is 25%, not 30%. the fed meets as america confronts a growing income inequality. is "bloombergthis surveillance." live from our world headquarters in new york. the final day of april, i am tom keene. joining me is scarlet fu at adam johnson. a busy day. here is adam johnson with our morning brief. >> overnight, german unemployment falls for a fifth month as the economy expands. good news. the bank of japan refrains from expanding stimulus as board members forecast that the pace of inflation will quake and in each of the next two financial years. they will ultimately reach 2%. a slew of economic data. >> a seattle slew! >> listen up. 7:00, mortgage applications. a: 15, adp employment, a: 30, personal consumption and gdp. 2:00 the fed pmi,

rate decision. >> i was talking to michael mckee, the gdp report dovetailed with the fed. interesting as we get to the jobs report on friday. >> big economic day. earnings before the bell, time warner. after the bell we have yelped and carlyle. dothere's the brief, let me the data check before we get to a busy front page. features negative two, -- future nothing, nymex crude 100.34, douth. -- south. 1300, renminbi currency,er chinese exporting deflation out of china -- something to watch into may. an incredibly busy morning.

look at the front pages. here's scarlet fu. top our front page. prosecutors considering charges against credit suisse and bnp paribas according to people familiar with the situation. credit suisse big investigated over whether it helped americans as a taxes. prosecutors trying to figure out whether bnp broke the law by doing business with iran, cuba, sudan, countries we have sanctions with. >> these are criminal. >> it could result in the first guilty plea from a major bank in 20 years. >> these are two different cases. credit suisse is about moving american money. you did that? >> i might have tried in a previous life. it is individual versus sufferance. that is the -- it is individual versus sovereigns. that is why the bnp paribas issue is concerning, you are helping sovereigns move money

across borders. >> and "the new york times," there is the idea of a, do they go after the bank criminally, do they go after a subsidiary criminally? banks in europe respond? we will talk about that. >> we have seen shares plunge. the banks say they have not set enough money to cover whatever financial penalty they might have to pay. we will cover this and will be speaking with chris wheeler later. >> for a european perspective, that is very important. perspective on twitter, this is our second front-page story. results, shares plunging in the premarket about 12%. it is not you who did not sweet enough, there are not enough new people tweeting. people outside the world of media or marketing. membership growth is the issue. slowing down, still double-digit percentages, 25%. 30%, the deceleration

has people concerned. twitter has been trying to move to image and video sharing and printing it can monetize off the mainstream user base. still questions about whether it is a niche product. worth highlighting the drop in shares. >> think about how tough it is to be a public company and grow at business when .5% is not good enough. -- when 25% is not good enough, welcome to wall street. >> do you think the owners regrettable and public? >> it is tough. >> the third story is how will la clippers owner don sterling respond to the nba? adam silver imposed a lifetime ban for sterling's racist remarks and fined him $2.5 million. silver announced another step -- >> i will urge the board of governors to exercise its authority to force a sale of the team. and i will do everything in my power to ensure that that

happens. speculation sterling could file an antitrust suit against the leak. it could get litigious. thewhile, the court, clippers beat golden state in game 5, 113-103. important point, i was wrong. i thought it would be a big deal. >> is a huge deal. >> i get some things right, something's wrong. important., it is a huge deal. >> at this point, you have almost got to root for the clippers. >> they have chris paul. >> i am ready to go out and buy a clippers t-shirt. you know, these guys are making it happen against the odds. root for them. >> we will talk to them, we will bring you bloomberg sports. up to speed.

>> this brings us to our twitter question of the day, who should buy the la clippers? magic johnson has expressed interest. >> david geffen, the media mogul . ustrieste, -- tweet @bsurveillance. breaking news, the volume of exelontions, m&a deals, looking to buy pepco for about %27.25 in cash. exelon looking to make a bid for pepco for $27.25 in cash, $5.4 billion. >> the mergers and acquisition show. the apple deal yesterday is an

example. >> bond sale. needed to geteld it done for less amount of money. compared to what it would have been five years or 10 years ago, it is a giveaway. theere's the stunner of day. the a.j. stunner of the day, utilities up 13.5% because of the interest rate issue. lower for longer. >> douglas ramsey was on "surveillance was quite radio yesterday. he says it is a mystery. he says it does not look normal that utilities are on such a run. >> you almost wonder is it reflects the notion that the fed was going to raise rates sooner than expected and all the sudden janet yellen says no, we will keep low rates for longer. that is good for utilities. >> we will monitor this story with exelon and pepco. >> wants to monitor.

there is a fed meeting this afternoon, slack is the word of the moment for fed economics. chair yellen used the word 14 times in her recent speech at the economic club of new york. others say stagnation. any economist at brown university. his situation was with a guy named krugman, bernanke, michael woodford. i don't know anyone who had a trial by fire like you did against those three heavyweight. how do you define stagnation and slot? >> the question up until now has -- this mightsing drag on for longer.

indeed it may. that is a lot of possibility. >> you studied with michael woodward when heated interest no one reads it but everyone loves it. as any modern economics and woodford's book or krugman's book? are we on original territory? >> do you mean the current situation we are facing now? >> is it a textbook meeting the fed has today or are they on original ground? >> if we find ourselves in the situation for much longer it might pose challenges we did not anticipate in the book of .oodford in 2003 we have some answers during that time with japan. there were certainly solutions

people provided at that time. perhaps it is time to take a closer look at those. >> if we dig into the data ahead of the fed, we might get a sense for what they are going to say. i will show two charts. gary langerom research, 20% of americans think the economy is getting better, not good. 36% say is getting worse. 4.1%, that sounds good, trailing gdp. if you look over the past 50 years, it is way below trend. are we in a new, permanent slowdown? >> this is nominal gdp, topline gdp that speaks to the disinflation, deflation question. professor eggertson, this is a crucial point right now. should janet yellen be worried about disinflation and what we see in europe -- deflation?

