china will stumble. at macy's, they parade to new retail glory. good morning, everyone. this is bloomberg "surveillance ." live from new york. i am tom keene. fu, adame, scarlet johnson. we can do an entire hour on the new york rangers. scarlett and i are exhausted. we sit up, you did not. at 8:40 went to bed five. >> were they leading? >> yeah. awesome game. i have to get into some tickets. call my buddy, get into some tickets. love it. here is what we had overnight, for those not watching hockey. some reasonably good data. u.k. unemployment fell to a the-year low, 6.8%, for

first quarter. bank of england says the economy is strengthening and it is going to keep rates low for a long time. >> this is governor carney speaking right now. >> you can go to bloomberg.com and see the headlines. german inflation moving up. suggesting there is growth in germany. the bank of china is seeking $16 billion in a preferred stock offering. that is being marketed to mainland investors. economic data in the 7:00, we have mortgage applications will epi, that is the so what. i, that is the so what. we are going to be joined by formally the man who ran satz. fu has one. the use to make a john deere zamboni. >> dirty eight horsepower. it is surprisingly strong.

-- 38 horsepower. it is surprisingly strong. seaworld. >> seaworld is controversial, right? >> what is that movie they came out with, scarlet? ?blackfish" a couple of items -- president obama will be speaking at 3:30 talkingappan zee bridge about infrastructure. >> the tappan zee bridge, for our global audience, is north of new york city, spanning the hudson river. a checker cab down to the tappan zee bridge when the transmission went out years ago. ,> kids are being excused early at 11:00 a.m. >> because of the traffic.

also, mark zuckerberg turns 30 years old today. the eighth orat, ninth richest man in the country or the universe. happy birthday, mark zuckerberg. >> very good. data check, equities bonds -- equities, bonds, currencies, commodities. this is a big deal -- in the last hour, yields have come in. the 10-year, 2.58%. lower, note prices higher in the last 60 minutes. i don't have a reason why. euro-dollar, 1.3719. we are back up to over 80, which 10,000, on the dx. -- here is thew

inflation-adjusted stock market. the dow -- where were you here? this is the agony. this is the fear of 2009 and the , 2006. 2005-ish did you have the guts to buy here? i didn't. >> no. >> let's get to the front page. here is our front page. >> we start in europe. a judges ruling -- a judge -- meansmeets headache headache and expenses for google. flooding these companies with takedown requests. the ruling says that citizens have the right to be forgotten online. the cookies are no longer -- >> "the new york times" made a deal about it.

is morehington post" reticent, say we really do not know what it means. >> if you had the opportunity to ask if your information be removed, would you take it? >> yes. why wouldn't you want to remove the bad stuff, right? and the flashbulbs were going nuts. >> my good friend nouriel roubini -- what did he do? question mark for a lot of these companies who have built businesses handling a lot of data. >> what is tmz going to do? they depend on that stuff. >> it is well said, the difference between the eu and america. story,second front-page reagan leaders and the white house reversing course on tight mortgage rules.

fannie mae and freddie mac should make more credit available to those who want to own a home. >> what about professor robert shiller out of yale, nobel laureate, who says if you adjust your cost and inflation you only .8 are sentnly make -- .8%. >> perhaps taken away from their this reverses course and changes the role. it emphasizes the presence that they will have. >> it is why senator bob corker of tennessee says even though we want to get rid of them, you cannot. we actually need them. >> it is almost like a big anotheranother day,

high for record stocks. blue chips are getting it done these days, and it comes as people are not even questioning what the fed is doing. >> there is no buzz on this. aen pushing five years, into bold market. our guest host for the hour, is , chief global strategist at leland company. is this the most unloved bull market since time began? >> it has been unloved for a couple of years and it is getting into the hatred camp right now. i think people are seeing the market that keeps edging higher. one of the highs on the street with 2100 spx price target for year end, the evaluations have been stretched, so people do not like this idea. >> are we climbing walls of worry, or is something else going on?

>> most bull markets climb some walls of worry, there's always something to worry about. it could be prudent -- it could be putin, china. some table has been set by broader sort of glacial title shifts, if you will, that are conspiring. corporations are navigating the environment as well as they can, and they have had a pretty good history of success. >> you justice him and i want to take outs with, and that is that valuations are stretched. depending on your number for earnings, we are sometime -- somewhere around 16 point five times earnings. 16 range is 14 to 17, so why .5 times stretched? >> if you look at a 40 year average, we are right on top of that number. the difference is you look at it

from where we are in the context of the recovery, from the recession, for a mid to later -- e bull market >> the price you are paying for the growth you are getting. >> we are three times what we 2 2000 seven. >> so paying 16.5 times is very have six from when you percent growth. 2007,k in 2005, 2006, global gdp away from america was escalating. now it is decelerating. in some countries stabilizing. margins have not been accelerating as well. >> that is where you get to the other leg of the stool. moreu reaffirm your up than 10% call this morning? >> i am still on 2100. for the year end, you step out a

few weeks, and everyone was very nervous about this unloved rally, that kind of stuff. performanceay get a changing move. >> we will come back with the strategist here to talk about the market that just will not go down. breaking news right now with scarlet fu. sears holdings is looking at a 51% stake in sears canada, including the possible sale of sears holdings were sears interest as a sale. hiring a bank to look at potential options, which may be a sale. facing some challenges in the last year. >> i am looking at bloomberg data right now. sears lost money in 20 11, 2012, 2013, expected to lose in 2014,

a specter to lose in 2015. >> that turnaround is a long way off. to 40.as been 120 down without exaggeration, it is a train wreck. >> the stock is slightly higher this morning at 46.50, after yesterday closing at 43.23. let's get to the rest of company news headlines. an unexpected forecast from sony. the japanese electronics company warns that it will lose money this year. that will be its sixth annual loss in seven years. sony trying to overcome slumping demand for tvs and personal computers. buy 50has agreed to 737's. chinese regulators said in february they will lift the rules to encourage budget airlines. value pharmaceuticals plans to

make another run at botox maker allergan. allergan rejected an offer saying it undervalued the company so it plans to improve its offer later this month. the soap opera continues. that is this morning's company news. astrazeneca, pfizer, and the rest of them, they are just an immovable force. we have money, what do you do? >> it is not whether it is going to happen, it is at what price. >> like the rangers winning, right? >> they have done incredibly well, so it is just a matter of what the score would be. >> never in doubt with the rangers, right? >> i was a little bit worried. >> macy's reporting first-quarter earnings in less than two hours. why wait until then when you can get a preview with us? bloomberg back, surveillance, streaming on your tablet, your phone, and bloomberg.com. ♪

