shareholders for more capital. .t&t will acquire directv the pfizer and astrazeneca deal comes down to board squabbling over price. good morning, everyone. it is bloomberg "surveillance." monday, may 19. i am tom keene. joining me a scarlet fu and adam johnson. going right to the morning breeze. can there be three or four deals during the show today? >> oeste, starting with economic data. home prices fall once again. undermining growth. in thailand, ongoing protests that have shaved tdp by .6%. emerging markets still up almost three percent this year. >> even with all the buffeting. >> the war in buffeting -- warren buffeting of news. inthe highest minimum wage

the world. no economic data to speak of in the u.s.. earnings will be slim pickings. this will be after the bell. ben bernanke speaking in dallas. >> i agree. not a minor deal. >> especially since he was more positive on the economy rack in january when he left. more overt like greenspan or pullback in the reticent? >> we will find out. , the recently ousted new york times editor will address graduates at wake forrest college. >> every reason to cancel. i do not know anything about the story. every reason to cancel. >> she is looking for a job, too. self branding here.

like i am sure every agent told her to cancel. we cannot cancel the data check. really interesting over the weekend. futures negative eight. euro-dollar does nothing. hydrocarbons a bit elevated. the vix, good market. the yen valleys. make it to 100 on yen. stronger japanese yen. there is the indian rupee up. indonesian moment there. going to the indonesian rupee. weakness. india nine percent inflation. there is the enthusiasm. >> a long track record of weakness. a huge deal. speaking today. going on.at is

>> looking forward to that conversation. where to begin. >> starting with the big european banks in the spotlight. starting with credit suisse. may plead guilty as early as today in the tax evasion case. two would also have to pay $.5 billion to the justice department and regulators according to the people familiar with the matter. afford twouisse can point $5 billion. a criminal indictment different. there is the fallout. ableay not as a company be to do business with the bank that has been convicted. lex we will talk to any number of guests on this. you have to be incorrect to understand the importance of the institutions. there is no u.s. equivalent. foundation credit suisse and ubs has. >> the ceo made big victim in

all of this. -- may be victim and all of this. we will bring you headlines. deutsche bank raising capital by selling 11 billion dollars in shares. the second-biggest capital raise. part of that will be sold to cutters royal family. they will then raise another 8.6 billion through a right offer. moving on. going to craig moffett in the moment. i think it is critical to show the division over the right steel. >> bank of america merrill lynch cutting deutsche bank to underperform as a result of this. rejecting what pfizer calls the final offer. they increase the bid to 55 towns per share. 117 billion in cash and stock. >> astrazeneca has put a number on it, 58 pounds. $.55.s effectively

trading at a discount. >> i love the reporting. it is going to harm science. u.k. will harm jobs in the . pfizer would not give a guarantee that it will not cut jobs. that is the issue. >> a busy morning. >> this is official. up 1-0 in thee series. living onto at&t. directv.ed to by they gave the satellite tv provider in the nfl sunday ticket package to go along with the phone, wireless and high-speed internet services. this comes as time warner cable and comcast are sorting out their merger as well. front page as well. >> william: joins us. bloomberg television contributor.

merger and acquisitions. any number of deals. honor to have howard linden. stocky -- know him from twist. now.throw things at you >> it is too small of a team. no one can throw. opinion oflove your when you see a merger frenzy. what does the signal? >> it signals cheap money. it signals some kind of old market still. the rejection signals some kind of silliness by people that they are believing their own stuff. >> let me suggest the news item of the day. do you expect mr. dugan will go out the board? >> there has to be some fallout from an indictment. >> absolutely. talking about the importance of the institutions, someone will have to fall on the sword come a

which would be amazing if that is all it is. arthur andersen was nearly criminally indicted. drexel was criminally indicted and had to go out of business. if they can still stay in business and be criminally indicted, that would be a new one. >> right now within the schedule, craig moffett joins us on a different non--banking transaction. at&t and directv. money is cheap. something we predicted. how large will the pushback the from washington? >> the point you just made, that this was predicted 10 years ago i think is really the important one. that is the question of why now? this feels like a deal that 10 years ago might have made sense. today is a real head scratcher. is aven that directv doomed market, what does at&t

get out of this purchase beyond steady cash flow? >> that is the right question. i think the answer is steady cash flow. about nineividend is point $5 billion. generating 11 billion and free cash flow. that does not leave much cushion to sustain the dividend. it has to be looking at buying a cash accretive business that can make the dividend more comfortable. 10 years int about the making is the same point that can be said about the verizon wireless joint venture deal. i think that really was the kicking off of the latest wave of merger and acquisition activity across the board, especially in telecom and media markets and i think it is a carry on from that. lex i think that is right. you have seen a ton of dealmaking. i think in some ways the real watershed event was comcast and time warner cable. not so much that these companies

are trying to reach bond strategically to time -- comcast and time warner cable but trying to respond by looking at the landscape in washington and understand whether the odds of getting a deal done are better before the deal is finished with the review or while the deal is still in front of the fcc. >> howard linden with us. with all the investments come a cutting-edge of venture capital. are these dinosaurs? >> i call with the united states of at&t. acquisition, cash flow but also that neutrality at the corporate level. at&t ready to complete with -- compete with netflix. also looking to control the fast lane and now they have directv. is all about.t washington is so behind on this. this is frightening. that is what no one is talking

about. everyone is talking about the price. what about net neutrality? control? a $5 billion investment with the fast lane. >> within the heated debate, the single thing to me is the combination. i feel like i am in the 1930's. >> here is what i want you to try to help me understand. you said at&t gets cash flow. why don't you like this deal? >> if you want to to watch any channel on your phone on it is not obvious why you would have to buy directv in order to negotiate agreements in order to do that. that is really the challenge, what is the strategic imperative the on the deal beyond the cash flow? i get the argument that i would like to offer customers a bundle of wireless and directv at a tocount, but you do not need buy a company in order to give people a discount.

