sanctions? the netherlands awaits the bodies of those from flight mh17 . in gaza,continues secretary john kerry seeks a cease-fire in gaza. tuesday, july 22. i am tom. here's adam johnson. >> eu foreign ministers considering a blacklist of associates. -- companies accused of profiting from ukraine's troubles. this keeps going. >> case involving. there was a set of good do's that moved us forward. budget deficit little changed. there has been one of the big stories. governor mark carney, bank of england governor six weeks ago telegraph into the markets, rates are going to go

up. 8:30 in the u.s., consumer price index. >> finally. a look at inflation that is not affected by the weather. inflection.a little 10:00, richmond fed manufacturing activity and existing home sales. the bell,efore coca-cola, mcdonald's, lockheed martin, verizon. after the bell, microsoft and electronic arts. prince george turns one today. >> very important. no question about it. today have any idea what is coming? >> the birthday party was a huge hit. >> lego party. >> when i was a kid, i had legos. i made them take my bucket of legos in the car for car trips. not sure my dad appreciated that. n> i've stopped many a toe o

legos. bonds, currencies, commodities. market is turning. futures advance, 10 year yield under 2.50%. euro weaker and hyper carbon -- euro weaker and hydrocarbon elevated. vix churn. 12.821, pretty good, equities have been resilient. dow above 17,000. yen weaker after two days of strength. gold strength. scarlet will talk about the german 10 year yield. here's the dollar, spiking high er. bet on what the outcome could be for europe from addingwith sanctions and cold and on -- from all the sanctions and getting cold in

autumn. >> our first front-page story in ukraine, the bodies of the victims of mh17 have begun their journey home to the netherlands. the train carrying them arrived , government held city. pro-russian rebels have handed over the black boxes as pressure mounts on vladimir putin. he released a video overnight in video, offering conciliatory words. not clear what the next step is. the eu is considering tougher sanctions, waiting for some kind of movement. >> going after as we just mentioned, going after individuals in russia. as was originally the plan. there were 11 targeted in the first round. now they are going back and getting tough again on people. >> it is clumsy. there is still fighting going on. >> still skirmishes. >> officials try to go in and

they decided it was not safe enough. >> dutch officials attempted to do that and had to turn around. people want in, rebels were shooting off guns. >> the inspectors are wearing bullet-proof vest's. to rescue -- i shouldn't say rescue -- trying to remove bodies. try to gather evidence, it is hard to fathom. >> we have to move to the middle east, the u.s. is calling for a cease-fire in gaza as the death toll nears 600. actually, exceeds 600. john kerry holing talks with egyptian officials on more aggressive diplomatic pushes. he told reporters that hamas needs to make a decision to halt two weeks of fighting. ' version is that it was not consulted on the proposal, which israel accepted. it's demanding that any accord lift economic curbs on gaza. gaza areots of

stunning. what i find interesting, correct me if i am wrong, you look at the headlines we have in the terminal, not much news. not many headlines from israel. not many headlines from ukraine. there is a lowland the storm. >> fighting continues. >> one headline that jumped out at me, 149 children have been killed in gaza in two weeks. 149 children. ones saying no, we don't want to participate. >> a lot of people say it is in their interest to remain belligerent. >> thank you for saying "belligerent." president obama, effectively, said that as israel yesterday. that was a very strong statement. interesting to see the news across bloomberg television today. we will go to tel aviv in a moment. the final front page. >> a company news story, time

warner and the attempt to block the takeover bid from 21st century fox. support of time warner is taking a step who fording -- to th warting the offer. removing measures investors could have used to pressure time warner to sell. delaying action to force a vote annualune for the shareholders meeting. >> i thought you were going to say yosemite sam was hired as a banker. >> bankers are lining up. this is a $80 billion bid. se of and everybody else -- yosemite sam and everybody else. >> this would postpone action until june? delay action to force a vote until june. one effort they are making to stay this off. we will monitor this headline along with the others.

those are our front-page stories. upfutures up 6, dow futures 60. effort toairo, an work towards bases fire brokered by egypt secular government. this is a timeless but of arab-israeli how, hamas and israel are too far apart. elliott gotkine is in tel aviv. how have the israeli people reacted to what they have observed in gaza? large israelis support the israeli objective, the israeli operation in gaza. not to say that there is not a degree of discomfort at the rising toll of casualties on the palestinian side and in particular the toll on the israeli side. 29 israelis have been killed. plus are what, 570

palestinians killed. a large number of those are children and noncombatants. there is discomfort about it israelis by and large support the fact that this is something israel was reluctant to join into and it had to be done. >> we focused on hamas and how they are distant from the cease-fire. secretary kerry and the egyptians are speaking of. how close is israel to wanting a cease-fire? the egyptianepted cease-fire proposal last week, hamas says it was not consulted. it says it would go to egypt to discuss the proposals. kerry, due to meet with nextdent al-sisi in the half hour or so, has said the ball is in hamas' court to accept the cease-fire proposal. hamas is demanding not only in end to the blockade but also the release of prisoners that were really arrested during the search for the murders of three

teenagers, three israeli teenagers. >> you mentioned secretary of state kerry in cairo for meetings in about 30 minutes, do we have a sense of who is driving this? secretary kerry, the egyptians, somebody from either side, loss or israel -- hamas or israel? >> the u.s. clearly thinks netanyahu has made his point. right saying israel has a to defend itself, has expressed concern about the rising number of civilian casualties. tory is not in town just make up numbers, he feels he can make a difference, perhaps by knocking heads together. the egyptians are no longer on the best of terms with hamas. they are crushing the muslim brotherhood in egypt, a brother organization of hamas. although egyptian egypt is seen as the only one that can perhaps

work on this cease-fire, it is not clear that hamas sees them as an impartial adjudicator. >> thank you, elliott gotkine from tel aviv. you see the tension and the times. ukraine photos, palestinian photos of anguish and agony. of "the newhe cover york times." >> pain on both sides. we want to introduce our guest for the hour, president of the committee for responsible federal budget. senior global political analyst --citigroup, tina for him tina fordham. where might we get a cease-fire first? gasa or -- gaza or ukraine? >> gaza, there's more pressure. and ukraine, president poroshenko has an opportunity to flush separatists out of eastern ukraine. nobody is telling him not to.