>> good morning, everyone. bloomberg "surveillance." this is an important interview coming up on bloomberg "surveillance." we will listen to ryan chilcote, sergei lav roth for 10 years has been the -- surrogate lavro v has been the foreign minister of russia. look for that on bloomberg "surveillance." i am tom keene. with me, scarlet fu and adam johnson. we have never done a bloomberg "surveillance" on this amount of a lack of sleep. scarlett and i up late celebrating the new york rangers. >> it will be 20 years since they won their last stanley cup.

>> i actually remember art messier walking around with the stanley cup, anyone wants a drink, i am buying. >> to get to retailers because macy's will be recording earnings,- reporting not just macy's but across the board for retailers, the poor weather was an issue. we heard how a lot of retailers could not get rid of their inventory at the end of the year , the fiscal year, so that carried over into the first quarter as well. and you have the week mall traffic that hurts all of these big department stores. bloomberg industries points out that inventory outpaced sales growth, leading to a buildup of inventory. >> that will hurt margins, right? mr. lundgren when was flat on his back, this was a train wreck. remember marshall fields?

an absolute train wreck, and this guy is arguably ceo of the decade in american enterprise. he turned -- and this thing was a dog -- and terry lundgren turn this thing around. >> the analyst report was all talking about the best in class management. the best in class management of macy's and how they really spearheaded the whole store within a store, the localized selling, localize merchandise at macy's. >> we go zuckerberg, bill gates, jeff and melt -- jeff i mmelt -- and they are great, but here they are hitting the ball out of the park. a 1800 jobs this year, saving million dollars annually. >> i want to know if they will keep the wooden escalators. remember your childhood? >> have you been to an old macy's anytime? they really changed everything.

it is now the store within a store concept. >> if you look at the earnings growth -- forget 2011, because 2010 was a disaster zone. the 2012, 20% growth. 2013, 70% growth. that is incredible in retail. >> wheaton company, weikel purves, i know you cannot -- guys you ares, the relying on to drive earnings and cash flow to investment to help move things along. ,> well, it is interesting almost all of the 500 have reported now. >> what have you learned? , the% of those companies 6.9%.e bead, that is one of the highest average beats over the last two years. with all the winter weather and

all that kind of stuff, sales growth was a 53% beat on sales as well. you see similar trends in the nasdaq as well as the russell 2000. the companies have been doing good work here. >> i like the way you put that. small caps beat. what accounts for the difference? it i a big theme for the markets -- let's face it, a lot of the work done is below the line. >> what is really important in my analysis is someone shopped t macy's -- >> what is it, "the post"? party-z wanted to stay in

-- stay and party with rihanna. of adam johnson. how can you know this stuff? >> truth be told, it is only because scarlet >> it is the most credible story so far. >> now we know why beyoncé was just standing there silently. her sister is basically defending her. he is married now. >> that is why you have been depressed. >> a lot more coming up on bloomberg "surveillance." food authorhour, michael pollan. what was the last meal you

cooked? shift boy rd, -- chef boyardee, heating that up, that does not count. ♪

>> good morning, everyone. bloomberg "surveillance" with tom keene, scarlet fu, and adam johnson. here is adam. >> rebels in used in yo ukraine ambushed russian troops, killing at least seven. meanwhile, in nebraska, the tea party scored a victory in the republican senate by mary.

college president then sass was backed by ted cruz and sarah palin. he won easily. and in the nhl, the new york rangers aching history last night, beating the pittsburgh penguins 2-1. the first time they have ever won a series after trailing three games to one. next up for the rangers, the winner of the boston-montréal series. are you going to be watching that when? >> yes, i think nbc sports is doing a phenomenal job. teams are playing. >> for all of you worldwide, scarlett, what is the specific exciting thing about the rangers? >> it has been 20 years since they won bank the stanley cup. it was an incredible flurry. night, tomotion last

see him speak last night, with his mother diane, he could barely get through the -- his mother dying, he could barely get through the interview. >> i don't know what the equivalent is in london with premier soccer, but with boston-new york, montréal-new york -- >> it is huge. in california they have their own series. >> we are hockey crazy this morning on "surveillance." coming up, pimco looks for growth in china. ♪

>> good morning, everyone. good morning, worldwide. this is bloomberg "surveillance ." russian foreign minister si

ergei lavrov will sit down with ryan chilcote. front and center will be a discussion on ukraine. this is bloomberg "surveillance ." with me is scarlet fu and adam johnson. what i am looking at his yields this morning. the 10-year yield below 2.6, 2.579. we are back to low yields before the janet yellen testimony of about a week ago. let's go to gainers and losers in a record equity market with scarlet fu. >> one loser here is elizabeth arden. they make britney spears brand perfumes. now they are hiring goldman sachs to explore options. >> you know what that means? show me a bit. >> don't you have a relative who

is in the business? >> yes, my sister is a perfumer. >> in any case, elizabeth arden is looking for a potential buyer. that.ill go with maybe sears can find a potential buyer as well. >> let's go to an important conversation on china. their newut with secular forecast and suggests subpar growth for china. that is critical for the u.s. economy to send a chartered bank, his deep roots in asia. taliban her s let me start with you, david, do you believe in sub 7% china

