minister malarkey. -- maliki. fire phone. uphill battle. good morning, this is "bloomberg surveillance." we are live from our world headquarters in new york city. it is thursday, 219. i am tom keene with scarlet fu and adam johnson. u.k. ant to start in the retail sales for first time in four months. we get that news effectively 24 hours after the bank of england governor says, market, you better wake up or we're going have to raise rates at some point. >> it is a swirl. his central banks world right now. chair we got more of yellen yesterday. claims.itial jobless

9:45, comfort index. 10:00, philadelphia fed business outlook as well as the economic indicators. could be up for the 14 month in a row. does that get in with attention? makefinitely, as we try to sense of what the fed is going to do in 2015 and 2016. >> i am alighting on lead indicators. >> do need another cup of coffee? blackberry at 7:00 earnings. >> this is a big deal? >> they been trying to turn the company around. it is more of a niche player. we will see how it turns out. >> on the heels of the new amazon smartphone. and kroger before the bell. after the bell, oracle and smith & wesson. >> major market movement yesterday afternoon. s&p 500, can we start talking about 2000?

euro-dollar stronger. nymex crude elevated. on to the second screen, please. the vix well under 11. does that show that complacency, the punch bowl, there is the dow, truly on the 17,000. brent crude gets my attention. 170.ing, finally through that speaks to the actions of the last summer of days. we have scoured the newspapers, the websites. here's our front page with scarlet fu. all the distress and tension in iraq is one of the things were looking up. despite that, yup markets in the u.s., europe region and asia climbing after the federal reserve says interest rates will remain low for considerable amount of time. it is remarkable how stocks continue marching higher. >> i would argue it is remarkable how chair yellen is

keeping the punch bowl in front of everybody. >> we could literally spend the entire hour on this non-loved bull market. i've never seen anything like it. here's a snapshot off the bloomberg terminal of what we witnessed yesterday. here is pre-fed boredom. here's the volatility. we get some enthusiasm. what did she say at 2:47? michael mckee. she said, the punch bowl is never-ending. it is like the game of thrones. up we go. just amazing. >> and the fed continues with the taper as well, reducing its are kisses. -- it's purchases. we will address that and a little bit. we want to get to iraq, the tension there. the u.s. is just as then -- just

distancing itself from maliki. his government is dominated by shiite muslims and u.s. is urging them to be more inclusive. >> it is a complex story. ?hat gets your attention most >> it is hard to figure out who the rebels are comprised of. we don't know the history and how much it affects other areas. >> their sunni extremist, but it is hard for us to appreciate what that means. >> we will do my morning must read later, talking about the debris of saddam hussein's sunni jihadistsg with the in some form. >> they have joined isil. >> i don't know if the word joint is the right word. >> aligned. >> they have aligned with the jihadists and it makes for

confusion although to the white house. >> bp has begun withdrawing employees out of iraq as the lessons and more people to secure them. >> 175 marines were sent in to get our people out. is that what i recall? >> i would say, embassy and support staff. >> more than a store in a moment. push on an awesome deal, meeting with a finance minister and unions. more on the ge $17 billion offer. the deadline is coming up, monday. >> do we know who has the upper hand? >> they like to use offer, but are being pressured by the french government to take a hard look at what siemens and mitsubishi have put together. >> which is $2 billion more than ge's offer, but it is complex because there are three buyers and destroying -- string

adventure. >> this will play out. jeffrey immelt has been on a road. >> within the iraq story, we have to make this clear, here's a headline from ata, iraqi forces regained full control of the oil refinery. we need to be careful with that. >> that is a concern. in close to baghdad, too. about 35 to 40 miles. >> those are the from page stories on this thursday morning. >> our guest host this morning, of globald president strategies on janet yellen and the fed and his call on a more tepid american economic experiment. also, bryan white with the chertoff group, senior official with the department of homeland security. let's begin with what we

observed yesterday. what was the key moment within the yellen is conference? 2:47 p.m. aid, the she essentially said the punch bowl is there and she sadly not going to take it out. i don't think they're going to raise interest rates at the end of 2015. the fed has been wrong every time on its growth forecast. i think the rate increases will be postponed. up on his number last evening. why are we allowing supposedly "emergency measures introduced in 2008 to go to their seventh year? i thought this was a substantial note on what arafat has gone wrong. what is the remedy right now

that you see janet yellen has to do? you have to stop quantitative easing. you have to have a symbolic increase in interest rates. federal funds goes up one quarter, one half a percent. cause bondt -- yields to rise. do it now or be prepared to take much longer medicine later. >> given the fact we have unemployment at 6.3%, we have inflation moving up close to 2.1% i'm a why is she still keeping the punch bowl here? >> she's keeping the punch bowl because she is worried about the long-term unemployed. she realizes the 6.3% and implement rate is largely because of the following participation rate. she knows there's a lot of pain and i think that is why the change comes and that is where i think the fed is wrong in terms of its benevolence to the markets. is this able market you can

believe in or house of cards developed by not just yellen but governor carney and the other central banks? >> right question. this reminds me of the first half of 2008. oil prices very high and rising. growth aspect said to be doing very well and everybody feeling complacent about the overall outlook. you see be raised -- ecb raised rates. characteristics which are similar. >> we need to bring in our twitter question of the day -- >> am not involved in this twitter question. this is brilliant. plural word is "bubbles" . a set of distortions.

>> stocks, bonds, housing, take your pick. >> brian white with us as well with the chertoff group. if we could move to iraq, you're talking with former secretary chertoff each and every day. what is their focus on what is going on in iraq? >> we are concerned about the continued instability in the region. what you essentially have is a failed state or a failing state. the future looks like one of two options. you will either be a prolonged stalemate in the region or you will see the solution of vice president biden advocated, three states emerge. >> he was there yesterday, talking about the need for an inclusive action. what is the quality of intelligence going to our cabinet officials and to the president this morning? >> we use extensive collection apparatus, however, the key point to note is when we withdrew forces out of iraq, we withdrew a lot of our intelligence on the ground.