>> vladimir putin delivered a video message offering consolatory words, why have we not seen more from him -- and mark he is in a difficult position. this is an organic movement in the eyes of the kremlin rising up to fight the legitimate government and kiev. >> with their backing. >> you say that, i cannot comment. putin will want to play for time. the fact that the black boxes have been turnover is important. there.as a delay the next step would be to push for an international investigation. >> you write brilliantly on the politics of all this and how it folds into investment. we will have richard haas in the next hour, he has just written of the 30 years war. as you write for citigroup, do you perceive what america is seeing as a beginning of a set 30 years worse?

>> i have called it a paradigm shift. we have a concentration of geopolitical developments. so far, they are not moving markets. that is because there is a perception leg. -- lag. the last 25 years since the fall of the berlin wall have been peaceful and prosperous. that is what investors are used to working in. committee foress, responsible federal budget. is there a risk that as we focus on so much happening outside the u.s. that the issues facing the u.s., the federal budget deficit, etc., might get pushed aside. >> the federal budget deficit is so intertwined. one of the biggest challenges has been economic growth. now, with what is going on around the world, you remember they are international, global risks we need to be paired for. ising a sound fiscal policy critical to help grow the

economy. it is also critical to be prepared when you have situations overseas which may cost more money and may have effects on the global economy and depressed things. the problem is that right now, because we have ever spent, over borrow, and have a high national debt, we are unprepared to deal with these issues in a way that we could have in the past when our debt levels were lower. >> glad you are here with us. our twitter question of the day, as the world focuses on ukraine and gaza, where we ignoring? tweet us @bsurveillance. >> domestic issues, other geopolitical issues. >> syria? china and japan, etc. usim -- >> tweet @bsurveillance. a strategy shift at credit suisse after posting the risk really loss in six years. credit suisse said it will stop commodities trading. the fine from the u.s. tax investigation cost more than 2.5

billion dollars. apple's iphone launch this fall will be its biggest ever. the screens will be larger, 4.7 and 5.5 inches. apple is asking suppliers for 80 million phones, the company's biggest initial order ever. the hedge fund manager who has been attacking herbalife will hold a news conference this morning. bill ackman says he will review his latest findings about the shake maker. he claims it is a pyramid scheme. that is this morning's company news. adam? >> talking about netflix. are you a fan of "orange is the new black? 50 million subscribers a muddy stock is up, we will talk about it. this is bloomberg "surveillance" streaming on your tablet, your phone, and bloomberg.com. good morning. ♪

>> good morning, bloomberg "surveillance." i am tom keene with scarlet fu and adam johnson. a discussion on what i do not watch, i think i'm the only one on the planet. you watchingt netflix. shares rising in the premarket i 450 seven dollars. not a blowout quarter but enough to impress. second-quarter earnings more than doubled. , sales rose share 25%. topline and bottom-line -- >> $1.15 versus $.49 a year ago, more than doubled. rate, butnal growth investors had priced in a lot of this. in terms of subscriber numbers, added more u.s. and international subscribers than anticipated. margins are expanding as well. it has a little bit of pricing

power because it introduced price increases for new customers. >> do they still do the dvd in the envelope? part of themaller business. they are focused on streaming domestically and internationally. because of the expansion to overseas markets, especially europe, that will hurt. >> because of your research and what you saw from the sell side, what is the upside from here? they're trying to be like hbo. >> they have arty beaten hbo in terms of u.s. subscribers. but yes, their time to do more original programming. money they pay and licenses has been burdensome and they need to stop doing that. $36 million made per year. what is the next gold mine for netflix? are looking to reach 60 million to 90 million u.s. subscribers. as much as a 150% increase from the current level.

and a lot of people point out it is going to be harder to get the next 35 million that it took to get the first 35 million. saturation domestically. >> it is like wall street, what have you done for me lately? yourre only as good as last trade. quit house of cards," blockbuster. "largest and a black -- "house of cards," blockbuster. "orange is the new black," blockbuster. >> they are going to do a new series on marco polo. are you going to watch? >> i say i'm not going to watch and then i get sucked in. andaya, they have 18 buys 18 holds. rare occurrence on wall street. usually everyone is on one side. in the last, 400% couple years, you want to be a little cautious. an eye on netflix. fairly positive. >> mark mahaney looks like a

genius. >> what his price target? >> $530. >> at $470 now. weing up, richard haas as continue the conversation on all the geopolitical headlines, whether in the ukraine or gaza. this is bloomberg "surveillance" on bloomberg television, streaming on your tablet, and bloomberg.com. we will be right back. ♪

good morning, bloomberg "surveillance." good morning from new york city. with me, scarlet fu, adam johnson. our morning must read. morning must listen. >> courtesy of our colleagues in

london. manus cranny said down with the ceo of credit suisse. listen to what ready to and -- listen to what brady dougan had to say. >> one of the most and fork is -- one of the most important focuses has been running a compliant businesses. we have a pretty good record. we have not had any issues on the libor side or fx side. we have learned a lot of lessons and we continue to try to work very hard to run a compliant business. that is an everyday challenge that you really have to go to work at and try to tackle every single day. i think we have actually had a pretty good record of that. that is something we're going to continue to be focused on. it is the right thing for the shareholders, we have to run a compliant business. >> how many times did he say the words "compliant business"? >> he had talking points. consul said say

"compliant business." >> we did not get in trouble for this, for that. >> earnings are one third of what they were before the crisis. >> the battle with each bank being different. maya macguineas with the committee for responsible federal budget. in honor of dr. frank. frank -- in honor of. fran -- in honor of dodd frank, thumbs up or down? >> the amount of time it takes them deal of compliance is stunning. the changes for the entire industry. do people feel more certain they're going to be crisis going forward? no, still many risks on the table. >> are we compliant? [laughter] >> they are. is pushinglion fine

it to rethinking its strategy. >> in ukraine and gaza, beginning of a criminal investigation in london on currency matters. >> that will take a couple years to resolve. we will keep an i on these big global banks and their compliance. coming up on "surveillance," chaos in the middle east and ukraine continues, what does the global unrest mean for the world oil supply? andand adam, nymex crude brent. this is "surveillance pickup ♪

findarlet fu and i cannot words to tell you what the last two weeks have been like in new york city. it has been gorgeous. like fall, except war.