growth? >> eventually. i don't think it is something we will see this year, next year, even perhaps in 2016. but by 2020 we will be on slower growth past demographics, and among the other things we will be playing a big role in. the main difference to focus on is to think through what is the big difference between rowing at 6%, seven percent for today's china, what is the dollar delta that you get for that compared to six. >> you spend a lot of time working in foreign exchange. the litmus paper of the market, the big shock for all of us has been the reminding movements. about theina saying manipulation of their currency? around andgone talked to a lot of clients, and some of the feedback has been .hy is china devaluing its way

it is not devaluing and it is not a hard landing. we disagree with it. two-way creating a market, creating a more normal currency. the slowdown is orchestrated, managed. it is not by accident. the dollar china to be in a range. it is a more normal currency than it was before. >> getting people to the countryside into the city and stoking a whole new middle class ? >> that is a critical part of the equation. we were looking recently into what the productivity story is, and the big challenges from demographics will be removing three quarters of today's population of australia from china's workforce, and another quarter from 2025 to 2030.

i think it is going to be -- it has already happened. >> within this conversation, the gloom crew is really focusing on china exporting deflation, the idea of their set of policies housing less inflation and even price decline in parts of the world. >> i like what you said about policy. my morning must read has to do with china's reforming policy overall. they write "china has a glut --s gradual graduate glut. that is something that china's leaders cannot afford to contemplate. callum henderson, is that something china's leaders are obsessed with priced into markets? -- itst you have economic

is interesting to me that china has been criticized for the short-term pain that reform is causing, and yet at the same , it ishe gloom crew going through a short-term slowdown. is michael purves, -- do you need a a better chinese economy? can you continue to drive multinationals higher in our equities markets? >> if you are on yahoo!, yes, or alibaba. the global story of the u.s. equity story, most countries today are exporting more to each other than they ever have been, and we are all more interconnected. but if you look at the chinese indices, they have been been up for a while now.

how much more will they be beaten up if the china slowdown keeps coming? i don't think so. there's been some fantastic performers in the chinese market last year. you have to go beneath the surface. >> david, a lot of talk about the potential alibaba ipo, the largest one we have seen in a long time. operates in china, is registered in the cayman islands, and will list in the u.s.. how concerned should we as international investors be about financial disclosures in china? thisu also have to look at from the point of view of what is available in terms of what you can buy, in terms of what quality companies are out there, and transparency links also in with this bogeyman of shadow banking, that it is a disaster waiting to happen in china, when in fact it is completely on leveraged and unlinked and includes bank company loans.

,hat is a very big difference with, for example, the u.s. it is the transparency issue that leaves people worried. >> i want you to both die then china, tothe prism of --gapore, the philippines what is the link between the chinese companies -- the chinese -- >> now the new trade corridors between asia and africa, the middle east, and asia, you have most exports in asia going to china. those trade patterns have completely changed the markets and how the markets interact. >> callum henderson, thank you so much. mann, thankavid you so much.

>> what you talk about china, you talk about how much the consumer there is spending -- not just women, but men as well. the sequel should be centered on men. that is our single best chart next on bloomberg "surveillance ." ♪

>> good morning, everyone. bloomberg "surveillance." tom with scarlet fu and adam johnson. >> in turkey, rescue workers trying to save hundreds of coal miners trapped underground by a fire. it may turn out to be the country's worst mining disaster ever. we wish everybody well. almost 52,000 institutions want bernie madoffthe incident. a record-breaking night in christie's. $745 million worth of contemporary art. that went to two

andsts -- barnett newman francis bacon. i don't know why those two guys are so hot, but amazing. set aporary art sales record. >> you wonder about, all the e-mails that we get. we thank you for watching and listening nationwide. we get a lot of pushback on saides about 700 -- you 700 million dollars? >> $745 million sold in one night. the average american is not going to christie's to buy art. it includes all the people working part-time who want to work full-time. the headline numbers are misleading. >> retailed yesterday was saudi, nice revision, but there is a lot going on. shows how the new

age guy is going shopping. >> like lundquist. >> new age guys like tom. >> men make up 40% of the total luxury market around the world. women are still the majority, but the men share has climbed 40% in 2013.995 to this is called the rise of the yummy -- remember the young urban males? it just shows how the pie is split up, how it is sliced. >> you are looking at me out of the side of your eyes. adam johnson, can we look anymore boring? >> dark suits? -- isave the bowtie and

like, to me, a separate market. >> it is a little bit. >> you guys are kind of old-school still. if you're splurging on crazy socks, that is a new trend for men. miller is the -- >> the new paradigm? yummy, the young urban male. i will tell you this -- in houston a month ago, there are no yummys. guys walking around in jeans and cowboy shirts. that is the uniform. this is a new york thing. down 14th street. >> mr. purves, what is the last thing you bought for your wardrobe? >> that was probably in 1994. i am not part of the secular trend.

seven percent growth for menswear the last few years versus four percent for women. this is not just happening in new york, it is happening globally -- paris, beijing. men. of >> you want to do some photos? -- ave three >> all rangers? >> no, not all rangers today. astronauts from japan, russia, and the u.s. landing safely in the soyuz spacecraft. the am not sure this is not coach of the penguins. >> number 2 -- london mayor and shaggy hair icon helps shear a sheep.

