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tv   Bloomberg Surveillance  Bloomberg  October 13, 2014 6:00am-8:01am EDT

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lows -- yield test at new lows. corporate america goes in search of synergy splitting into. it is all the rage. good morning, this is "bloomberg surveillance." we're live from our world headquarters in new york. it is monday, october 13. i am tom keene. we welcome back scarlet fu. also with us, adam johnson as well. that's get to our top stories. >> the band is back together. a warning from fed policymakers, the vice-chairman says a slowdown in the world economy could undermine the was expansion and lead to a delay in raising interest rates. he made the comments at the imf annual meetings in washington. they expect to raise benchmark interest rate sometime next your. cfx was oppressed by canadian pacific drilling sometime in the past week. they rebuffed the overture, not
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known the canadian pacific will come back with another proposal. a merger of the two were great a real wrote transcontinental reach. railroad transcontinental reach. for the first time, someone has contracted ebola inside u.s. borders. the victim, a health care worker in dallas, was caring for the liberian man who died. a hazardous material crew has begun decontaminating the apartment where the woman lived. authorities say she was way protective here but at some point there was "breach of protocol" that may have led to the infection. the cdc warns there may be more cases. possibleunately, it is in the coming days that we will see additional cases of ebola. this is because the health care workers who cared for this individual may have had a breach of the same nature of the individual who appears now to have pulmonary positive test. to the world health
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organization, there are nearly 8400 cases of more than 4000 deaths stemming from the ebola virus so far. turning to hong kong where a truck and cab drivers are losing patience with the pro-democracy demonstrators, for the second time says the rallies began last month, police had to come between the protesters and those who wanted a menstruation to end . hundreds of people try to break through barricades. hong kong's chief executive warned the government won't allow demonstrators to occupy the streets for much longer. >> to get about football and forget about hockey, how about based all in the national league playoffs? home run in the bottom of the ninth get the st. louis cardinals a five to four win over the san francisco giants. the series now tied at one game each. in the american league, kansas city and baltimore. how about those royals? they won the first two games. that is exciting. >> when was the last time they went -- million years
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ago. looks the royals again tonight. i will be watching monday night football, san francisco at st. louis. for those more kind of baseball, feel free. >> let's get a data check. >> equities bonds, bond market closed unchanged off the stunning friday close of 2.28%. reaching 3%. not there yet. on to the next screen. now over the 20 year average, a big deal. 21.24 shows the clear and present angst. there is bond market closed. brent crude, nowhere near nymex, the still under 90. is 1228.gold
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to 30 year bond, not back paul volcker. we just rolled over once again through it in the long-term linkage to the possibility market. pretty consistent trend there, even with the bobs along the way. we want to bring in our guest host. 500 lasted posting its biggest weekly drop in two years and futures has stayed the course, indicating a lower open as well. give us your take on the state of the markets. is the fed driving this or reacting to this? fed's reactor. we are problems of global growth, especially in europe. not just wrote growth, but inflation problems, too, so concerns about deflation and you put that together and the markets of the world are taking a pause and a little concerned. we're doing some technical damage in the meantime. it will take a while to repair this.
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the 200ve gone down to day moving average on the s&p 500. the first time in two years. i was stunned how fast we got there. but no question about it. 5%.e only down s&p 500 we were down 7% in january. or percent in april and august. -- 4% in april and august. we will come out at some point because we're not going every session. >> dr. phil called me this morning and took the out the ledge. though, we are down 4%. ubs came out the wonderful earnings. he said, everybody calmed down. we're going to go up 10% in earnings. what is your earnings view? does that push aside all this juvenile political -- >> tennis a big number. if we can get high single digits i'm a happy man. i think we are seeing economic improvement in the u.s. manufacturing side is doing well. that should allow earnings to be
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ok. the wrinkle of courses we sell some stuff to europe and the dollar is up and both of those will have a bit -- >> i'm good a load up on the double leverage. >> cash, cash, cash. go triple. i am glad you are here to talk us off the ledge. your vice-chairman of raymond james financial. give us a little perspective. bob mentions the dollar, up about 9% over the past two months. at what point does that hurt u.s. exporters ability to produce earnings? >> it is hard to know when it does that. i do think we have an advantage versus europe in terms of manufacturing costs. that is the compensating factor. we have had great return on invested capital at our markets. there is a lot of efficiency. we have a relatively inexpensive labor force and tech savvy. you add those up, and i think this is a fair amount of room. ,> the cover this morning
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george magnus, and we all adore, a ubs, happen to know the imf has revised the forecast six times the last three years. everybody is like, it is going to get better, it's going to get better. then doom and gloom will stop the equity markets always come back. do you still have that believe? >> i think part of it is structural. with the aging baby boomers, having to the capital of the market and other markets being less and less attractive and scary to investors, any of the strong dollar in the united states, all of those things combined, in my view, are driving demand for u.s. equities. tax you wrote in your latest piece, which is a good one, a company -- >> he wrote a good one? really? >> he wrote a good one. it was my weekend read. you said thesness, only thing that can effectively to real u.s. markets is a
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slowdown in u.s. earnings growth and it sounds like phil is in there is the appreciating dollar . fred is not even sure that has an impact. is that the way to look at it? >> it is never quite that simple, but i think you hit the nail on the head. are we going every session? very high probability, no. this is a pause. it will eventually refresh. we just don't know exactly when. >> is is columbus day enough? i heard over the weekend -- >> bob doll is matching. >> it has been a better than good year for bill ackman. off some 30%. today, celebrated selling shares in amsterdam. he spoke to bloomberg this morning. making its ipo debut. >> we're not for sure how the way, but not a bad business model -- hathaway, but not a bad
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business model. we will only invest in the public markets, but we will buy large estates of public companies like we have in the past. this will enable us to have a capital base that manages -- matches the duration of our investment. >> do you think more like warren buffett than carl icahn? a betterk that is choice. in terms of investment strategy, we're much more like berkshire hathaway then icahn. >> joining us from amsterdam now, king of the junket, hans nichols with us with pershing capital. why are you in amsterdam? in amsterdam?man take his company public or one of his funds public, just for regulatory reasons, easier to do that in europe. a choice between amsterdam and london. he chose amsterdam over london. when walking year, i walk through the red light district. it was a nice prelude to what we
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are going to get from bill ackman. when we spoke to him after the ipo, he gave us a giant strip. he is talking about a 45 to 60 day window where they will announce what they are going to spend $6 billion. he gave us a couple of hymns. a u.s. company, a company thinks has some real value to unlock on. that is an indication -- sometime in late november, we will get the full strip revealed and see where bill ackman is going to put a $6 billion. >> you are a racy guy this morning. is this the beginning of something? is this a treatment activism or a one-off for an -- bill ackman? is raising one fund. he's going to permit a capital, and that is really what he is here for. when he talked in about what it means to be an activist investor, the term here, it actually originated here in some ways, 1608 unit your first crybaby shareholders, upset with
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the way the covenant was run and started being a crybaby. i asked if that was applicable to family -- to have any said, maybe carl icahn with thing, but he would not think of himself as a crybaby activist. , i recommend studio 80 in amsterdam as you try to make your way out. with william ackman. we may hear more from you this morning. >> coming up, we will stay with this -- he always make something good out of it. pursuit of a big acquisition. we will discuss. in theof csx rising market. which brings us to our twitter question of the day -- oil injuring a bear market last week. >> big time. >> we will be right back.