>> everyone is out of town. >> it has been gorgeous. humidity, you can go for a run and you are happy to be there. >> better not be any excuses about third-quarter gdp. morning, bloomberg "surveillance," i am tom keene. with me, scarlet fu and adam johnson. quickly on the equity and bond markets. euro under 1.35 on significant dollar strength, oil elevated. west texas intermediate, 105.25. adam? withinia and iraq rank the top seven oil producers in the world. russia faces sanctions and insurgents threaten iraq, prices have not spiked. tina fordham, citigroup's

analyst, one of the most influential women in finance. risks, most political markets have localized everything that has happened. at aad isis in iraq, look map, you see that the oil facilities are in the south and the krg, curtis regional authority is still pumping. libya continues to produce. the effect is a pretty minor fear premium. >> still oil coming out. is there still a risk that longer term there is not going to be investment to keep facilities up to spec? >> that's an open question. one of the things we will be looking for is whether isis and pushed -- can be pushed back towards syria they have not been pushed further. , give usroader scale opec.ate on

the strange relationship between russia and the saudis and major players. >> russia finds itself in a very unusual position. spent a lot of his second term trying to get russia integrated international institutions, from the wto to the g-8. opec aside, one of those things on the table for sanctions is whether russia might be moved from the g 20. althoughuggest that that is the kind of thing that market street as a symbolic from the point of view of russia as a sovereign, it would impose costs. >> do sanctions work? case has always been south africa and the anti-apartheid sanctions. >> they did work. >> that is an example of how things work. iswashington, the iran case

an example of how smart sanctions work. what is different about russia, russia is a country that is most integrated into the global economy and financial systems of any country that has been sanctioned. cuba, libya, north korea, axis of evil countries, russia does not fit into that group and is a member of the un security council. it is something that really has never tried, hence the toing and froing we are seeing. >> investors are localized and risk. the low interest-rate environment allows them to do that. what happens when the federal reserve and bank of england starts normalizing interest rates and increase? >> it is a sign that it is the most important to wash. we talked about the proliferation of geopolitical risk. many of which are systemic in nature. why isn't there more of a reaction, the answer is always liquidity. it is not the scale, it is the liquidity around the system.

sanction a country and then all the sudden, the weather gets cold and say yeah, europe needs oil. >> that's why you have seen the sanctions on individuals, the incremental tactic here. sanctioning energy is unlikely. maybe technology to do with energy infrastructure. there will be an effort to keep energy off the table. there could be moves to get to toividuals closer to putin impose costs on the regime and not economic blowback that could derail european recovery. >> good having your perspective. let's ask our twitter question of the day. as the world focuses on ukraine and gaza, what are we ignoring? are there other spots in the world we should be more focused on? tweet us @bsurveillance. >> some breaking news.

more m&a, cit, a nonbank finance company is buying one mustang. -- one bank. adding to earnings per share, 20 % ets in 2016. >> i remember the morning of indymac. they aretus -- trying to restructure and this is what you do. chunk of the follow on. tyco. spun off from >> they do everything from leaves an -- from lease aircraft. >> cit buying onewest bank. stock.llion cash in

investors in europe searching for safety, coming up on bloomberg "surveillance." ♪

crocs good morning, bloomberg "surveillance." coming up, in deefense of

herbalife. street smarte on apartmr. ackman tears herbalife. >> saying it is a pyramid scheme. p.m. this afternoon herbalife. this is bloomberg "surveillance ." top headlines. moreraeli warplanes hit than 70 gaza targets overnight, among them, five mosques, a sports complex and the home of a late military chief. death toll at 585. defense official says one soldier is missing. a wildfire in washington is the largest in state history. firefighters are finally getting the upper hand. lerler winds and coo

temperatures are helping. nearly 400 square miles have gone up in smoke, sparked by lightning. pulp,ulp, no americans drinking less orange juice. being squeezed by energy drinks and flavored water. i'm a gatorade guy. >> and a lot of caffeine in gatorade. >> probably a lot of bad stuff. whatever. it tastes so good. >> i like tonic water. time for our single best chart. >> i thought you had a beverage of your choice. >> that goes in the tonic water. safety trade taking place, treasuries rising, so to are german bunds. on an internet basis, the yield is at a0 dayear bund record. 1.136%.day basis,

the previous low in june 2012, the red circle, that was when mario draghi famously vowed to do whatever it takes to support the euro and ensure the currency bloc's survival. >> he's been true to his word. >> he has not had to put any money out. >> the challenges of geopolitics. the german 10 year acting differ from the u.s. 10 year. ofwe will get in with all that with jeff rosenberg from black rock and the 7:00 hour. recommending a more conservative portfolio, a defensive stance. big deal in is a economics. there will not be a rocky mount high for wall street's leading economists, no room at jackson hole lodge. michael mckee has a take it as a member of the press. he will be there, young hot

videos, even harris, and vincent reinhart -- jan hatzius, ethan harris, vincent brian hartline not invited. the central bank version of the velvet rope. you have to be on the list, nobody has seen the list. they change the same every year and invite people based on what the theme is. there were no wall street people invited last year. a bunch ofere was them. it goes back and forth. >> is this a change to the new president of the kansas city fed? a new regime and a new policy? >> it probably is a change. she wants to invite different people who had been there. some people have been there since the beginning, they want fresh faces. it has more to do with the theme. >> the old and the new testament, i want to see.

