Transcripts For BLOOMBERG Bloomberg Surveillance 20140908

Theres a Traditional Store that goes along with that. Theres a lady and a moon. Sounds good, right . I was just thinking, what do they drink . Sake. Wrong, wrong, wrong country. Jack lew is talking tax reform at a 45. Do you think they will get anything done . No. Producer calls this a sprint. It is more like running in place to do nothing. U. S. Mens open finals are tonight. We have the 11th seeded and the 14th seeded. And you are going. Yes, it should be fun. How come he gets all the tickets . I have no life. You went to the jets . Yes. You spent the whole weekend in a hockey rink. Futures ares, commercia negative 3. That is the s p 500 off of a very good friday. There is a lofty dow. We will talk to Jeffrey Rosenberg and the 7 00 hour about where the dow is versus the economy. I will get to the sterling in a minute. Theres the brent crude. Instability this causes everybody angst. Ates the pound sterling 1. 70. This is jawdropping. Move to thetanic banking system. Back here in july, the pound was trading at 172. Fast forward a few weeks, 161. Still dropping. Mary poppins. E this is very serious. Lena komileva will join us from london. Tore pleased to bring her on discuss the abrupt move in the poundsterling. Lets get to the front page. We start with United States president , mr. Obama says he is ready to unveil how he will fight the Islamic State. Your outline steps in a speech on wednesday after he was criticized for not having a strategy. Heres what he said on meet the press. Be askingm going to them and compute understand, number one, this is a serious threat. Number two, we have the capacity to do with it. Here is how were going to do with it. I am going to be asking congress to make sure to understand and , and itwhat our plan is is going to require some resources, i expect, above what were currently doing. Those resources will not involve applying u. S. Ground troops. The white house says this campaign may take three years to finish. Very important interview with chuck todd. It is amazing how it synthesized this mass unrest of the summer and so many different issues, not just about iraq. The first time shot todd in that chuck todd in that chair. Asserted himself quite well. We spoke to him on friday. I think is going to bring some radical changes. Writing in the New York Times on monday, but very exciting time chuck todd taking the helm. Falls thendstrolling most against the dollar and more than a year. This comes after new polls show for the first time a majority of voters favor scotland breaking away from the United Kingdom. The vote is set for september 18. The poll has gotten much closer, are ahead. The yeses one of the great spiritual trips i made was to edinburgh. I spent a repair. I did an interview from adam smiths front porch. If you go down the royal walk, premised are cameron is in that castle Prime Minister cameron is in that castle. Sweating bullets, trying to figure this out. For all of the talk and concern about breaking away, curious, isnt it . The scots are doing the same as ukraine. A different context, but curious. 5. 8 . Sterling down and keeps falling. Our third frontpage story, alibaba kicking off its roadshow in new york, a story of waldorf the story hotel. Are you going to that . No. Likely the biggest ipo in u. S. Ever. Of 160n evaluation billion seeking evaluation of for 60 billion. One of the questions, ali baba is an huge amount of acquisitions this year. 4. 5 billion, cash. Why is it going public . The 22it really need billion is going to raise . Visibility. I would suggest it would be a little sweat in the room at the waldorf. . Too many questions about accounting, transparency, accounting, accounting, accounting. I would suggest that will be some tough questions. This is not like facebook. Interest equity. Have 30 peopley controlling the voting. Were going to cover this in depth. I would suggest this will not be like facebook. Expert whoing in our lived in hong kong, worked in hong kong from bloomberg for several years and now joins us in new york. Your been covering alibaba for years. What is your take . I disagree. I think all the questions investors will be asking pretty riskshere are going to be boilerplate approach. The questions theyre going to be asking, those in the swanky hotels, will be pretty basic. We can come up with a top five questions. The first is what adam is talking about, the fact a government structure which puts all the power with the top 30 people. The number two, the variable interest equity entity which essentially says you can have access to the profits owned by the Cayman Islands which owns ali baba, but you wont have access to the ownership [indiscernible] jack ma is going to do it he does best, hey, there are risks associated with it. If you look at the latest filing from friday, this was a the 400e letter within plus document a surprise. Quick see said very clearly when he looks at the overall top to constituents, number one, customers, number two, plays, number three, shareholders, he will look at shareholders as number three but very much willing to focus on the shareholders as well. I wonder what fidelity or ask. Ngton are going to when you mentioned jack ma, is his tight grip a selling point or someone block . Alternately, investors are going to have to make their ultimately, investors are going to have to make their own decision. I would say it is an asset. One is saying this company is going straight to the moon. Straight to the moon, that brings up a shameless plug, john scully, the book is not out yet, the first copy i have here yet. Steve jobs said to me no, it doesnt say that. Were looking for to moonshot. Can you run a Public Company in america just about one guy . They were turned down by the Hong Kong Stock Exchange to go public there. Aboutare issues accounting and issues about control of the insiders in terms of shareholder vote. I think ali baba is interesting when you start to look at what it can mean from the standpoint of how does the computer with amazon and a lot of the companies that are over here trying to move into china . What happened when they were turned down in hong kong . You have many people who are part of the exchange to said, hong kong should change the rules to allow the biggest ecommerce platform globally many people say, it is a big concern because of the governance. You could argue perhaps new york were so desperate to get this that they pretty much allowed for this to happen. It is not too dissimilar from other u. S. Companies. That strange linkage of government, will it pony up for public shares of alibaba . It used in question. I would say most have one. That was another interesting piece that happen to the filing on friday. You got a sense of who was going to be selling shares and there were some chinese companies. Was surprised you . That softbank was not selling. There holding onto it. You are the ceo of pepsico and apple and you founded 11 companies. You know the mindset of Institutional Investors better