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>> good morning, "bloomberg surveillance." we say good columbus day morning to all of you across the nation. scarlet fu and adam johnson with me. >> csx can move 110 afraid 430 miles on one gallon -- >> how do they do that? hybrid. canadian pacific was a piece of those profits and launching a hostile bid. that is according to "the wall street journal." csx apparently has said no. question, here's number one. how realistic is to think a cross-border deal in a highly competitive market can actually get approved and get done? >> it is her friend l index question. it is sbc.
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>> the market is concentrated. why would they even try? >> sometimes these things have confounding outcomes. sometimes they get approved anyway. it is really hard to know. sometimes it is corporate efficiency going on. it is part of its price control, so if you look at the dynamics here, canadian pacific does not play in the united states to the extent. it is really a question of how to combine business will operate. >> i think it is cool with apple, facebook, twitter, twitter, twitter, apple, apple, apple. this is real world. the bloomberg story was great on the premium the ua should of tiny canadian pacific to the lesser cold effected valuation of east coast csx. >> canadian pacific is a much smaller company.
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what is curious, our guys at the market makers team spoke to hunter harrison, the gentleman who runs canadian pacific about a month ago. here's what he had to say about competition. i don't think there's a choice. i think if you look down the line, there's not going to be more real roads built. we have got to start doing more with less. >> who merges with whom? >> i think you can look at any east-west, nation. >> so it is either you pass plus --up plus csx. >> not very to get to comply with the law and to stay within the bounds of competitiveness of the act, but, look, that would create a lot of capacity right there, just the mergers themselves. is your wheelhouse, looking at big companies, mostly american but in some case across
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the world, how hard is it to pull synergies out of these big mergers like this? >> not all that hard. as he put out, it is not that true d. >> not that tricky. >> there aren't that many choices. when you put something together like this, immediately, you have all kinds of costs they go away. the synergies can be huge and grow fast. text burlington northern had to abandon a takeover because of objections from u.s. railroad. >> the stb. >> the track record is not so great. >> csx is supposed to announce earnings tomorrow morning. i believe that would be before the open. listen to that train whistle. record third-quarter earnings. is that part of the story? >> absolutely. back to what we're saying earlier, the economy is doing better and lots of pieces are, particularly manufacturing and capital investment, energy story
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, and all of that fits right into the rail story in many ways. >> we first saw that from mr. buffett when he bought burlington northern santa fe. >> the transnational, they went after burlington northern pre-buffett and when after canadian national 14 years ago. there's a president here. i am fascinated by the way ackman has to us around. canadian pacific has been a dog of docks, already worried about what color the bridge is painted. it is stunning. >> didn't ackman bring in hunter harrison? >> he did. i was reading some comments about mr. harrison from a couple of years ago. he said, the sightings are used efficiently. this is a guy who really tweaks the operation. >> that is what they have done as well. there we are on the railroad. how about cars?
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coming up on bloomberg television, chrysler chairman joins street smart this afternoon at 3:00 p.m. stay with us. it is "bloomberg surveillance." ♪
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morning, "bloomberg surveillance." i am tom keene with scarlet fu and adam johnson. >> this comes to us from "the wall street journal." now the general counsel to court kurdestan.
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that is part of the problem, now that we have created this bureaucratic structure in iraq that we are afraid of. the news of the moment where turkey will coalition air flights to land in turkey and use their air bases without question over the weekend, the situation there deteriorated. the other is within the book that everyone knows i love so much, "the kissinger -- the kissinger book, "world order." he talks about the naïveté of the u.s. wanting a world democracy. >> we assumed our system works for everyone. >> and we should accept the limitations that it doesn't? >> he says that is a tough decision, but what we're doing
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is a challenging path to take. >> here's the other wrinkle i find so intriguing. fred, feel free to weigh in here. in the turks view, the kurdish forces as terrorists. they control the one supply line, which is why they effectively let kobani fall. they would not let arms go to these people they view as terrorists can even that the terrorists are fighting isis, which is another terrorist organization. >> it all goes back to shifting alliances, doesn't it, bob? >> there are multiple sides to all this. it is hard to know, do i agree with you or have a view and half of adam? who was on whose side for which issues? wild to watch. >> do you think any of the is what isl angst responsible for taking the s&p 500 down to the 200 day moving average in like two weeks? >> it is what is on the list
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along with all of these other things. i think the market is said so far, every time there's a geopolitical crisis, does this effect u.s. economic and earnings growth? market creeps the higher. now it is saying, you're throwing this one at me and i says that me and russia -- i can't take them all at once. >> it may not affect the u.s. economic outlook, but it affects what is going on in europe. yorty have inflationary environment there. on the brink every session. >> i just want to comment. i think the contextual approach we take to a lot of nationbuilding is completely artificial. we, the u.s. look at iraq. iraq has never been a country. this was dictated by artificial borders that go back to lawrence of arabia. same with bosnia. we have this naïve approach that somehow we are going to impose democracy where there is not literacy. frankly, much more important,
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there are hatreds that go back hundreds of years. it is a cultural context that we do not bring to the table. clocks are we arrogant? and think we're ignorant naïve. i think we're wasting a lot of resources on an outcome that it is not going to be favorable to us. >> and lives as well. tomorrow marks the start of earnings season for the big banks. >> really? >> what to expect from the third quarter. we will come back with more "surveillance" after this. ♪
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>> good morning, "bloomberg surveillance." the bond market closed today. i did not want to come in. scarlet said, please. top headlines are open. >> we're going to start with canadian pacific railway and -- was rebuffed. it the overture occurred in the past week. unclear if another will come. csx said, we don't want to merge with you. they would've had a market capital of about $62.5 billion. the stock is up. stay tuned as to whether there are some sort of other bid. moving on. $4.9 billion order for boeing. they will deliver 50 single aisle 737's to indonesia.