our ability to have great insight is actually a little bit limited. what they have done lately is with the launch of a lot of the drone aircraft and increased isr , they're getting better information. >> what else do we need to do? >> i think we did a solution that is inclusive of syria. you can't talk about iraq without talking about syria. >> how to do that? that was the whole problem between the u.s. and russia, right? there was the red line and it was actually mr. putin you could argue he build out mr. obama by coming in and trying to broker something there. how do we get something going in syria? >> the options are limited, but i think we need to stabilize baghdad and in we need to determine how much of a commitment to we want to put into the region? sis, thatunnis and i is going to represent the potential threat to us at some point. what we have done over the past eight to 10 years is we have

aggressively brought the fight overseas. right now we are in retrenchment and i think that is going to further unrest. >> and we will talk more about that later in the hour. right now with our company news, here scarlet fu. >> hedge fund manager once tried to make light squared arrival to the biggest, now the company's board. he made billions in the recession by betting against the prime mortgages. one less reason to still the next microsoft and android smart phone. according to the new york attorney general, the funds will have kill switches that will let users do so when lost or stolen. appareld of american has suspended the company's founder and ceo and plans to fire him. the clothing retailer says it is a result and allegations of misconduct.

they've been losing money. the board said the dismissal may trigger a notice of default. that is today's company news. guys checkod one, do your facebook account last night? >> i just heard about this. >> facebook suffered its largest outer in -- outage in four years. out for 30 minutes. facebook later said it resolve the issues quickly and are back to 100%. if you consider how big facebook billion monthly active users, that would make it the second most populous country , store country, after china. that says something. >> i would argue 1.2 billion people not being able to get on facebook for 30 minutes argues for greater productivity. less and less, full disclosure. >> i wonder if twitter got a bump up because of it? >> this to amazon smartphone.

$199 with a lot of features. the question is, whether you're interested? it has 3-d pictures. we will discuss after a very quick break. ♪

>> good morning. pageantry and changing of the guard in spain. king felipe they was sworn in today as the new king. he promises new times ahead. it was zero discussion in madrid this morning of their football team. they just didn't work out. the script didn't work in brazil. quickly reigning champions. he reigning champions. >> the pageantry in the

madrid. good morning, this is "bloomberg surveillance." fum tom keene with scarlet and adam johnson. coming up later today, william .'brien 10:00 a.m. on bloomberg television. >> as we've been discussing amazon unveiled its new phone yesterday, it basically lets you link directly to prime. in theory, you can shop everywhere. for 199as a 3-d camera dollars. it is available only on at&t. are you a buyer of this thing or is it a gimmick? >> is just designed so you can shop more easily as opposed to opening a nap and pressing a few more buttons? >> why didn't they create an app

for my iphone? why do i knew -- why do i need a new piece of hardware to shop on prime? >> also the tone of what took so long to get here. , go back pushing for 10 years who talked about the internet and the digital space, there were only be one or two winners. there's no third or fourth winner. how do they become one of those one or two winners? apple control in this country 77% of the market for smartphones and 67% abroad. ago, they wrote about this. agreement withve at&t, it is not really breaking new ground or being innovative. it is pretty much following the script to most of the smart phone companies have gone with.

>> it seems like it is locking up people's desire to buy on mobile. which i understand. i get it, but -- >> do you need to ditch your existing smartphone for this one? >> do they get new people or do they get people to drop their android or iphone and go to this fire phone? that is an interesting game theory. >> brian white, you shop on amazon enough you would consider this phone? >> i wouldn't, but i think people will. it is a cheaper phone. >> if they get a price reduction on amazon -- >> i should point out, the one thing that gets my attention, earnings are suppose to double this year and again next year for amazon. >> we go to sri kumar. would you go to an amazon phone? >> no come i wouldn't. i keep my phones for a long time. 2003.3 echo >>

i think i can keep it until 2020. >> coming up in the next hour, the chief u.s. economist at morgan stanley will be joining us to discuss the taper timeline and his stitcher straights move in the future. this is "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." i am tom keene. futures flat after that huge surge we saw yesterday afternoon. top headlines with adam johnson. >> prosecutors winding their investigation into the foreign

exchange trading industry. justice is nowof interviewing salespeople at the world's biggest banks, looking into whether dealers traded ahead of their clients. lawyers for the suspect in masters boston bombing marathon or should say right on bombing, they want to move the trial to washington, d.c. they say dzhokhar tsarnaev cannot get a fair trial in boston or anywhere else in massachusetts. i'm not sure if you would get a fair trial anywhere because of what happened, for that matter. three people were killed in the attack, more than 200 others wounded. chile beat spain 2-0 and not spain out of the tournament and ends the spanish six-your dominance of world soccer. spaniards one in 2010 at the world cup as well as the last european -- anyway, they are the top headlines. >> they averaged three goals a game. this is a big deal.

it is actually getting exciting. >> it is exciting. >> i watched some yesterday and i was engaged. >> mexico time brazil, that was an incredibly exciting game. >> we call that a draw. do they shelter all! -- shout draw!! >> morning must-read. argued a move should be made. moving export and would continuing technology would lead to -- they have some numbers that look pretty impressive given the fact the economy could be doing better. >> you wonder, can it work?

canada should forward the idea todayback up near 159 oil -- 115 in oil today. >> changing the debate over whether the videos cannot afford to export. >> big debate. >> something we will continue to discuss. done with the macro economy and geopolitics. coming up, we want to focus on inflation and what this means for interest rates benefits mandate. we will be right back on "bloomberg surveillance." we will see you after the break. ♪

>> good morning, "bloomberg surveillance."

a less sweltering day here in new york. vincent reinhart joining us in the next hour. we welcome all of you worldwide, this is "bloomberg surveillance." i am tom keene with scarlet fu and adam johnson. a quick data check. the euro stronger. oil is elevated. here's the brain crude chart. quiet 9, 10 days ago. up we go with the first iraq issues. down we go. you can see that deterioration nearaq driving us up right 115. we are watching that very carefully on brent crude. i look surprised me, back at the one-year chart, and the high over the past year has 116.61.