>> maybe they are buying it because they can't, because washington is completely absent from the deals. you do not hear a peep on what what is going on lately. >> i am not sure about that. the doj came out quite strongly against the sprint and t-mobile deal that had not been announced yet. i think there will be a rigorous antitrust review of this deal because 85% of the comp -- country still going from for competitors to three. it is not a national consolidation. not a scary as it would have been if they had merged with fish for example but i still think it will get up the rogue review. >> we have seen combinations. what does it mean for cbs and disney and bloomberg? >> on paper, gives them a lot more to go shading leverage.

now you will have to giants. warner cable,me assuming the deal gets approved in washington. it's the deal gets approved in washington, you are talking about 29 million subscribers. this one talking about 26. aose companies would have different level of scale than anyone else. more than half of the pay-tv market. they will have a lot of leverage when they sit down and negotiate with content. like thank you. this is what you will see all through the morning on the merger frenzy. we will touch on india as well. incredibly busy day. >> just getting started. when we come back, go digital or go home. serious disruptions. this is bloomberg "surveillance." ♪

>> good morning, everyone. bloomberg "surveillance." everyone involved in the merger and tracks action. that is the feeling as you look across manhattan and on to new jersey as well. like three major deals. like some of them are not working out. at&t, directv. >> it is all about scale. >> i think it is about cheap money. we welcome you. i am tom keene. >> the gray lady, the new york times. pushing out asow editor but the backdrop to the drama is new york times struggling to adapt. they have started to make money

on the digital initiative, but they still face weaknesses from digital upstarts like a speed which got a hold of an internal report. some of the highlights, takeaways -- the headline is journalism advantage is drinking -- shrinking. >> the new york times said in the journalism is shrinking. >> this was put together by the son of the publisher. they say there is too much of a focus on the front page of the paper. reporters get paid and compensated according to how often they are cited. there is this still the wall a twin the editorial side and business side when they should be collaborating more. >> a naked memo. howard linden, there it is. the dirty laundry of any given institution. it is a big disruption, isn't it? >> it has to be so confusing.

you go from blogs to 140 characters. now it has to go back to somewhere in the middle. 140 characters getting boring. you have guys leaving to do the charts and data. >> the key sentence was writing that what they are missing -- admitting that it takes a lot fewer people to make news nowadays. >> we embed from users taste on their flow. everything is page 10. page one is easy. everyone talks about page one. what is on page 10 becoming page one is behind the scenes and curated rooms. that is how you make money. everyone can do page one. >> what happened to his talented staff? that is the issue. they are losing people left and

right to digital upstarts. >> they are losing people. it is still a magnet, people want to work there because it is an incredible brand. if you are a reporter you can get almost -- access almost anywhere. the product i think remains internal. i think the product has never been better. clearly not about the performance of the work in making the product better. that incredible to me someone would leak that 97 page. leaking going on all over the place, which is pretty amazing. >> isn't the new york times effectively morphing itself through the upshot where it is very spicy short writing with a chart that says focus on this now. >> i said something about this last night, convict the trader. ray story but leading with a heavily -- silly headline. falling craig to the

headlines that. to read up for you want the story. that is not what i want. i do not need the headline. i just need the story because i trusted. this report led by the younger sulzberger. he can write. he has been a writer for the new york times. i told his father once, this kid can write. like the kid actually has talent. >> this does not go away with just " the new york times." credit suisse getting ready to plead guilty. that leads us to the twitter question of the day i'm a what is the tipping point for ousting a ceo? brady dougan perhaps the next to leave. what is the tipping point? tweet

us. ♪

>> good morning, everyone. michael o'leary, last. should just move over to the united states. it :00 this morning. look for that. it is bloomberg "surveillance." to the must-read. adam johnson back to princeton. paul krugman. let me share with you what he wrote today. but owns always involvement stakes on both sides is far worse worker responsible so were the money -- so were the people

let when the money. -- the people that lend the money. here is this. there is a fair populist argument here. ok, let's punish the bankers, but in fairness to the bankers, we are talking about potentially credit suisse being indicted criminally. .pmorgan jamie dimon has paid 20 billion and fees. does he have it right, krugman? >> personally i do think he has it right. bankers have not been held accountable for their actions leading up to the crisis. trader. a credit suisse >> are finds an equivalent to? >> no, why would they be an equivalent? and jpmorgan got a big raise. >> do you assume he exits with a big fancy package? >> why not?

>> i am asking. agree, buto everybody likes a witchhunt. does not matter what continent, which country. if you're going to have a witchhunt, do it quicker. >> how do you best -- respond to someone like sallie krawcheck enough is enough? say,re is what i have to and i like her a lot but there has been no accountability for the action. witchhunt is not the right word. accountability is a very good word. there has not been a accountability for the behavior that occurred. these institutions paid the fines. the stock goes up. there has not been accountability for the people who made the decision. >> who is next? >> that is it.

no firms left either. like everyone who left the get paid off as well. >> of course. >> this is part of the initiation. you want me to leave come at the new pay me. it continues. left.jill abramson >> twitter question of the day, what is the tipping point for ousting a leader? tweet us @bsurveillance. ♪

>> good morning, everyone. washington with mergers and acquisitions on their mind. we will go to peter cook in the next hour to talk about at&t and

directv. the land of easy money. in scarlet fu and adam johnson. an eventful weekend for too big to fail thinking events that will lead to cost reduction. deutsche bank saves think -- saves face with a two-part offering. william cowan bloomberg chief contributor. he has seen all of this before. the song, put on a happy face. howard linden with us as well. we have seen this many times before. they are coming out and massaging the real story. they need more capital. they have to raise it. it is a cash stall. i am a shareholder and say no? >> you get deluded. >> at the same time, the stock price probably goes down.