>> she should be concerned about it. eere concretely, we may not s renormalization anytime soon. the discussion at the fed has been too focused on an exit as opposed to planning for this. episodes wee last saw this kind in the u.s. was interest rates collapsing in -- you begin your new paper in 1938, is that what we are living? >> interest rates do not start rising again until 1947 after world war ii, when we saw a massive expansion in government due to the war effort. it is a long period. in japan, interest rates started falling in the mid-90's and are still at zero. the assumption this will start improving one or two years out may not be warranted. >> you what is said to be more

active, you say it is passive and waiting for things to happen. to create action through communication. is this a new paradigm for the central bank? is time for it to look at what ben bernanke said in 1999 when he was analyzing the bank of japan. on theested they may err upside and allow for access inflation, 3% 4% inflation. at the beginning of the crisis people or putting these options on the table and people push them out, thinking they were not good options because they do not on credibilityrd on inflation. i was under the perception this would be a short run thing. maybe it is time to put other options -- >> seven years on. gautti eggertson with us. stellingr user growth and sending the stock stumbling yesterday. what are's first-quarter

earnings. this is "bloomberg surveillance," streaming on your tablet, your phone, and bloomberg.com. ♪

>> good morning, i am tom keene. futures -3, dow futures -8. .aybe it was not a failed dick costolo on "market makers" at 11:00 a.m. some sporting charts on the migration of users at twitter he will discuss on "market makers" this morning. >> let's stay with the idea of twitter, the number of users increased last quarter by 25%, sounds great. not good enough for investors. in the fourth quarter, twitter

grew its membership base by 30%. the deceleration has everyone concerned. membership and twitter overall, 250 5 million monthly active users. that sounds pretty impressive but it is 1/5 the size of facebook's base. it has a long way to go to print it is a mainstream school. twitter needs to prove it is more than a niche product. mainstreaml for users and can gain mass appeal and turn it into an advertising powerhouse. there's the first derivative. that is a great chart. the declining rate of growth. >> that says it all. >> "business insider" had two great charts on this. you mentioned brian wheezer this morning. >> he is pivotal. he made some interesting see user whenever you

growth slowing -- look at the emerging markets. makes the point that long-term monetization and twitter depends on countries ts,h more robust media marke the u.s. and u.k. you cannot have growth in indonesia make up for the fact that growth is slowing down in the u.s. >> you are talking equities more than i am. is there a buzz on these stocks? >> this trades at 13,000 times earnings. 19.3 times sales, that is the concern. dissension between twitter and facebook, twitter is a fifth the size of facebook, but cannot monetize? >> what did we learn on the conference call. >> the company is focused on mobile, 80% of mobile -- mobile

80% of its makes up total revenue. twitter has always done very well. it is whether it can get the monthly active user number back up in the director investors want to see. >> 7 buys on twitter versus 14 holds and 13 sells. hold and sell is the word. , economicsggertson professor at brown university, do you use twitter? >> i don't. >> that's the problem. >> why not? >> it never caught on with me. >> they need to get mainstream is not exactly mainstream. he is the intellectual elite. guys like those who have not really caught on to twitter. >> in this world of facebook, twitter, and other innovation -- ps' speech in

switzerland, he said we are waiting for that new new. atm where you said, looking railroads in 1880 or steel in 1930, is this the new new? or is it people playing in silicon valley? changing how it is people communicate. i do use facebook. in fact, i know people who i've started using it -- >> you use facebook to throw your children's pictures around. i am passing into a a lot of different things than i was before. the information circles -- >> we will get you on twitter before the hour is over. gautti eggertson of brown university. coming up on the next hour of onrveillance," betting leather recliners and dine in movie theaters. has the strategy worked? speaking with the ceo in the next hour of "bloomberg

surveillance." streaming on your tablet, smartphone, and bloomberg.com. ♪

>> good morning, "bloomberg surveillance." i am tom keene. with me as scarlet fu and adam johnson. headlines in ukraine. they will form a special police force for the eastern part of ukraine. evolveory continues to with headlines, stay with us all day as we give you the news in an evening in ukraine. here are the top headlines. >> a warning from vladimir putin, he says further economic sanctions with that denies u.s. and eu's role in energy industry. couldn't -- putin says he is

prepared to retaliate. authorities now say at least 30 people died in two days of tornadoes in the southeast. more than 200 were injured. arkansas and mississippi were the hardest hit, 27 people in those two states alone were killed. the los angeles clippers made the news off the court. beat the golden state warriors, 113-103 in game five of the playoffs. the win came hours after the nba band donald sterling for life over his racist remarks. >> we will touch on this later. the future of the team is up for grabs. >> who might own it, a lot of commentary. must read, adam johnson will get us started. a friend of the show, ambassador richard haas, the president of council on foreign relations. "american foreign policy is

in trouble in disarray." his point is we are not sending a clear message. defined what it is we stand for and what it is we need to do. >> from his book as well, he has pushed on this. gautti eggertson with us from brown university on the value of economic growth. as you read the world economy, what the imf said at the spring meetings, is the rest of the world going to catch up with the united states? maybe not the old normal but at least in this sense? to we need to get used to a subpar global economy? guess that is the base scenario we are worried about. the normal might be one in which we see low interest rates and aggregate demand.

europe is not looking great. there is concern in asia. on everyone.ing the scenario that we might be in for a while. >> scarlet, as we go to the fed meeting this afternoon, it is remarkable how the caution buttresses up against optimistic notes. >> especially economists saying unemployment will fall to six .3%. a big story this morning, u.s. regulators probing into credit suisse and bnp paribas. ♪

>> good morning. "surveillance" breaksclusive, rain nonstop until may. >> that is a cool picture.

