Go on to a second look at firstquarter gdp later in the week which may decline. Thats a rear view of the First Quarter but radioshack is the only company of note reporting. Their store were i live is gone. Its a train wreck. Lets do a data check. Equities are better than good. A record high in the s p 500 and we advance further. The euro is off the key elections. Vxx shows the good news in a quite markets. Goal begins a decline, still and arrange but nevertheless 1284. But weaker yuan and the indian rupee turn as they have a new government. Here is the minimizing shareholder value of astrazeneca. That is painful. Table,as a deal on that 53 pounds, 50 pence and now its trading like 42 because there is no deal. We looked at the newspapers and scarlet fu did that. There is a lot to go over with the elections. I want to start with ukraine which has a new president ends in his excess on the battlefield. The governments of the military has significant significant losses from rebels. The its helicopters to retake an airport in Eastern Ukraine and 30 rebels were killed. The newident president is a billionaire and vows to step up operations against separatists. There is no continuity between the different rebels. Some stand for aligning with russia and some say we dont trust russia. The bottom line is the guy starts strong with military action. There was a real mystery to the morning after. Is noblunt, there mystery. They are attacking separatists and eight. In Eastern Ukraine. He won with 55 of the vote. A lot of people were not voting. In the eastern half of the country, they said they could not get to the polls. We will check in with Ryan Chilcote in a moment. Page story isnt pfizer ending its takeover bid for astrazeneca. The 117 billion not enough and astrazeneca says it does not take into account the drug it has its pipeline. There is a threemonth coolingoff. Before anymore talks can take place. Pfizers are hoping that they can push the deal for next time. Fascinating the way the by sideline is up on this. One group was for it on the other group was are you kidding me. Price was within 12 of breakeven. In other words, you can only pay so much before its no longer adding to pfizer earnings. Outou wonder how this comes if they revisit this. Do we have a third story . Of course, this is about china pushing domestic banks to replace ibm servers with chinese made ones. Its some retaliation after the u. S. Charge five military officers with cyber theft. The Chinese Government is now reviewing whether their reliance on ibm servers compromises the country. Talking about consultancies and china might be pushed out. There are ramifications. Its effectively a trade war without being a trade war. The dominoes start to fall. We expected some kind of pushback to happen and this is what it looks like now. Those are the frontpage stories. We are trying to get our head back into it. Marketvery international. Ukraine has held elections but can he all the people and the nation together . Ryan chilcote was in st. Petersburg, russia and is now in kiev, ukraine. What is the single thing i need to know from you now . It was what you were talking about earlier that the new president elect of this country is upping the ante in this countrys conflict with the kremlin. The kremlin warned ukraine from escalating its military action in the east of the country and thats exactly what the president elect has done. We have not just sing Ground Troops but fixed wing aircraft, helicopter gunships and active military combat in the eastern part of the country as the ukrainians try to expel the separatists in that region. That is a president elect indicating he will not be rolled over. He will not give up on the eastern country. What is the support or dialogue between the separatists and russian . . Thats a good question. The kremlin says it does not have control over the separatists though it has not condemned them. We saw over the last 24 hours was very interesting in that we actually have prorussian fighters coming into ukraine from russia itself. These are fighters that described themselves as chechen volunteers, irregulars if you will come in a part of the regular Russian Military but thats not how the Ukrainian Government sees it. The Ukrainian Government is accusing russia of intervening militarily in the complex. The chechen fighters are battle hardened guys who would have thought in at least one war between russia and chechnya before russia effectively took control over chechnya. That is a ramping up of the conflict on the separatists side as well. Give us some color on the president elect. He is a billionaire, we know speakst he also ukrainian and russian fluently. What is his backstory to work with different groups of people . Hes very interesting in that sense. He has made a pile of money. We estimate his fortune at about 1 billion from selling his chocolate which is the biggest brand in the country and does pretty well in russia, too. He was foreign minister under he wassident and then the economic minister under the next president. Streethat, he joined the jantests to expel president ecowas from power. He has worked with everybody out there. Coming away with a 54 vote is a very impressive showing, the closest other candidate in the polls got 13 . He avoided a second round and has a lot of support going into this conflict which continues. Thank you so much. Our guest hosts this hour is stanley cower. He is an expert on your nations fiscal budget, it its deficit on the way to a surplus. Joining us as well is stephen whiting. With you. T its almost a nonevent for this three day weekend up up and away for equities. Why are equity market still driving higher . Record high corporate profits are still growing. Is this once again wrong . Yes, in the First Quarter it was not a brilliant quarter but for an economy that sequentially did not grow much at all, we talked