returning price on equity. bank ofou do that? >> america merrill lynch says they are not going to do that in the know this morning. >> now that they have to raise more capital and prove they have more capital, they need to rethink where they will allocate resources. like every other bank on the street, it seems like pulling back from fixed income and commodities is the way to go. anyone left in a better position as a result of this? lex if i am goldman sachs come i am pretty happy these days. barclays pulling back. they are basically saying we do not want to be an investment bank anymore. a slowdown in fixed income currencies commodities. is that slow down a one off or do you look at it as a structural slowdown? never one off.re

they seem like they are at the time, but these things add and flow all the time. that is why goldman is in the businesses and the way, so that one can complement the other. you see a slowdown. part of which is structurally driven because the capital requirements and not allowed to be in certain business lines anymore but they will figure it out. we will not be talking about this in a few years. >> who will step in and make markets? sachs, i amoldman loving this. j.p. morgan chase and morgan stanley to a lesser degree. bank of america to a lesser degree. the american banks rarely better positioned. >> is this. call to senator shelby being out on the white house friday like moment?ember that we have the courage to do this.

we clear the markets. >> i am not sure. the truth is, by relating the banks, by pouring the capital we'vehe banks quickly benefited our banks. no question getting around that. whether that benefits the american people or something else. >> why our regulator still convinced raising capital is the best way to shield the bank from financial stocks? , awhen asset values decrease two percent decrease in the asset value wiped out equity count. by having more equity, it will take a bigger decrease in the asset value to wipe it out. i personally do not think it matters much. it should be more about accountability for your actions. make sure you have skin in the game for what you do. >> apple could buy deutsche

bank. bank's.al deutsche you do not like the banks. why is that? what is great about america is weakened vote with our pocketbooks. it has been a bull market. i do not object on the banks, think about the banks. a lot of money to make without thinking about the banks. look what silicon valley has done in new york in brooklyn during the too big to fail discussion. they have disrupted it. all of the stuff that happened in 2008 while we were saving the banks, they were getting disrupted underneath. this will all be fixed. it goes back to the directv comment from the analyst. 10 years. we are still paying the price for goldman sachs going public and all the banks going public. these rules that we trust congress and government to

maine, we pay the price with the dilution 15 years later. >> a goes back to the original observation, we have to go back to the partnership approach. >> publicly traded banks. the case, what can the banks learn from silicon valley? what are best practices? >> they are learning nothing. they will get fat. they will not take the same risk because they have great jobs. -- goodthe grid traders traders -- not hiring kids on the street anymore because they have to come from harvard and whatever, what is happening is much as a hated wall street because they do not want to do with regulation. they will come from wall street, whether it is rowboat advisers or robin hood you have that was zero commission trading, or disrupting because of

acquisition. it is coming. west is coming east. >> this is going to be a revolution. coming from many different angles. wouldould predict that, i be rich. >> so high for investment banking. upstarts in silicon valley. maybe they can disrupt the brokerage. >> it is great for andreessen and fred wilson and even guys like me, t. rowe price, blackrock -- they cannot get into these deals unless square paying $5 billion were a startup in a private weight. what happens is they cannot get into the deals until it is way too late. they will get buried in the deal because they are overpaying for the start up. credit suisse has 45,000. jpmorgan 150,000. credit suisse smaller than the

bank inks but we still treat them like a big ink. >> they are a big bank. there are not that many big banks. national champions in switzerland. u.s. wey now in the have national champions. they will be protected. >> would you be long the banks? >> they do not exist for the benefit of shareholders. they exist for those that work there. >> a critical question that even the supporters will bring up. trying to figure out the bone i is. >> they get multiple bonuses. out withgan will walk select bonus intact. >> they call it other things. how about that? guest host for the hour. we want to get their take on our single best chart, which is next. our ceos of little bit overcommitted? we will discuss coming up next. ♪

>> good morning, everyone. an incredibly busy morning. adam johnson and scarlet fu joining me. single best ranking this

morning. >> our theme today is about ceos. it is a 24/7 job these days. executives men might as directors of other boards as well. they seem to be overcommitted. the bloomberg ranking team tallying up meetings each year. greg masi sits on seven boards. at 1060 to a tort -- one board meetings per year. does that mean he does do that but that is what he is scheduled for. 35 per year. the reason why people like serving on a board is it is a way to make a lot of money. bloomberg news found the director of the s&p 500 companies had an average of 200 $81,000, a record high. with us. linden

thise start with you, is because of the money? >> have to. i think we all suffer from distraction. world is beautiful right now with social, global, local. hard not to be perceived as an expert in so many things. i get asked all the time. saying no has become harder and harder. if you throw in cash, yes -- a lot easier. there is not enough time. big vision but as a distracted ceo with so much opportunity, it is hard to be an expert in all of this so i say yes. has to be common sense but very hard to resist the money. of guyshey just a bunch that know each other very well and invite each other back all the time? environment,cial

no doubt about it. people did not ask too many hard questions. i remember after he wrote the book about the collapse of bear stearns, i have members of the board of directors come up to me afterwards saying i wish we had known this while we were on the board. it is like going to the club. ceo, you areod good at schmoozing the board of director. >> keeping the morning going. futures down negative five. much weaker. rupee as well strengthens. joining us live, bloomberg news momentousis after a

election in india. wonderful to have you with us. the huge debris of wind away from the gandhi's and congress party, how much of -- mr.s behind mr. brody modi? >> this has been a decisive victory. most are expecting to win the expected theno one magnitude. 280 two seats, this is a landslide. a huge endorsement for the prime minister. more portly, also a decisive moment in the history of politics that has decimated the congress party and many of its stronghold. led from thehe has front with the past couple of months. division we read of in the united states is to train

columbia and howard university, here is my morning must reads. bringing it up from the him.ssor not supporting i am not an american citizen. i have to go through the rigors of standing in line at the airport. i go through all of the visa procedures having to answer immigration officer questions. this is the indian commitment to the selection. how does he sell this worldwide? support across the world. the riots fromy 2000 to have always haunted him. the fact of the matter remains that the supreme court appointed him and found no evidence of his director indirect involvement.

years of the0 chief administration. the ability to run into the government effectively has perhaps made him so successful across the country. >> adam johnson, this is the support he gives. for framing this in such a way. the transition from gandhi's massive to india. what does this mean for india's outreach in the rest of the world? >> two things. facing high-growth inflation. government. a new spectator plagued by investment scandals.