like something out of a movie. >> from the top of our world headquarters. that residential building is going to be ginormous, the orange on the right side. >> you can barely see it. >> it is going up quickly, i walk by it everyday. good morning, "bloomberg surveillance." i am tom keene with their lives who and adam johnson. let's do a quick get a check. --ill get through this bit 1.3830, a churn as we wait for that fed meeting. gainers in twitter. >> i will put another one in, gainer, spring up 11.3% to $8.27, biggest gain since july, boosting the forecast after

first-quarter earnings topped estimates. at&t and verizon control over half the market. >> a loser? >> coach. you are not buying enough him andbags. >> or shoes. >> why is coach stumbling? >> michael kors has been doing pretty well, kate spade as well. >> sales down 21%. they were expected to fall 21%. michael kors is hot. >> hot, hot. >> i agree with that analysis. it is our top story this morning. attention on new york city -- criminal charges might be filed against european banks bnp paribas and credit suisse. their worries are not mario draghi or christine lagarde, but prosecutors in new york.

we go to christopher wheeler in geton with medio banco to a european perspective. was this a surprise to see criminal charges rumored against bnp paribas credit suisse? morning. i suppose the answer is we have been there before. in 2009 there were criminal ahead of thest gbs famous john doe summons. i think we have heard noise ofterday, noise coming out politicians about their concern about certain things being exempted from fines or settlements as a result of peration with a 30's. if banks have been found to do long, rather than allowing them to settle, they should be brought to trial. news coverage there is a real new york band. for the global audience, this does have a european banks

respond. do they go to washington? >> it is difficult. we saw how standard chartered and hsbc responded when they were accused of overseas money laundering. they quickly settled. given the importance of new york to most global banks, it is not in your best interest to do anything other than try and put whatever the issue is behind you as quickly as possible. >> credit suisse has been the target since 2011 of a u.s. criminal probe into whether it helped americans evade taxes. shouldn't this be priced in and expected by the bank's ceo? >> i think it is, they took another $425 million against this matter in their plea 13 accounts. they clearly are close to some settlement. on, there are 12 or 13 swiss banks also involved.

they want to put it behind them, reputational he it is bad. >> is there a chance this goes to trial or gets settled? settling obviously makes more sense but it is very expensive. one has to ask, what the talks going on between the eu and the whether the du will say hold on, what is going on here? money beingot of extracted by regulators and we want to be clear this is fair. it is also calculated appropriately. it is dealt with in a way that does not appear to be untoward in terms of losing banking licenses. >> can you try to translate a number for us, what it will cost banks individually? >> billions more dollars, that is the point. what we are seeing here is the

u.s.-swiss tax issue. and something specific on money laundering. we have the whole libor and forex story to pan out. our americanfor viewers, tell us in europe the way credit suisse and bnp paribas perceived? how are these banks different to european viewers? >> i think credit suisse is one of the biggest wealth managers in the world. it has looked -- it is looked at as a sound institution but it has been caught in a position, the same as para ball they are leading players but we must be clear. the u.s. and new york are vitally important and they want to make sure they continue to operate there. chris, jacob frenkel said a criminal indictment could close the bank. do you agree?

>> that's a dangerous thing to say. that costs an awful lot of jobs. that is very extreme but this is some of the rhetoric we have heard coming out of your site of the atlantic on these matters in the last four years. >> christopher wheeler, thank you so much. with mediobanca. by thescinated, adam, importance of this almost pneumatically. -- almost diplomatically. right.are this is, at the white house level, president hollande level. a national institution like bnp paribas. >> gautti eggertson with us from brown university. i think of john charles roget in france and his work on banking crises.

from where you sit, fed economics, is the crisis over? it continues for the banks. as the crisis over? >> that is a hard call to make. in terms of the banking sector, it is a hard call. i am not quite sure. the concern is i am not sure we are seeing renormalization in terms of interest rates, that is my main concern. whether the banks are still in trouble remains to be seen. >> and when we get the renormalization of interest rates, how with a european banks -- they are perceived as more fragile. >> the stress tests have not been very stressful. onthe mystery is what are their derivatives. we do not know the derivatives bank.ic deutsche story. big banking

>> another big story, somethin o wars." new for "star seven newcomers in the cast of the seven "star wars" flick. old enough, you remember the first "star wars." >> they are not the action guys. >> harrison ford is still a pretty tough guy. >> i went to the first movie the second it was out. the theater was packed. i will never forget -- at the end of the movie, the entire theater stood up and applauded. i have never seen that before. the whole place stood up. taken by "star wars" that i cut off the hair of my barbie doll and named her league skywalker. -- luke skywalker.

>> breaksclusive. >> let's hear the trumpet again. disney now owns the franchise, bought it from george lucas. >> gautti eggertson, what was your favorite star wars? >> the third one. >> mine was when the white fangs when across the snow. -- the white things went across the snow. >> we should point out, gerry amc, will be joining us in the next hour. they came out with earnings for the first time as a public company. sabres on set. aereo's network of tiny antennas have sparked a supreme court case. do people really watch network

television? we will discuss, next on "surveillance." ♪

>> good morning. a busy morning. "bloomberg surveillance," the final day of april. we thank you for watching us all

of april and hope you will be with us every day through the month of may. adam johnson? >> senate democrats admit they will not have enough votes to pass an increase to the minimum wage. the senate holds a procedural vote on a measure to raise the minimum wage from $7.25 to $10 10 cents an hour, 60 votes are needed. in oklahoma, a botched execution of a prison inmate last night, a new combination of lethal drugs left the prisoner writing and clenching his teeth, he died of a heart attack. washer execution delayed. in london, a strike in the third day. demand for london's bicycles jumped 70%. transport workers processing job cuts, those are your top headlines. >> our single best chart. >> one of my favorite

activities, watching television. your use bunny ears to get tv? >> i do. almost $200 for everything under the sun -- nhl, nfl. >> you do? mine is $174. time warner cable. >> gautti eggertson, what is yours, professor? what do you pay for cable? >> i am not quite sure. >> it is auto pay, you don't look at it. for all the controversy over aereo, you do not see a lot. turns out the current business d,del might be flawe demand for free tv is declining. that the hours spent watching free broadcast television has plateaued. overs not gone anywhere the last six years. contrast that with the time spent watching cable tv.