>> i have never done this. >> i have not birthed sheep, i have birthed calves. >> really? >> yeah. >> who is the dose that he's -- quis guy? the most interesting bloomberg "surveillance" guy, adam johnson. obama awarding army theeant kyle j white with metal of the white house. that's with the medal. >> and many before him, for all those who did not win the award but served. >> those who come back injured

and do not come back at all. >> just fabulous, absolutely fabulous. >> those are your top photos. coming up in the next hour, america gets back into the kitchen, which brings us to our twitter question of the day -- what was the last meal you cooked? what was the last meal you cooked, tom? >> september, a year and a half ago. >> what did you make? >> stick of butter, bottle of wine, add meat. ♪

>> this is bloomberg "surveillance." scarlet fu with tom keene and adam johnson. let's get you news from the files of "bloomberg west. test version of google glasses going on sale for $1500. google is hoping buyers will provide feedback on both the hardware and software. the victory for -- a state supreme court judge has voided -- the states were

is investigating whether air b&b allows users to run a legal hotels. of germany are starting to deliver more software online. a person familiar with the matter says job cuts will not number in the high thousands. that is today's company news from the files of "bloomberg west." >> everything is priced to perfection. stocks at all-time highs, bond yields are near record lows. >> they are outrageous in zürich. 40 bucks more in zürich than in new york. figure that out. to michaeluestion purves, our guest for the hour you wedon -- what are telling clients to buy echo >> you have seen a lot of asset classes here that have been bid up, bonds and equities.

you have to put these all into relative value terms. the one key question to answer your question is what is more overvalued perhaps, one way to look at it. treasuries or the s&p 500. as we talked about earlier in the show, the fundamentals are you lookming, and as at price to growth in the s&p 500 and that kind of stuff. on the other hand, if you look at the 10 year treasury, yield now, if nominal gdp forecasts are to be true and you step back and think about gdp in 2016-2017, and the potential for higher inflation metrics later this year, i think the s&p -- >> so the question is, do you 500? where do&p

you drill down? >> the framework, when you think about the s&p that keeps edging higher -- we know it is a rich market. you have to keep looking for value stocks. that has been a key feature of the rally this year, if you want to call it a rally. the mood has been about value. i think the trade stays on, but i am also looking opportunistically for some of -e higher data -- higher beta -not those necessarily, but some of the ones that have been beaten up, they may regain footing here. don't count them out. >> we have different audiences, and one of them is not sophisticated. they are in the market, they have a curiosity about michael purves' world, but they are like, i missed the boat on this. get is your mechanism to into this enthusiasm if you are

not already in a? dollar-cost average? >> it depends on the time frame, but if they are in for five, 10, 15 years -- >> and you agree that the majority of the american public is not in this bull market? >> without question. , you aretail side starting to see that change. i think it is starting to come in. as you are coming in as a retail investor, you need to think about going through the top 15 names in the s&p 500, find the ones trading at 14 or lower, and china, just for the cash balances if they are very substantial, solid fundamental -- >> talking about apple. >> apple is one of the most boring tech stocks in the world right now, but for that audience, that is probably a sensible long-term investment. good way toght be a describe it if you look at the vicks. it is fairly low.

.- the vix it is fairly low. >> if you look across, the volatility of the euro or the yen or oil or even gold, all of these things are at lifetime or within millimeters -- multi-decade lows. >> in other words, low volatility. >> very low volatility. all of these volatilities are converging. the scary thing, when you had something remotely similar to this was the 2006-2007 timeframe. at least for the near term, this , 13elling me that the vix to 18, that is a higher number than it looks like in the context of broader capital markets. >> but we have less correlation than we did before. doesn't matter? between stocks and bonds, stock center and sees.

currencies.d >> i definitely think it does matter because it speaks to the broader issue about what is really moving all these capital markets. it is very much still a heavy central banking -- >> that is the whole story and that is what is different this time, right? banks are throwing money at it pushing this up. >> and being more interlocked, whether they want to be or not with other central banks. >> you have to come back soon. michael purves with our call for 2100 on the s&p. thank you so much. the forex report -- russian ruble continues, putin strong. 37.4, humming in with a vengeance. dollar-yen, a stronger yen right

now. hour, ag up in the next sitdown with russian of foreign affairs minister surrogate lavrov. -- surrogate lavrov -- sergei lavrov. ♪

>> this is "bloomberg

surveillance." >> and unloved bull market is going higher, is this a bull market -- and the russian foreign minister new russian union. and michael: says get out of restaurants, and get back into polinitchen -- michael says get out of the restaurants and get back into the kitchen. i am tom keene and joining me is scarlet and eric and chris. erik johnson is with us as well. we are sleep deprived after the rangers last night. the chairman of the national retail popular -- national coalition is with us. and we go to ryan chilcote with the russian foreign minister, and they'll be speaking on any number of items including the ukraine and crimea and the referendum that we saw over the weekend.

we go over to the 25th of the month, the vote that you will see out of kiev on the ukraine. with much to talk about with ryan chilcote. >> the talks that are taking place today in kiev, do you see any chance of those talks being successful? information about the details of those talks. i understand that this is the result of the pressure which has been exerted on the ukrainian in accordance osc with the geneva statement of the 17th of april which called for an all-inclusive national dialogue with the produce a patient of all political groups, in the ukraine and frankly i don't know what exactly is the composition of the roundtable which has been not very loudly announced, as i understand in kiev.

with this dialog to -- for this dialogue to succeed, it is absolutely necessary to ensure equal participation before the and alsof the ukraine, the regions of the west, where we also have some issues related to self-determination of minorities, they want cultural and the hungarian prime this is viktor orban -- stepping in the direction of national dialogue. >> my understanding is that the ukrainian central government is happy to have anyone at the talks who does not have blood on their hands. is this right? tot is not an except the way -- acceptable way to handle this? >> who will handle the business of the blood on their hands?