than anyone. Do they have to buy what is effectively going to be the largest ipo in history just because they have to be there . They do. This is just too big of a company not to have some investment in. I think it is when a big company that has a reach into some of the other businesses. They call it the circle of trust in china but there is a whole network of relationships of other investments that jack ma has made investments in and in many cases coming is the controlling entity and it. We will continue to discuss this. Worked getting everyone up, tom, especially. I threw the state forest steve jobs. Stapler at steve jobs. We will be right back when discuss alibaba and our twitter question of the day ties it all together we want to hear from you. We will be right back. Good morning, bloomberg surveillance. An important interview this morning. This is not just the head of zerhouni. R d, elias look for this this morning, the former head of the National Institute of health. Looking forward to this interview and our 7 00 hour this morning. This is bloomberg surveillance. Company News Headlines, we start with electrolux bungee home a plants unit. Plus appliancem unit. The biggest acquisition for electrolux, planning a rates offering to fund about one quarter. Np paribas the french think paid a record fine to mexico for breaking u. S. Sanctions. Many of those violations centered on its commodity trade finance operation. There will second largest metal trader. General motors eying a handsfree future. Planning a cadillac that will not require hand on its steering will or foot on the pedal. It is designed for speeds up to 70 Miles Per Hour or in congested traffic, the model is due out in 2017. That a great shot over the driver and thes steering will came off. Seriously . Things happen while you drive. That is not going be the center of your advertising, stuff happens. Driverless driving when youre in the center of florida citrus, but in new york city . No thank you. Cooks alibaba begins its roadshow, could be the biggest ipo in history. Jack mar is the companys public face. He is the leadership. He is essentially, like you said, steve jobs at apple. Should there be a discount or premium attached . In hong kong, they say premium. The challenge that he has to face is enormous. He is tried to take a Chinese Company and put it on the global stage to create a Global Company and that is not going to be an easy task. Many say he is the man that can help accomplish that, mainly because hes so familiar with the global stage already. He speaks english fluently. He is seen in china as this rockstar figure. In the pricing that we see right now, is there feeling there being kicks and reaching too high . One thing i found interesting, this is, many would say, conservatively priced. Foolish sayingof the word conservative and were talking about a pricing that is 15 times cash flow. Can you use the word conservative with that number . Look at amazon. They will have about the same market value as with their projecting for alibaba. Yet amazon has a 1 profit margin and alibaba has over 40 . Although, that is falling. Talks is still a profitable company. As you say, pretty much right there. If you take a look, it is expensive compared to other companies if you take a look at the sales through june, about 17 times that. Compared to amazon and ebay, that is a lot lower. We much higher than what we should be comparing it with. I think the premium of sense for jack ma. Anytime you have a founder who is in control and captures the stage and the imagination of everybody in the broad ecosystem, that is a real plus. Steve jobs had it. Obviously, the founder of the large mobile Device Company has it. A really key thing to have a founder who has the kind of charisma. He also has a control that is unilateral. Prove there is risk for shareholders, isnt it . Their practice in china that are different to what we are accustomed to in the United States. , questions about whether the board had approved it or not. Push back by yahoo on that. The reality is, he really is a dynamic leader and he is a key plus to the company. When you talk about different practices in china, specifically, should we as nonchinese investors be concerned . We always have to be concerned because theres a certain opaqueness to china. I dont actually do business in china in terms of marketing products there, though im doing it. The other emerging markets in the world. Not because i dont like china, but there are things i is a westerner just cannot understand enough to be able to market their against the chinese competitors. Sets the rules, they can change the rules. That is how they work. They are paid and have been known to change vague and none to change the rules lastminute. Are you going to this . At the waldorf . No, im going to be in studio all day talking about alibaba. Thank you so much for giving us that brief. Very good. Broadcast,our global crim air crocodile premier crocodile. Tonight, 9 00 p. M. Eastern time right here on Bloomberg Television. Much, much more for you including the collapse of pounds sterling. Stay with us. Good morning, time for our morning mustread. Fashion because begun here in new york city and theres a very in the newpiece york times about trademarking or lack thereof. This is something you have had to deal with. How do you draw the lines . Is tricky. It youre trying to build brand and brand is really important. Trying to differentiate products that are relative commodities to one another is always hard. That is what pepsi and coke had to do. Best video yesterday. No one does it better. And also designed the latest google glass. Coming up, sterling plunges. What does it mean for Global Markets . Good morning, bloomberg surveillance. Were monitoring the headlines from ukraine. Not much to speak of after a fillede truce weekend. Adam has the top headlines. The first time in many weeks we havent talked ukraine into 30 minutes into the show. The ceasefire is being put to the test. Government and promotions of does reported to continue fighting. The truce, in theory, is in its third day, even as explosions continued in the combat zones. The conflict so far has caused more than 2500 lives. U. S. Expansive air defense in iraq. Strikes conducted for the first time in western part of the country. Designed to protect another dam in the part of the country. The bombings call weeks of strikes around the muzzle dam mosul dam. Finally, the duchess of cambridge expecting once again. Kate middleton and her husband prince liam are having a second child. Born son Prince George was in july of last year. Bump. Can really see her whenyal. A broken it tears guy johnson tell me this. I think the quick solution, she has to name it alex windsor. Baby alex. Put it offey can until she delivers. Delay the vote. George will not be happy. Because theyre cutting back his realm . Like game of thrones. Baby charles . Baby diana . It could be a girl. Baby tom. Quick data check sterling shook to its foundings overnight. , when you sell the poll, how