i'm surprised given everything that is happening in iraq -- >> writing up yesterday, why hasn't oil moved? ok, it is time for bloomberg surveillance victory lap. sri kumar has been persistent on a call for subdued local economic, and with little information. lagardess and christine , looking to embrace the view. others disagree, they're more optimistic after a market moving meeting by the central bank to the world. sri kumar joins us this morning. what did the optimists it wrong? >> they get a wrong because they expect the monetary growth, quantitative easing, will produce economic growth at her rapid pace. sometimes when you take a

medication and it hasn't worked for five years, you better change her medication. but that is essentially the error with the optimists. that had five years of big bond purchases, and we don't have sustainable economic growth. they haven't changed it. in your great interview with christine lagarde of the imf, for instance, she said she looks are slower growth later this year but not a downward spiral. the question then is, what we have had is a spiral for five years of not picking up, why not admit it? why not say you need a different medication? >> equivocal distinction, the idea that suits and ties and fancy dresses can actually change the job market worldwide through monetary policy for mature fancy economics. there is no evidence of that, is there? >> there are two problems with it. one, you started out with zero

interest rate in 2008 and we have that again and again that monetary policy is ineffective at very interest -- low interest rate levels. the second problem, unemployment is becoming structural. it is long-term unemployment getting more important and that means you cannot essentially -- verynet yellen has been overt about the structural versus cyclical issues. >> but she might be a little powerless here. you said they'd need to make it next was objective, but is cap it done without structural. with a midterm election year. what kind of short-term fixes are on the table? any don't think there are short-term fixes, especially after five years of not done much. i go one step further beyond fiscal policy. if you're saying to spend more money and that will create jobs,

that isn't going to happen because we tried doing it in 2009 and 2010. what needs to be done is very 2003,he german model from emphasize vocational training, educate workers, attach high school students to potential employers, an increase employment when they come out of high school. nothing to do with monetary policy or fiscal policy. reforms andructural reforms in the labor market. germany did it and succeeded. france has not and they are suffering-implement. say, spend whatever you have to do for that. would you agree? >> i totally disagree. >> disagree? >> i disagree with the paul krugman view. you would want to spend more money to keep increasing the deficit from the levels they are at. the emphasis is more in terms of actually focusing on employment,

which i don't think he favors because i think he believes it helps the employers, the fatcats. you essentially have to change the approach, and that is where i think i would differ from it. if you're going to be spending, spending in the direction of creating jobs not overall fiscal to visit increase, which i think is more of the paul krugman point of view. >> are you a pessimist or someone cautious looking for a better time ahead, or is the new neutral going to be a subdued euro sclerosis that we have to get used to? >> that is a good question. i don't think we are destined to be a new normal forever. >> you don't have a defeatist attitude. >> not at all. the structural change that will ,ome is fracking, more energy and that will be positive change. not because of anything we did. it is essentially because of the opportunity to month -- the

opportunity market presents to us. if you do have the training we are talking about, that in turn is going to be very positive for job creation as well. this is why you need not just emphasize fiscal expansion, but specifically how each act is going to help in terms of jobs. >> we're focusing on what the fed should be doing. given what they are doing, what does that mean for stocks and bonds and corporate bonds over the next year? >> we talked about bubbles and you talked about various bubbles, scarlet. i think the bubbles are going to get bigger. as one famous x ceo of a new york bank said, the music is on, the players are dancing -- >> sri kumar quoting charles prince. >> i did not name him, but yes. >> continue. the musicu have that, will stop. the question is, you don't know when it is going to stop. adam and i have had time to talk about what it does equities over

the last year. i think the danger continues to be present. the danger is increased because the bubble is seen in high yield bonds. that is a huge bubble. >> what a primitive get to our twitter question. >> perfect. is yellen's low rates for longer policy creating more bubbles? you just heard sri kumar give his view. what is yours? tweet us. >> how does your internet speed compared to others? the latest findings in our single best chart, next. ♪

not amajority, celebration for the spanish football team, this is the coronation of philippe -- felipe at the royal palace of madrid built in the early 18th century on territory taken in the ninth century. there gazing upon a palace with 3400 rooms. the pageantry and the celebration as the spaniards

celebrate their new king. this is "bloomberg surveillance." you morning to all of worldwide, i am tom keene with scarlet fu and adam johnson. mr. johnson has our top headlines. he will not do them in spanish. >> the u.s. distancing itself from iraq's embattled prime minister maliki. the obama administration is pressing for political change that could lend a growing urgency by sunnis. ukraine's president is trying to build support for unilateral cease-fire. poroshenko says pro-russian rebels will be given a limited window to lay down their weapons and says those who have it committed serious crimes will be allowed to leave the country. one of the rebel leaders calls the cease-fire offer "nonsense." know ifors want to congressional staff members tipped off wall street traders about a change in of care policy. they have subpoenaed a house committee to testify before a grand jury according to "the

wall street journal." those are the top headlines. >> let's get to our single best chart. high-speed internet because the fcc released its report yesterday -- looking at high-speed internet because the fcc released its report yesterday. dsl, verizon, centurylink the windstream lagging behind, not giving customers what they promised wall cable and broadband, fiber broadband, are doing a little better at delivering. what is interesting, doesn't answer the question of who is responsible for slowdowns and congestion we try to stream video. netflix and verizon publicly battling each other and accusing each other of doing just that. this just presents a snapshot of who is not delivering and who is delivering. don't backdrop is, we have a national policy. >> we don't. we have consolidation were a lot of people have a lot fewer

choices about who they can choose to provide their services. >> when you travel to asia, is wi-fi -- >> it is fine and well, it is great. you can go to the most remote part of china and there will be five bars. >> unbelievable. >> i can't even get a bar in my bedroom. >> i was driving in a very remote part of china a couple of years ago and the streetlights -- it was while because the streetlights down the highway a little wind turbines on them as well as solar panels. their standalone. they don't need wires. that is amazing. >> can i just have your guys travel life? >> no one is stopping you. take off.d to >> i'm not taking off until the red sox win again. >> we're going to start with our number three pitcher, windsor castle. elizabeth the first

whichal visit to the u.k. coincides with the global economic roundtable. >> a lot of monarchs. >> you are a fan of baby george. you like kids. >> yeah. "frozen" three times. a correction, prince george. >> president obama talking with the builder of a robotic giraffe. cool stuff. the fair uses projects -- it promotes projects that have new technologies, new tools, and tries to give people a voice they can -- >> maybe can solve the budget deficit. >> brian white, our guest host, cyber security and innovation and what it means for our security, are we a robot nation?