it has grown from 900 hours per 2010. in 2004 to 1100 in this is a problem for aereo, that broadcasts only network tv. even though aereo is small, it represents a threat. >> in the next hour, we will talk to the executive who is dead set against aereo. >> the ceo of e.w. scripps, they own about 21 television stations. they have a lot at stake. >> i read the research on this, they show cable wins. >> prestige cable. >> cable wins -- >> profitability -- >> viewers, influence. >> radio does well. everybody has expected the death of radio. >> if uyou drive -- >> i do not drive a lot. >> i figured since you were in

providence -- >> i take the train. >> he is in the quiet card writing quadratic equations. >> photos. >> physical photos. >>-- difficult photos. over theansas, looking damage from the tornado. the second time in three years tornadoes have ripped through the region. amazing. nearly 40 people have died in two days. we wish everyone well. >> did we know the storms are coming? >> what do you do? >> forecasters were saying be careful. >> i have never seen one. >> i have never seen anything to that extent, it is kind of hard to imagine, trucks being picked up and there. -- nin the air. number two, tube commuters in

london. >> actually -- >> no. >> that is tony abbott from australia. this?y abbott -- what is >> molten metal? >> ok. manufacturing in australia. a big thing for bhp billiton and rio tinto. >> the bank of japan governor is all ears when it comes to reaching the 2% inflation goal. >> gautti eggertson with us. studied under benjamin bernanke at princeton. 1993k at ben bernanke's japan onecturing

reflation. why does it take japan so long to right their ship? is it cultural or common sense economics? >> i think it is very difficult to get a central bank to say it wants to increase inflation relative -- >> they are hardwired -- thee have been so used to main problem bringing it down. it has been a shift -- >> do you have optimism about abenomics? >> it was certainly a step in the right direction. it wast the preliminary, largely a success. one of my main concerns was might not have been ambitious enough. it seems that it has been. >> we will pick this up when we continue. we will talk about income inequality, what should the government do about the growing divide? "surveillance," on bloomberg television, streaming on your tablet, your smart, and bloomberg.com. ♪

>> this is "bloomberg surveillance," i am scarlet fit with tom keene and adam johnson. some company news. global love affair with twitter might he wearing off, membership

growth slowed down to 25% in the first quarter. shares falling as much as 11% in the premarket to their lowest level since ipo. revenue doubled and twitter broke even when you backed out certain items. ebay falling in extended trading. second-quarter sales fell short of the highest estimates. ebay posted a first-quarter loss, the company took a 3 billion dollar tax charge to repatriate foreign earnings. of cash for amount expansion. in san jose, california, a jury resumes the liberation in the apple andal with samsung. apple says sam sun copied the iphone's futures. >> isn't is a huge deal? >> it is. company pride. ofif apple wins, billions dollars. >> these are on phones that are

basically no longer used. >> that is the irony. you cannot sell iphone and you would have sold three years ago, you send it overseas. >> apple needs cash. the book of the moment, 696 pages, "m the 21st century." 21st"capital in the century." americans push back against thomas piketty. somebody who knows what is in the book, gautti eggertson. he weighs in on the debate of the moment at economics. everybody is talking about inequality. let's talk about the phrase you have. we are all toiling. what is the paradox of toil?

>> i am not sure i would tie the paradox of toil to the rise of inequality. that has more to do with the situation in terms of the recession. the key problem is that we need increasing demand. at that point, trying to pursue policies that stimulate price is not the right thing to do. you, economists like acclaimed phd is, do you get as simple as we do? should we bring the top down to support the bottom. if the top does well, the bottom will rise? do you ever look at it that some politically? -- that simplistically. >> in the book, it is to main elements. a escutcheon of how inequality has evolved. -- a discussion of how inequality has evolved. to predict what is going to happen in the future. it is pretty ominous. there, the consensus is weaker.

he is suggesting we are moving to even more inequality. that is where the debate is. >> the return on capital exceeds the rate of growth. >> listen to you, math guy! right? hat g, >> i learned something. >> if johnson is starting to quadratic equation -- >> he puts forward this hypothesis as long as r is greater in g, there will be an increase in inequality. >> now you are doing math! has become aetty cultural phenomenon. he captures the zeitgeist. what do you not by about what he says?

what do disagree with? >> the key aspect of his work that is fascinating is documenting what has happened, collecting that data. when it comes to forecasting where we are heading with black that is where it is flawed -- where it is heading, it is flawed. he has an interesting hypothesis. i cannot say i have found where we are going, but that is the debate. >> one final question. we have not talked about europe and the work you have done from iceland. how important is mario draghi in the next 12 months? should i focus on janet yellen or mario draghi? >> they will both play an important role in the coming months. perhaps i am more concerned about europe and the u.s., they are both -- >> gautti eggertson from brown university, thank you for being

with us. how about a forex report. euro/dollarere, renminbiuble churns, stronger. stay with us, "bloomberg surveillance." ♪

may face criminal charges in

new york. they will appeal to washington. growth isails as user not what he five -- is at 25%. the morning, everyone. this is "bloomberg surveillance." i'm tom keene. joining me, scarlet fu and adam johnson. we will get right to a busy day and a busy week. here's adam johnson. >> german unemployment falls for a fifth month as the economy stance. bank of japan refrains from expanding monetary stimulus. its board members forecast that the pace of inflation will quicken in each of the next two financial years to reach its two percent target. we get the mortgage applications at 8:15. the implement change at 8:30. gdp and personal consumption. 9:45, chicago index.