did you react . Good morning. I think clearly the markets are in shock. Voteossibility of a yes with scotland voting to leave the United Kingdom next week has emerged as the kind of low probability but high impact event, not a similar to the black swan event that froze Financial Markets turn the height of the financial crisis. The problem is, the difference between the binary yes or no outcome is so vast, it has been a possible for markets to trade. The other problem is part of the tail risk of the yes vote next isk by the scots is that it in a rational vote. Whether scotland votes yes or no, they are heading toward greater political evolution. A yes vote will be a vote for economic consistency and that is not anything in one expected. This is an editorial from one of the u. K. Newspapers, from the telegraph. In risk looking like panic his to become due by a call for continuation of the worlds most successful partnership. How threatened is Prime Minister cameron . I think the implications of a yes vote politically will be devastating, but there are important financial and economic dimensions. If anything, if scotland were to evolve, that would increase the chances of a conservativeled government by Prime Minister cameron after the next parliament treat election in may. Disturb oruld do is fragment the oldest banking market in the world. Officially huge consequences for the great u. K. Economy, which has got external liability. That is, financial ability of u. K. Businesses and consumers, banks, and sovereign to the rest of the world, 400 of gdp. What for investors think about the risk will matter. What were seeing so far from the collapse of the pound and the rights and options for investors have no appetite it is a collapse of the pound. Lena komileva, you mentioned 400 of gdp. What about domestic investors . For domestic investors, this is going to be hugely important. First of all, if we get a yes vote next week, and that is the black swan event, if it does arrive incidentally, that will happen fomce eve of the announcement next week. Looking at potential volatility on both sides of the atlantic. If we were to get a yes or, looking at once a Political Uncertainty as edinburgh and london get locked into a lengthy political negotiations, separating the nations assets, liabilities, showing the bank of england, and the regulator for scottish banks. That will have an impact on Business Confidence in an impact on the cost of doing business in and out of scotland. It will certainly impact the probability of u. K. Saying within the eu during the next parliament. One of the things i think about is we are single world now as it becomes more digital, Global Economy that the nationstate boundaries just arent as significant as they used to be. It is and just what is going on in scotland and you take, which is cute huge, but look at other parts of the world. The influence of other entities. It could be large global corporations, protest groups. The twoas much power as governments in those countries. One of the assets that you talk about, lena, oil. Think about it. In the north sea, oil could end up going to scotland and not england. How might that upset the balance . It would upset the balance, but theres another common denominator, and that is were talking about the splintering of the oldest aaa sovereign debt market in the world. In terms of the very dna of europes financial rate could be quite significant. One last question, what does this mean for Governor Carney . How limited or constrained is the bank of england, the chair of the Federal Reserve . How constrained other with a 5. 8 depreciation in pound sterling . This is a great question. Majorst two iftral banks, the scots there were to vote yes next week, then the government would have no choice but to take a democratic decision and run with the negotiations between london which can mean months of political policy uncertainty. And economic uncertainty. Thank you so much. The last 14 seconds, sterling got a bid. Lena komileva, thank you so much. Coming up, Corporate America starting to put its cache to use. Who is spending what and the tech world. Our single best chart is next. This is bloomberg surveillance. Back, i believe it is a threeweek lovefest for congress. Theyre not focused on september, theyre focused on the first tuesday of november and also focused on washington, d. C. Good morning, it is bloomberg surveillance. Welcome to all of you on the september morning. I am tom keene with scarlet fu and adam johnson. Top headlines. Owner willher nba sell his franchise after racially charged remarks. Atlanta hawks owner Bruce Levenson under fire for an email he wrote in 2012, examining why the Team Struggled to draw white seasonticket holders. He wrote in the email the team white fans might be afraid of its black fans. There were several other comments. It is mindboggling. From harvard,n Public Health school sing 350 million from the family of the foundation of Real Estate Developers from Hong Kongbased group. The school will be renamed. And the rich get richer. Theyre putting that money to good work. Serena williams has made history at the u. S. Open. The omes the winner of her 18th grand slam title. Ising to sate stretch straight sets. With christied everett and martina navratilova. Chart, a lineyst chart. Single best chart today looks at how some of the big cap tech names are to point their cash. The lines are for quarter moving averages. White, intel and yellow are leading the charge. Both spent a lot on some connection semi conducting. Apple is in blue, spends a lot on production equipment. Microsoft and amazon increasing spending, but assets are mostly data center. Fascinating, two conversations ive had over the past year, the ceo of six flags as well as the ceo of corning, both of them spend 9 on accommodation of capex. In 30 days, it will be out moonshot. I am trying to sell you some books. The reports make the decision. The ceo presents them. Some businesses are really capitalintensive. Like intel or samsung . The one that struck me on this chart, look at the line for samsung. Samsung is getting squeezed at the bottom of their product line , particularly by the brands coming out of asia. It is getting squeezed at the top end of the line by apple. Victory . Cook claim things change too quickly. I think apple has positioned himself dutifully. Parshall september. On the differentials between unit dynamics and price dynamics, apple takes the high ground, giving up unit sales to make those big margins. If you go to a market like india where there is no carrier canidy and the apple iphone cost 600 to 700, apples market share is about 2 . Ok, i can live with that because they do such a good job in their margins are so high at the highend of their product line. I mentioned the 9 they came out of six flags in corning. Is there a number you ballpark for hardware makers . No. You have a look at it come to Dubai Company like intel has to spend money on capital. Getting better and better efficiencies means huge Capital Investments