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the order comes as the southeast asian carriers by it more plans to serve a growing market of about 600 million people. the highest selling aircraft in the world. norway is the biggest energy company, sells it share in oil field. but no more. that is now going to malaysia's $2.25as of about 2.25 -- billion. >> a quick look, data check. that shows the recent angst. brent crude 88.34. scarlet, hold my hand. we're covering the markets. banks are out this week. it is terrible. swoon, i say. --
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jpmorgan is down 4.3%. we need bob doll. right there, hysteria. jpmorgan down 4.3%. >> the world might end tomorrow, if not yesterday. markets are volatile. we know that. we haven't had a 10%. the elusive to percent, for how long? >> three years. summer of 2011. >> it is amazing where only off 4% an all-time high in people thinking the world is about to end. sloggy.llowed the >> it is slow because of the cross currents in the economy and the absence of lending until recently, starting to do better. watch capital markets activity this quarter. volume subject of a little bit. we've had a little more about --
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volatility. banks, thistors and bench reduction, cost cutting will be another big thing. no one looks to invest in bank shares over the look at cost cutting, do they? >> they're looking at if they're going to expand lending, it will capital markets activity improve. surface, there are a lot of people at banks and that is where the costs are. if taking it more efficient -- which many have -- it helps the return. >> the credit trends have improved but we're seeing diminishing reserve releases over the last couple of quarters. that instantaneous boost of the bottom line is not quite there anymore. >> well said. that is one of the issues. >> i think there are a couple of other factors. we were talking off-line about the mckinsey study, which shows systematically and improvement in return on invested capital. that does not help the lending
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environment, right? >> for sure. >> the feds a common native this accommodative doesn't help. oil is down 23% to 25%, yet i don't hear screaming of the soul recommendations on bigger midsize well. why is that? >> it happened so fast as last 20% of people are just trying to catch the breath on this issue. i think the offset that is getting talked about a lot more inappropriately is the boon that is for u.s. consumers. big tax cut would be the equivalent of what we've seen in the oil -- >> i agree. exxon mobil is down about 10%. >> and where is it trading now? >> it is gone from 40 to 85 no last four years. just terrible. >> and that is in the face of a
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stronger u.s. dollar. >> you don't think they managed the dividend grooved? the five-year is 9.99%. >> and yields 3% and just closed at least trades at about 11.5 to 12 times earning. is that cheap? >> i don't think oil prices are going a ton lower unless we are going to have some worldwide depression, so that is probably a pretty good place to be. it is a low beta stocks. in the bull market phase, it went up and lacked the overall market. as tom pointed out, has gone down less than -- >> bob, you know that the bull market is getting older but still has legs. does earnings season speed things up or slow it down? earnings are the again now, that is what we have to focus on. i can't argue for a lot more pe, so the 20 plus over the last five years for the stock market has been e and pe. if pe is slowing or finished, it is all about e.
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still up. the game is done over. we're seeing a lot of innings. the easy money is in the rearview mirror, unfortunately. >> how sustainable is a person earnings growth going into next year? bit of ak that is a stretch. i'm closer to six. be almost every other financial asset class out there. >> my morning must read. nice essay on his perennial call about -- central bankers have purchased short-term relief of long-term instability. fred, this goes to the age-old fear of higher yields. if we get a little bit of lift off and rates, what does that do for the equity spirit? >> it should not, long-term, or
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even intermediate-term, do great damage to equities. the bond market -- let's face it. higher yields, bonds get out. >> you talked about lower oil prices hoping the huge body of america. a little bit of yield provides comfort for the banks, right? >> absolutely. higher rates in general would be good for the equity market. banks in particular. and we get higher rates. --k to the earning story >> you start penalizing savers. >> exactly. >> rip up the script. bob doll, do share buybacks continue? >> they do. probably at a store pays because companies are now hiring some workers. they're doing some capital expenditures. they're not just buying back stock in raising dividends. probably at a slower pace. >> i am calmer now. >> coming up, just how much is
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europe underperforming u.s. and are we at an inflection point? of the day question ties this all up into one nice package. us.t we want to hear from you. this is "bloomberg surveillance." ♪
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>> good morning, "bloomberg surveillance." we willt 20 minutes, know about the nobel prize on economics. michael mckee will give us good perspective on that. it is time for single best chart. here's the nobel prize winner with scarlet fu. >> yeah, right. the weakness of european stocks. it is from jim polson of wells capital management. it is a ratio of the eurozone stock index to the u.s. index. just a ratio. it means european stocks are underperforming. the line appears to have bottomed in the summer of 2012. before recovering a bit. trading range has been
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established clearly. we're the lower end of the range again. the question now is, our european stocks about to break below this range and establish the relative lows? jim paulsen says this could be a buying opportunity. we hasan debate whether investors should go buy it, but fred, to your wheelhouse, advising companies, among others , should u.s. companies be buying european companies? is this an opportunity to do cross-border deals? >> they have to do it in the context of the european economic outlook versus the u.s. economic outlook. i think the european outlook is by definition inferior because they have higher burdens around -- labor costs and labor productivity are much lower. you have tremendous government costs. we complain about government and the cost of doing business in this country, but it is worse in europe. their basic demand for products