ays. is an exciting four d >> these are the proceedings of the last two years, they simulate a book every year with the transcript of what went on. last year was the changing policy landscape. this year before, global intervention -- global dimensions in unconventional monetary policy. >> tina read them cover to cover. maya macguineas' name is in here. somebody else who has experience. >> what you think about wall street economists not attending? >> it is good, they do rotate the people who come. they have a set of people who come regularly. then they rotated the different people and i've had the chance to go when it was more about fiscal policy. they are dense papers but a lot of important, groundbreaking work comes out of the symposium and then guide some of the thinking in the coming months. >> this is not when are we going

to raise rates, this is very dense, academic work. it is like an academic conference. >> what was the big id out of last year? >> basically, what do we do in the future given that we have never done any of this so far. there was not a single take away their way there was the year before when michael woodford talked about the idea of using forward guidance. >> tom went on about that for weeks. work with an analyst at citigroup, one of the most famous attendees. you and i remember the day the film dollar -- your member the remember the day someone stormed out. there can be emotion. >> that kind of thing happens but everybody makes up at the end. >> would you like to go? >> i would like to go to the fishing part. economists and

central bankers fish, there is not a formal fishing part. there is formal hiking, rafting and outdoor sessions. no fishing. i know a number of central bankers go fishing on their way to and from the conference. ms. yellen will be in attendance? >> they invite you and then they say you are not supposed to tell people you are coming or report who is going to be there. it has been reported by others that janet yellen will be there in her capacity as the fed chairman. ben bernanke did not go last year, first time ever a fed chairman did not attend. >> is she going to lead a hiking expedition? >> i've never hiked. >> you would if yellen was leading the way. >> we get up for "surveillance" at about 3:00 a.m.

not funny. >> do not feed the bears. mike, you cannot tell us where you're going? >> i can tell you that i am going, the press are in a different category. we do pay to attend like everybody else but they do allow press in as long as we respect the rules of the conference. certain things off the record. >> waking up at midnight to join us on "surveillance." >> thanks so much. with defense budgets at pre-world war ii levels, with the u.s. have enough room to respond in the wake of a new crisis? are we at the same state of readiness? we discussed with maya macguineas, after the break. this is bloomberg "surveillance pickup ♪

>> further breaking news from israel. this is on the soldier. a lot of back-and-forth on this. is aentioning it, now it much more important and serious set of headlines. israeli army identifies the soldier unaccounted for in gaza.

soldier.holding the hamas has not said whether the soldier is dead or alive. >> we heard reports of this and now we have confirmation. we will be monitoring these headlines. the death toll is above 600 right now. we will speak with elliott gotkine. and 30in the gaza strip plus israelis. >> fighting continues in gaza even as the cease-fire is worked on in cairo. >> this is bloomberg "surveillance," i am scarlet fu with tom keene and adam johnson. some company news from the files netflixmberg west," reaching more than 50 million subscribers worldwide. second-quarter earnings more than doubled. u.s.than a 5 million customers joined the internet video service. the second season of "orange is the new black" helps boost

numbers. yahoo! makes a move to reach smartphones. i am a starter -- buying a startup that helps programmers. fleury analyzes data and helps target ads. to harmonize with spotify. they are planning a partnership. beic from mtv and vh1 will streamed for free on spotify. that is this morning's company news from the files of "bloomberg west." doubt futures5, of 48. a quiet headline in february 2014. the defense department would cut back spending to levels not seen since before world war ii, 1939 is one item. that was february, this is july. our abilityq, gaza, to show the flag across the pacific. maya macguineas is president of the committee for a responsible

federal budget and joins us now on the nation's defense budget. the the the budget is a belief thebut make -- beneath budget is a belief, does washington have a belief about what our defense department should do? >> washington does not have a do plan about what our defense department should do. chairman of the joint chiefs of staff does. in the kind of get lost budget process. you did not see a discussion of what capacity we need to have and what the risks going forward are. now, our budget is locked in a place where if we were to get dragged in to what is going on or if the kinds of economic sanctions affect us at home, we do not have the flexibility in our military budget to adjust. >> is it nostalgic to think that we need someone such as the late howard baker or john stennis, do we need those southern senators that drove us forward? what we do need are the

leaders. the people who show the leadership that reflects a vision. i don't think there is a vision that anyone understands and is backed up by a budget. we do not have the capacity in our budget to be flexible in the defense area because so many other parts of the budget are squeezing out. as we are drawing down defense spending, that is getting sucked up into other parts of the budget. >> within this conversation, q,ere is the vision post-ira post-afghanistan? what would happen if the plane struck down turned out to be a u.s. airliner? what room does the u.s. have to respond? >> there's a lack of desire to get engaged militarily. wouldmple like that change things very quickly. the fact is that you should have , it is a rated a find -- it is a rainy day fund so you can

respond. we had that in the economic crisis in 2008 because our that level compared to the economy are half of what they are now. our ability to pay for involvement around the world is hindered by costs in our budget. >> tina fordham with citigroup. you talk about vox populi, is public opinion so divisive we cannot do what maya suggested? >> there's no support among the u.s. public for military spending or military engagement. there was a poll out from politico yesterday that said 62% of americans don't think we should get engaged in ukraine or middle east conflicts. that is very telling. the world is becoming more dangerous. to take some way of the savings from the fact that we are no longer putting troops on the ground in the middle east or even -- to apply