this is a very historical statement. this is like the relation to the syrian crisis. the west said that anyone could participate as part of the government in the negotiations, and the negotiations of those with blood on their hands. and there are a lot of people with blood on their hands -- they will be called -- current coalition members. involved been directly in the events in february, and the secretary of the security council in the ukraine was seen , taking itsniper gun from his car. and so on and so forth. for is either reconsideration or the winner .etermines whom to talk to >> clearly you're not satisfied with the way the diplomatic process is going. what would it take for russia,

give me what needs to be in a deal that russia would find acceptable? the separation of power -- >> the basic thing is the geneva statement of the 17th of april, which starts with no use of force, no violence, and no violence means that not just the east and the south -- try to preserve in geneva -- this is about the east and the south, which is a distortion. that is not the end of this antiterrorist operation. you cannot invite people to sit down and talk as you continue to shell them with artillery, with mortars, with fighter planes and we certainly want to understand ,ow it happened that the u.n. u.n.-painted ella copters were used against protesters in the

south. the united nations expressed their concern. if you want to promote national dialogue, you don't do it while you're fighting demonstrators who do not agree with your government. and the elected governors -- >> that should be the result of this national dialogue. >> you are not laying out those conditions now? >> that has been the goal. this will be the subject of the national dialogue. >> can the ukraine be part of the european union, is that acceptable? >> it is up to the ukrainians to decide. they have to decide what the consequences -- what will be the consequences for the obligations under the economic arrangements inside. it was the ukraine that insisted on signing the treaty on free -- this matter was initiated and obviously russia

is reluctant because there is now a free-trade area -- and we have to harmonize the obligations under the economic arrangement, the economic arrangements which they wanted to join. >> can the ukraine be part of nato? , notis would really be only an issue of the ukrainian people, this would be an issue of russia. we entered into agreements that were made with nato members, that nato would originally not be expanded, and then nato was expanded, contrary to the commitments that there would be no substantial forces on the territory, no military infrastructure would be brought to the russian borders. all of this was violated, one way or the other. -- and drawing the

ukraine into nato would be very negative for the entire system of european security and we would be completely against it. i have nothing to hide. view,s the issue -- in my it all started in the 1990's, when nato decided that in spite of all the pronouncements that the cold war is over and there theyd be no winners, looked upon themselves as a winner. in practical terms, the current crisis -- the seeds for the current crisis were planted in 2008, in april, and it started in bucharest, when nato leaders stated in a regulation that georgia and the ukraine would be months later, mr. -- decided he had the license to

invade his own people, and to resolve the conflict by force. much affectedly by this premise. by the way, like right now in the ukraine, suck -- really -- began destroying monuments to the heroes of world war ii. the threat is very much visible in the context of invitation to nato, in the context of the clinical system of those who believe that the ukraine must join nato. >> you have a problem with what you see as the west meddling in what you see as your backyard. >> not at all. this is not our backyard and we cannot consider -- former soviet space. these are not russian cities. russian language, the russian theon -- it was born on

territory of the ukraine, as it stands now and we do not consider ourselves foreigners. the backyardre expression was joined -- was coined is different from north america, there are differences in culture and we have been one nation for more than 300 years. that, when they brought their religion there thousands of years ago, -- >> you raised a really good point. impossible to use this historical and psychological family feeling. >> president clinton mentioned -- president putin mentioned not long ago the new russia, referring to part of the ukraine. if what was part of the russian empire -- does that give russia a right to lay claim to it?

-- a said, we are russia term from medieval ages. >> the empire for conquering -- >> it is like, what and you , you say,hen you know where are you from and they say south europe, do you feel some in thisstic intention answer? it is a historical term. >> the president also said that god only knows why the soviet authorities transferred parts of the eastern ukraine, that were russia to the ukraine. -- ounds like >> this is the effect. >> a lot of people when they heard this, they know a lot about what they said with giving

crimea to the ukraine in 1964. is this a historical rationalization for this part of the country? >> this is a statement of fact. indeed, the soviet authorities were covering up the administrative boundaries inside the soviet union, the way that they did. sometimes the secretary-general was from the ukraine, and they shufflingling -- because nobody in the worst of nightmares could imagine that the soviet state would cease to exist. but eventually when the soviet union collapsed, there was no intention to try to get back what was given to the ukraine, under the soviet leadership. a few years ago we finalized the border treaty with the ukraine, and we started the demarcation

of the land border with the ukraine without even thinking of challenging that outcome. it is only the events of the last few months, it is only the effect of the current regime, and the support of the united states that the european union came to power, relying on extremists -- who tried to use ande to impose their rules anti-russian policies, canceling the rights of the ethnic russians in the ukraine, and the rise of the russian speakers, and that caused the people of crimea to revolt against this. >> good morning, everyone. "bloomberg surveillance" from new york city and you are listening to ryan chilcote in moscow. sergei lavrov, for 10 years the russian ambassador to the united nations, 10 years driving the foreign message for vladimir

putin and the russian people. i thought that this was absolutely fascinating, adam johnson and scarlet fu with me as well. the key headline across bloomberg was the idea that the ukraine is not a foreign country to russia. he really reaffirmed that the mandate that we saw -- >> he said kiev was the mother city of russia, that is where the russian language essentially began. >> speaking back to their religion and culture and we will continue to monitor those headlines and get them to you. there it is. god knows why the russians and soviets cap boundaries like they did. >> that is what was interesting, how he mentioned what the soviet union was. every other word was soviet. >> we are them, they are us, we are all together. he said that all regions of the ukraine must be involved and there must be no violence.

>> there is a mixup that you expect. >> he is walking a line, the escalating but making it clear that the ukraine and russia are more than -- >> the pushback against the obama administration with the statement on nato, he clearly reaffirmed that they want nothing to do with nato. said, i categorically reject the idea of the ukraine going to nato, -- >> of ukraine joining nato would be an issue for russia. >> and this is the tapestry of this past weekend, the referendum in 2 of the eastern provinces, questions about whether this was rigged or not, in donetsk. you did this better than me, the russian that you took in school. two, luhansk and donetsk, want to be separate republics, they don't want to be with russia.