for each design cycle. It is not a nation of a percentage. It varies when youre going through a different design cycle. Some cycles are very expensive, for instance, intel is moving into mobile which is a very expensive capital. This book is inflammatory. I took the computer and threw it out in the parking lot. Steve cried. Our guestelly is host. Coming up, lots of anticipation ahead of apples product launch. We will speak with mr. Scully but what he expects a blockbuster announcement. This is bloomberg surveillance. We will be right back. Our twitter question of the day cash. A lot of why is it going public . Tweet us. This is bloomberg surveillance. Lets get you started with some company news. Netflix putting on western europe. They star service this month in france and five other countries. It is facing a backlash according to the wall street journal. Targeting over issues like privacy and taxes. Acquisition, centurylink may be interested. They want to provide into Cloud Computing Services According to people familiar with the service. Teslas 5 million battery plant, Las Vegas Review journal says they won an annual accounting of whether hiring economic and other goals are being met. That is todays company news from the files of bloomberg west. Tomorrow, apple unveiling its new iphone. Possible iwallet. s our guest host, ran apple in the 1980s and 1990s and since has founded 11 companies and just written his new book called moonshot. Ive been wondering for over a year why apple hasnt made a move into mobile payments. Ago,culated about a year apple could go out and buy ebay and get paypal, but i think now the stars are aligning. Another question i been asking myself, will there ever be another Creative Leap by apple now the steve jobs is gone . Going tohe iphone 6 is be a great product, but it is just a continued improvement of a great product from the past. The Creative Leap i believe may well happen this week with the announcement of what apple is going to do with mobile payments. I think of it this way. First of all, apple has 809. Redit card stored names it is been criticized about its security, but it can take biometric with the bigger print fingerprint plus a simple password now bringing in all the Major Credit Card Companies visa, mastercard, amex from bringing in major retailers such as walgreens and cvs. I think the fundamentals are in place for apple to really build out an incredible mobile payment will stop could be a Creative Leap. Are they stealing the market share or creating it . Summoned people have wanted to be a mobile payments. We all know it is going to be huge. It was just like we knew smartphones were going to happen. There were smartphones before the iphone, but apple got the pieces right. Image and 800 million itunes image and 800 million itunes. They do about filing dollars in revenue with itunes. I dont think they tapped the potential. They need Something Like mobile payments. If you look at other things theyre doing, field can medications, nfc, but the iphone and whatever iwatch is ultimately called, the ibeacon, which means message is in store can come right back to your device. ,f you have a one click tobuy they license from amazon, you could those pieces together, and who does a better job than apple integrating the pieces together . I think we are going to be pleasantly surprised. This may be their Creative Leap. Talking about Capital Expenditures couple of minutes ago. This would require huge Capital Expenditure by retailers to put in all of the stations effectively in the stores that would enable this to happen, right . Acon. At is just for ibe you have toiwallet, swipe the phone at a receiver. If apple had tried this a few years ago, it wouldve been too soon. Everybody knows as a convergence between brickandmortar and ecommerce, amazons outbuilding the same day supply centers, so the retailers are highly motivated to figure out how to begin into the digital ecommerce game and this is part of the puzzle. I busted your chops about your new book moonshot. I threw a six pack of pepsi at him and he docked. But you also have learned in layers. How has mr. Cook learned in layers . You start with a core confidence. Tim cook, even before he became ceo, was clearly a world leader in logistics, supply chain getting it done. You got to get it done. What he is starting to do now is to bring in talent that is different than his own experience. Look at the fashion talent, in, the creative people that are coming in. I think he is saying, he doesnt have to do these things but he is to bring the talent from where you said, would steve jobs be happy with what he would observe tomorrow . I would think you would be really pleased he picked the right guy to be ceo, tim cook, and he is doing a great job. I look at the products and i know there is all this i this and i that, the photos are a miracle. On the apple 5 have been stunning. I want to ask you about the smart watch. Theres a lot of speculation on that. What evidence is there that people outside Silicon Valley one such a device . Not a lot yet. If you look at the opportunity for watches, i mean, it is highly speculative. What do people really want . Is, probably just a small part of what these devices are going to be. There are a lot of other things you can do with a wearable product on your wrist. Scully john, former ceo of pepsico and apple, out with this new book called moonshot. Pound sterling is the only story today. This is bloomberg surveillance. Alibaba begins its roadshow. How to stay invested in this autumn of numerous discontents. Our markets reports from reality, the American Economy and the Dow Jones Industrial average. Did morning, everyone. Were live from World Headquarters in new york or it it is monday, september 8. I am tom keene. Scarlet fu and adam johnson. We have much to talk about. We will talk about alibaba and of course the electrolux deal that was just announced. Heres adam johnson. Crude falls below 100 dollars a barrel since june of 2013. That is due to slowing growth in china and japan. ,apans economy contract 7. 