we havehe bell, earnings from time warner and after the bell, earnings from yelp. >> we will keep our eye on those results. general electric making an offer or what would be its biggest acquisition ever. ge is willing to pay $17 billion for the energy business. it makes power equipment and trains.ed they will make an offer for pending access to financial information. a big computer error over at the intercontinentalexchange group, two options u.s. exchanges. that almost 20,000 erroneous trades that were canceled. -- ice has already announced plans to upgrade the technology. demand for the new mercedes model has profits soaring. first-quarter earnings were 95%

at the german automaker. that is today's company news. one story we are keeping a close eye on him of federal and state prosecutors are considering privilege charges against credit suisse. whether they broke the law by doing business with cuba and iran. previous investigations into banks have usually resulted in nonprosecution agreements through settlement. what is different this time that has regulators going for the most aggressive move possible? >> it is unusual. situation where you have deferred prosecution which involves a big fine and putting in compliance measures -- there

may be a bit of a political calculus and dynamic. all other u.s. senators in the hearing were critical. helping -- of not holding them accountable. that might be a factor. >> this is u.s. politics at work. what can you tell us about the players room? in a big been involved insider trading case that has been what he is getting a lot of attention on. what they do is they focus on banks. the argument for not criminally prosecuting them is the collateral damage to others. the people who work there. -- acame a discussed gust of the idea of too big to be indicted. what they're looking at is moving offshore to you paid

taxes. the critical distinction between avoiding taxes, which is not illegal, using regulations, laws, loopholes to avoid paying taxes -- but evading taxes is where they are moving money offshore and hiding it from authorities. pay tax onlaw, you worldwide income. that is important for people to remember. >> you got terrific respect around -- cornell and public service. what are the options this morning for the lawyers and bnp? how many choices do they have before we go to the alleged criminal charges in a number of days or weeks? >> you guys have alluded to this earlier. they would be seeking a naughty and's in washington. which is what has happened in all of these other cases. try to sit down and convince inm that there is no utility

actually bringing a criminal tremendous will be collateral damage at these institutions were forced to be shut down. we are open to discussing a reasonable fine. we are open to putting in compliance measures to make sure that this type of conduct does not happen. prosecutorsderal straddle the tension between and the charges politics of sovereign countries can involved? >> i was watching you guys talking about this and i saw your points. you guys are right. this transcends on some level just the idea of street criminal prosecution. as you said, could go to the white house level. internationale relationship between countries. that is a factor. the lawyers really have to emphasize that in their presentation to doj.

if you guys think we did something wrong, we are willing to resign. >> does this mean that american banks will face criminal charges? >> that's a good point. we haven't had a prosecution of a major bank in quite some time. everybody is going to be looking at this closely. i don't have a personal blog, but i think this will be resolved without a formal charge. >> thank you so much. >> a criminal charge. if you don't stay tuned at 2:00 this afternoon, there is a fed meeting announcement. word 14llen used the times in our economic speech. john has studied what our federal reserve does.

q -- he isalready with our dq economics. >> is going to be a relatively boring fed day. we don't have a press conference . as a consequence, we are not going to have any clarification at the timetable. i would look for some better language on the economy. we are rebounding from the harsh winter weather. not much else different than what we had -- no new forecasts and no new press conference. nothing the fed would want to make a major change on. maybe the fed should go to press conferences after every effort. >> you and i have been through so much of this -- i was sitting with you when we learned about bernie made off. i remember that very clearly. there is a chart which shows the distortion of this federal reserve. the balance sheet -- i sent it out on radio. how distorted is this

institution as janet yellen? >> the balance sheet is very upside. it would take many years in the economy to absorb the amount of excess reserve -- even if the fed stopped buying and did not sell a lot of portfolio to run , itthe currency demand would take more than a decade to absorb that balance sheet. will have tremendous amounts of liquidity. warehouseiquidity be as the fed eventually switches to tightening policy in the first half? >> i like your idea of the putting green. used to go, where are we and where is the putting green? we are not even on the golf course not. >> it's completely uncharted. is what you just highlighted the only solution here that the fed has to hold all of its paper to maturity? >> i think the fed should

actually contemplate selling assets at some point. the fed seems to have ruled that out at this stage in terms of its extra energy. if you are not going to sell, you have to warehouse and you have to pay interest. -- banks are a politically charged issue. imagine what's going to happen if the fed keeps two $.5 trillion of excess reserves and is paying the banks for percent -- four percent. is losing money, so it's not paying anything to the treasury. imagine that political faux pas. it's not just monetary economics. it's political economics. i would like you to tie in all of this would put -- all of this with what you see in the stock market. the s&p is 12 points way from its record close. what can the fed do or say that

would change your outlook on equity? >> i think very little at this stage. the equity markets supported by the level of profits -- a level of profit growth has to be relatively slow because the economy is pretty much maxed out. macroeconomic profit margins aren't very wide levels. profits can only grow with normal gdp, around five percent over the next year. equity is overvalued. from --writing with us >> who should by the clippers? tweet us. we want to know. we will take a very quick break and we are back with mr. john ryding. ♪

>> good morning am everyone. it is fed day. our guest host, john ryding. signs of real improvement in the stock formation. a jobs report on friday. this is a debate about the fed behind the story -- head of the story. the job market is getting better. >> absolutely the job market is getting better. the most telling indicator for april was the for the drop in claims whichobless suggests that fewer companies

are laying off workers. there is plenty of job openings out there in terms of the numbers we see from the labor department. the missing piece has been getting existing workers into the jobs -- the labor market is not matching as well the unemployed to the jobs available. the idea of that long-term unemployed buying us the regular unemployed. there's is a number -- the structural unemployment won't improve. is it a matter of time to get there? >> time helps. unfortunately, it's too long for the long-term unemployed. we need nonmonetary government economic policies. work retraining policies, tax incentives -- >> policies like germany. why can't we be more like germany? dividedse we have a government in washington that is completely gridlocked on the

subject of economic policy. so we get absolutely nothing out of washington leading the fed to carry the bomb. impetus on one particular level of policy and it's already so pushed to the extreme, potentially bad things are going to happen down the road. he will have unintended consequences. maybe another financial crisis you're notnt. helping the long-term unemployed. >> you worked for years at bear economics. now rdq do you still have the worry of future inflation? inflation could be a problem in the future? >> i do. right now, the liquidity the fed idle on banks balance sheet. we start to reconnect the banks willingness to lend with the amount of reserve they have

available, the money supply could literally explode and the fed could do little about it. we saw that in the 1970's. we have sort of forgotten about the potential for that to happen. i think that risk is there. >> we're thrilled to have you here on fed day. even more thrilled after what happened in liverpool. john ryding with us from rdq economics. what happens to bitcoin? > ♪