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both in europe over time is this to be less because negative population growth in certain inept for migration from different ethnic groups -- we seem to be fighting a lot. >> bring up that chart again. this is the total exxon chart were exxon does better. all you need to know about is 5.5% total yield them a 3% next on yield. are we going to migrate toward european-like yields? >> let's hope we don't get there because that means we would have the same sclerosis as europe does. >> their high yield is not a sign of a good thing, is what you're saying. clocks i don't think so. europe has structural problems. in the short run, what is the ecb going to do? are they going to finally get ahead of the curve? for have not all -- harder
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them because of the political constituencies. wanting they did right was get ahead of the curve, put the pedal to the metal and help us avoid recession or worse, deflation. europe is faced with the same challenge. .> the ecb is playing catch-up the response is different now than two years ago given mario draghi is more aggressive and euro is falling. >> mario draghi is aggressive, certainly and talk. -- certainly in talk. >> i want to go to our photos. istially, the first one hardly loose. it is pretty serious. kobani, on the border between .yria and turkey smoke rising afternoon attack on the islamic state. 50 airstrikes have been launched since last monday. 50. not happy with
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those turkish tank set up and sitting there, not firing. >> the idea here is, we're on two fronts with anbar province west of baghdad as well. i thought this got lightly over the week and how serious it is. we see that with the news this morning, the turks will finally allow the coalition of the planes down in turkey. >> the islamic state has also carry out suicide attacks just what the baghdad. i think about 75 miles north. >> moving onto to our number two photo, south koreans releasing balloons caring anti-north korean pamphlets. over 200,000 leaflets, 300 bucks, and $1000 cash. >> in those balloons? >> yes. and south korea, they fill the bulletins with helium and the pamphlets. the balloons go over to north korea and explode at a certain altitude and the pamphlets fault. a the balloon on the left has bob doll monthly.
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and kim jong-un has not been spotted. >> he has not been seen in about six weeks. there is concern he had gout was unable to walk and was having surgery, that we don't know. with mr. tomme fun lackey, age 94, a wing walker. he is seen here on a 1945 by plane. he has broken the record for oldest man to walk the wings. >> and he doesn't wear a helmet. >> no. why would you? >> he wants to feel the wind blowing through his hair. f-16,er flying in an would you get out there on the wing? >> it is amazing. pilot andt the f-16 said, i have no fear. and he said, really?
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to my credit, i was not afraid, but i was a little nauseous when we landed. an hour and 15 minutes of doing loops. we went to 9 g's. >> how did you keep anything down? it is pretty common to fill your helmet. >> i did not eat for 20 hours before that flight. that is how. >> that is the salvation. >> i want to point out, do not miss our politics show. that is today at 5:00 p.m. >> your interviewing christopher columbus, right? >> it is columbus day. this is "bloomberg surveillance." streaming everywhere you are. we will be right back in two minutes. ♪
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>> commodities tank. a perfect time to talk to our children. bart chilton.- what a story. theill speak them about
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markets, high-frequency trading. a good time to speak to bart chilton. time for company news. >> twitter users in france can now tweet money to the followers. the company has teamed up with s money. the new service will be available to anyone with a bank account and a twitter handle in france. >> fyi, mine is -- >> keep that up. hackers targeting snapchat, said to be planning a massive online leak of his many as 200,000 photos and videos. many of them nude. the company admits images were compromised. delete some 18,000 web links in the u.k. in just over a month. the daily mail reports written's have asked the search try to remove links to more than 53,000 pages under the eu's right to be forgotten laws. the report says most of the
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requests are from criminals and sex offenders. that is today's company news. there was a distinct theme there. divorce.ate splitting up companies for the sake of "recognizing shareholder value." ebay spinning off paypal, hp splitting up into. , why is it suddenly that cfos assume institutional investors can a longer do -- deal with some of the parts of a business and they have to split ?t up and make it "easier" >> boards are now being proactive. it goes back to the split up of i.t. chief years ago and well before that, we had disparate value. one of my favorites is emc. vm software get spun off in the valuation has just exploded.
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it is a software company, not a hardware company. >> and to be fair, that hasn't happened yet. >> the complete spin off hasn't happened, but the pressure on --'s board is >> this conversation is critical. what is the catalyst? low nominal gdp, persistent nominal gdp. the revenue line for these hopes and dreams isn't happening. do something. >> you hit the nail on the head. loan a little gdp means i'm struggling to grow. if i am the ceo or the board, have to be creative. i made by a company to try to make it happen -- >> what about bonuses? >> it may have something to do with that. other words, if your cfo, you're going to be graded on the stock price. >> ceos and boards are also graded on driving stock prices. we're talking about disparate value. here's a company and it is growing at 7% or 8%.
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it isn't big enough to be a standalone public company within it that is growing at 18%. >> paypal. >> yes. it makes sense. some of these spinoffs make more sense. some make less sense. but some are absolutely compelling. >> we got some headlines that her --ut is buying done acumen occasion's unit this morning. -- a communications unit. fred, is the point of the spinoff to create the conditions for the sale of a business? if ebay splitting up paypal, added that both are now up for grabs. >> that can be a factor, but i think the real factors creating a criminal value. i don't -- i may not want to buy ebay, but i certainly want to buy paypal, as an example, an investor could take deposition. >> this is what is called a
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moore's trust. the way of reading this, net scout is not going to buy danaher. that may be some of the legal issues, but bob doll, they have their own way of doing business. they are bringing in net scout to merge with a communications unit. is what it looks like to me. >> the question then is, what do they do with that unit? rail discussion earlier, is it to cut expenses or limited overhead and as fred said, boost volume? >> the reversed moore's trust enables them to basically divest its business without tax burdens. that is the purpose of the structure. >> do you see what you learn on "bloomberg surveillance"? we got interpretation from fred lane. >> does he bill us by the syllable? >> i hope not.