those resources elsewhere into programs that might make more of a difference? have a drawdown in the military, allow us to use resources for other things. there is a lot of fun that investments in this country right now. we've already basically laid claims to those resources. from our biggest government programs -- social security, medicare, and medicaid. the aging population, growing health care costs, are growing our budget. claims from commitments we made years and decades ago. we need to figure out how to have those programs become sustainable. moreyear-to-year, you need choices in your budget that we have right now. >> al hunt spoke with chuck hagel over the weekend. hillis his tone on capital and the secretary of defense's relationship with the pentagon? >> the level of tension between

the parties in the administration, i cannot number the last ally has seen that. even with issues like this, which normally -- i cannot remember the last time i have seen that. even with issues like this, which normally unite the country. the tension between the administration and congress is so high. almost every issue turns into something political. >> i have got to rip up the script. , can get a better economy we get to a budget surplus? will not fixconomy the problem, but we cannot get there without a better economy. thates not negate the fact we need to deal with how we're going to aging the population, health care costs, a tax code standing in the way of being competitive. those will have to take place and in hand. >> thank you, maya macguineas and tina fordham. >> give us a forex report.

report.nged jan uighur, you're a weaker, the dollar stronger. ruble under 30 50, stronger ruble. >> richard haas joins us next. ♪ . .

>> this is "bloomberg surveillance."

>> and european foreign ministers meet in brussels. will vladimir putin and russia face new severe sanctions? this as the netherlands awaits the remains from those in-flight mh17. fighting continues in gaza. hamas says it is holding an israeli soldier. good morning, everyone. this is "bloomberg surveillance." we're live from our world headquarters in new york. it is tuesday, july 22. i am tom keene. joining me scarlet fu and adam johnson. our guest host for the hour, jeffrey rosenberg, black rocks chief investment strategist for fixed income. >> considering blacklisting more putin associates. deficit waset little changed meanwhile in june as the economic recovery boosted and government departments increased their spending. moving over to the u.s. --

economic data at eight: 30, cpi, consumer price index, that at 10:00 the richmond fed manufacturing activity read on the economy as well as existing home sales. that is the one i am most focused on. earnings before the bell, coca-cola, mcdonald's, lockheed martin, verizon, after the bell, electronic arts. today, item of note prince george turns one today. >> is he being given scotland? >> no, but we are told he is being given a lego party, as any royal one-year-old -- >> united technologies may be showing some of the tone -- >> just reporting one dollar 84 versus $1.70.la -- $1.84 let's move onto company headlines. shift that credit suisse after

the bank posted it's worse quarterly loss in six years, is that will stop commodity trading. apple's iphone launch will be the biggest ever this fall, screens will be larger, 4.7 inches and 5.5 inches, and according to the "wall street " apple is asking suppliers for up to 80 million phones, the biggest in its order in apple history. a time warner switches to defense. the board is trying to fend off rupert murdoch's takeover plan. the company is changing the bylaws meeting shareholders cannot call special meetings, taking detected away from hostile investors. 20 century fox controlled by rupert murdoch offered $75 billion for time warner. it has been rejected. >> very good, scarlet. right now, breaking news to continue on israel this morning. israeli army identifies a soldier unaccounted for in gaza. hamas says it is holding the soldier by the same name.

hamas has not said whether the soldier is dead or alive. elliott gotkine is in our tel aviv news bureau. elliott, described the response of the people of israel to the idea of one soldier being held, dead or alive, by hamas. experiencedel has this kind of thing before, but let's be clear -- we do not know exactly about the situation right now. i have a press release from the israeli armed forces simply naming the soldier as aron shaul. his identification process has yet to be completed, however, if hamas is indeed holding a number n israeli soldier come it would potentially be a bargaining chip for hamas. the last time hamas did kidnap israeli soldier in 2006, hamas swap them for the freedom palestinian prisoners.

if they are rolling a soldier dead or alive, they would presumably try to exact as high a price as possible for returning him. >> what is the likelihood of increased israeli defense force attacks given this new news, or for that matter just a continuation of the days of this war? the think it certainly has potential to complicate matters. israel might be less inclined to get its forces out of the gaza strip until such time as it is clear and has clarified exactly what happened to the soldier, who is believed to be an armored personnel carrier that was hit by an antitank missile come on sunday, which was the bloodiest day so far. the fighting is still going on. there are still many palestinians dying, israeli soldiers dying, and this could complicate matters in terms of finalizing a cease-fire. i'm not think that will make any difference right at this moment

just yet. >> elliott, it is easy to talk about numbers and not relate to them. now dead. in hamas it is a horrific number. again, it is just a number. if we start getting more sort of personal, whether it is this particular soldier or somebody else, does that change the complexion of what is happening? to 29k, i think we're up israelis killed so far, so from israel's perspective, i think it has the broad support of multiple in the country because of the objective of stopping these rockets from being fired into israel, which israel from the left and the right would agree is not a tolerable situation. i was just reading an editorial by david landau, who also wrote a book on ariel sharon's life, he says if you carry out attacks which have inevitable consequences come even if the consequence is on intentional,

in jewish lawng and morally. and of course a very large number of civilian casualties on the palestinian side, some in that is making people in israel feel uncomfortable. elliott gotkine, please stay with us. is richard haass, council on foreign relations, and jeffrey rosenberg is with us as well, of blackrock. you are way out in front of this with your book of two years ago. just your immediate observation of what secretary kerry can accomplish in cairo. >> the best he can accomplish is what you might call a narrow cease-fire. hamas can putd aside all the conditions they want. the problem with a narrow cease-fire is just that -- it does not deal with any of the causes of the conflict. it is not prevent hamas from rearming. if you try to get ambitious and diplomacy right now, you are going to fail. that is secretary kerry's dilemma. >> you delivered that in spades

last night with your op ed in project syndicate. i want to go to this right now, folks. richard haass putting a 17th century perspective on where we are now. this is my morning must-read. we will bring it up your with project syndicate. 3.5 years after the dawn of the arab spring, there is a real possibility that we are witnessing the early phase of prolonged, costly, and deadly struggle. as bad as things are, they could become worse. and you give scope and scale to the 30 years war. >> obviously the first part of the 17th century europe, catholic-protestant laws between and within kingdoms -- what i actually think we are seeing in the middle east is similar to that. religious wars essentially within islam across and within boundaries. it is both liberal and religious, and i do not see any reason that what we are seeing in iraq and. elsewhere, why this could not go on for years or decades. it's what kind of diplomacy do we need if we cannot have the henry kissinger does diplomacy?