>> we will continue those headlines. dow futures -- and the 10 year yield is the headline, coming in 2.58%. lower yields with the report yesterday morning. more economic data today. >> and the russian ruble is weakening a little bit following those comments from sergei lavrov. we will continue to monitor this on "surveillance." coming up, activewear is the new everyday wear. we will tell you more coming up. ♪

>> good morning, everyone. i ammberg surveillance," tom keene with scarlet fu and adam johnson. with us is the chairman of the national retail federation, former ceo and the chairman of all of the efforts, at hamilton college in upstate new york. the coldest ice rink in north america. adam johnson has the headlines this morning. >> i would imagine that you actually played.

in turkey, rescue workers are trying to free hundreds of coal underground by a fire. more than 200 of the miners have been killed. the foreign minister says this is the worst mining disaster ever. a victory in the public in the easily overass won other candidates. the new york rangers making history as they defeat the 2-1, this isnguins the first time that they had won a series after trailing three games to nothing. >> the best team won and the emotion -- >> this was such a nailbiter and it made me nervous. >> this is just incredible. a fabulous game and coverage and it is just great for hockey. >> they took it all the way, 20 years since their last stanley cup. >> the next one is the -- the

next one is going to the winner of the bruins -- >> the ducks play away, just a great chance -- >> those other top headlines. >> let's move onto something else, something we have been talking about or a while. the change in retail, trackbacks are the new genes. line forr is the new designers, a new line of fitness where is coming out and and taylor and urban outfitters have the new activewear brands. our next guest is the chairman of the national retail federation and former saks ceo. they were this activewear to run their errands. shoes andmean less fewer dresses? is this a new category or are they just replacing another category? revolution as people are dressing more informally, many of them are

dressing down and you see a more , andl environment designers are taking advantage of this, this has been an area that the nikes of the world and then -- uncontrolled and now we have a big splash and now you see designer brands taking a big advantage of it. i think there is an accessory trend towards shoes and handbags that continues to be strong. there is a weakness in some of the more formal apparel. >> and you see that, this is up nine percent versus two percent in the overall apparel market. but all of these new retailers are trying to expand overseas. americanimply the practice of wearing workout clothing as your streetwear? does this translate other cultures? >> i think it does translate, you are seeing this in europe as well. >> people don't wear yoga pants walking around the city? >> you are seeing some of that.

>> coming out of saks fifth avenue, which has the best online experience with fancy clothes, you are with colgate? with who else? >> aaron mark -- thehat is the trend around marginal -- what is the marginal trend around what she is talking about, to get the right merchandising rights, to copy someone like little women -- lulemon? >> there is a switch towards the omni-channel. anytime,nt the product anywhere that they want to get it. online and at the stores. people are looking for new innovations and in the end, what scarlet is talking about is innovation products, that is what people want. website --ise dbf this bad for saks fifth avenue?

>> they both interact. when louis vuitton opened a their sales at saks fifth avenue went up. >> the minimum pricing there is about $2000. >> $15,000. what you do find is that the internet is much better for shopping, people are researching 82% and 82 -- and around 82% of e-commerce is affected by shopping and looking around and if you are not differentiating the service experience or how people can look for your product, i think that you will lose. >> in this conversation was interesting is that they invented the word exclusive. i talk about that but he invented the word exclusive in a department store. how can they be exclusive in workout clothing? >> this is high and low as well and the fabric is something that is very technologically in vance, it encompasses all of this new material we have not

had before. what kind of margins are there itactivewear, this is making on the low and just the same way that someone on the high-end is making it. >> you have people on the low-end making shoes and handbags, about the design elements and fabrication and styling, the branding. all of this goes into the making of the product so you can have a tracksuit that is very high-end because of the designer who is making it. >> i have a question -- >> we want to bring you headlines from the interview that ryan chilcote is having with russia's foreign minister, sergei lavrov. the ukraine is as close as you can get, when ukrainians are killing ukrainians, that is as close as you can get to civil war. this interview is available on bloomberg.com. >> look at those headlines on the bloomberg terminal. this is an x jordan are interview going on right now.

really pulled into the news of the day. ten-year yields at 2.58%. >> when we come back, we will llin, --michael co pollan, on why people need to get back into the kitchen. coming up.

>> first, bloomberg. >> this is "bloomberg surveillance." with tomlet fu, here keene and adam johnson. we start a court ruling in europe that may affect google and other internet companies. to bens have a right

forgotten online, that means that the big search engine companies could be swamped with requests to delete personal information. shareholders at vodafone may get left out in the cold by at&t. they had been banking on a takeover bid from the u.s. phone company, but this is likely off of the table because of the bid to buy directv. and a bit on the biggest rental community in manhattan. fortis investment -- fortress investment is vying to buy peter cooper village. the owners defaulted on the 3 billion-dollar mortgage three years ago. this is today's company news. >> this is front and center for global wall street. they are too big to jail. how big will the fines before credit suisse and bnp paribas. there are suggestions of a $3.5 .illion fine

carry geithner is knee deep in this news and is talking about a push back involving eric holder. this about washington or new york prosecutors? >> this is about new york prosecutors. we have a starting point that could be a pretty big fine for bnp paribas. there are a lot of people negotiating this. we have the manhattan das office, and we have the new york state banking regulators at the table. >> i don't care about the headlines, there is always a backstory to these negotiations. look back to what i find to be pretty interesting as an anecdote in these cases. two years ago, standard chartered was in similar hot water. >> peter sampson and crew. >> they had paid $340 million to settle this, but in the middle of the process the department of financial services and the u.s. banking regulators threatened to

pull them and that, to me shows that they can really affect the pressure on us to get the settlement to where they want to get, maybe move it forward quicker. but pulling the license of a bank in new york state would be a pretty serious thing that would hurt business. >> the critical distinction is criminal charges. typically this is negotiated. as it was pointed out to us -- there is a whole cascade if a bank is guilty of criminal charges. what has changed with a bank in that? >> i don't think anything has changed with the bag, what changed is what prosecutors want to show, that they can go after a bank and what eric holder said is that the banks are not too big to jail. cracking down hard and showing that they can do this. to your point we don't know what the effects will be. we talked about this before and this is an unknown entity. we don't know what the

collateral damage is. what the market is telling me is that the best case will be -- with bnp paribas. >> companies doing business with credit suisse will not be able to do business with credit suisse anymore if they plead guilty. >> this could be a big change. the difference between the bnp paribas discussion and the credit suisse discussion, it will not necessarily be that kind of number four credit suisse. >> we are looking at the distinction of the case, credit -- it hasallegedly helped allegedly -- it has allegedly helped u.s. citizens avoid paying taxes. sanctionss is a issue, we have many banks who settled over the years over violating sanctions protocol in the u.s. and they settled. what we are interested in finding out is what is different about this case, the bnp paribas case, where they will not settle, and paid his big fine of