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having you here on monday morning with a lot of news, gentlemen. >> let's get a report. how about a forex report? the bond market is closed. stronger yen, weakness in the dollar over the last couple of days. 1.12.a back to we're still not going to get near 70. the russian ruble still a train wreck. we did see the effect of that on mr. putin. there's a bit of a turn in the currency market. can we go home? >> no. we're not bond traders, and we can't go home. >> we have futures moving higher. >> do i get to go early? >> no. when the futures opened last night at 6:00 p.m. for trading, s&p futures were down 12.
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>> steady recovery. >> she said it is columbus day. that means to shop. >> that's your interpretation. coming up, bart chilton. we will see you then. ♪
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>> this is bloomberg
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"surveillance pickup >> unrest in hong kong. cap guy first stormed the barricades. equities chair and as yields test new lows friday. oil continues on a freefall. pharmaceutical giants race to find a vaccine for the ebola virus. this is bloomberg "surveillance," live from new york. i'm tom keene. joining me, scarlet fu and adam johnson. let's get to our top stories. a less than spectacular trading debut for pershing square holdings. went public in amsterdam. shares down as much as 11%. ackmannterview, bill spoke with hans nichols about the investment strategy. >> we are not berkshire hathaway, it is not a bad business model. think about a long-duration investment strategy. we will only invest in the public markets and by public
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companies. this will enable us to have a capital base that matches the duration of our investments. >> do you think of yourself as warren buffett or carl icahn? >> i'm friendly with mr. icahn, in terms of investment strategy, we are more like extrapolate and icahn -- like than berkshire hathaway than icahn. wasslamic state says it behind car bomb attacks in baghdad, more than 40 people died in shiite neighborhoods. forces are consolidating their heart i chunk of western iraq and trying to capture the capital of anbar province. shutting down a merger proposal. canadian pacific approached csx but was rebuffed. ceo hunter, cp
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harrison floated the idea. harrison spoke on "market makers." >> i don't think there's a choice. if you look on the line garnett going to be more railroads. we've got to start doing more with less. m? merges with who >> any east-west combination. someonehe first time, has contracted ebola in the u.s. a health care worker in dallas was caring for the man who died. a hazmat crew has began decontaminating the apartment where the woman lived. she was wearing gear but there was a preach of protocol that may have led to the infection. the world health organizations says 4000 deaths have been caused so far. a mystery jet. stream known for jets such as the g650. roll out a plane
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on tuesday. the company will not admit it is holding an event this week. those are your stories. very good. a lot going on. data check with the bond market closed. futures up six, bonds closing the ugly friday 2.3%. euro-dollar 1.2688. this morning.own that will be a theme later with bart chilton. about 20.n, vix we have a nobel prize -- it is a single winner. who is that? >> jean tirole.
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member of the toulouse school of economics. a book called "inside and outside liquidity" in 2011. >> more liquidity. french economics, going back hundreds of years. there's a different character to french economics. you see that with thomas picketty. michael mckee has never been on bloomberg surveillance. other candidates, familiar names. hong kong, michael mckee prepares for a discussion with mr. tirole. in hong kong, scuffles breaking at in the central business district. masked men charging protesters. an escalation. we want more perspective from
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andrew davis. what do we know about a man trying to break through the barricades and attacking protesters? are they cap and truck drivers asare they hired thugs, students alleged? >> probably a mixture of both. againstre cab drivers the processors, who want to open the barricades so they can drive routes more easily. there were some guys with knives theazor blades to cut ties students used to put barricades those guys are pretty scary looking and the police were quick to wrestle them to the ground. just people that are really becoming more and more annoyed with the student presence on the streets. it is disrupting traffic and causing long rush hours, disrupting transport. t drive from one side
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of the city to the other. three weeks now. >> give us an update on the deadlines in place. eung has said he will not step down. almost zero chance china will change decision to vet candidates. the students are holding firm. sad seems to be willing or have anything to negotiate. the hong kong government says even if we wanted to negotiate, this is beijing's decision. you are talking to the wrong people. students want beijing to drop its insistence that they vet candidates for the election and they want cy leung to step down. if he steps down, maybe that would be a way to save face. toy are not even talking each other at this point. they seem pretty far apart. nothing seems to be going on, at least publicly. maybe behind the scenes. in terms of deadline, the police said they will start sharing
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some roads. have given protesters until wednesday or they will open the roads with trucks. we will have to see how serious they are about that. it could get ugly. >> we see that now with the truck drivers and cab drivers. thank you for giving us the latest on the ground in hong kong. >> you know it is ironic, you have the police protecting the protesters, who are protesting the government. the police are part of the government. >> has come full circle. >> three weeks? around incan get their cars. movie stars and famous people have to take the subway. >> if you are just a resident, that is where the protests are. you can't function. 48e a deep breath, wait hours before you sue in the u.s.
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18 banks meeting in washington as part of the imf. in case any of them will face a 2008-like meltdown. bart chilton was commissioner of the safety seat -- of the cftc. you're saying it's ok to go gently and not ever regulate. >>-- not overregulate. >> whatever you can do without regulation, that is good. in 2008, there was not enough regulation. wall street take advantage of that here and we all know the outcome. and this case, we had 18 banks who have agreed to go ahead and stay any immediate resolution of a bankruptcy or a failure, that's a good thing. and it will be followed by regulations. we will not have a lehman
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,rothers like circumstance everybody has a claim on the money right away. at royals market -- it roils markets. there are still court cases on lehman now. this will improve systemic stability. it is a good thing. about do you think only 1/3 of the dodd-frank legislation has gone through? >> a point of personal privilege, the cftc did 90% of the rules. in general, there are five. , office of comptroller of the currency, fed, the fdic. are comforted. what we do in the u.s. and packs all around the world. they need to harmonize.
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that is why the 18 banks are taking a voluntary step, which will be followed in the future. >> bart chilton, former commissioner of the cftc. tom? >> we will come up with a nobel prize announcement. from the university of toulouse. >> he covered banks. this is on banks and regulation. >> a theme for our hour. do not miss mike mckee speaking to us about a nobel prize awarded to jean tirole, 2014 nobel prize for economics. ♪
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>> good morning. bloomberg "surveillance." michael mckee and my favorite moment of the year. the award for the nobel prize. statistics,eritage economy tricks, the history of reigns supreme. jean tirole takes the award. >> you did not win.