>> good morning, everyone. a difficult yesterday afternoon for twitter. ceo will be on market makers 11:00 a.m. difficult questions of a difficult earnings report. how far down as the stock? 11%. i'm tom keene. an adam scarlet fu johnson.

>> amc, the country's second-largest movie chain reports increases of five percent in the first court. even as ticket prices raised two percent. this is your first quarter. congratulations. how is going public changing the way you manage your 13 years? >> not in any significant manner. the fact is, we managed leaders for the benefits of our guests. there is no significant changes in the way we have managed this. another big piece of news this week, you decided to pay your first quarterly dividend. what gave you the confidence to pay money out in an environment where people are going to netflix and amazon? >> our business was very healthy. tremendous a generator of cash flow. we are quite confident as we go forward that the numbers -- people still come to the movies. we're doing a good movie and we had many of them the first

quarter and you match that up with a great ruby going experience as we are doing in a lot of these remodels that we're putting in place now. the business generates a tremendous amount of cash flow and allows us to return some of that back to the shareholders in the form of a dividend and allows us to need to invest in that moving going experience. the results of the first quarter speak for themselves. earnings were up 24%. we think that a sustainable. of things,der scheme captain america doing better than good. i think of the review of star wars and all that. what kind of movie works best in 2019?ter in 2014 or what kind of movie do you want from hollywood? >> we want them all. i love captain america on a personal basis. i am a superhero guy. friday,ted about it,

spiderman is opening up. business, whatur really works well is not just one kind of movie. it's offerings that it cut -- that cut across all segments of the audience. andeed the family movies some of the god is for real. >> are you paying a dividend because of frozen? >> it's his favorite movie. >> is at the let it go dividend? >> no. you can't quite tied up like that. we paid the dividend because the business generates the cash flow and there is that expectation of a capital return among the investor base. it's not related to anyone movie. dividend policy is set based on

the underlying health of the business. none of the performance of any one piece of content. us.hings for joining >> betty liu is back in new york. you are in l.a. are you are moderating movie capital panels. you spoke with jeffrey, who was chief of dreamworks animation. >> one of the legends in hollywood. a true movie mogul. has interesting -- jerry the optimistic business and. we are watching our movies on smaller and smaller screens. what jeff said, look, i'm going to put both feet in my mouth and say that in 10 years, we are all going to be paying movies by the inch. people are going to start paying for movies by how big of a screen as they actually watch it on. if it's on your smart phone, it

will be four dollars or something like that. if you're watching on a 40 inch television screen, it can be $10. if you're watching a movie theater, that's a whole different business model. we are going to become much more screen dependent. other thing he told you come in the future, movies will be in the theater for 17 days and then go digital. you don't have to wait for months. >> it is going to be staggered. you have the movies in the theaters and then they go into netflixs and then on to . it will be a much smaller window. if that is going to change hollywood. if that is going to change amc. >> not good for mc. >> look for an implosion in the building industry. he talked about how different price points for different movies like seven dollars per lincoln versus $25 for the next iron man sequel.

>> it's clear that nobody quite knows how technology is going to transform the ways consumers get their content. i was at the cable show and one of the big complaints among the programmers is that technology is not caught up with what consumers want. yourifficult still to get content from tv and moved onto your ipad and smart phone. bloomberg has one of the best ways to do it. shameless plug. who do you have on your show today? cox communications, the third largest cable operator will be on as well. they're investing heavy and broadband. -- heavy in broadband. >> looking forward to it. coming up on "surveillance" we will continue this conversation on media. who is the biggest loser in the

high court standoff? we are on bloomberg television and streaming on bloomberg radio come on your tablet, on your smart phone and apple tv. we are everywhere you go. ♪

>> this is "bloomberg surveillance." let's get you some company news now. starting with general electric. making an offer for what would be its biggest acquisition ever. ge is willing to pay $17 billion for the energy business. the french company makes power

equipment and high-speed trains. there may be a counterbid from siemens as a result there is a big computer error at the intercontinentalexchange group. two options -- to u.s. options exchanges. they took place at the exchanges. if they have already announced plans to upgrade the technology. demand for the new mercedes model has profit soaring. risk order earnings rose 95%. rollout capthe new margins lower than analysts had anticipated. >> did you get the mercedes with the red brake pads? >> it's kind of aggressive. >> it something you would do >>. in my youth. when i used to wear loud suits and drive loud cars. one hundred dollars in bitcoin will be distributed to every undergraduate youth at m.i.t.