1 the most since 2009. We should note that china and south korea and taiwan are all closed today. Different story here in the u. S. , irises and session for three weeks. We will see if they can actually accomplish something. Mens finals are tonight. Underdogs are in the finals. Other again. E each this is a 5 00. I am going. I lucked into a ticket. Are you sitting up past center field westmark i do know where he will be sitting to be completely honest. These are pretty good seats. Centre court. Centre court. That would be fun. Lets get you some companies. Electrolux bought ges Home Appliance unit. Adds ge to the Swedish Companies holdings. It is a biggest acquisition ever for electrolux. We will be speaking with the ceo shortly. General motors has a handsfree future. They are planning a cadillac that will not require hands on the steering wheel. The Super Cruise Technology will be designed for speeds of 70 Miles Per Hour. The model is due out in 2017. The alibaba roadshow kicks off today in new york. This may be the august ipo in u. S. History. They are seeking a valuation of up to 163 billion. They hope to raise 21 billion. That is the latest company news. We were just talking. It will be happy kisses. I dont think so. You are concerned that they will sweep this up. They will have a difficult time convincing investors. Hong kong did not want this offering. There in lies all you need to know. Lets bring in some perspective on this. Their executives need to demonstrate that they are on par with ruvell. Google. A conservative number, more conservative than what wall street had expected. Sweeney is head of Media Research and joins us. You think this is a conservative number . Trailing revenue. I think this is where they will start to look at this name. 19 times trailing revenue is where facebook came out. At this perspective, you could argue that the underwriters in the Company Learned a little bit from the facebook offering. They will bring a valuation that is reasonable. If they do their job well on the roadshow, they can walk up the e. Ice do you trust the accounting underneath . Do you have a sense of their cash flow and the allocation of that cash flow . The biggest risk is what we call china risk. It is very broad. You can throw the accounting and theyre if you will. Addressed inhat be the room . I want to know about the sweat in the room at the waldorf astoria. There will be one big issue that will come to the front. That is what happened two years ago when alibaba removed the ment aspect of the covert Corporate Structure and transferred to jack maa and some of his colleagues. It was done for regulatory purposes. The disclosure surrounding it was very suspect. Major shea whole shareholders were not made aware until after the fact. This gets to the fact that effectively 30 people are going to control this. This is a variable equity. This is affiliated with alibaba. Alibaba gets most of the economic proceeds. They get a great relationship. How this was handled is very suspect. Did you ever get a good lunch at a roadshow . Never. The chicken is terrible. Its still going to be a lousy lunch. I think there is tangible sweat here. Do you believe in the accounting question mark you have to take it as far as you can. We have a big board accounting firm. We do have an issue where they have a recent acquisition, a Media Company they identified some accounting irregularities. This is a small subsidiary that they have required acquired. A lot of investors are going to have to get comfortable with the china risk. I think they will like frankly. Is ali baba doing this ipo . Is this jack cashing out . I think a lot of people are cashing out. Yahoo is cashing out. They are raising capital for themselves. They want to expand in china but outside of china. They want to compete against amazon and google. Capital is important. What i consider to be the smart arestors like softbank selling no shares. Silver lake is only selling 2 . Some are rolling their money back in. Jack maa is the face of the company. To john scully of apple formerly, he is like steve jobs. Is there a discount that should be affiliated with him being such a big part of the company . Is absolute the face of the company. Is number two person actually kind of leaving this ipo. He will be the number one face on the roadshow around the world talking about the business. This is him inappropriate to ask you. Somebody like blackrock has to go into this and make some decisions. Ae of the key decisions mutual fund is going to make . Is and how much to buy . Is it buy or not buy . I think it is a question of how much to buy. This is a play on the Chinese Consumer market over the next 10 years. This is a play on the ecommerce market in china. This is a company where the growth is three times the rate of the global ecommerce market. That is a large market. Alibaba knows how to play it. If you extrapolate out alibaba to what facebook has belowyou get a valuation apple and exxon. It is insane. Ge and electrolux, this deal did not work six years ago. How happy are they this morning . Under pressureen to rationalize some of the assets. This is a small transaction for them. This is something the market would like to see, i think. There is a lot of symbolism. Electrolux will keep the ge name. When you think to so many people in the u. S. , you think of lightbulbs and their washing machines. Appliances account for only 5 of revenues. It is a tiny part of the company. Ofi worked for ge right out college. What did you do . I put together sales spreadsheets. I wasnt very good for it. Shameless or motion the ceo of7 30 a. M. , electrolux will be joining us to give us more perspective on this purchase. Jeff rosenberg is with us. We will go do some work with you this morning. M a going to see some on. Its good for a bull market. It is emblematic. It tells you where you are in the cycle. You dont have big m a without confidence in the ceo suite. From a macro perspective, it is where we are midcycle type of economic recovery adding gaining some woman him. In your equity market belief, started in september . I will answerlly that question by way of the United States. What you have is a very strong in strengthening economy. Report, every other report is very strong. You have a strong economy. Youre bolstering and building confidence. Can the stock market absorb the change in the fed Interest Rates . Ge should by the boston red sox. Well see. You so sweeney, thank much. A new World Bank Report says Global Leaders need to start digitizing payment. Who really benefits . We discuss, coming up on surveillance. Good morning, everyone. Bloomberg surveillance. I am tom keene with scarlet fu and adam johnsosn. What a jobs report. A lot of the different things. A flood of robust data ended tepid. At happened that barely keeps up with population growth during. Does this mean that the central bank will delay its Interest Rate increased . I dont think it delays the increase itself. It delays some of the chatter and some the concerns around that as it was heightening toward next weeks meeting. It takes the pressure off a little bit to see some change. It takes the market pressure in terms of architecture off. Onus onputs more of an later jobs report, particularly october . It haslook at august, traditionally not been the seasonal adjustments correct. Gets a report that later revised. An october you will have a lot of expectations for this to be revised higher. Backook for october to go nearly 200,000 level. You will look at this report as an anomaly. We are seeing strengthening in the job market. There is pounds sterling down 5. 