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the call list. scientificole, director of industrial economics at the university of toulouse. it is the swedish prize in economic sciences. >> now we have that out of the way. that in some was categories, large organizations dominate. the theory in the past was how do you regulate these? it was mostly one-size-fits-all. you might put price caps or size caps. his work and game theory shows that does not always work. you need to regulate industry by industry and see how each industry is regulated. >> i go back to the book on oligopoly, perfect competition and monopoly and the strange
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thing in between. >> these market failures are the subject of his research. he's worked in a number of areas, including industrial organization and banking. this is for his work on large organizations. >> perfect i do have -- perfect day to have bart chilton. about well timed. what can we learn from the europeans about better market structure? >> they've done a lot. they are a stagger step behind the u.s. in doing regulations. they are close on our heels. they have some rules that are better in some regards. the question going forward is how you harmonize these things to ensure global markets are more seamless. >> what else do we need to know about jean tirole? >> he has a doctorate in mathematics. and a doctorate in economics.
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>> is the nobel amount he wins close to what piketty got off "capital." >> definitely not. >> mike mckee on jean tirole. sergio marchionne, 3:00 p.m. on "street smarts." future cuup 5. bloomberg "surveillance," good morning. ♪
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>> good morning. bloomberg "surveillance." i'm tom keene. adam johnson came in on columbus day. >> a warning from fed policymakers. stanley fischer says a slowdown in the world economy could undermine u.s. expansion and lead to a delay in raising rates. he may be, and -- he made the
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comment at the imf meetings in washington. most expect the rates to raise next year. truck drivers getting set up with barricades in hong kong. had to come between protesters, who want the and theators to end, demonstrators themselves. hong kong's chief executive says the government will not allow demonstrators to occupy the streets much longer. it's been about three weeks. warren buffett rules out the berkshire hathaway plan. he lands to license the name to europe and asia. 1400 u.s. estate agencies expected to use the berkshire happily home services brand name next spring. those are your top headlines. of francerole wednesday nobel prize in economics. known for organizational research. out of the university of toulouse. looking at regulation and how financial systems should and should not run.
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er thisrole, sole winn year. different from the three last year. >> i want to point out i'm very impressed that you are familiar with this gentleman. rochetow jean charles better, they work within the same department at jean tirole. >> does it mean anything that the nobel committee would go to france on the heels of mr. piketty? spread it around. last year they did investments and i could this year it is more towards banks. futures have fallen 20% since mid-summer, forcing saudi arabia to rewrite contracts with asia to the lowest level since 2008. san and iraq following formally served as advisor to saudi arabia's minister of finance. at what price point do the
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saudis start to have difficulty finding their own expansion plans? >> at these levels, saudi arabia as well as the uae, they are predefined. brent,ven is that 92 for the surplus is sustainable. uae.r brent for the they are sitting on huge foreign assets. >> you advise the saudi royal family. as prices decline, they have a margin. what is the plan? what would your advice be? downe question is how far do they go and for how long do they stay down. if they go to $50, which i don't think it will, then that could be an issue. what they're going to do is cut
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down on the capital expenses. 750 billion dollars of foreign assets, in case of saudi. gdp's foreignof reserves. qatar, 200%> it is pretty sustainable. >> you and i have had the privilege of speaking in riyadh. the generalization is everybody is old. how is the transition of the family going to go in the next five years? this is a critical issue. issue everybody wants to discuss. everyone has an opinion. if you talk to people based out of saudi arabia, they tell you this is the most critical issue, what happens to the succession. i would say the succession issue is settled. there is somebody who's going to take over.
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been decided. eventually, there will be people that will be willing to serve and serve the country well. >> color the recent threats in riyadh. are they looking south to yemen? looking south to iran. something new? something new. yemen has always consistently been a problem. iran is always an issue. what happens to syria and iraq, something the saudi leadership has pointed out. you need to deal with these countries. they were not dealt with appropriately. there is concern and hence the role of the u.s. coming back into the region. as well is of the saudi's and other countries. >> we are joined by bart chilton, former cftc commissioner. .> i'm just curious when we have circumstances where insee prices going down, 17%
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six months, does that create incredible competition among opec members? do the dynamics change over there? >> definitely. the dynamics have to change. the problem we are in now is that there is a supply-demand disequilibrium. at some point, opec has to deal with this. saudi arabia plays a role. the saudi's and the other are happyin the gulf with prices at these levels. they could go further down. i'm not worried about it. i do think these are good levels for producers and consumers. >> john, thank you for joining us. "surveillance," a nurse in dallas has contracted ebola. tormaceuticals rushing create a vaccine to combat the disease. why has it taken so long to get
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a drug to market? we discussed. this is bloomberg "surveillance," on bloomberg television, streaming on bloomberg.com. we will be right back. ♪
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>> this is bloomberg "surveillance." scarlet fu with tom keene. some company news. canadian pacific railway posing a merger with csx and is robust. -- is rebuffed. unclear if another overture is coming. the combined companies would of $62.5rket all you billion. a $4.9 billion for boeing. 50 747s to indonesia. a growing market. shares of fiat chrysler ready to make their debut on the new york stock exchange. under the ticker fcau.
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chrysler-fiat forms the world's seventh biggest automaker. 4 in the u.s. market. coming up on bloomberg at 3:00 p.m., chrysler tow chairman and ceo joins trish regan. bart chilton with us, former cftc commissioner. critical of high-frequency trading for years. calling the cheetahs. hoping a group of high-frequency traders will call for regulation. eyes glaze over all this. are we closer to good markets? we've never had better markets. they are more efficient and more effective, they are safer. they are less expensive for the retail investor. it is all good. >> why is michael lewis ramped up? >> it was a great book.