this fall. at the giant social experiment spearheaded by two i'm i.t. -- to m.i.t. students. thanks for joining us. what is your best case scenario here? >> thanks for having us. best case narrow, we want to see building on some things and the role of the coin in the world. m.i.t. is a constant bit of innovation. we are excited to see what will come out of this. >> what are you going to do with your bitcoin? for'm not getting bitcoin the six pyramid. we are only targeting undergrads at this point. >> is the goal to make people aware or to see what they do with that? to convert the faithful? >> bitcoin isn't really too much

of a hot topic at m.i.t.. it's a bit of a shame. m.i.t. should be focusing on this. it should be the center of the bitcoin world. if that is what we are hoping to a couple share. >> are these guys girl magnets? because they are in the bitcoin club? how is that working out, guys? fiancée -- >> all over the bitcoin. >> no complaints. >> what kind of demand is there from the student body at m.i.t. for bitcoin? is it a topic of conversation that you're trying to get started or were there percolation's already? >> there was already some conversation going on on campus but we got the m.i.t. bitcoin club kicked off in january. we really want to make it more

of a focus and get people more educated. there is a mix of a few people who really understand bitcoin and a lot people who are just approaching it for the first time and are very curious. they start at the point of, what is bitcoin? we want to educate people. >> education is one thing. but practicality is not appear china has made it illegal to transact bitcoin, as has russia. beyond education, how do you get people to trust this thing in the way that sovereign countries have not? a leading engineering institution, m.i.t. is the king of practicality. that is part of the spearman. seeing what real-world applications we can build that people will end up trusting. >> such as? >> there is a number of things we can do that would be very important. for example, you could build a decentralized kick starter for crowd funding. you could build a micro-payment solution which would be approved

for news media in terms of online newspapers. having a solution for their content. >> i'm curious, have any professors at m.i.t. torn you to shreds on this? do they look at the theory of bitcoin and forget about the efficiency and say the bitcoin club has got it wrong? say that most professors are pretty excited ingut this project and see where it goes. there are plenty professors who have questions about it. most of the questions tend to come from the economic side. people understand the code and technical aspect of bitcoin and a pretty enthusiastic about it. >> jeremy and dan at m.i.t. fascinating conversation. good luck with that. >> thank you so much.

>> they are so cute. >> those guys are scary. futures show little change ahead of the gdp announcement. we will keep an eye on that. >> good morning, everyone. i'm tom keene to me, scarlet fu and adam johnson. a busy morning. we look at something that is just grabbing the media. >> the supreme court justices attention as well. no matter who prevails in the the stakes are particularly high for local television. these businesses face an uncertain future as viewers increasingly turn to premium cable content. is the us ofsident -- you're not a fan

aereo. you see it as theft of content. is that what it represents that's bad for tv? >> you have a system in place where we deliver free tv and it's a system that has worked for many years. works for us and our cable partners and the broadcast networks. i could say, we see this as very simple theft. i'm from kentucky. this no different than sunday stealing my porch swing and selling it for a profit at a flea market. >> is this kentucky versus the --tagon is in new york versus the fancy guys in new york? ofthey invest millions dollars each day integrate local content. great news content. great public service. then aereo taking that and grading a content business. >> the retransmission fees are a big deal.

they're relatively new. they only began getting paid out about 10 years ago. how dependent are you on these retransmission fees? >> to a second revenue stream. paid -- they're taking it from comcast or time warner or somebody else. it's a value exchange that works. >> it only popped up 10 years ago and was not necessary until then. >> it existed well before that. there was trading of content or trading up services that we did. then we started to converted to cash. there has been pretty dramatic growth in the past 10 years. doing said we have been this for years and it has worked well for your spirit would've things are changing and what has worked does not necessarily work? >> i think we are as much a part of that change is anybody else. we work with our network partners -- primarily abc and nbc and the cable operators.

create additional services for mobile. it's not like we have been sitting in not doing anything for your spirit we are delivering these services well. it's a clever attempt to package a content service as an antenna. which it is not. i can even pronounce the last word from 2000. if you were sitting with very right now, he is against you on this. what would you spell out to b arry? >> we would spell out, "theft." i wasn't at the hearing. our corporate counsel was. >> would it still beats that if he gave it away for free? >> i have not heard that proposal. >> we have seen how the viewership numbers has come

down. network broadcasts versus cable television, which is paid tv. is the system flawed? -- we're this disrupting ourselves pretty aggressively. we are greeting mobile products. i think it works pretty well. >> people should continue paying $200 per month for the cable bill? >> people get great value. localaereo wins, do my stations go away? >> no. you have rules to be changed and many more years of trying to sort this out. we don't think that's a big -- >> the gloom that radio will go away, we will see. ,> if you look at the stocks they have done well. the market does not seem to believe there is any short-term -- -- we want to bring

up our twitter question of the day. clippersd buy the la now that don sterling has been banned for life? ♪

>> good morning, everyone.

with me, scarlet fu and adam johnson. it is a morning curdled for our coverage this afternoon. today -- it is fed day. look for our coverage this afternoon. >> the biggest u.s. nuclear pepco.r agreed to by this year's biggest utility unitedtion in the states. we have now seen $1.4 trillion worth of deals announced globally so far this year. up 72% from the same time a year ago. >> yesterday, the great mergers and acquisition attorney suggested for trillion is not out of the question. orwhich would equate to exceed the 2007 record. effectively a new record. or close to it. >> what about earnings? >> we have an edge on their earnings.

comingeb m.d. will be out with earnings today. use yelp? >> i use it all the time. --giving you the edge t-mobile, linkedin and expedia. i signed up two months ago. >> you should talk to social katie. i wrote one up. may be a way to become an influencer. take a cue from steve jobs. forget the three-hour power lunch. a broad number is holding walks. president obama and his working day walking around the grounds with his chief of staff. it takes five minutes. clinched aberg

facebook deal to buy what app over a long walk around silicon valley. >> i like that. i'm a big fan of standing meetings. they are faster than seeded meetings. what is your secret? >> we have things we call a standup meeting. everybody understands that's what it is and it will be over quick. we do walk around as well. >that's through downtown cincinnati. our new consolidated group in cincinnati takes walks and goes to grater's ice cream. and skyline chili. >> i just finished a one volume of charles dickens -- used to walk 20 miles at night.

he would walk and think about it. around new york city, that is one of the great privileges. >> we should have 5:00 a.m. at meetings. >> we should walk during the show. >> the fed expected to announce its decision on interest rates and tapering. what should you be watching for in this statement? .> a walking fed meeting here ♪