$3.5 billion. it will essentially be a lot more serious than previous cases. including standard chartered, which settled. credit suisse will also likely have a guilty plea. they use the department of justice to negotiate with credit suisse with a similar model, these cases are running parallel, and what we look at is a guilty plea and a fine. avenueran sachs fifth and now -- what would be your corporate responsibility as a ceo, doing business with a bank that is found guilty of these charges? >> that is really of concern and it would affect our behavior. we have a lot of alternatives and we have a lot of companies we work with, and if you have a situation like this, i think that we would be majorly concerned. >> did that happen this week? >> we hope it will be happening

in the next couple of weeks. carriey geithner -- geiger, thank you for joining us. >> we have reports on wholesale inflation in futures opening lower -- remember that stocks closed yesterday on a record high. >> good morning everyone, "bloomberg surveillance." i am tom keene with scarlet fu and adam johnson. sergei b is talking to bloomberg news and london, they're moving the ruble. this is out on itunes and android. a much stronger ruble with the lavrov. from stronger comments on civil war, look for those comments on bloomberg television platforms. let's move on to an incredibly important book, arguably the most used book in the keane

household, the omnivore's delimna on cooking. get back into the kitchen, a kitchen will use fire, water, air and earth to create great food that will assist in losing weight. you can see me as a sign for that. thyme has turnips and like michael pollan. did you ever think that "omnivo have themna" would impact that it had? >> i did not, i thought this would be a very small book. >> i read this to my children, the one time of year that i cook i will say, brussels sprouts, let's read about them. i want to start with butter. how do i use butter in the kitchen? >> butter was demonized for a long time, it began in the late

70's and early 80's. we thought that the saturated fats with a great dietary evil. the great dietary evil. invest oil -- we thought this was a good idea, but this had transfatty, which were lethal. people are gradually moving back to butter. >> do you have margarine in your house? >> we have i can't believe it's not butter. >> a little butter goes a long way because it is natural if you use them in moderation. anything that people have been eating for thousands of years, i feel pretty confident about. and i tend to want to see processed foods, things like i can't believe it's not butter around for a long time before i start eating it. we have gotten it so wrong so many times when we try to simulate food. >> are we doing it right when we

take the rawest form of the vegetable and making this into juices and eating this instead of processed food? ask that is much better, that is real food and you're just putting it in a blender and that is terrific. simpler is better. eateven word mantra is to food, not too much and mostly plants. >> talking to my staff this morning and all the mistakes i have made, some of this is too much kitchen stuff. this is a basic pot and you turn on the fire. >> this is really amazing how simple that your cooking is. we have been cooking with fire for about 2 million years and you can do the most amazing things with nothing more than a flame. our tendency is always to complicate things. >> this is all about empowerment. why give power to corporations like mcdonald's? take it back yourself. >> the only way you will have control over your diet is if your food -- you are cooking

your food and you have control over it. when we begin outsourcing are cooking to large corporations, that is when we get into trouble. you can track the decline into home cooking with a rise in obesity. corporations cook differently than humans. they use way too much salt and fat and sugar because they use expensive ingredients they have to make attractive. they also process the fiber out of foods, which is very important and they take the water out of food, which makes every bite contain more calories. learn howorporations to really cook healthy food, we are much better off doing it ourselves. >> so are they trying to engineer earnings growth, population growth of one percent but you have to grow five or six percent? >> this is the dilemma of the food industry, you have to grow faster than the number of stomachs, which is rising one percent per year.

you add more value and make food more convenient, so the interest of these companies is different. author of pollan, "the omnivore's dilemma." what was the last mill that you cook? we want to hear from you. cooked?that you we want to hear from you. ♪

>> good morning, everyone.

"bloomberg surveillance." i am tom keene and with me, scarlet fu and adam johnson. futures are down -11. here are the top headlines. >> in turkey, rescuers are 100ng to rescue more than coal miners. more than 200 have been killed. this may cannot be the worst mining disaster ever in the country. 62,000 people and institutions want to share the money made with the bernie made off scheme, back the money that they lost in the bernie made off -- madoff scheme. christies, they sold $700,000 worth of contemporary art, the most ever. much of this winter barnett and francis bacon. those are the top headlines. >> i was looking at this. the rangers game,

between periods. from the surveillance box at madison square garden. >> $1 million, we are not doing that. >> vermont is the first state in the nation to demand the labeling of gmo's. michael pollan with us. of's are within 70% processed food. have we passed the point of no return? >> these are kind of in trouble as a product. these are crops engineered to withstand herbicide. they are failing in the fields. out howbes have figured to resist against this? >> you put enough of the same herbicide down, evolution dictates you will select for resistance. the product is in trouble and the public is running away from these products every time that

they get a chance. gmo-free label, along gluten, is the most popular and there is more support than there was years ago. i think that these companies find themselves in a very awkward spot. >> are gmo's in cheerios? >> they just announced that there wouldn't be. there are no gmo oats in the market. what they had to do is remove cornstarch. >> within your life's work and the profound influence that you have had, you have changed our dialogue. on page 336 of "cooked," mystereiies remain. this goes back through the centuries. what is the biggest mystery? >> we don't know why a carrot is healthy. we think we have food because of

the nutrients that they maintain, so we took out the big -- beta-carotene, putting this in a supplement to help resist cancer but it did not do anything. when you gave it to them separately, they got sicker. and so, we have to have a lot of respect for the complexity of food. >> michael pollan, author of "cooked." thank you for joining us. >> next, the russian foreign take on the ukraine, this is coming up. ♪

