does the sec have the guts to tank ali baba's ipo? the most alluring option for the sec's current commissioners might be to do nothing, pray for some diplomatic solution to emerge and leave the mess for their successors to clean up." toi would be hard-pressed get in front of this kind of ipo. you buy shares? >> listen, it all comes down to valuation at the end of the day. how will the company be valued? i do not really by individual public stocks much because i am heavily invested in the sector and that is not what i do every day. away theaba is going leading chinese internet company. if you believe in china and the internet in china, they effectively own it. why not just go that route? >> you could. i am not making a case for or against alibaba, especially because we have not seen the valuation. i am simply saying whether they fully get underneath the covers or not, this is a massive story from a chinese internet growth scenario. i think a lot of investors will be attracted to that. >> if it is a proxy for china and technology, is it more about hopes and dreams or near-term reality? >> i think that is the key question, and a lot of it has to do with the market we are in. my suspicion would be up until the past few weeks and months, i would say it is hopes and dreams, that it will be interesting to see whether the market takes a different tone with it. roadshow,ll have a right? >> oh, yeah. >> what is the question that mo koyfman would ask at the roadshow? to me it is about price .aterhouse cooper's hong kong >> i would want to get under the economics of their e-commerce businesses and i would went to understand specifically -- i would want to understand how specifically each of those divisions are performing not just on a topline basis but on a margin contribution basis. the second question i would want to understand -- i just don't know how much visibility we are going to get -- is all the related parties and the related entities that have invested alongside alibaba, and they have a number of businesses -- bank, yahoo!, etc.? >> no, no -- who they are? the eight people around jack mauer, or what ever it is? >> i don't know who all the people are. i don't have a sense of what all the holdings look like. that is something i want to get my arms around. >> i want to say, in a million years i have never seen a conversation like this. this is original. >> there are a lot of question marks. everyone is a bit be wilted by it. that e-commerce is different in china than the u.s.? >> i think the market share that they command and the ability to control prices in china is somewhat different than it is in the u.s. if you just look at the top line profitability numbers, it would indicate that it is different in china than the u.s. but again, i would like to get underneath the hood a little bit on the various pieces of the e-commerce business. there is no question alibaba is a juggernaut, and i don't see that going away. >> one good thing with the u.s. listening is you have to comply with u.s. accounting, which is we will get those numbers. >> we shall see. >> let's get to the agenda tom aware we look at the stories that will dominate the news flow this morning. tom, what are you focused on? on thejohnson's report ecb and the non-news we saw minutes ago. we will go to some boring headlines at 8:30, and then is going to be interesting. i cannot say enough about what an oriole bird been he -- about what nouriel roubini said about mario draghi's courage to get out in front of the ecb. >> he did not have to put any money in front of it either. he just had to talk. tom, you have to head over to the radio show. bloomberg "surveillance." it continues. a: 30 a.m. is mario draghi's news conference. we had a blockbuster april jobs report, but what do the weekly numbers tell us? the fed is just as obsessed with the labor market as it is with the housing market, according to ian shepardson, who told us this morning that housing will be a big focal point. >> the headline number on unemployment is meaningless. we're just not counting people. it is about a four-year low. on my agenda, football. the nfl draft tonight at 8:00. i want to know what happens to johnny manziel, a.k.a. johnny football. he is at number two. the number one tight end out of south carolina, he barely played last year. >> odd that he is not higher rank. what would improve your nfl viewing experience? in helmets?ass >> i think that could be somewhat distracting. >> for everybody, especially if they do not have a steady cam. >> my viewing experience would had anfl red zone cheerleaders channel. >> it is gratuitous. what would make your viewing experience better, mo? >> i have to say i think football is pretty great. i would love to be able to subscribe to an nfl package, one time fee, paid directly to the league, yet it on any device anywhere i want. >> that is not what you're asking for, by the way. >> i think baseball did a good job, but i would love to see the nfl do the same thing. where is my iphone? here. show me football on this thing any time i want to see it, anywhere i am. >> how much would you pay for it? >> a couple hundred bucks a year. >> mo koyfman, thank you so much. twomberg "surveillance continues on radio. "in the loop" is up next. ♪ is thursday,ng, it may 8 and we are live from bloomberg world headquarters. you are "in the loop." we got a great grandma had today because billionaire casino willte sheldon adelson have a rare interview. i spoke with him earlier this week in las vegas. he did not make it to the top of the billionaires world by being a wallflower. he puts it all on display in our conversation. >> when you ask me a question, i try to be honest. how am i able to be honest? i flunked. diplomacy 101. >> you will hear him be honest for the next two hours. he will mouth off on everything from why he hates online gambling to what he really thinks of those other casino guys and how chinese gamblers are putting money into his pocket, money he is using to put a republican in the white house. it's exclusively here on bloomberg television. first, here is look at our tech headlines. headlines. our clays

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