that is quaint, but that is not work in 2014. >> the problem in the middle east as you do not have functioned states. look at what is going on in iraq and syria. you could maybe get some of the outsiders to beg off. my hunch is no. these things tend to go on until they burn out. in its own ways, we need to fasten our seatbelts and think about how is it we insulate ourselves from some of the worst aspects of this? talented asnk as henry kissinger is, as dedicated as john kerry is, not every problem is right for resolution. i am sorry to be so negative this morning. he middle east is not right for resolution. twice we want to thank -- >> we want to thank elliott gotkine joining us from the middle east and giving us the latest. you mentioned a narrow cease-fire in the middle east. what about a prospect of cease-fire between russian militants and ukraine?

>> what you need to have an order for that to happen, first of all, is the europeans -- they need to put greater pressure on russia. putin has to understand the domestic price he will pay for continuing the strategy. but then -- and this is where it gets really sensitive, and here i think there is a place for diplomacy -- the united states and europe have to give mr. putin something of an off ramp if he wants to take it. my hunch is he might. if you are sitting where vladimir putin is, you care most about his own saying power, putinism, and right now this has become a threat. he has set in motion clinical forces to his right, the people and ukraine are potentially a threat, you might almost call it blowback. he has got to be careful about what he has set in motion, so it is quite possible this is not what he counted on. he can't control what is going on. ramp?at is his offer gekk >> the russian ethics and

ukraine and secondly the political orientation of ukraine, maybe formal assertions about ukraine not a curing nato for a certain future, certain connections between ukraine and eu, certain connections between ukraine and russia, and it gives putin some way to back down and to save face. >> very good. richard haass with us for the hour, council on foreign relations, jeff rosenberg as well. >> that is interesting. an offramp for vladimir putin. >> president obama gave him an offramp on syria. >> our border question of the day -- as the world focuses on ukraine and gaza, what are we ignoring? is it syria, is it iraq, is it asia? tweet us @bsurveillance. ♪

>> a good one, everyone. "bloomberg surveillance." i am tom keene. jeffrey rosenberg as chief investment strategist at black rock. he strategizes so his clients may have a pot of money at the beginning of the retirement trail. as expected, the expected return work the so-sumpedon of investment return. it is changing. not all of it is good news. this is an important conversation. where is our expected return? >> expected returns are links to

economic performance. at the end of the day, the ability to generate returns is a function of the economy's ability to grow and deliver returns for investors, and the big story in the aftermath of the crisis is that you're in a lower level of economic growth and therefore a lower level of returns. a big part of a lower level of returns for fixed income investors, for retirees, is the low level of interest rates. we have lived in a world of zero interest rates -- long time. >> it is a big part of the conversation what we get out of that, but investors have been faced with much lower bond years come in for retirees, that has been a big issue. portfolio, blended am i looking for 4%, 7%? can i be more optimistic with what i see in equities? >> you have to look at it over a different time horizons. we have had a remarkably strong equity market returns, 30% plus returns last year, but that is very much a part of the cyclical recovery that is not sustainable. when we look at long-term returns, you are really looking at a lower level of returns.

it may seem strange because we have had such strong returns, but it is really a lower level of returns. >> finance is a curve that looks like this, and you can argue 65.35 -- is all of that theory blown up? >> one of the biggest drivers is the weightings in a portfolio, how much in stocks versus how much in bonds, but really what drives that idea is that on offset risks and equities, that you put them into a portfolio because they are a diverse of fire. we had periods like last year where that backfired on you. that hasike this year, worked, but you have to be in the right area of a bond market. the right area of a 60/40 portfolio, somewhat surprising longer duration instrument, so the weighting of the portfolio depends on where you are in the fixed income portfolio. >> where am i on bonds really quickly total?

total return? >> you have to play defense right now. we heard a lot about that from policymakers are now, very careful about how much risk we are taking. veryt risk a particular valuable. jeff rosenberg with blackrock and what to do with your retirement over the weekend. what we will do is mention ukraine and gaza. richard haass is with us, president of the council on foreign relations. stay with us worldwide. it is "bloomberg surveillance." ♪

>> good morning, everyone. "bloomberg surveillance." with me scarlet fu and adam johnson. our guest host, jeffrey rosenberg, blackrock's chief investment strategist. with us, richard haass from the council on foreign relations. top headlines this morning, here is adam johnson. >> detroit takes another step back from the brain. the city's workers and retirees voted to take tension cuts. that will help us right in merge and theory. i travele

a trial will decide if the big rusty plan is fair to creditors. and firefighters are getting the upper hand thanks to calmer winds and cooler temperatures. nearly 400 square miles have effectively gone up in smoke, and that was originally sparked by lightning. warplanes hit more than 70 gaza targets, among them five mosques, sports complex, and the home of a late hamas military chief. the death toll now at 580 five. those are civilians. hamas says it is holding an israeli soldier who was reported missing after the latest battle. >> is there an obama doctrine? more importantly, should there be a u.s. foreign-policy wrapped andnd presidential politics believes from the presidency of the council on foreign relations, richard haass commands a post at international relations acidly asks in a