the state ofked at the president. he has pulled the economy out of its funk. that is number one. the challenge is not going to be easy. giving direction and leadership. that's i think will be the most important thing. markets havethe been watching out for. >> thank you. bloomberg television in india. thisd tons on this weekend. a profound moment. >> a real shift. the rupee continuing to strengthen. 58 point 51 from a low of 50 one back in early january. coming up, markets turned but we keep getting higher lows and presumably higher highs. where do investors see growth?

join us next. this is bloomberg "surveillance." ♪

>> this is bloomberg "surveillance." i am scarlet fu with tom keene and adam johnson.

getting you company headlines. apple and google the claire a cease-fire. dropping smartphone patents against one another. they say they will work together to reform patent law. this involved them over -- motorola mobility phone unit. user suing apple over vanishing text messages. the message system interfered with delivery of text messages one she switched to a samsung smartphone. .> it is called snapchat >> two years after facebook went public, insiders have cashed in. since the ipo they spoke insiders have sold 7.2 billion and in -- in stock. cofounder mark zuckerberg and peter teal. that is today's company news from the files of bloomberg " west. >> is he like old news at 30?

>> he just turned 30. >> i give him credit. he has been written off a few times but seems to be gathering momentum. facebook seems to be gathering momentum. i find myself using it more than i have ever used it. >> y? >> to me, it is relevant. you cannot get the guy too much grief because he has tried to retain the crown. as tom does love his throne, i love my thrown from coronado, once you have decided what thrown you want and get it, try to keep it. keep the throne. if you know what you want and then get it and try to keep it, why should we evade a person? >> he would not have it anymore i do not think if he had not traded the stock through the ipo

price. when the ipo traded down, everyone wanted his head. somehow it rebounded. a everybody gets it to just zealous. ceo of the year last year. -- to jeff bezos. some credit and victory lap to sheryl sandberg? >> cheryl lehman sandberg. >> more than one person. i think ultimately the face book business plan is in trouble because they do not share economics with users. and you do that someone else comes along and willing to share economics, that i think you will have a chance for confirmation of the business. >> what is happening in the equity markets? >> brady dougan, i can see it.

>> each week you put out a list of high value stocks. you have had incredible returns. they have averaged 20% returns. then you also wrote to followers who said in march, it changed. >> what changed is price. price volume and volume is not important as social. think the youtube generation change that. thething changed underneath surface where tech seems to be self-correcting itself. we will see whether this lays out. somethingere is bigger going on. and the stock i like, it has been a horrific three or four months. for those that have been land -- lazy, they have been pounded. now? >> i dou like

not like much. >> once a gets more complicated than that, and the price is not working, i have to sit on the sidelines. there is so much good stuff in america that you have to wait your turn sometimes. i do not think the market for me right now is that good. that market is still very good. next you understand the markets and biotech? >> it was a fair market. i try to preach to people that they do not really understand it, why are they doing it? like writing text box. they get killed.

they have to understand the catalyst behind them. that is how you make money. the smaller investors diversify. they all end up owning the same things. eventually the same door and same type of crashes happen. that is a problem as well. lex i think americans are over diversified. tom loves his job. single most important item, over diversified. >> time and money. i am not a stock ticker, that is for sure. david tempora last week, billion dollar man, he said this is a very scary time in the markets. bonds and equity markets. thank you so much.

howard linden, bill:, greatly appreciated. forex report right now. yet in stronger, won a 1.6. showing some of the tension. we continue on credit suisse. bloomberg surveillance. ♪

>> this is "bloomberg surveillance."

suisse,at credit regulators were in a panic over criminal charges, this as deutsche bank has shareholders from mark capital. a frenzy as at&t will acquire directv, and pfizer-astrazeneca deal comes down to squabbling over price. good morning, everyone. this is "bloomberg surveillance" and we are squabbling, this is may 19. i am tom keene and joining me, scarlet fu and adam johnson. we have john of financo and a bloombergn, television, intriguing editor. we are busy, busy. let's get to the morning brief. >> chinese home prices fall once again, undermining growth, and this is finally causing gdp to shrink. lawmakers reject an

increase in the minimum wage, no economic data here in the united states but we are summing to taper the earnings season. fed chair, ben bernanke is speaking in dallas, at 12:50 eastern time. new york times editor jill abramson is talking to graduates at wake forrest. >> she could have canceled. >> but she stuck it out. >> this is a chance to make her next impression. let's get you some company news headlines right now. at&t, agreeing to the biggest takeover in eight years, buying directv for $48 billion in cash and stock. this goes along with its phone and wireless and broadband services. there'll be unprecedented concessions to speed up the review by regulators.

astrazeneca rejected the final offer from pfizer, they said the $117 billion offer was too low. pfizer says it will not go directly to ask zeneca shareholders with a also offer. withtrazeneca shareholders a hostile offer. credit suisse -- the chairman says there may be an agreement in the case as early as today. according to a person familiar with the matter, credit suisse would plead guilty and pay 2.5 ilium dollars in penalties. >> -- billion dollars in penalties. -- $2.5 billion in penalties. will be share dilution, there will be less profit, and obligatory interviews painting a picture of management and control. hans nichols spoke today to mr. learn?hat did you

>> i learned that he is in control. there is a certain choreography to these interviews. jain try to say is this is the right time to get capital and he thinks the market is ripe for it, that is how he put it. >> we decided we would get one step ahead, with a capital buffer. and the innovation position. why $1cond question was billion. ofstarted with the ratio 9.5, then up to 11.8, which we think is a very healthy buffer. tom, i would suggest that they have full floors of people in the deutsche bank building behind me running analytics on how they got that number. maybe alchemy but i suspect that they ran the numbers. >> how threatened is mr. jain's

tenure? call,s is another cash does he have the support of the deutsche bank boards? >> he seems to have support and his position seems to be strong. of himselft ahead when he said the hunger march from new castle is open. this was not the case. you have massive litigation and potential problems. so nobody really blame him, some shareholders do, but there is not a great deal of blame that he did not anticipate the new regulatory environment and potential litigation. $3 billion they set aside last year, and what the other banks are doing is the decline in currencies and commodities. time to look around the corner and see all three of those events. >> i want to bring in bill cohen, i know that there are some question marks about him and how much of a good cultural fit he was at deutsche bank.