>> good morning, everyone. " i amberg surveillance, tom keene, and with me scarlet fu and adam johnson. coming up tomorrow, "surveillance" is looking at this, the author of "freakano mics," stephen dubner joins us, with "think like a freak." steve levin will join us, and i have to talk to him about the -- levitt, and i will have to talk to him about the passing of becker. we did the interview and levitt

and i had no idea what the book would come. we thought, this is a new book. >> it has taken on a new life of its own. this is "bloomberg surveillance" with a very excited tom keene and adam johnson. our guest is the former ceo of saks fifth avenue, currently on the board of jcpenney. let's get some updates from the files of bloomberg west. computerrsion of the is going on sale -- this was mostly by invitation only. google hopes that buyers will provide feedback for the hardware and software. in -- airbnb is in a investigators are trying to determine if they are running a legal hotels. and planning its first job cuts

in 18 years, sap is moving its operations online. someone says that the jobs could -- someone involved says the job cuts will not be in the high thousands. >> we continue our discussion on an industry of profound top to bottom change, retail and shopping and clothes, are being transformed by the internet. we are shopping differently today than we did a few years ago. his does not describe facilities as the leader of the retail coalition -- on the boards of colgate and jcpenney as well. time to talk about retail. i look at transformation and i look at my family, where will we be? >> you are seeing this transformation as technology is impacting everything. the consumer will be shopping and researching online and ordering new kinds of products we have not seen before, personalized products.

>> where does this change the income statement of the income operation? a smartermean consumer and less profits? >> it does not mean less profits but could mean a smarter consumer. of thell take advantage technology and for example, macy's has done a wonderful job in the channel environment by using -- by taking the internet channel and combining it with the experience of the store channel, so that what you are seeing is an environment where technology is changing the way that consumers shop, and i think that some are doing a good job and some are not doing a good job. andhis is about aspiration, what was that movie with meryl streep? prada" was such a take on aspiration in retail. where will that be in five or 10 years? >> the culture of our country is aspiring towards the higher end

products, towards luxury. you will continue to see that going on. >> within the conversation, i cannot talk enough about the costume exhibit -- in new york. always the most fabulous part of the museum, no matter when you go. i want to talk about discounting, the promotional environment was very strong and that is what we see in the macy's results. people were saying that the consumer expects discounts all the time. is this the case outside of high sales periods, like when we don't have a holiday season? >> the environment is more promotional but what tom was talking about with the internet and technology, they have perfect information and they know what the prices are around the corner. you will continue to see this information in the environment and the brands have to plan on that. when jcpenney which everyday low prices and didn't go promotional

you saw the reaction from the consumers. we were able to be promotional and still get the margins. >> can anybody do a fair and square price like jcpenney? >> it all depends on the sector and the price points. at the very high-end you can do that, but it will be very hard on part of the market. >> seers is exploring strategic alternatives again. ng strategicexplori alternatives again. what companies are doing it right? >> jcpenney is moving away from their strategy that they were on, and macy's is doing great and nordstrom is doing great and you have all kinds of companies in the niche of specialty brands who have done this great. has a home run and you have a lot of brands and companies that are doing very well. >> let me define strategic options. saks, do you spend

$3000 -- or do you go right to spend $3000. this is extremely dangerous. i have a profound financial question. there so few size zeros and size numeral twos. -- size twos. why don't they make the sizes that we demand? >> this is such an important question. this is a technology issue as well because the data is there, we can talk about millions of the data points that will tell you what the right sizes are by the store and buy the customers. but the brands are not necessarily using this. you have a consumer, the average size of the american consumer is probably size 12 or size 14. you have a number of large consumers that are not finding these sizes either. i remember going back at one time when we did not have enough size 14's and 15's for our

customers. we turned out and bought a whole bunch of those and that was our best seller. then you run out of them and you don't know what the demand is because they are gone. for went to get something scarlet and there was nothing that fit you. >> it feels like this is intentional. >> you have data, historical data that you are building on, but the historical data may have been sold out of the size zeros of weeks.n a couple >> we can do a whole hour on zero's and twos. >> you have to listen to the consumer, absolutely. >> let's look at the agenda of the stories shaping the day. important, the ukraine is on my agenda today. ryan chilcote sat down with .ergei lavrov listen to what mr. lavrov said about the ukraine.

>> the ukrainians -- i think this is as close to a civil as you can get. >> that is the headline picked up worldwide. this is a profound interview. word, exclusive but this was the real deal about this story. >> this man was at the forefront of the negotiations of what the entire world is focused on. >> he really stressed in the ukraine -- i don't think anyone in the west is buying this. >> he says russia does not want to send troops anywhere. >> they have 20,000 on the borders. >> my agenda is twofold. is coming out, is there inflation, this is a sign of growth. how do you know about the size two's, tom keane? >> that could be a three-hour show. i will give you that on my agenda, with masons reporting earnings in five minutes.

department story is stores may show a gain of one percent versus last year. this was a tough quarter for a lot of retailers. >> you wonder how they will bounce back but i think that there is a lot of optimism. >> because of the april numbers. on our twitter question, we asked you what the final meal was that you cooked. here are the answers. course, that is always a motivation. how about this? >> grubhub. that is one of the disruptive new ways. >> how about this 1 -- very good. love it, there. chris whalen, out on twitter -- >> steve, what did you make? >> i do a lot on the grill.

i will not cook in the kitchen but i do grill. >> we will talk to you about -- >> "surveillance" continues on radio, and "in the loop" with alex steel, next. ♪ . .

>> good morning. it is wednesday, may 14. we are live from bloomberg world headquarters. ."u are "in the loop i am alix steel, in for betty liu.

here is a look's at our top headlines. russia's foreign minister -- minister sergey lavrov says there is a real civil war going on in ukraine. nook and turns of insider trading involving the federal reserve. some investorss have gotten advanced word of policy changes and traded on the information and the fed has now changed the way they release policy statements. asailer sears is up as much 5% in early trading. crossingacy's earnings right now. sales in the first quarter coming in at $6.28 million, coming in light on estimates, and earnings coming in right in $.61 per share. let's head to chief markets correspondent scarlet