post-american century, how should america respond to your ukraine, countless gaza battles, and the 10 years of war in iraq and afghanistan? this is the art in question. you address it in your book. how do we get to a point where we know what our foreign policy is? >> two things. think of national security as a coin with two sides. there is a foreign-policy side and a domestic side. you have got to rebuild the domestic side. infrastructure, immigration, getting this economy growing probably at twice the current rate, which is not crazy by any means. overseas, stabilization, where the powerful countries of this era are, and we have to limit the potential for instability in places like the middle east. that is the essence i would argue for foreign-policy right now. >> is their political leadership on capitol hill i could if that believef? or are they all retired? >> a lot of the big loopers,

southern democrats, they are gone. up forrries me is hell grabs american foreign policy is. you have got everything from china minimalist or neo-isolationist to those who sibley do not get it to those at the other extreme, people who want to do things that we ought to have learned are impossible. i worry about the intellectual incoherence. this year marks the 25th anniversary of the end of the cold war when the religion wall came down. what you see is still an intellectual vacuum. that is no american policy enjoys anything like bipartisan support or support between the white house and the congress. >> what is curious is that almost like you are talking about a pivot away from the mideast and towards asia. mideast almost becomes containment. >> to some extent yes. the administration use exactly that word, pivot or rebalancing, a greater emphasis in asia. that is where our greatest interests are. it is also where the united states is best positioned to promote those interest using

trade negotiations, diplomacy, air and naval presence. we can help stabilize asia and the pacific. the administration articulated it, but it's problem is that have not implemented it. idea of it but it has not become policy. >> and in places like the middle east and ukraine? >> what you are seeing is the unraveling. another historical analogy, the post-world war i sentiment. whereas in asia, strong states are emerging. and in the middle east, weak states that are unraveling. >> the other books that we read as amateurs in this, as you are professional, richard haass, how do we link in jeffrey rosenberg's world. the actual truth of 1940 where all of the sudden your policies directly confronts jeff rosenberg's finance and

investment world. when does that occur? >> in some ways we are seeing it. it happened over the last five or six years. the economics unraveled. that has stabilized. i have of the meetings been at recently, it is really interesting how many business ties and investors have said well, we have focused on economic instability the last pew years. a littlekind of calmed bit. right now it is geopolitical risk that holds the greatest potential for market disruption. the problem is fixing geopolitical risk in some ways is even harder than addressing economic risks. >> because the underlying politics are so broken. >> one of the answers for that is the sanctions. he wrote a book before the most recent one on sanctions in american policy. that is really -- we just talked about the most recent news and ukraine, the ratcheting up the sanctions, getting bigger, more whatnational companies -- do you think is the outlook care for sanctions, and particularly, where is your coming on?

>> be big thing with sanction is the good news -- if you can get others to support it, if you can get europe to support it, the potential for sanctions to have an impact is credible. easier said than done. the other thing of the blowback from sanctions. the idea that because of interdependence, yes, we can hurt russia, but if russia gets hurt, it also has implications for europe and ourselves. sanctions are a double-edged sword. >> oil. >> yes, and we have got to launch a long-term energy project, the transatlantic energy project, to reduce european dependence on russia and gas. the idea that we would allow ourselves to become so dependent, in this case europe, on russia's one position of real strength, comparative advantage, which is there a cash crop, oil and gas -- this to me is strategically -- i almost say stupid. we have got to launch a project to reduce this overtime. >> richard haass, present on the

council on foreign relations, thank you so much. deal economics, tom, that is newg to be "surveillance's" focus. >> deal finance. >> we will be back with more including your 401(k) plan. we will discuss. ♪

>> this is "bloomberg surveillance." i am scarlet fu here with tom keene and adam johnson. let's get you some company news headlines. are in a complex tax evasion scheme. a senate panel wants to investigate deutsche bank and

barclays. a report says that went on for 15 years costing the treasury billions of dollars. verizon post double-digit growth in earnings and operating income for a sixth straight quarter. verizon added almost 1.5 million retail connections. it's the ceo says the company is taking great momentum into the second half of this year. and a hedge fund manager who has been attacking herbalife will hold a conference. bill ackman says he will relate veal his latest findings. herbalife responded on twitter saying the truth will prevail. as we turn back to geopolitics, geoeconomic according to richard what, the question is -- crises are world leaders overlooking? you sayhaass of cfr, it is asia, but what in asia? >> let me take a step back.

there are writings about the origins of times crowding out the importance, and i am not saying the middle east is not important. i think the urgent stories of the middle east and ukraine are crowding out the most important stories of this era, which is asia, china, india. this is where the people are, where the gdp is, and the problem is after several decades of asia being largely stable, enjoying tremendous economic growth, the economic growth has slowed and what we're seeing is greater nationalism and greater competition between and among states coming out of the woodwork. the shocklack of absorbers. it lacks the political, military, diplomatic networks to prevent crises or dampen them down. >> what kind of role can the united states play? what kind of opportunity does that present to washington? >> we are the one country that can stabilize asia because of our alliance relations, good enough relations with china. we need to do it with our air and naval presence. we need to do with our diplomacy. we need to do with trade and negotiations. the united states is the one country that can help reassure

friends but also one of others. >> there is a curious tribal -- china, japan, the u.s. -- because there is a tension between two of those legs, china and japan. how does the u.s. reassessed that? >> we have got to be reassuring to japan, we do not want japan going off on its own. but we cannot be so reassuring giving japan diplomatic moral hazard that they feel that anything they could do we are there for. with china, we had to be careful, robust, pushback, but we do not want then do think we have switched over into an relationship. threading the needle will be difficult but essential. >> difficult because the theident of china and premise or of japan are using nationalism to get everyone going. jinping.bout xi >> legitimacy for the last 30, 40 years has come from a