in san francisco, is the robots 20 47? >> people are bullish about drones. this idea about amazon delivering best packages, that is -- >> you believe that. >> i believe you will see drones used in domestic airspace for uses we can't even imagine yet. i do think we're getting there. >> so many people here on the east coast kind of said, just one big advertisement. >> i think the key concern is privacy. that is the thing with all of these did technologies that has to be fixed. are you going to become bowl someone taking pictures over your home and using these drones for things other than just delivering packages? i don't know, but i know a lot of investment is flowing into drones another unmanned systems. get a drone of fenway park or wrigley field in chicago? you have crashes or the guy says, wait a minute,

this flew over my house and i'm going to shoot it down, right? >> or if it lands in your backyard. things are letting these fly. essentially saying, we need to come up with policy but we're not going to really get in the way of the use of these right now. ken feinberg as a drones are. >> our number one photo, ready echo world cup update. against theg a goal goalkeeper of spain. beckett brought chile to the -- >> it was a free kick. it was a free kick. it went over the wall of players -- you know, they're standing. but in hockey, come on, the goalie pushed the ball out. you did not catch it. or soccer. he pushed it straight back out. that is the photo. this is great. this is like red sox baseball. he kicked it in and try to come

back. it was bizarre. it was like spain almost wanted to lose. i can see the hate mail coming out. >> exactly. >> spain has won the past two european championships and they are out. >> this is my total soccer skill. >> i think you to take a picture of that letter, the two of you together. >> tom keene, how tall are you? >> it depends on how much money my kids need. >> at least 6'5". i clock in at 5'11". scarlet fu? >> 5'4" on a really good day. coming up, with mounting to tune, what it means for american security -- with mounting pressure in iraq, what it means for american security. this is "bloomberg surveillance." ♪

>> this is "bloomberg surveillance." let's get you some company news headlines on the files of bloomberg west. sony ceo is apologizing after the company's forecast's six

loss. he says counting on restructuring new smartphones as well as spiderman films to turn the company around. apple is taking advantage of the dispute between amazon and book publisher. apple now promoting and discounting pre-orders for the digital books. they can't agree on pricing for books by authors such as harry potter. amazon won't let customers reorder the books as a result. film and television studio raising capital ahead of a planned ipo. the company helps fund the facebook movie "the social network." the recently signed partnerships in china and india. the ceo spoke to bloomberg television. >> what i can say is jefferies is our banker and we have been thislucky to have incredible institution to work with. we are kind of on our pre-ipo

roadshow, setting up the proper capital to go public. our goal is to have it happen somewhere less than the next 12 to 18 months. >> that is today's company news. the enthusiasm around tech has included media companies. --we talked nonslip go about months ago about the los angeles tech. it is different than new york. >> do they have a name for it? >> silicon canyon. that sounds about right. silicon sunset. i don't know. earlier we were talking about the refinery in iraq and you said you just noticed another headline, bloomberg is confirming -- >> i'm not clear on it. i'm going with, we don't know about the major refiner into we get all the headlines. we have to be careful on this, folks. the aggregation of news flow we

get into the bloomberg terminals. you have to have some real respect for who is doing the talking. >> there are mixed reports. one thing that is not mixed, the word from the white house, for secretary jay carney says the prime minister's government is not doing enough and the key question facing the president is whether to intervene militarily. brian white serves as the chief of staff at home security and with us this hour. what is the risk the u.s. intervention leads to new terrorist attacks here at home? >> i think what we first have to step back and see what is happening is that within syria and iraq right now with the territory that isis controls, that is going to be fertile ground for new training camps to develop a new unrest. and with that type of lack of u.s. presence in the region, it is very unlikely you may see increased threats to the homeland here. i don't know you can make a direct corollary to the lack of action in iraq now leading to more attacks in the u.s.. >> so we as americans should not be concerned about we as americans getting more involved

in iraq? to getiew is, we do need more involved. we need to use some air power. we need to consider special operations forces in the region to at least make sure we continue to control and hold baghdad. the important point about this that,ry is sisi captures that is a source of revenue for them. we need to make sure that iraq has the capability to defend its own infrastructure. >> that would assume someone would buy oil effectively being refined by terrorists. that is a big assumption. >> true. >> if we wanted to pursue air strikes, do we know what and where to strike? a lot of the intelligence on the ground has been withdrawn. >> that is exactly the point. what looks like, we don't have good information on where they are and what the effect of those would be. and also where they are amassing from. the other issue, a lot of the people that are loyal to either the current government, the maliki, are going to be leaving.

there are reports they have walked away and said, hey, we don't want to fight and defend. you are experts on drums. can i ask a dumb question? what does a drone do or see when it flies over central park or flies over kirkuk in iraq? >> it depends on the sensors that you put on the drum itself. each has different capabilities. some are sensing, some have great photographic capability. what they do for national security, they're taking images and using the best they can do to get a sense of what is going on on the ground. >> can you shoot a drone down? >> if you can see it. one of the things that is happened with iraq and afghanistan, we have four air wars and ungoverned airspace. in the future, we talk about drones as is they are panacea.

talking about future conflict, you may not be open -- operating in ungoverned airspace. >> you're with the department of homeland security for number of years. we haven't had a code red or orange even in a long time. is that good or bad? >> i think it breeds a little bit of complacency, but i also gives great credit to the fbi, the department of homeland security and the entire u.s. government and how we have been aggressive in moving forward and taking this fight to the terrorists. the threat hasn't gone away, it is just tampered down. to thekumar, this goes council of foreign relations, we need a strong america that a strong foreign policy. what kind of gdp growth to we need to have richard haas or sri kumar's strong america? is it 3%? >> would probably need consistent through percent growth. that is what contributes to the strength of the us economy. >> sri kumar, thank you so much.

brian white, thank you so much from the chertoff group. 170 gets myr attention. there is gold at 1281. >> we will be right back. ♪

>> this >> is "bloomberg surveillance."