he was taking some german lessons. but how secure is the job when it comes down to it, are they looking to eventually get rid of him? >> i have not heard any of that. there is something inherently unstable at having 2 ceos. he is a well-regarded investment banker and i think that deutsche bank is that these use institution to run. i think that he is a good face of it. on the other hand if you said 13 months ago they would not need capital anymore, and now you say that we do need $8 billion in capital, that is not exactly the kind of statement that you want to make and i don't hear american ceos making those statements. i suspect that he will weather this. if they raise all this capital and soothe the shareholders and the stock goes down -- using

trouble. if the stock price goes up and this is the right moment to raise capital, people will forget this and he will be fine. >> any of the banks, deutsche bank made a statement about trying to get a return on equity versus 15%, how are any of the banks going to do that? if yous hard and harder are raising $8 billion in new capital. your capital is that much larger and i don't see how you get a return. there is a big risk-reward business. and so i think that the firms that are best positioned, like goldman sachs, which is incredibly well-positioned, will probably have the highest lead. twoeutsche bank has the geographies, what is the response of the german people and the german government to this cash call? >> the german government has not weighed in. we will see with the regulators

say in frankfurt but so far berlin has been quiet. $8 billion is a big number. just getting to what mr. cohen is saying, this is a big number but there is a giant unknown in all of this. that is why the credit suisse case is so important, nobody knows with a final bill will be for any of these banks, how many indictments or guilty pleas will be handed out and nobody knows if there is systemic risk. and that is the take on this, if there is systemic risk for having the guilty pleas by major banks, or is this just the bank trying to game the system? forans nichols, thank you joining us and congratulations on your important interview, we will see that on our platforms throughout the day. >> time for the twitter question of the day, what is the tipping point for ousting a ceo? do you want to weigh in on this?

indictments, one, and a third might be a dilutive capital raise which we are seeing in deutsche bank and it is not easy to make ceos disappear. blankfein is lloyd still around and jamie dimon is still around. >> ron johnson disappeared. -- you look at retailers and deal with investors in retail, and there has been a change at the top of the retail industry. >> there is no doubt about that. the consumer industry itself is rapidly changing, not only with the online world but new retailers arrive every day to take market share. that is one of the recent trends that a lot of people have talked about, conserving the millenial customer. when all that changes, if the ceo is not on top of his game he is expendable and they have been

after a lot of consumer businesses. -- isigners and ceos ceo?el cohen a >> a lot of designers have become ceos, merchant princes is one of the words that was used, historically. the creative aspect is very important for these businesses. that needs to be the top job. you are the expert, and not me, but ralph lauren and tommy hilfiger, there have an great designers who have also been great businessmen. hadrally -- they have strong business partners. in the case of ralph lauren. the yen and the yang between the chief merchant and the chief operator. are brothers to brooks this morning, this brand really

matters. >> you have to have some technical expertise as well, that is something we can get into with john burke, the ceo of financco. alexis has not been a dull moment for seven years. book on deutsche bank? >> i don't know yet. congratulations. >> we're still waiting for headlines across credit suisse agreeing to plead guilty, and find out what they may pay. >> and criminal charges we have not seen in 20 years. "surveillance," at consumers lost faith in target? this is "bloomberg surveillance" on bloomberg television and radio. ♪

>> this is "bloomberg surveillance," i am tom keene and mrs. john burke, the ceo of financo. how brandshion is have become more brandier. forget about the alligator shoes or that shirt, he just figured it out. abercrombie & fitch has not. what are they missing right now? >> the world has unfortunately moved away from them, five or 10 years ago that millenial

customer wanted a look, they wanted to be on trend and on fashion and they had it. media, world with social you have a plethora of ideas and options for that customer, and they are looking to change more quickly. they are looking to individualize their look, and it makes it difficult for one brand that is tied to one look to survive. >> do you spend a lot of money investing and making your brand or is this like a gorilla brand? >> with social media, it can be done very quickly. look at michael morse and where they have come from so fast, that is because in today's world the information is on your iphone and ipad. >> can this be sustainable after what we have seen from decades of ralph and others taking the good news and keeping it going? >> this is a lot about management and agility, the ability to move with trends and standing for something. today they are extremely powerful.

they have great dna and can keep it working. >> at the college outside of boston -- what is the best practice of building a brand against this? >> the best practice in today's world is you have to be true to something. you have to have a position or a dna, something that speaks to that customer. >> you have to set that and john lombardo has done that and you can wear this to the office and not get killed. who is the worst practice are and who is getting branding wrong right now? >> like you mentioned it earlier, the teen retailers have really struggled recently. that in large part is because of the competitive threat and the fact that today's young customers have really shifted away from them. they are struggling and trying to reinvent themselves. that is not easy when you have stood for something for so long, it is not easy. >> sears roebuck is in real trouble and the financials in canworld are tied right in,

sears make it? >> they have a huge footprint and a huge customer base but they have to move quickly. investing in internet and online is very important. lands end has spun off to focus on its core business but they have to make change, and reinvest in the business. >> john burke and we will talk about target as well, the week in mergers and what you need to know about at&t and directv, coming up. ♪

>> good morning, everyone. "bloomberg surveillance" and an incredibly is a morning. more on mergers, the acquisition of the day -- with me is scarlet fu and adam. our guest host is john burke, the chief investment officer of financo is with us as well. let's go to top headlines and here is adam johnson. >> in libya, gunmen storm the

country's parliament and the military police chief says he is replacing the lawmakers with a 60 member group but the parliament says it is still in operation. two people were killed and 60 underscore wounded. godzilla is crushing the competition, quite literally. the remake of the japanese monster classic to get $93 million. did you take the family in this weekend? >> we did not, it was too aggressive. we were looking for something more sensitive and we reran "rat atouille." "godzilla" was produced by warner bros. and let's talk about another one. let's talk about hockey. the chicago blackhawks won in game 1 of the west finals, game and game two, the rangers crushed the canadiens 7-2.