8 . I think janet yellen doesnt care, but there is this interdependency of these global systems. Is veryound stirling specific. Broad and we see the euro weakening. The dollar is strengthening. What youre really talking about here is economic divergence. The u. S. Is the economic engine of growth. If have slowing in asia in asia. Did you sell emerging markets this morning . I think youre talking about stocks . Not necessarily. The issue with emerging markets market stocks is how well can emerging markets react to a deal with a stronger dollar . That is quite significant. How long can you have a u. S. 10 year at 243 when the economy is doing well . Our outlook is not so much longer, but you will see some increase in interestrate. Not a huge amount. The long end of the curve is being supported i the global factors. What is going to shift as the front end of the yield curve. That has been our concern for long time. With usey rosenberg is from blackrock. We will look at the short end of the yield curve. What it means for all of your investments. Stay with us worldwide. Good morning. Its bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. I am tom keene with scarlet fu and adam johnsosn. Twitter question for the day, why is ali baba going public . That will be question for today. The roadshow begins today. We have some divergences of opinion on this transaction. Alibaba has a gigantic transaction. Why is it going public . I was suspicious. Cashing outust question mark looked at the chop just top headlines. A majority of scottish voters want to break away from the u. K. 51 to 49 edge. The pound tumbled on the news. The u. S. Expands its air offensive in iraq. Thekes were conducted for first time in the western part of the country. Follow weeks of strikes on the other side of the country. Militants have seized control of another dam. For you. E the duchess of cambridge is expecting once again. Yes. Breathlessly exciting. Tom keene is shedding a tear. They are having their second child. Prince george was born in july of last year. Now he has competition. Kensington palace says she is suffering acute morning sickness. We wish her well in all seriousness. These are the top headlines. Very good. I dont even know where to begin with that. Get the baby out of here. Maybe george is going to be upset. Lets look at something global and important. Digital payments, maybe cash is disappearing. Tanks still control the game banks still control the game. She is effort in digital among others with bill and Melinda Gates. I have been to dubai. One day i saw the paycheck sequence to people from all respect and building the construction site. Theyve got to get that money back home. They cant do it through banks, can they . There are many challenges for people who want that money to come home and find ways they can do it cost efficiently and safely and will reach the family members. What we are abdicating along with bill and Melinda Gates and the world bank is to say lets look at how we can digitize payments and include all of those workers across the world in the Financial System. Run from this discussion . There is a huge business opportunity. There are 1. 4 billion people who are excluded. If we look at ways they could be included, that is a new business model. It is a high volume and low margin business. How have the banks responded . And mexico, we did a study with the mexican government. They are saving money by putting money directly to the clients. They have a new business opportunity. Accounts,have transfers go into it. It is a new business opportunity. I was floored on this. Is only ago, the size growing. The world is getting more internationally connected. You put the onus on government to adopt digital payments. Of those who have, what prompted their willingness to invest the time and resources . We are calling on g20 governments in particular because that is 35 of the economy. Over 500 billion. The opportunity is worth the investment. It creates and builds the Financial System which is critical for economic growth. It is good for the governments. Countries, obviously the larger economies in western europe are in the emerging economies like brazil and mexico are looking at this opportunity. Is this really more of an emerging markets or countries issue as opposed to a g 71 . The emerging markets in the g20 economy like mexico and brazil and indonesia are looking at this as a great way of expanding their economies. If you think about it, indonesia is growing at 6 . There are 250 Million People there. Only about a quarter are included in the formal Financial System. Like there an application legal immigrants to move money more easily back and forth . We are focusing on the opportunity within the g20 economies and saying if you can include people in the form of the Financial System, you create ways that they can invest and save. This is critical. You can create opportunity. Does this help Illegal Immigrants in the United States . I cant comment on Legal Immigration in the United States. If we are able to look at how to include people in the formal Financial System, you have a more transparent system. There is a digital footprint so you can follow it. We are talking about digital payments. Doesnt help that let apple is launching new products and one of them is this new i want. This is a huge deal. Coming up, Keith Mclachlan will join us. Bought gecke appliance from General Electric. This is bloomberg surveillance. I am scarlet fu with tom keene and adam johnson. The wall street journal says they will gain to seats on the walgreens board. Recentlyacy chain offered a gloomy financial projections and faces growing pressure from shareholders. Sharp looks to sell its solar energy developers. They are shopping recurrent energy. Is trying to step back from the solar industry. On Carlyle Group wagers economic growth. Manager the number two of investment alternatives and the assets stand at 13. 6 billion dollars. That is the latest company news at this morning. Lets head out to the newsroom where thomas with olivia sterns. Good morning. Olivia, you have done a lot of studying on what were seeing. Present obama was forced to address the epidemic of ebola in west africa on meet the press. Protect from a longterm risk. If we dont make that effort not justhis spreads her africa but other parts of the world, there is the prospect and the virus mutates becomes more easily transmittable and then it could be a danger to the United States. Ofjoining us now is the head developing a number of vaccines. Director of the institute of health. Thank you for joining us. Transferredican was to the United States in omaha. What is your take on what the responses been to ebola . This is high emergency high thiscy, we should look at as a fundamental change in the disease. Nothing should be spared in terms of understanding why it should be spreading at the speed and scale that was not there before. What the administration is doing is the right thing to do. Focus and put more research on what the risk is. A number of companies are working on drugs and vaccines. As the head of the nationalist of health, you have a unique perspective on the Research Going on. From what youve seen it, how far are we from here . We have some evidence that some antibodies can stop the disease. Thenih has worked on vaccine that is being developed with other pharmaceutical companies, gs k in particular. What is going to happen is the need for