about the revision earlier. It was a real frostbitten quarter and we still managed to grow over the past year for just over five percent. We will continue that. With threeshows percent over the next few quarters, we will have good earnings news. You were always out front on what the market signals. Does the market doing better signal better gdp growth down the road . Yes, this is a market that essentially discounted a great deal of confidence last year. This is signaling there is more to come but we are requiring a followthrough in the real economy. If the economy were going to stall out from here, we would have difficulties in the equity market at this level. You have a bead on washington, what do you think of president obama making a surprise trip to afghanistan . He has done this before, he and the vice president. You would not announce Something Like this ahead of time. Day, itwith memorial was in part political and in part sincere to show the troops that you support them. In their a, we are going to pull out troops by the end of the year. Im not sure that is circling the wagons. It could be a victory lap or the fact that we have so Many Americans who have died in afghanistan what are you saying . This is as much toward the families this is personal. I think the last time we spoke to you, there were headlines about a military going back to 1940. Gote ive seen you, weve ukraine, china, vietnam, the chinese sunk a boat overnight off vietnam how does our military shrink when i see a president with a tableau behind him . Its very important not to find not to define military might is numbers of people. The way we fight these days, the military contingencies dont require more people on the ground as much as they do a more technologically proficient military. Dont just count the number of troops. You have to look at spending on other things and what the capabilities are. Can we afford to give up one carrier . Sure, it just depends how you will substitute. Carriers in many ways our Tech Knowledge ease of previous wars at this point. If you got missiles and drones and god knows what else, there are other ways of a compass and the same thing. Collender is with us and we are getting you prepared for a fourday workweek. I have never seen you this excited. I got more than four hours sleep. And a beverage of my choice. I went on instagram. This is proof. Last night, presumably, not this morning. Weve got a full two hours of bloomberg surveillance coming up. What language should your children or grandchildren learn to speak . Thats eric twitter question of the day. Good morning, everyone. Important you wonder what will be said anja jyane is with Deutsche Bank and he has challenges and they will be discussed with Stephanie Ruhle 10 00rket makers live at a. M. Is the most important interview of the day. 10 00 hour. T in the this is bloomberg surveillance. We are going to london right now. Big transaction in england falls apart another gets highlevel attention. Iser abandoned its bid to buy astrazeneca. The biggestbeen deal ever in the drug industry imeltantime, ges jeff is getting ready to talk with the french prime minister. Ge got an extension of the deadline for its land purchase by through a so what is jeff imelt going to do with this extra time . Groundworklaying the for a charm offensive. , have seen people from ge jeffimelt will a dress the French Parliament tonight. This is about getting the french government comfortable with this push themoralthom and away from backing off their rival from siemens which could come any day now. One common denominator in the ge transaction and the visor is job guarantees. Are these considered bloated companies that have rooms to room to cut costs aggressively . Not particularly, the job guarantees are really a symptom of the political environment in europe right now. And the u. K. And french, the populist right wing did well in elections and that has politicians nervous about how voters perceive their economic management. I think we will be hearing a lot more about demand and these kind of guarantees when deals happen. You mentioned charm offensive. We saw a complete lack with mr. Reid of pfizer when he went to the u. K. What does jeff imelt need to do to turn up the charm . He has something on his side which is significant which is that target once the deal and has agreed to this do with ge. Its a totally paidup French Company so they can make the argument that this is a good thing for them and for france. In the u. K. , this was a situation where astrazeneca did not want to be bought. Most people would also agree that gef has played this reasonably well in france. Its a hard country to do business where you have to be prepared for politicians to perhaps say one thing behind closed doors and turn around and tell the press and other thing. Getink ge and jeff imelt that but this is a bumpy road. The french government and the u. K. Government have played prominent roles in road blocking both transactions. Would this be as big of an issue if the buyer were not an American Company . Fire ands is the rival this is an offer that has been solicited in the case of alstom when it elements of the french government, the idea creating a european champion. There is always a bit of baggage around having an american buyer. I dont think it makes a huge difference. There is enormous nervousness out there among politicians out or threatening jobs and that is pretty much buyer agnostic given the broader political context. Thank you for your time this morning. Upve got a lot more coming in the next hour, the former Deputy Director of the Consumer Financial protection board will be joining us. Bloomberght here on 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, futures are up nine on a strong friday close. Checkre fourday workweek jeff top headlines. The military is trying to figure out how to rescue the nigerian