>> they were there for the game and they went to the funeral. >> they really came together after the funeral. >> for all of hockey, this is a great time of year. >> game 2 in canada. watch what they do and not what they say. half of target customers are nervous that their data has been compromised, but seven percent said it will actually shop there less as a result. walsch joins us now and we have john berg, ceo of financo. that target customers are still loyal really surprises me here. >> this is true. of target and seven percent is a number, this is a big number when you get into the big scheme of things but again, target fans love target because it is a great product with great prices. >> what is so -- what is such a big part about their brand right now, they had trouble positioning as amazon gained

position. >> they had such a weird partnership with one of those big designers and people up to say -- going to target to get an item, something that is very different that they can afford very >> how effective has target been about using their actual stores and warehouses and target.com? despite what is happening to them across the board, they have lost a lot of customers but they're getting back to the community, and this is almost about the hyper-localization in the market, i know we are having problems and things have happened to us but we are trying to give back, locally to grow these communities. >> john burke, ceo of financo. what does target due to preserve their brand right now? they are in this strange area where they are no longer holding up. >> have to reinvent. >> reinvent is a strong word,

that may be jcpenney that went through the full reinvention. the competition from not only amazon, but from the dollar stores, from grocery stores, in terms of their convenience aspect, the drugstores, you have to stand for something. the brand is absolutely critical to their future. >> but you are talking about price. >> prices an important component. >> what is more important, the price or the product? >> a combination of both. people go to target more than they would. people say they would regular -- rather go there then walmart, because the brand is so much stronger. i don't mind going there and saying i'm getting something really unique and pretty rather than going to walmart. >> is there an aspiration to retail in some of these categories? does anybody walk into target wanting to pay more? that you didhing years ago -- do they walk in,

aspirational into target? >> this may be different from other retailers on the lower end, but they have to reignite that excitement. >> how do they do that, john berg? >> you have to get brands that matter to your customer, not just in apparel. you have to get this across the full spectrum of products, whether this is greeting cards or the beauty category. >> how is this different from costco? you spend two thirds of your weekend there. >> it is all about value. >> aspirational products. >> great prices and you get the value. i don't think i walk into target and get the value. they have to anticipate this a little bit. >> i think it will take some time and they are trying to show the customers, the ceo has stepped down, and the cio is also down and we will reengage and get some excitement, get people into play to say that we are thinking about the customer and making sure that this is

secure. >> they have reported that they are doing something right. >> they have this "it" factor. it goes back to the imagery, the beautiful images and people say, i want to be that and i want to be there. michael moore says a great job with their pictures and also the price points are at the place where they aspirational enough that people want to get there, but also so affordable that people can as well. back to a target? >> i don't think so. no offense, but i think his days of running a major retailer are over. you just can't survive that. >> the "it" factor. >> jennifer had it at the beauty bar. this brings us to the twitter question of the day. we talked about ron johnson. what is the tipping point for ousting a ceo. tweet us, please.

>> thank you jennifer walsh, and john berg is our guest for the hour. coming up, astrazeneca rejects pfizer's final bid. stay with us on television and radio. ♪

>> first, bloomberg. >> this is "bloomberg surveillance," i am scarlet fu with tom keene and adam johnson. futures are setting a low right now and we have breaking news on the u.s. and china. peter cook has the latest details. >> what we're hearing right now

is that the justice department later this morning will announce charges against chinese individuals accused of spying on the united states, the cyber- threat we have been reporting on for some time now, concerns that the u.s. has about the chinese military and some of the actions they have been taking to spy on cyber as a weapon to spy on u.s. companies and the u.s. government. deal,ill be a very big and it will raise some real questions about the u.s.-china relationship going forward. this was signaled by the u.s. government for some time. a formal charge coming from the justice department later on today, we expect eric holder to hold a news conference and we will learn more at that time. this is a new wrinkle in the relationship between the u.s. and china. it will aggravate that relationship to be sure. lou is visiting

is visiting china and the news of a u.s. general and chinese general arguing about military. give us the umbrella of u.s.-chinese relations if we see these charges against individuals later on today? >> one of the first things i talked -- thought of was if this came up in the conversation that china, wead over in can say this with certainty. the u.s.-chinese strategic dialogue is going to take place either on the summer and so there is clearly an effort to maintain the u.s.-china conversation but this will be a difficult challenge going forward. the united states has been very ample evidence that the chinese have used their own military to not only spy on the united states but also to obtain corporate secrets, here in the united states.

they say that this is a line that the u.s. does not cross even though they spy on other countries and that is what is going to make it a lot about today from the attorney general. ofand we have a cacophony headlines coming out about this. >> and you wonder what the rest of the world might be saying about this when the nsa, has effectively been doing some of this arguably with other countries. looking onto angela merkel and etc.. we have a lot to talk about in washington. at&t officially announced a nearly $50 billion bid for directv. competing with comcast and time warner, and the real question is, peter cook. can this deal even pass with regulators? the sense that i get is that there will be a lot of outcry from consumer groups, we have seen statements critical of this deal that we need more competition rather than mergers

but this deal will probably pass muster with regulators, perhaps with some tough conditions on here. but they don't compete all that directly. one area is pay-tv, there are about 5 million a customers versus directv and it is hard to believe that regulators will stay in the way, and at&t has launched a print of strike, withing out to regulators, conditions their place on themselves to go forward. they will abide by in neutrality rules for three years, they had no obligation to do that other than voluntarily, and they will expand broadband access to 50 million customer locations to satisfy lawmakers in rule areas, trying to expand their network, and they have -- they plan to put $9 billion in that broadcast auction next year, the minimum amount that they are willing to bid if there is enough for them to bid on. those are three things that they think will help satisfy

regulators, wondering if this is an anti-competitive deal. >> we can get away from comcast and time warner cable. -- may look more favorably on directv because there will be a bulwark against comcast. what are you hearing? >> that is safe to say and the flipside of that is that the folks at comcast, and i heard a little bit of this from lobbyists and panelists over the weekend, they are celebrating the announcement from at&t, they will get more competition but it makes their deal looked better. it makes it look like everyone is getting big, and you'll have 2 giants competing against each other. my guess is at the end of the day, the deal will go through and that will help comcast and time warner as well. >> peter cook, thank you. we appreciate you helping us understand that. >> regulators have a lot of work on their hands in the next couple of days.