>> janet yellen signals further accommodation, this amid a tepid 2014. the white house begins to distance itself from prime minister maliki. and jeffrey baze owes attacks with the fire phone. en route and up till in defeating apple and samsung. good morning, everybody. thursday, june 19. i am tom keene. joining me, scarlet fu and adam johnson. our guest on technology, chief executive officer of beta works -- i got it right. adam johnson with us this morning. u.k. will start in the where retail sales fell for the first time in a 4 months -- that for the month of may. 8:30, the weekly jobless frames number of stop -- jobless claims

number. as well as the leading economic indicators. if they come in as expected, up a couple of percentage points, 14th month in a row that we have leading economic indicators up. >> $966 million in revenue for the first quarter, higher than what analysts had been looking for. they were looking for 954. but still losing money -- a loss per share of $.11. the consensus was for a loss of $.25, but there is a big range from anywhere from a 52 sent deficit to a seven cent that is it. $.52 deficit to seven cents deficit. >> did they raise the dividend? didell, you know what they to do is say that they are targeting breakeven cash flow by the end of this year.

i don't know if that leaves them a lot of room to raise the dividend, tom. >> i don't believe there is a dividend here, tom. >> best -- >> looking at best buy. >> i'm sorry. brain freeze. >> research in motion became blackberry. tom is looking at best buy. there is no dividend increase. >> yes, excuse me. --ninth out of cap quarter ninth out of 10th quarter it lost money. >> what a train wreck. >> total train wreck. >> i mean, am i right? >> yes, it's a train wreck. rite aid and kroger coming out with earnings after the bell, and then smith & wesson. scarlet, what else do you have? >> company news headlines, and we start with general electric. ceo jeff immelt making a final

bid for alstom energy assets. he will present new details of ge's $17 billion bid. siemens and mitsubishi have teamed up to make their own offer. now all amazon ceo jeff bezos has to do is make the company's smart phone stand out from the rest. the fire phone has 3-d viewing and a year of free membership to the prime shipping program. it costs the same as apple's iphone and the galaxy from samsung, so where is the differentiation? finally, the board of american apparel has suspended the companies founder and ceo on plans to fire him. the casual clothing retailer says that allegations of misconduct by dov charney -- american apparel has been learning mone -- losing money and the ceo's dismissal may trigger the fault. >> what does american apparel do? >> it sells 1970's, 1980's

cotton shirts, the throwback look. >> it is like a rainbow of t-shirts. you can get the same t-shirt in one of seven different colors. -- 27 different colors. >> chimeric dollars. -- primary colors. >they are known for their racy advertisements. >> really? >> leggings -- >> leggings? lululemon? i don't think so. to nouriident biden al-maliki, attacking an oil refinery and -- an attack on an oil refinery and civil war beckons. ofte an image yesterday congress and congressional leadership with the president in the oval office.

is there any consensus in washington on an action plan on iraq? >> there really isn't, tom. what you know from the white house now, they have been fairly public with the fact that they are not ready to take specific actions. the big problem right now i'm if there is one thing everybody can agree on, it is that prime minister maliki's leadership over the last five years has brought them to this point. it is what the white house and congressional leaders have been pushing for and that is the exact opposite of what he has done. as a shiite, he has pushed away unnis and he is in a position to call for national unity and there is no unity to be had. >> 10 the administration get to the sunday talk shows? it is thursday, and the basic idea of getting to sunday morning, or do they need to do for the visibility of the sunday talk shows? >> they need to set forth a plan of some sort. talking to republicans who were

briefed on the meeting with leadership yesterday with the president, what they were most concerned about is there is no concrete set of steps they feel like they are going to take. the white house and the national security council have been meeting on a very regular basis and are looking at a series of options. it is not like they don't have anything on the table right now. the pup is no real good option right now -- the problem is that there was no real good option right now. if they can lay out a coherent strategy other than we are not quite there yet and we are waiting to see what happens, that is the key for sunday. >> saudi arabia has been pretty silent on all this. who can the united states count on as regional allies to get us through this and figure out what is happening on the ground? >> scarlet, i think the regional allies thing is important to keep an eye on the next couple days. as the u.s. waits to find the best path forward, regional allies are extremely uneasy. he sighed the united arab

emirates pull out their ambassador yesterday, basically criticized the iraq he government as it has been run by maliki. sunni government, maliki shiite. you have a situation where the u.s. doesn't act soon, regional interests are going to make their own moves and i don't think the u.s. wants to be any part of sitting in the back is that occurs. >> phil mattingly, thank you so much, on regional interests in a beleaguered iraq this morning. >> blackberry announced results and it is another quarter of losses. first-quarter adjusted loss, $.11 a share. the consensus was for a much wider loss of $.25. revenue did beat analyst estimates. that, blackberry is targeting breakeven cash flow by the end of this fiscal year. >> very good.

as amazon launches a phone, apple repairs for eight -- prepares for a full onslaught of new product, blackberry fights to stay relevant. , very interesting market in research and technology, knee-deep in technology. i saw a whole back story yesterday on this phone, away from amazon, away from my old cell. just about the phone. what did idc learn yesterday for mr. bezos? >> what we learned is he is trying to do the same maneuver that apple and google and microsoft are doing, which is differentiate on services. andheir case it is retail it is shopping and it is an experience around driving more engagement on an amazon device. this is about differentiating with the services, less about the hardware over time. but you have got to do something whizbang with the hardware to get people excited.

multiple cameras, 3-d imaging, sort of look, see, buy. that is the way they are trying to differentiate and it is unique. >> crawford, stay with us. is there anything new here that is happening with this announcement? >> i actually see the landscape as separate organizations or companies and i see that apple is in a corner here that is very different from where google and amazon is. when amazon announced yesterday is from, as crawford said, a product perspective, an actual phone with a lot of whizbang features but not a lot of surprises. buy is click thing to interesting. it is a good android phone. the place they have not innovated is the price point. >> crawford, very quickly, can blackberry survived? >> blackberry is probably going

to have a tough time surviving as they are today. they are becoming less relevant as a hundred supplier. -- as a hardware supplier. muchawford, thank you so could they do terrific work on all the nuts and bolts of this stuff. >> smartphone revenue for blackberry the first quarter was $1.6 million -- >> chump change. >> smartphone, the actual hardware is the tough sell right now for blackberry. mixed messages from the federal reserve yesterday sent stocks around the world soaring. we will discuss all of this with vince reinhart coming up next. it is our twitter weston of the day as well -- question of the day as well.