girls. Pope francis is wrapped up a threeday visit to the holy land. He mourned the victims of the in israeland attacks and pope francis called for the establishment of a palestinian state. In the nhl playoffs, the Los Angeles Kings are now one game away from the stanley cup finals. They meet they beat the Chicago Blackhawks last night and lead the bestofseven Conference Series three games to one and bring it back to new york tonight. The new york rangers have a chance to get to the first stanley cup in 20 years. Its exciting. The Los Angeles Kings and the rangers, nobody would have predicted this. Although the western Conference Teams are stronger than the Eastern Conference Team so i am worried. We have to get through tonights game first. There is not nearly enough attention paid to western conference hockey. There is a huge bias of coverage in the eastern teams and you forget. We are talking about the original sex. That counts for a lot for it. Heres our morning must reads it i was actually cooking this weekend. Why cant washington figure this out . And donothing congresses, why cannot we balance it the way i we balance our diet . People dont like diets. Its the same thing. People say i want to do this but when it comes down to the hardware, it becomes impossible where they dont want to exercise is not as much. Has the government Proven Ability to eat less . No. Goingtionary spending is down as a percentage of gdp. We are just Getting Started on this conversation. Stan collender is with us for the hour. Will the deficit turned into a surplus . Good morning, all of you worldwide, this is the view from the hamptons of manhattan. Entire control room was in the hamptons as we can. No, thats gorgeous manhattan on a perfect day. It is like summer today. Good summer morning to all of you in the northern hemisphere. A perfect day in new york city. This is bloomberg surveillance, scarlet and adam johnson are with me. Lets do a quick data check. We were up friday. Lets get to adam johnson on washington. We have new evidence that this is not a donothing congress. Its just to do very little congress. Washington is on track to pass the fewest number of laws in a given year since 1988. 1948. Collender what is this record gridlock mean . We are not doing a budget this year. Are we going to do a budget in the next couple of years . The country has survived without watches but the better question is, does fiscal policy or anything else washington is doing have any rate any ability to respond to the economy . The answer at the moment is now. No. Its entirely political and the private sector is on some. If we are not responding to fiscal policy can what is driving it now . This is fundamentals working. There is a growing population , they are growing hours and there is more productive labor force. You have to hope that youre not in one of these crisis moments where you are just about over a cliff and government needs to step in and its not there. We want to bring you to disparate views. How critical is Economic Growth to our fiscal policy . To me it is everything. Absolutely critical and unemployment has a powerful correlation with nearterm budget performance. And does notatters have a close correlation is the longterm structural performance. That depends on whether we want oflive in ever larger share our life in retirement and provide benefits at a level consistent with people who are retired. Are we reaching up to get to the plugin . At the moment, we probably need 3. 5 real gdp growth to have an impact on the budget, to have the deficit declined further. Whether we will get there is a more interesting question without government intervention. The government is withdrawing from the economy and given the politics, there is no chance this will change soon even with elections coming up. President obama the most republican president we have had in ages on fiscal policy . Voters would never say that. Look at the trajectory three percent gdp. And the deficit continues to fall perhaps for the 2016 election. Who benefits the most from this . It looks like nobody is benefiting. The president is not getting credit for it at all. Why is that . Deficit or billion 450 that it will be this year is still a deficit. Its clear that no one wants to take credit for the fact that this is the largest fouryear drop in modesto in the deficit since world war ii. At a percentage of gdp is about three percent. We have not had a surplus since clinton but running a deficit is somehow acceptable . Deficit can be acceptable when you think about fiscal policy relative to the economy, sometimes the deficit is important like in an economic downturn. For every one who complains currently that the economy is not growing fast now, when you have Monetary Policy and fiscal policy not helpful, the economy is not growing as fast as it might. Its difficult to say that Monetary Policy is doing nothing we have very accommodative monetary dollars he the fed is expanding its balance sheets. Incremental a, there is less going on to stimulate the American Economy and fiscal policy has been a significant drag. Is this the worst news for democratic primary nominees or the republican set of nominees . Who likes this world least . Probably my wife. Democrats hate what is going on and reducing the deficit and not getting credit for it and an economy thats improving. Probably the most republican president since bill clinton had four surpluses in a row. Its fascinating. The president s Approval Rating right now is like 42 which is the lowest of his presidency. What is he doing wrong . Where do you want to start . Hes got a republican minority in the senate and a majority in the house thats been after him since the beginning. Obamacare, the ukraine, the fact that housing is still in bad shape, unemployment is still higher than people would like although it has come down the deficit was always a surrogate.