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my favorite michael lewis book is "blind side." >> what is the number one issue mr. lewis missed? he said high-frequency traders are a pariah. they are part of markets. the thing we need to do, how do you set the rules and regulations for their involvement. how do you deal with the larger question, the question mary jo white has raised at the sec. we gone from having the market -- the new york stock exchange and having 45 different places to trade, including dark pools. how does that work? >> where will we be in a couple years. i audience understands that 45 places to trade is not good. torybody does not want merge. would you suggest we should have fewer players and a consolidation of the industry? >> i think so. it will happen naturally because of markets. i don't think we will have 45
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places, maybe 20 or twice i. it is a good thing. at some point when you have all the dark pulls that are less transparent, they report trades andyou do not see bids asset prices. there will be more transparency, that is always a good thing. >> how do we get trust back? we remember the day we went down. how do we get the trust back to mom-and-pop in the market? >> it has to do with transparency. when we go back to 2008, it was because we could not see what was happening in the $600 over-the-counter market. totally off regulators screens. that has changed. we are safer than we were. >> jean tirole winning the nobel prize from france, if he goes to england and has one player managing the team. what is wrong with the london model versus 45 players in the u.s.? >> the london model relies upon
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laissez-faire principles-based regulation. >> that worked out. >> didn't it? ultimately, it is a balance. he do not want to be regulatory -- you do not want to be overzealous in your regulatory approach. >> what is your wish list for president obama? >> capital and margin requirements done. everybody should have requirements clear. once we get that done, we're going to be protected. >> bart chilton. we will discuss the chicago cubs. sox guy. >> adam, please. >> orioles-royals tonight. audi watching football. s&p futures up. last night, they were down about
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.75%. 10 year not trading because bonds are closed. 1.5%.lat, oil down in 2.5 the lowest price years. >> this is bloomberg "surveillance," here with tom keene adam johnson. let's talk about ebola. it is being transmitted stateside. pharmaceutical companies are fast tracking efforts to produce an effective drug. glaxosmithkline hopes to have 20,000 doses of its experiment by year end. on a is vice president of u.s. public policy at glaxosmithkline and joins us from philadelphia. thanks for joining us. a nurse in dallas has contracted ebola. how does this change the way the private sector and public sector address this crisis? what do companies
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like glaxosmithkline need the government to do next? >> it is tragic that this nurse did contract the ebola vaccine. the country has to make sure they are following protocol for treating a person that is highly infectious. that was a very unfortunate .ncident that happened what we are seeing with our vaccine candidate, which is not a treatment for ebola but would prevent people from contracting the disease. we are seeing a consortium of coming together, private and public sector, regulators, and charitable organizations, to try to accelerate the development of the vaccine silica it could be used with high-risk individuals. >> glad you drew the distinction between a treatment and a vaccine. exponential about a growth for an epidemic. what is the ramp-up capability
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for manufacturing? andsk has a large footprint bar security. we do have the scale and scope to develop the vaccine in the case we need to go to large scale production. part of the funding we are getting from some of these charitable organizations is allowing us to plan for that development. right now, we are planning to produce 10,000 doses to help support the clinical trials. we are in the planning process to look to see if we have to go to larger skill production how we can accommodate that. >> i want to be careful given the stress you see in texas. is there a vaccine right now? >> there is not. this is the most promising vaccine, it was effective and nonhuman trials. we did expedite the process to move into clinical trials. >> what are we waiting for? when you speak to your team at
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glaxosmithkline, what are we waiting for? we need to make sure the vaccine is safe. it has not been used in humans. we cannot compromise safety. it would not do anyone any good if we were to introduce a vaccine that caused side effects. the first phase is to make sure the vaccine is safe. the second is to make sure it doesn't generate the immune doesnse -- to make sure it generate the immune response. >> the first time i've heard anyone from the pharmacology industry explain. >> spelling it out is important. i want to bring in bart chilton. >> i was working for senator tom daschle when anthrax was in our office in 2001 following 9/11. , know that at hhs and dod they're spending $5 billion a year.
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they have problems working together. why has it taken so long? is it because there is no commercial application other than the government? people are wondering what is going on, what is the deal with the timing? >> there are multiple infections in the world. it is hard to predict when one infection will really take off and cause a serious outbreak as we are seeing with ebola. dod has been working on this vaccine candidate since 2003. now that we see that ebola is prevalent, we are accelerating the process. part of the challenge is particularly around what disease is going to take effect. and making sure we had a process in place so that when we see these types of epidemics, there guidance from a nasty a perspective. there is support from a manufacturing perspective. there is a lot of policy opportunities as a result of the
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situation. >> chilton donna altenpohl -- , vice president of u.s. public policy at glaxosmithkline joining us from philadelphia. >> talking about commodities. we have the former cftc commissioner, bart chilton. we'll be right back after the break. ♪
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>> you are watching bloomberg "surveillance." and johnson with tom keene scarlet fu. six months, still no signs of any agreement between amazon and their e-book war with hachette. patience of authors like james patterson, who holds the record for number one bestsellers published by hachette. talking to erik schatzker in palm beach. >> you look at what has happened --etting into religious work religious war does not work. it is not working in syria. it did not work in ireland. amazon has created a religious war. writers are religious about books. they will take the blows and use whatever they have to do. they are not going to let folks get hurt in this country. joins us.hatzker
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i'm amazed. this is not business, this is personal. >> it is. one of the reasons we are talking about amazon and hachette this morning with bart chilton is because jeff bezos has his own cheetah analogy. he likened amazon to a cheetah and publishers to weak gazelles. it's darwinian. it's amazon's duty to take advantage of the publishing industry. james patterson finds this objectionable. needs to stepte it up. hachette, by virtue of its agreement with the doj of your e-book pricing and apple, has to tread carefully. end the hachette to siege by letting the drawbridge drown and attacking amazon. publicly attacking jeff bezos piec. he said he would be camped out