>> good morning, everyone. "bloomberg surveillance ." i am tom keene. john borthwick, he is with beta works. you will notice a newer and different apple computer. a more15 we will know open company. john, i thought your note on this was absolutely brilliant. this is a different apple. guys like you are tech specialists. explain to me why this is a different apple. >> a couple weeks ago you had

the wwdc -- >> code guys in the room. >> it was a pretty transformative event in that what you saw emerging from it is , whole set of services products, operating systems, was to put only on the phone, but he started to see the desktop for the together in a phone. -- you started to see the asktop threaded together in phone. i see a new apple emerging, and it is really tim cook's apple. >> what is the distinction versus steve jobs's apple? >> maybe steve jobs' last stroke of genius was in summary at the helm who instead of being tim cook-- mercurial, is threading together all the pieces of the organization. mobile platform and the

desktop platform come together and use it to cloud-based services come together. you see a different type of company, a technology company. they bought some -- beats -- help me, dr. dree? >> dr. dre. you can see this strength across media and music and all the different components. one component that is open for them is a social. >> should they buy twitter? >> i think twitter is doing an incredible job with starting to assert itself as an independent company. they have a lot to do in 2014 and if they don't do it, they belong with apple. >> apple, not google -- that is a huge debate.

the design level, social dna, neither google nor apple have a lot of that. >> we need to spend some time on twitter and apple. john borthwick with us as well. in france -- i think he is in paris, lending the today -- jeffrey immelt lending to promote a deal with alstom. good morning, it is "bloomberg surveillance

>> good morning, everyone. "bloomberg surveillance." i am tom keene. with me, scarlet fu and adam johnson. our guest host john borthwick. >> prosecutors are widening their investigation into the foreign exchange trading industry. according to people familiar with the matter, the justice carmen in his interviewing salespeople of the world's biggest banks, looking into whether they traded ahead of their clients for big

benchmarks. in the boston marathon bombing want to move the trial to washington, d.c. 3 people, you may recall, were killed in the attack and at 2 others were wounded. chile world cup, brazil, pain 2-zero, knocking spain out of the tournament and ending spain's six-year dominance in soccer. that is quite a big deal. >> best part of the game, nobody fell down and did this "oh, i'm dying!" thing. >> the faker thing. >> i don't get that whole faking your injuries -- pronouncee how you it? chili? >> well done, scarlet.

scarlet was schooling me on how to say chinese names. >> it was actually erik schatzker -- >> if you need it to know how to pronounce things, go to scarlet or erik schatzker. >> listening to janet yellen, stocks began a final hour surge. call it the slack search, as the fed signaled no end to accommodation. the punch bowl was, shall we say, refreshed. vincent reinhart has lifted is perhaps more than any other economist in america. he is cohead of global economics at morgan stanley and was alan greenspan's head of research for many a year. this time is different is a phrase we know in economics. what was different about yesterday's press conference? >> nothing. it was the main message. it was entirely reassuring that janet yellen is going to keep the policies in place for, to coin a phrase, considerable time. dudley of them

new york fed, do they border on a responsibility to going on this course or would morgan stanley suggest they need to take a different tack, and soon? >> you want to separate policy affirmation from policy forecast. there is still resource slack in the economy, inflation is picking up a but still below their goal. they have room to run. >> you have read these histories far more than i have. milton friedman and anna sc hwartz. ben bernanke e. they all say the same thing, central banks are behind the eight ball. was janet yellen behind the eight ball yesterday? any policy is asymmetric and it goes up a lot more slowly than it goes down. we used to call it going up by the escalator and going down by the elevator. but itings are planned

is easy to convince yourself to start a little late and go a little slow. you want to make sure the expansionist sustained momentum. early on you don't worry that much about rising wage and costs. it is creating disposable income that makes consumption gains more widespread. inflation isn't such a bad thing if you are below role -- below goal. central banks tend to be asymmetric and they are telling you that because officials are increasingly saying 2% is a goal, not a ceiling. if it is a goal, sometimes you are above it, sometimes you are below it. >> shouldn't this be a sign that things are working and maybe rates auto be reconsidered? >> i believe it was characterized as a noise in the press conference. that is what janet yellen said about inflation. three munch -- three-month change above goal, that is worrisome. but officials pointed out that there were temporary factors

tending to drag inflation down and they were beginning to fade. if you're forecast comes true, that is not a reason to change the forecast. >> i want to bring in john borthwick, our guest was for the hour. tom started by asking if this time is different. most fundamentally, what you have is this massive shift taking place in computing, as people move from the desktop to their smart phones, and you have now about 1.8 billion smartphones in the world, going to about 3 billion in the next 2 years. we have never seen that before in humanity, to have computers and that many people's hands. >> within that and easy money that leads to the technology surge, vince reinhart, let's go to our twitter question. we need you to answer it. is there a multiple set of bubbles out there we need to worry about? >> the way federal deserve

officials would say, there are probably pockets of froth. look at the narrow spreads among the periphery, how easy it is to underwrite high-yield credit. yes, there is excesses, but that is the monetary transmission mechanism. you keep rates low and you encourage risk-taking and you support asset prices generally. will people look at some of those decisions with regret? yes. >> what are the ramifications if we get what david malpass once, and immediate rate increase just as a symbol of normality? >> that a whole lot of investors who went through narrow doors slowly, encouraged by federal risk-taking, will try to come out of those narrow doors in a hurry. that will be distressful. considering the case study we have for mages in november last year, just even talking of slowing assets was enough to blowout spreads.

>> vince reinhart, thank you so much with morgan stanley. >> rush for the exits. will amazon's new phone disrupted the current smartphone

>> this is "bloomberg surveillance" , with tom keene and adam johnson. hedge fund manager phil falcone wants to make -- the arrival to the biggest wireless providers. he had been fighting to keep control of light squared during

its two years of bankruptcy. had made billions during the recession by betting against subprime mortgages. have one less reason to steal the next microsoft and android smartphones, because according to the new york attorney general, the funds left kill switches that disable them if they are lost or stolen. and did you hear the one about the former goldman sachs trader complaining that his bonus was cut to more than $8 billion? he says he wants $5 million more, but it was between the 2010 bonus and what he told his mother to expect. golden says he was never promised the higher amount. cry me a river. >> cry me a river is right. another ceo, i'm not sure if he is crying a river, but we are talking about general electric ceo jeff and all. it -- jeff e-mailed. -- jeff immelt.