us to understand what mutated,when the virus we need the cdc to give us more information. We have done it genomic studies of the virus to see if we are with somethi that will be selfcontained or is evolving to the point that it could be a global threat. You are the most qualified person to speak on viral problems. Your work at Johns Hopkins and the mayo clinic as well, i go to algeria. I think of the plague. Everybody in america has to read about it in school. How close are we to it with this disease . You have to step back. We are facing an enormous amount of viral diseases that are spread faster than ever before because the world is interconnected. Hiv is a disease that came from the Animal Kingdom and transferred to humans. The same thing is true with sars. Caribbean, it is another disease. What you are seeing here is a fundamental trend in Public Health. We have to be cognizant of this and react to it. One drug and virus that you a drug like gang gay. One of the reasons i wanted to work was because they are one of the few avenues in the world that has a vaccine business that has gone on for 100 years. They are looking at diseases of the portal poor world. They are trying to save millions of lives but they do Rare Diseases one at a time. This is a disease that is spreading. Scarlet . Welcome back. Youre watching bloomberg on Bloomberg Television and bloomberg radio. If you are there, where there. I am adam johnson. Lets get you some News Headlines at 7 30 a. M. Afternds more missing flooding in kashmir. This the first Natural Disaster faced by the new Prime Minister. Replaced rising tension. Received a donation of 350 million. They are Real Estate Developers from hong kong. Theschool will be renamed chan school. Hisher nba owner will sell team after racially charged comments. He is under fire for an email. Teams whitet the fans might be afraid of the black fans. Incredible. He made several other comments as well. Those are the top headlines. I am stunned by that revelation. In this day and age, it is incredible. It is not good. This is one of the stories that broke not so long ago. Electrolux and Ge Appliances struck a deal. This is the biggest acquisition ever for a electrolux. From theoins us now nasdaq. This, on the heels of what are you going to do with Ge Appliances that General Electric wouldnt or couldnt . Great opportunity for us to increase and enhance our global competitiveness. The strategic fit, the industrial logic, the synergies are combining. This is quite substantial. We have complement her a products and brands. We have complementary channels. This is an opportunity to leverage and scale. We are doubling our size in the u. S. We are increasing the size of the group by about a third. This is a significant opportunity. As you point out, revenues will go up by 30 . That is a sizable deal. Thefirst discussed bringing ge appliance unit into a lecture locks back in 2008. There was a financial crisis. What took six years . With mergers and acquisitions you cant predict it. An attractive asset like this comes available, you have to be ready. We have the opportunity with General Electric to discuss the sale and i position. We are fortunate to be able to sign the deal last night. We know electrolux is a swedish deal. When you look at this, are you going to take the brand upscale . Is this a Ge Appliances that will focus on competing with viking and the upscale . Brand architecture spans a good part of the market. Monogram, ge cafe. They expand the good part of the market. It fits nicely with our portfolio. We have frigidaire, which is more of a mass brand. Ge monogram is more of a premium and electrolux is a more premium brand. This is a good architecture for us. I want to ask about the mass market and. Whirlpool is still number one. I know the deal still needs regulatory approval. What will you do differently so the ge can take over whirlpool . Assuming the deal goes through and we can get the regulators to approve it, it will be a close number on who is number one globally and in the United States. The trick for us is we see this as a ploy that strengthens our Balance Sheet to invest more globally in emerging markets and new technologies and new products. This is strengthen our business in the netted states. It is strengthening the Balance Sheet of the company to invest even more in global growth. Keith mclaughlin is join us from the nasdaq. Our twitter question of the day, why is alibaba when public . Tweet is. Good morning, everyone. Bloomberg surveillance. I am tom keene with scarlet fu and adam johnsosn. This matters to our guest host, Jeffrey Rosenberg from blackrock. We are looking at equity and economic data. It is a jungle as we try to gauge this odd linkage of the American Economy to your stock markets. There are the haves and havenots. We own a punch bowl filled with a draghi brim. What an on time we are living in. The themear is about of divergence. You talk about yellen and draghi. If theyre going in different directions. Made the and dependent modern said in 1951. Define the punch bowl . That is easy money policy. You are the punch bowl away the four people get too drunk at the party . Are we drunk . Policy. Nefited from a zero Interest Rates and the divergences i was talking about. People are seeing it in the currency. If youre running a global portfolio, you need to be careful. If you are a u. S. Investor, how much diversification you have. You are seeing a shift in monetary. You are looking at institutional accounts, that stronger dollar, does that benefit american portfolios . It depends on how those portfolios are structured. One of the big themes coming out of 2008 was diversifying away from the dollar. Diversifying away from the dollar made sense when the fed was leading the world in 20 Interest Rates and there was concern with the weak dollar. Today. Changing the theme we have a stronger dollar across the currency. You need to revisit it. Sterling has a fivepoint percent depreciation. This is a huge question. This is going to be the next question. Dollar strength is good. It helps those other economies to a point. If that point begins to break when too much of the strong dollar, this is a dollarized world. When the dollar is increasing on the back of higher Interest Rate expectation in the u. S. , it means the cost of dollars in the rest of the world is going up. When we see that, we see big problems for Financial Markets. Week ofegin a full september, how committed are you to the equity markets . On relative value in the fixed income markets. We look at relative global value. From my perspective as well as is, equities do look better positioned here. Jeff rosenberg, great update. It was the story of the weekend for the president. Congress is back in session. The president needs to consider a new offensive against the Islamic State. Stay with us worldwide. It is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. I am tom keene with scarlet fu and adam johnsosn. What a good time to speak with howard. The excitement and technology. Has new phones tomorrow. What a great day to start radio and television. Zon will be with us. Is jeffuest host rosenberg. Lets get you some company news from the files of numbers west lumbered west. A bit of a facing backlash. They been targeted targeted by regulators. Rackspace is a possible acquisition target. They want to expand into College Computing services. A valuation of 5. 