and directv did not expect this whole deal to be completed for 12 months, it gives you a sense of the work ahead. >> let's give you a quick check of the data. futures are lower with the 10 year yield coming down at 2.51%. >> good morning, everyone. this is "bloomberg surveillance" on bloomberg television and radio. all of the interviews are on bloomberg digital. always, keene, as scarlet fu and adam johnson. the guest host this hour is john burke. mccracken,is jeffrey bloomberg news editor who stopped sleeping on friday at 10 p.m. at night. inhave been trying to engage the process with the chief investor of pfizer, as esther zeneca saw them try to -- astrazeneca saw them try to sweeten the offer, i think that

this may hurt science. we are down to harming science from astrazeneca. you have to be kidding me. >> the board did not just reject them out right, they said it is a little bit better of an offer. does this mean if the science is protected if the insect -- executives get more money? it is kind of an interesting weekend. >> where is the government? >> the government in the u.k. has come out, adamantly against the deal, worried about job cuts and science and here in the united states, if this deal were to go forward i think that you would have the government talking about the tax inversion issue and what kind of taxes would be produced on the u.s. treasury side. >> i wonder, jeff mccracken. when you look at this in the discussion over the jobs, is this just the u.k. does not want to give up their prized company?

>> a lot of this goes back to candy and cap very. when they were acquired a lot of guarantees were put in place and they did not stick to them at kraft. now there is concern that if they're going to get guarantees they will have to stick. we will distrust the big u.s. company if they come over to acquire and apprised institution. it is not as if astrazeneca has a great history in britain. >> am i wrong to say that this price trend is matching? >> there is always a price, absolutely. most courts have said that you can't say no to every single offer. there does come a point where you have to take the deal. >> where are we at on pfizer? has said 50ca pounds and 50 pence, and the number one ranked biotech company says it becomes a breaking deal for pfizer.

so why do this? >> pfizer has said that this is the last offer and they will not bump their bid unless they get something more from astrazeneca. if astrazeneca is willing to extend talks, then pfizer will bump their bid to meet the 50-50 ceiling. >> i will put this out on bloomberg plus. describe this as we go with mr. berg on this. this is up and then down. >> on speculation -- >> astrazeneca. we will send it out on bloomberg. >> john berg, you look at mna opportunities, what is the between this and pharmaceutical groups? >> you have different regulatory bodies you have to deal with, besides just the ftc and so forth. but i think it is the same thing that we express and consumer consolidation. the scale absolutely matters.

eliminate these costs across the board. >> do you go back to scale as part of the conversation on gdp, if there is a blanket across the any smart executive has to do this -- the montréal canadiens did synergy. >> they need some synergy. the topline growth, if this is driven by gdp means that you have to do something to increase your bottom line. >> think of the consolidation across airlines -- we have three big airlines and in cambridge we have effectively 4. >> but going back to the 1930's, jeff mccracken, do i have something wrong here? >> you can also borrow some cheap labor, and what is striking is these dynamics have been in place for three or four years and all of a sudden there was a lot going on that we did not know about. but over the last few months of damage has broken and they have been let loose on the city

billion dollar deals. >> jeff mccracken of bloomberg news. the question of the day is what is the tipping point for ousting a ceo? tweet us at bloomberg surveillance, we want to hear from you. ♪

>> another slow morning on "bloomberg surveillance," is

absolutely unreal, the news flow. i am tom keene with scarlet adam johnson and before me, -- behind me, we are trying to keep it with the news flow here on bloomberg. it will continue through the morning. >> we are not complaining at all. eddie lew is with us, the -- betty liu is with us, the "in the loop" anchor. ryanair, the biggest carrier -- demand has come back but they have seen average fares come down to .3% so far this year, how will they get those prices back up? and have you been following the "new york times," the firing or abrhams?on of jill >> they wrote that the times was not doing enough to adapt? >> from the huffington post --

he will weigh in this -- weigh in on this as jill abramson gives her commencement speech this morning. has anythingif she to say. >> you can get alan to react the headlines. betty liu, "in the loop." >> a lot going on, mundane stuff. >> this is going on in the biotech space because we have venture scientists acquiring a summit -- i'm a cynical, and all stock transaction. adventures -- ventrus will buy the shares and they are up 9.5%. >> campbell soup fell short on earnings -- let me rephrase that. the headline, $.62 was better than the estimates but the reason that the stock is down is at the lower end of the range, 53 four the end of the

year and would represent a contraction of four percent versus last year. 235.94t is trading down after signing the deal to acquire directv. you have been on the phone with bankers all weekend long, jeff mccracken. is this a good deal? >> this is a little bit lower than we heard a couple of years ago, we thought it would be close to $100 per share. it was closer to 95. thereal focus is the nfl, sunday ticket package. verizon has the rights for the mobile, the mobile rights to the sunday ticket. footballif you are a fan and i'm sure that there are a few of them, adam can understand. >> imagine watching any game that you want, and last year when the giants had five losses in a row, i want to see that.

i am in the new york market and have to watch a giants game. >> this is the opportunity to have your phone and watch your team, or if you have a fantasy football team, this is one of those things that people are talking about and this is a big deal for at&t, they can deal on the mobile app. >> jeff mccracken on what really matters with the at&t deal. next, is gary newman out at credit suisse? this is next. ♪

>> this is "bloomberg surveillance," i am scarlet fu with tom keene and adam johnson. jeff mccrackene are with this. no economic data on tap very >> stay with us the next 11 minutes, it is a frenzy of news flow, including from china. retail, -- no economic data on tap. >> stay with us the next 11 minutes, it is a frenzy of news flow and green from china. right now on retail -- jeffrey mccracken is with us. the chief executive officer of taylor -- j. crew and m.