he is making a final push to buy alstom. we are joined by steve when a girl sanford bernstein. you know this company and mr. immelt better than anybody else. what does he need to do in france today? >> i think he really needs to make the case that the offer put on the table by siemens and andubishi is so complex really not in the best interest alstom,h employment and frankly, that it is going to break it up at the end of the day even though it looks from the surface like it might not, that it would be more difficult and attom to compete the end of the day he will end up with a weaker french entity, and that is what he will convince those folks that it is the stronger entity when combined with ge and they are willing to make the changes they need to accommodate that. >> steve, your black box on ge

are legendary. what is the common reading immelt and ge get in paris? are they a frenemy, are they a friend? >> it is interesting, ge has one of the most successful foreign ventures in the country of france through its engine programs with saffron. it really has been a phenomenal success story, a success story that on top of that you look at their operations in belfort, france, which i've been to a couple of times. they boughtions from alstom years ago, they are also quite strong and quite competitive. that being said, there is still it was entity and there are entitywho prefer a u.s. and those who prefer a german-japanese, natio -- german-japanese combination. >> it ge can pull this off and

by the energy assets from alstom, do you change your target generating -- target and your rating? >> pretty clearly what alstom would do is change the earnings growth outlook for ge's industrial businesses. they are deploying capital that otherwise is not getting deployed. and there is and accretive impact here. that being said, alstom carries a huge amount of risk with it. for those who know alstom deeply, they know that there is discussion with alstom's contracts being priced in challenging times, and the pricing puts those earnings at risk. day, look, gethe becomes a more industrial entity , it will have a higher level of industrial earnings. that is not to say they will have created value yet. but this is a positive move in general, in my view, for ge. >> final question, isn't ge

going to have to up its bid by $2 billion to match the other bid i mitsubishi? >> ge has made clear in a lot of discussions that they are willing to negotiate but are less flexible on pricing. it will be tough for them to not increase the offer in some way, whether it is price or terms, to make this happen. talk about other flex ability they could pursue to close the deal here. >> steve, always good to have you. >> thanks for having me. >> when does this trauma -- drama end? unless they push the deadline out once again. >> which is possible. >> the ge french present operations are world class will . andobless claims that 8:30 leading indicators after the

markets open. we also have the philly fed number. lotres not doing a whole after the s&p climbed to a record thanks to janet yellen and her pronouncement that interest rates will stay lower for longer. >> good morning, everyone. ," onmberg surveillance bloomberg television and bloomberg radio. tv, onearly on apple thing to look forward to. i am tom keene. with me, scarlet fu in adam johnson. our guest host on technology, john borthwick. >> amazon -- >> amazon fire? absolutely. >> is it? >> yes, we say that every day on "money clip." >> excuse me, is that a "money clip" plug? outrageous. andvailable on your phone,

amazon fire. >> the bells and whistles of 3-d cameras and imaging technology make this phone more of a shopping tool than anything else. it's pricing and availability are fairly conventional. a subsidized handset in return for a two-year contract with at&t. will jeff bezos' new toy hurt competitors like amazon and samsung? >> i'm underwhelmed. i am a creator and i do amazing things with my tablet as i wonder around the world could be selling point for samsung is i am not an apple fan boy. i don't need to buy something doesn't ask her to wander dollars just for the label. the selling point of the m's on fire is i am a consumer -- the selling point of the amazon fire is i am a consumer and i buy stuff. everything that it does feels like an app. i don't understand why you need a phone to do those things. some of those a ready exist

elsewhere and i don't know why you can't put those as an app on another phone. >> what do you think? what is the reason for putting this on the phone if you can get everything through an app? >> i think the integration and amazon moving to hardware was inevitable. the core features we talked about this morning -- not the 3-d, which is interesting technology but developers will have to push for it -- but the shopping button, fast buy button, that you can't do with an app. the cameras, touch of a button -- i think it is an interesting natural extension of amazon. i agree with you that it is not -- i don't think it is a big enough to shift to actually attract people and say, hey, i've got to have this phone. >> john borthwick, founder and ceo of betaworks. brendan greeley, where does this leave the other carriers? qualitativelywas

different than anything that had come before. we have never seen any other bump in subscriber rates with the introduction of any other phone for any other carrier. it is not move the dial at all for consumers will stop what we have seen move the dial for subscribers has been in the last year when there was a price were initiated by t-mobile. people aren't stupid. they care about their contract. if there contract gets cheaper they will switch carriers. >> why doesn't jeff bezos just say you get to percent off on every purchase if you do it -- on on everyoff purchase if you do it through the smartphone? >> maybe it is because that is where he makes all the money? >> here is the problem with that, you become like what jcpenney tries to do, low prices every day, new 2% -- 2% off all the time. why hasn't facebook come out

with a new phone? >> because it is an app, not a phone. it was an interesting experiment, i'm glad they try to, but as with the amazon phone, there are certain things that are not worth an entire phone. one thing i've been watching recently is the firefox os. mozilla decided it was going to build its own mobile open-source operating system three years ago. had i known this three years ago, i would've lasted out of the room. suddenly it turns out they are 8% in columbia, 3% in poland. they don't seem like huge numbers and i can sort of smell tom getting bored by these numbers, but windows with all of its marketing muscle has only cracked 3% worldwide. year ago andhed a a lot of emerging markets are already at 8%. >> that is a good point, but as we look at the amazon phone, they are not doing anything in

emerging markets right house with these a lot of questions out there. brendan greeley, thank you so much. we have john borthwick as our guest host for the hour. coming back, we will talk about tech valuations.

>> good morning, everyone.

"bloomberg surveillance." i'm tom keene. with me, scarlet fu and adam johnson. >> lawyers in the suspect for lost years boston marathon bombing want to move the trial to washington, d.c. they say chocolates and i have cannot get a fair trial in tsarnaev cannot get a fair trial in boston or anywhere in massachusetts. limitedko is giving a window for rebels to lay down weapons. want to know if the congressional staff members took off wall street traders about a change in health care policy. according to "the wall street journal," they have subpoenaed a aide. jury "surveillance" correction.

i said dr. dry. it has been noted on twitter i am an idiot. ree.ou also said dr. d >> andre young. we correct every error on "surveillance." loop," betty, what do you have coming up? >> we're covering the aftermath of the fed. we are also looking into this other issue, guys, which is due athletes make good ceo's? we have a former nfl player with us who started a chain of -- i wouldn't say fast casual restaurants down in the south. crawford ker will be joining us. also, brazilian racecar driver who has now brought hundreds of millions of dollars, he claims, into the west market. he says don't invest in brazil,

he doesn't think there are any prospects for growth in brazil, and he has brought all of his clients to the u.s., particularly to florida real estate. >> i was in bahamas a couple months ago and that is a huge business, brazilian money going to the bahamas. that is where it wants to live and it is getting funneled to the u.s. >> yeah, and miami as well. >> orlando, new york now. like a lot of professional athlete types with the onset today. >> none of my doing. >> i remember you talking about wanting to set up a show where you are surrounded by -- >> big, brawny men? sure, bring it on. >> that is why you are with tom keene. >> the original. 8:00he loop" begins at a.m. did you notice on facebook

yesterday? there was an outage. >> los angeles dodgers, no-hitter for those of us on the east coast. >> how often do those happen? >> more than you think is the answer. >> scarlet fu, the detail. >> our twitter question of the day, we have got to get to that.