>> good morning, everyone. bloomberg surveillance must watch, must listen tomorrow. the chief executive officer of global advertising. always interesting. martin sorrell on what he is seeing within business, economics, finance and investments. 7:00 a.m. tomorrow. onis just outstanding geopolitics. scarlet fu and adam johnson with us as well. good morning. >> let's get you company news. the global love affair with twitter -- membership growth in first quarter falling

11% to their lowest level since last year's ipo. ebay falling as well in premarket trading. biggest online marketplace estimated second order sales that missed analyst estimates. boasting a first quarter loss. the company paid a $3 million tax charge. boosting the amount of cash it had. resumesose, a jury deliberations today in that big patent trial involving apple and samsung. samsung became a major player in the smartphone industry by copying the iphone speakers. samsung says that is not true. that is today's company news. coast --of west >> this is an amazing story. the entire nation riveted with what we have seen with the los angeles clippers. their website when black shortly after adam silver band doll sterling from having much of

anything the day with the la clippers and the national basketball association. way from the drum of mr. sterling, the nba and the clippers must carry on. the clippers did that last night as they trumped the golden state warriors. chris paul and the other clippers simply got through the night with a victory. terrific perspective for us here at bloomberg surveillance and joins us right now. i want to talk basketball for so many of us not engaged in this. the lakers are in last place and the clippers are in first place. how surprised should i be? >> they have come out from under the lakers shadow for the last three years. >> did mr. sterling do that? >> i'm not sure he's the reason for it. there was some front office changes that happened. if we see this team go up for sale in the next few months, the clippers will command a price that a lot of people will be surprised with. >> they play at 10:30 eastern

time. what should we look for in that game after the emotion of last night? >> they're going back on the road to the warriors. you will see it carry over. get the if the emotions best of them as they move forward. >> behind the scenes, you have ba commission are making it clear how he wants this to move forward. i want to play what he said yesterday and get your take on it. >> i will urge the board of governors to exercise its -- irity to force a failed will do everything in my power to ensure that happens. >> you cover sports for bloomberg news. have you ever seen anything like this where it's so specific? >> adam silver was as forceful as you could be without going a full nuclear option, which was saying he would be forced to sell the team. that's the money question

right now. >> 75% of the board of governors, which is a representative from every team, which is 23 owners need to vote to say this guy needs to sell. >> do you know what that line up is right now? >> adam silver obviously speaks for the owners. i don't think he would've been that forceful yesterday if he wasn't very confident that he would get the 75% that he needed. storyt i love about this is not only that we have some resolution, but the tweets and opinions are flying out there. kevin ruth weeded out something that got retweeted 1427 times. the people who regulate rich white guys in basketball are wake-up or than the people who regulate rich white guys in banking. the consensus going into this was that he would maybe ban him for an indefinite amount of

time. maybe 1-2 years. an interesting point. just looking at doll sterling himself, you could say the arele who govern basketball the same who govern real estate. he has a history of discrimination. there are sexual assault charges against him. risk-based hiring discrimination lawsuits that were against him. this is a guy who had a past. the basketball realm is the one that forced him to sell his most valuable asset. >> they tolerated him for a long time. it's dangerous. >> is that enough to get me into the front row? >> i want to get your take on double sterling as an owner. owner or isands-off involved in every personal decision? >> he's not in the mark cuban realm. he is certainly a more hands-off owner. a very controversial one.

is gm for 23 years as one of those people who filed a discrimination suit. >> we talked about a-rod and the others. does mr. silvers performance yesterday change how commissioners act in other sports? >> he sent a message. we saw one of the most telling responses from kevin johnson. today, adam silver was not just delete commissioner. he with the players commissioner. it's pretty rare to see commissioner get such resounding support from players. a lot of commissioners from other leagues, beat roger caddell or others say, ok, if i acted this forceful, there will be similar support. >> as we spin this thing forward and talk about potential buyers, who are you hearing? >> david jumped forward and say you'd be willing. richest man in

l.a. is someone. he is a lakers partial owner. ellison from the warriors. you have a lot of money and buying a team is something you are interestined in -- >> can the rangers do it tonight? >> i think they can. back.ays helps to come the rangers play well at the garden. to suck up toave scarlet. that was unscripted, folks. we want to answer up with a question of the day. we asked everyone, who should buy the clippers? should form a consortium that investors -- consortium of investors. he is their biggest fan. what about plastic surgery?

investment group that bought the chargers -- the dodgers. -- have nba players >> that is a tough week right there -- tough tweet right there. >> it all happened before he even came out and admitted or denied -- which he has since done. >> biscuit to our agendas. thanks are in my agenda becaus prosecutors are considering criminal charges against credit suisse. watch the suggest 2:00 p.m. hour when there is nothing expected. it's when they act. just like the apple earnings report. >> i'm a paying attention to

gdp. the forecast is 1.2%. this is for the first quarter. a lot has to do with whether -- to do with the weather. >> a boatload of economic data. adp and women change ahead of the jobs report on friday. chicago purchasing management -- this would be market moving data. 1.2% of the bloomberg survey. we jump in the second quarter and do a lot better. i don't know where anybody is for the third quarter. >> it is hard to quantify. i was looking at the forecast yesterday for the economist track on bloomberg. all over the map. for ducks-kings. >> rangers all the way.

we have much more coming up on bloomberg television this morning. the twitter ceo will be live on "market makers." the stock is trading down 11% after membership growth slowdown. a bloomberg surveillance continues. in the loop is next. ♪

>> we are live.

i am betty liu. nancy, the creator of... to a, where she is looking for the next day and. interview with charts andding the brain faster internet speed for its customers. a major investment in broadband that will hit telecom and google right where it hurts. and the clippers can't jersey and why jesse jackson says -- the lat made news on the court last night. maybe the warriors on game five of the playoff series just a few hours. bid for what would be the greatest acquisition ever. ge is offering $17