3 billion at the end of last week. Concerns over the tesla battery , they won an annual accounting of whether hiring goals are being met. That is the company news from the files of lumbered west. The president is ready to unveil how he and the nation and the world will fight the Islamic State. Here is the president on meet the press. Going to ask the American People to understand is this is a serious threat. Dealve the capacity to with. Here is how we are going to deal that. I am going to ask congress to make sure that they understand and support what the plan is. Resourcesg to require above what we are currently doing. There is the president. Joining us is phil mattingly. Ove the president loading quoting that he shouldve anticipated the optics. One of the optics for the president . Why he is giving this speech on wednesday is there is a recognition inside the white house that a strategy they feel they have had a good handle on for the last couple of weeks has not been recognized in agras by either party. It is not been recognized by the people. See is are going to white house recognizing they have a problem and explain what they want to do and that is what you will see them try to do. A key point here is the speech is not going to be rolling out massive new initiatives. He is not going to announce airstrikes in syria. He will put together what they been doing over the last couple of weeks in a coherent shot. The book on the second term election bid, there was some tension. How much tension is there in the white house over this Foreign Policy matter . There is a lot. You have people who fall into the different camps. There are people who think for years the u. S. Shouldve been doing more in syria. Those people feel like they have been justified in that thought process. There are people where he even with what we are facing with isis, people are wary of the complexities of getting involved in syria now. Those of the two primary camps. In looking at how we are trying to deal with this, what you saw last week with the president in at tony and wales, you have people working on these issues for a long time, they will fall into different camps on how to do with things. What they are trying to do internally is coalesce around a single strategy. That is difficult. Weekendension over the was this is a president of restraint versus so many that want to do more. Coalitions,about the president is trying to bring together other arab states. I wonder if there is a resistance by them to effectively join america. I think what you have seen and heard last week throughout his trip in europe and what you have seen, he is taken top to these nations over the last week. This is a huge push for them. You hear the president say no roots in the ground when it comes to dealing with this issue. Their ideal world is that these city states would do the ones that will provide money and financing and other troops on the ground to actually counter this issue. The problem you are seeing is that of the states want to publicly be associated with United States. When we not thrilled are landing on their airstrips and talking about dealing with this problem. There is a careful balance. The u. S. Feels comfortable that they will work with them. I feel they can make the coalition happen. Ugly, they have to be very careful. The optics of working with United States. Stay with us for a moment. I want to bring in Jeff Rosenberg of blackrock. See treasuries in the safe haven. How much of that is driving treasuries versus when the fed raises Interest Rates . I think this is the connection for investors. The risks have been a more about russia and ukraine. It the issue for investors is benefiting traditionally front and yield curves. The backend. A lot of concerned about the flattening of the yield curve that signals a negative impact on the economy. Should i be worried about my equity portfolio . You need something to go up and it has to be a longer rate. Last question to you. Our secretary kerry and the president on the same page . They are. The interesting thing is when the chairman of the chiefs of staff . Were they were out front about the threat that the Islamic State posed to the United States. That was a little bit off message. You are trying to see them rein in what they were saying. John kerry in the president are very much on the same page. Great beefing just briefing. Rate briefing. Youre focused on our neighbors across the way. This is a big deal. 3. 1 standard deviations is a huge move in the pound. Pound sterling, i should say. This is a big deal off the announcement of a poll suggesting scotland will be anyone anticipated. These are ramifications over to Governor Carney. We will like to see with the literature says in the next couple of days. I think this jumbles the debate. We have got to get out into october. 1. 88. Pound is down 1. 72 about from seven weeks ago. Over to theto head radio studio. There is lots of gamma out there this morning. I am down going to gamma over to radio. Is alibaba. The roadshow will begin today at the waldorf astoria in new york. Theyre going to answer a lot of questions. A lot of analysts on wall street say the evaluation is conservative based on the filings on friday. Well see how that plays out. There are questions to answer about how much of a force jack ma is. I need to clarify this. I put my foot in my mouth. 1. 87. That is a big move. What is their to your question of the day . Why is ali baba going public . Is it just cashing out . Ome of the answers who wouldnt . Ill say. They have plenty of cash and are larger than amazon. That is a smart answer. Fairpoint. Two words cashing out. You say it is none of the above. It is a bit of catching up. It gives them a currency. You can make acquisitions. You can pay people with it. That is a big reason why companies go public. 4. 5ey have already spent million in acquisitions. Thank you so much for joining us, Jeff Rosenberg. We will continue on the radio. Loop is up next with betty liu. Thank you for watching. Good morning. It is monday, september 8. We are alive and i am betty liu. We have a great show for you to kick off this week. Why are hotels kicking into airlines . Charging you extra fees for everything. Arne sorenson on why he is not only charging you more but charging it charging you less than three years. Victory. Rating a go girl. Down 26 , why is that . No big names competing and no american names. Speaking to the amazing ryan brothers. At our tops a look headlines. Barack obama is getting ready to outline a military campaign against Islamic States. No u. S. Ground troops will be involved. The president s base the nation wednesday. e grain to buy