>> good morning, everyone. "bloomberg surveillance." coming up tomorrow, neera tanden from the center for american progress. television in the 7:00 a.m. hour. >> our guest host for the hour, john borthwick ceo and founder of betaworks. is apologizing after the kobe forecast its sixth loss in at 8 years. he is countering -- counting on restructuring, new smart phone,

man"a slate of "spider- movies to turn it around. cannot agreechette on pricing for books by authors like j.k. rowling so amazon will not allow pre-orders for hachette books. and a company that helped fund the facebook movie "the social network" has signed partnerships in china and india. >> jefferies is our banker and we have been very lucky to have this incredible institution to work with and we work with all of them. we are on our pre-ipo roadshow right now, which means we are in the process of setting up the proper capital raise to go public. our goal is to have it happen somewhere, let's say, in the next 12 to 18 months. >> that his company news from

the files of "bloomberg west." >> it is by our reports the most unloved bull market since time began. 999tech space approaches vibrations but is it different this time? no one better to talk to them john borthwick. social media and all that fits into new tech. more important is the things you have not invested in. what is the difference now than what we saw in 1999? 1999-2000through the error and i think this is very different. i think that the scope of the shift is taking place as we move from the desktop to the mobile phone, data into the cloud, wearables and what is the on the phone, there is so much innovation.

in certain areas you see these clusters and bubbles. we talked about it earlier, but these micro-bubbles, or capital runs into one corner of the room and inflates it and then deflated. >> is the cloud of the nanotechnology, is the cloud in nature of being that in three or four or 10 years? the cloud is one of those trends that was kind of ill-defined. we get a tremendous amount of value out of it. i think that the cloud -- i don't view that as being a bubble. it is terra firma across all the stuff. if i say meme, you would slap me. >> guys with english accents get away with stuff you and i can't

-- >> meme. >> cat videos. >> you say this is different from 2000. is there more substance this time around, more information, then "wow, there is an internet thing"? >> let's talk about new york 1999,ack in 1998, tremendous amount in the capital rates and everything was going to move to the internet. the company is raised a lot of money and a lot of that was plowed back into traditional ,edia, billboards, advertising companies that couldn't ever be profitable in some cases. when you have today is a pre-ipo market where there is a very darwinian process going on where companies that are growing really fast are breaking through and other companies are not.

>> you are a mover and shaker. haveomebody in the market on finance when they acquire shares in facebook -- have confidence when they acquire shares in twitter or facebook? to this in thess public markets is getting later and later, which is a problem that a lot of people are trying to solve. investors are coming into private. the other thing that is happening is the massive compression you are seeing and the time, that you can get an idea and get it to millions of people's hands. we launched a new version of our game and that is in the space of 12 days, 8 million people got on the game. -- and the version we launched last year it took us three months to get to 5 million people. we did that in 10 days. >> i need to ask you about one of the new tech companies, facebook.

for 30 minutes users worldwide couldn't log onto their account. facebook later said they had resolved the issue and are back to 100%. hereore interesting number with facebook is that the #facebookdown on twitter was referenced 49,000 times within an hour. twitter is part of the zeitgeist in a way that facebook isn't. >> it has a connection to existing media that facebook has never managed to get. it is a tremendously powerful people of the -- powerful piece of the twitter puzzle. i think there is a lot of headwinds still on twitter. >> key insight from john borthwick, that twitter needs to get it going with apple who could acquire them in some form. let's look at the stories

that are shaping the news today. what are you looking at, tom? >> the agenda for me is the market, and you have to disaggregate it from the fed. what about just the market? greatt" today with their article on buybacks, and led to a discussion -- this is not ending according to a lot of the people we talk to. >> that is the key to the whole thing. >> i'm not giving a market call here but i am saying to link central-bank activity to the market solely is a dangerous proposition. there is more going on here than that. >> and you have the fed it doing what it can on unemployment as well. adam, what are you focused on >> the washington and specifically white house response on iraq. brian white, who joined us in the previous hour, formerly with

the homeland security department, made it clear that there's so much implosion and disarray in iraq right now that the risk of this spreading to other countries like a serious -- like a syria-type situation is high. like it or not, it seems that america has to have a specific response and we have not heard that. >> tom, you have to head over to radio. >> great lineup. >> my agenda is da: 30 data. jobless claims coming out 8:30 a.m.. the fed is still looking at ways to make sure that employment growth can be stimulated. we need to point out that leading economic indicators and philly fed numbers are coming out at 10:00 a.m. john borthwick, final thought from you. as we get more going on the jobs front and overall economy, how is the job market looking in silicon valley, the tech sector, not just silicon valley but new york as well? >> there is a lot of demand for engineers and for people, an

influx of entrepreneurs and people wanting to build companies. much of the technology is transformed and having a large impact in a positive and sometimes negative way on the job front. well, that all ties in with the macro environment as well. let's bring in outrigger question of the day and the answers to them. adam johnson posed the question -- >> risk for nothing. oof. >> more philosophical. > sounds like armageddon. >> john, you don't think we are in a tech bubble. >> i don't. i think there is a tremendous amount of headwinds still in this cycle. >> all right, john borthwick,

thank you so much. >> oh, it's a pleasure. >> discussing tech and whether there is a bubble. "in the loop" is up next.

>> good morning. it is thursday, june 19. i'm betty liu and you are "in the loop"

kevin mccarthy likely to be the new house majority leader today. cantor, whoeric lost big in a primary race last week. stay with bloomberg for full coverage including a special edition of "bottom line." we will bring you the web via -- t-mobiley outspoken why on wh exclusive -- exclusivity suck with the new music streaming service. they mayymakers say expect interest rates to remain low for considerable time. janet yellen says she was optimistic about the economic recovery. the u.s. is distancing itself from the iraqi prime minister nouri al-maliki. and general electric ceo jeff immelt is making a last push to acquire