are in play, why are they in play? >> they have been in private equity for nimble of years -- number of years. we are at a very bullish time for retail restaurants. the entire industry, capital is very expensive. there is a tremendous amount of cash on the sidelines and it is a good time to be a seller. >> are the financials there -- will they justify the mergers and acquisitions? >> you have to look at multiple factors, where is the brand today and does this have sustainability? is the cash flow solid and is it growing? absolutely, with all counts. >> is this a buyer? i'm struck by the albatrosses out there, like torturous, where people invested the money and

had not been able to get out, and retail is kind -- kind of getting blown up i amazon. >> it totally depends on the asset. absolutely. there is still plenty of room to grow, restaurants, for example, did not face at -- competition from the internet or fashion. >> amazon can deliver food -- >> but that may come. asset, for the right there is still tremendous opportunity. one nice thing about the consumer space is that there are winners and losers every day. if you can tack onto one of those winners you are in good shape. >> the m&a volume is up seven percent for the year to date, and jeff covers this for bloomberg. all of this increased activity, how much of this involves private equity on one side or the other as opposed to actual operators? >> they did buy their way up the shares and you will see a lot

more announcements in the not-too-distant future. you have had major strategic mergers and men's wearhouse and joseph a bank, tepid topline growth and future earnings and we also had a sniff the get him out of private equity, the red lobster deal, being bought by golden gate in that case. this is both. >> why does this transaction occur? is this a cash flow deal where you have real estate selling web lobster, i have never been in one of them. >> there were two smith again issues, they had the real estate and the operating company that runs the brand. they are doing a sales lease on the property to monetize that and golden gate is buying the brand and the operating company, one of the real big trends with private equity has been the rising markets, the equity markets are roaring and this is

not the right time to take things private. that is one of the pockets that is down with the big equity. and since michael dell and heinz, you have seen those big transactions. what has been the sweet spot is when you take a small asset and you take 10 or 20% of the larger company private. >> the activists wanted the company to be split up, not in the way it has been done so far. people like golden gate have made the reputation on turning around businesses and bring in new management teams and focusing on the operations and improving the operations and then moving forward. >> why is it that retail is such a big target of private equity? that people are on the private equity side? >> hold on. i have a gray hair over here. [indiscernible] >> can you explain this? >> hudson bay is an example.

if the retailer owns real estate, that is what he refers to as a cpropco. you separate the ownership of the real estate and sell this off to one of the big real estate funds, then you lease it is thed then the opco operating company, the management team. this could be hospitality, restaurants, retail, gaming. >> if you tell a college student they can go to barcelona for the weekend, that is the transaction? is that right? >> but you were saying -- >> what this really does is it unlocks the value. so many of these companies have had their own real estate for such a long time, it is significantly undervalued in today's world. and doing the sales lease can monetize that value. you are buying something for a dollar and you can sell $.50 of

this in the property, to somebody else and get some of your money back in case you bank on the wrong retailer, you bought into toys when you should not have. you take ships off of the table. >> when this is actually split, is it done? >> that is step 1. when you have real estate you are leasing it back at a real cost. when people talk about the value that they got to red lobster, you have to factor in that that company will be paying rent, whereas before they did not pay rent. that is literally step one and then you focus on the operations, and bring those back into excellence. >> a fantastic conversation with john berg and jeff mccraken. and nowwilliams at nbc the wall street journal -- with more clarity, the chinese and military officers were charged

in a 10 a.m. press conference in washington, the language is very subtle. we say military officers, the journal says army workers, or military workers. >> that is kind of one in the same. >> i would say so and i would say that this is a huge deal. i don't even know the ramifications. >> think about what we have learned in the last few weeks with russia and with this situation where the u.s. seems to be going after individuals rather than the whole country. >> on sanctions with russia, this is a nice point. but his press conference -- >> the timing is interesting with the tensions in russia and trying to figure out where china stands. >> pfizer and astrazeneca. will there be another addition to this? about been speaking market a lot, but he is the number one investor. he is really good.

he has another note out this morning and he was all over this on sunday. he says because pfizer used the word proposal rather than offer that creates some little room. he says this gives you some wiggle room. >> this is like an opco and a proco. at creditis he out suisse? we are waiting for some resolution for the tax evasion. credit suisse will plead guilty and pay back $2.5 billion in penalties. >> it reminds me of sir howard davies, just resign and move on, that is what mr. dougan needs to do. >> he's the chairman of credit suisse as well and they want some top heads to roll. it brings us to the twitter question of the day, what is the tipping point for ousting a ceo? in first is a 20% plus drop

share prices. >> that is fair. >> how about this, a loss of real confidence in the ability to perform, by this measure, most banking ceos should have been replaced. more, more, once than one year of lackluster performance, a recent memory of ron johnson. writeseff mccracken about him three times, gone. that is all i have to say, gone. >> the leading indicator. >> pack your bags. >> which ceo is in line to move his -- to lose his job next. >> don't put me in that position. you brought up campbell earlier. they have been speculated for a long time of someone who would make sense for warren buffett, this is a brand he can understand and it it's the metrics of the past. headline, at&t says that sunday ticket will be renewed in the midterms.

>> that is what everyone is looking at. >> i don't know. >> will to survive another day? gentlemen, thank you. jeff, john, thank you. >> "bloomberg surveillance" continues on the radio, "in the loop" with betty liu is next. ♪

>> good morning. it is monday, may 19. we are live. you are loop tank." i am betty liu. the deal is done. after a weekend of ironing out

details, at&t has agreed to buy out directv. -- it will go along with its phone, wireless, and broadband services. astrazeneca has rejected what pfizer calls its final takeover bid. possible hundred $17 billion offer is too low. pfizer will not go to shareholders for a hostile takeover. the u.s. is bringing cyber espionage charges against officials of another government. the justice department has filed charges against chinese military officials. they are accused of stealing military trade secrets. for more on the u.s. legal action, the first of its kind against china, we want to bring in phil mattingly.