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on jeff bezos' doorstep and invite every author on the planet who demonstrate. >> why doesn't he do it? >> he's got a right books. he doesn't believe one man acting alone is enough. writers have formed a coalition called others united, 900 authors, philip roth and malcolm gladwell among them. what patterson says is that for bezos to payor attention, they would have to boycott amazon. to agree to take looks down. that's the nuclear option. i asked him are we close to that. he said probably not. two reasons. one, there's a lack of will. they're willing to speak out but not willing to vote with their
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pocketbooks. you have to wonder how well it would resume. jeff bezos would pay attention. research suggests books make up $70 plusf amazon's billion in revenue. >> that is james patterson's livelihood. >> erik, thank you. rga resources is acquiring atlas pipeline. more details after this. ♪
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>> who should we talk to about markets in turmoil? i cannot think about anyone better than robert albe rtson. tomorrow on bloomberg "surveillance." looking forward to talking about the linkage in equities, bonds, currencies, and commodities. on tomrg "surveillance," keene. scarlet fu has breaking news. french. resources partners will buy atlas pipeline for $4 billion. resources will buy atlas
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energy for 1.9 delete dollars in cash and stock. offs had spun non-midstream assets, these are contingent upon one another. an m&a play in energy. other company news. in france can tweet money. according to the financial times. the company has teamed up with s-money, a division of group bpce. hackers at it again. targeting snapchat. said to be planning an online leak of as many as 200,000 photos and videos, many of them nude. wereompany admits images compromise, say a third party at is responsible. google deletes 18,000 web links in the u.k. in a month. the daily mail reports people removeked the giant to
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60 3000 pages. most of the requests are from criminals and six offenders. that's today's company news from the files of "bloomberg west." 2011l down 25% from its peak. corn, 58%.. the only thing up in commodities is beef. live cattle's done a double in 4 years. what to make of commodities? bart chilton is purdue, indiana, he is with us on commodities. corn. oil, oil, oil, oil. it's a bear market. >> that's an ugly chart. how does a guy like you react over the midwest breaking of her grain prices. >> you have to make sure the
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supply and demand fundamentals are operating. it's a little troublesome in general in commodities. i'm pleased. certainly you get worried when you see such volatility. >> the media does not get this. hedgers is a huge part, speculators are a lesser part. who is getting hammered the most? >> i don't know if anyone is getting hammered. depends if you are going longer short. or hedged and you have some to back it up. the commercial people -- >> general mills. >> they're ok. it is the speculators, some have gone to the market. maybe dave gone along and it has not hurt them yet. if prices stay down, it will. >> in chicago, did you do this? >> the hand gestures. >> back when there was a pit.
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it's electronic. >> where are we with the efficiency of our commodity market? >> talked about it earlier. i think they are more efficient and effective than they had ever been. "surveillance" breaks -sclusive. gps.hn deere are guided by you can get a link to futures. you see rain clouds, you can sell contracts from your tractor. is there conflict? >> i don't think so. it is amazing what the hedgers do. i was in houston last year. they are looking at the wind. wind speed they
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expected, hedging every 15 minutes based upon whether the 20 miles an hour. these are dynamic. >> you are not as worried about the carnage in commodities because it is more efficient and open. find are, you had to problem and scoop up paper of the trading room floor. now you have an audit trail. >> instantaneous trading, that sounds like the demand is being driven by people who want to trade, rather than being offered first and picked up later. >> that's right. >> what you mean? >> people want to be trading at that speed rather than being made available and that relies -- >> is being driven by end users
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rather than guys -- >> by the structure itself. >> we talked about crude. are out of thes crude market. in 2008 and 2010, 12-1 long speculators versus end users. that is gone. it is fundamental traders. a lot less of the long speculators. the generalization of chicago being the head of the commodities trades, how do they look at china? in general. is a better china good for chicago commodities? for better china is good the world. it is obviously slowing. with regard to chicago, there in 85 countries. chicagoy looks to and the cme.
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i think they are doing fine. volumes are little bit down and prices are more volatile than we would like. >> who is the guy on the white sox that retired? >> i forget. >> paul? he did not get the derek jeter treatment. they do things in a more measured, intelligent -- >> we know that is not true. former oil, being a trader, i am nostalgic. you go to the oil pits, there are maybe 200 guys. them?y still have >> they are sitting around doing nothing. there used to be 5000. >> it is not as exciting. it is still efficient and effective and markets are doing ok even though there has been volatility. >> commodities. what carnage. adam, will we see a $79 on my next crude? >> traders are looking for $80. >> you take out the risk premium
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in oil and you get to $75 or $80. >> should we do the agenda? can i do the non-agenda? >> the fact that bond markets are closed. >> the way we open the bond markets, i would say with five, a higher yield off the friday carnage. see how bonds open tomorrow. a big deal. stocks.ly so for the s&p 500 stopped on its 200 -day moving average. yellow line. time we have seen the s&p 500 go down to that long-term trend in two years. >> wow. item, no earnings to know today. get ready for a slew of earnings tomorrow. three big banks, jp morgan, wells fargo, and citigroup.
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all on the same day because of the holiday. 7 companies within the s&p 500 overall. gerardt of value from cassidy at rbc capital markets. and today from bob doll. i don't have a strong opinion other than there are a lot of jobs involved. talking abouts equities, bart chilton was talking about commodities. our twitter question of the day, what offers the most upside? "stocks, easy money. commodities are eight crapshoot. " >> smart answer. >> "feels like we are easing into a recession." >> fed might not have bullets. >> monetary policy. >> "time to hold cash." this was you tweeting. your triple leveraged cash fund. chilton, former cftc
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commissioner. how are you making money? >> even in the private sector, i should not be investing in markets. us.art chilton joining thank you for coming in. bloomberg "surveillance" on radio continues. "in the loop" is next. ♪
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>> good morning. we are alive from bloomberg world headquarters. we have a great program ahead
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for you. $1.5 trillion. that is a much we walked away -- wiped away last week. exceeding.rices are are we in for a correction? first, here is a look at our top headlines. u.s. stocks coming off their worst week in two years, growing concerns that a slowdown in the world economy could undermine the u.s. expansion. the latest comes from stanley fischer, who spoke over the weekend at the imf annual meeting in washington. >> we are not berkshire hathaway. that is not a bad business model. you think about a long-duration strategy. >> clearly, that is not stanley fischer. that is bill ackman.

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