double-digit economic growth. those days are over. the low hanging fruit has been picked. it is not coming back. so china and the communist already has to build legitimacy, build public support at home in the absence of high economic levels of growth. what i am worried about is they are both going to crack down at home. we are beginning to see that with some of the anticorruption purges, and abroad, they will turn to adventurism as a way of satisfying popular pressures. pushore assertive china into the south china sea, pushing against japan, and again what asia is missing are the -- like europe -- you have nothing in asia, for example like franco german reconciliation, china and poisonousa really relationship. you do not have all of the diplomatic row arrangements in the asia that you have in europe, and that is what worries me. your estate can only fill a place if we are they're much more than we are. that sets us apart from the

old world and from asia. are they now an optical? are the oceans now an obstacle to a better american foreign-policy? >> if we have the illusion that oceans protect us, that is dangerous. it is really a dangerous idea, and i worry that it is taking hold. the polls coming out show more and more americans have sort of had it with the world, and the oceans do not protect us in an age of terrorism. it is not productive in an age in which we have interests around the world, and we have got to be active. >> anderson cooper last night, post-american world, what is richard haass' post-american world? >> it is not a will that china or india or japan or russia or anybody else. the alternative world in which is american lead is a world of greater disorder, is a messier world to my world that is bad for us, but for others. there is no one else who is willing and able to help play

this role of a global stabilizer. either we do it or it is not get done. what worries me is that fewer and you were americans are willing to do it. >> richard haass, president on the council on foreign relations, thank you so much for joining us today. >> thanks for having me. >> outward order question of the day --as the world focuses on ukraine and gaza, what are we ignoring? tweet us @bsurveillance. >> good morning, everyone. look for all of our interviews out on digital media, particularly on bloomberg.com. i am tom keene. fu. me adam johnson scarlet our guest toes, jeffrey rosenberg, he is at the blackrock, chief investment strategist at blackrock. makingcal philips $75,000 a year and thanks to its top ranked 401(k) matching program, you will retire at xd $3.8 million in savings. million in savings.

aggie, i am blown away. everyone should read this. it is important. what makes conoco's lancet so effective? >> not only are they giving a high match, but they are matching people 9% if you put in only one thing percent of your pay, but they are also taking an additional contributions no matter what you put into the plan of 6% to 90%. we found a number of companies we ranked as top 250 and the s&p are actually taking and in addition to the match, and i can really help people. match?hat a 9-1 money and pretax conoco puts in nine dollars? >> exactly, adam. companies have historically guarded very closely their 401(k) plans. it is difficult for people to find information and compare companies because the filings are hard to go through, they read like a tax report, and

companies guard their plans very closely. but we did realize in doing this study that a number of companies are doing what i call frontloading it, like conoco phillips, they will give you 9-to-1. visa will give you 2-to-1. >> where is the average plan in terms of the match? >> the industry averages are about 3%. a lot of companies will say if you get 6%, we will give 3%, but most of the companies that top-ranked in our company are way above that. some companies are getting up to 70%, again conical getting 9%, a number of companies giving 6%, at theumber kicking in end of the year no matter what you put in. >> and amazon and facebook are way low on the list. what is going on there? >> a number of the tech companies are lagging for two reasons. one of them -- some like amazon, you put into 4%, they put in 2%,

and also making you invested three years before you can leave with getting all of your money. >> 401k used to be a supplemental way for people to put aside money for retirement. it has kind of overtaken the defined benefit plan. legislation and regulation have kind of fallen off by the wayside, too. >> the, one of the things we try to do and are hoping people can gain from this transference he is exactly that. give people more information because now most companies have shifted away from pensions to 401(k)s, but again, it is hard for people to compare them, so it is something that is becoming more and more important. it is rising like health care when you go to look for a job. >> this study is nothing short of phenomenal. adam, you mentioned $3 million for the young buck that actually does the right thing yo? $75,000 overy of 35 years, $3.8 million. this, i amou know 42, i have done nothing.

i go in and make 7%, and that is a $10,000 contribution, i come up with almost $690,000 on my own. critical within the calculus of adding another 309 thousand dollars to get me up to almost $1 million because like the rest of america, jeff, i screwed up and started late. >> i want to bring in one other idea, peggy. we talk about match, but let's also talk about asset allocation. what have you seen in terms of that? difficult to find the investments that companies are providing their plans, and they make intentional choices when they do the funds that are in there, but we are seeing a rise of index funds in 401(k) plans and target dates, which can be passively managed. we did see a number of companies in the ranking are offering at least one type of stock, bond, an international fund, and we tried to point that out because that is the way people can create their own low-cost

performance. >> peggy collins, thank you for the wake-up call. please, everyone read it online. >> really revealing. arturo question of the day -- as the world focuses on ukraine and gaza, what are we ignoring? we want to hear from you. tweet us @bsurveillance. ♪

>> good morning, everyone. welcome to "bloomberg

surveillance," from our studios herein new york city. coming up, and :00 a.m., "in the will be in gerard the 9:00 a.m. our. jack gerard on oil. has not reallyat advanced off the various turmoil in ukraine and gaza as well. this is "bloomberg surveillance." i am tom keene. with me scarlet fu and adam johnson. i think we need to have a morning mover. >> coke. for the first time in over a year, beats the analysts' forecasts, however it is down, and scar, the revenue is a little bit light. >> $12.57 billion in the quarter $12.83 billiono millio dollars. the second half comparable estimates, earning per byres, excuse me, hurt

structural items. >> i'm not sure what structural items means, but it is structural. >> it is structural. >> and someone else facing structural challenges -- credit suisse and the rest of the banking industry. credit suisse shares in the united states, trading lower in his direct. -- in zurich. the shares are down. bradycranny sat down with dougan of credit suisse, listen to what he had to say about the bank's governance. >> one of the things i think has been the most important focuses of us for many years is making sure we are running a very compliant business, and if you look actually at our record on number, these areas, i think we have a pretty good record. we have not had any issues on the libor site. we do not have any materialist is on the ethics aside, so we have learned a lot of lessons, and we continue to work very hard to run a compliant business. that is an everyday challenge.

that is some thing you have to go to work out and try to tackle everything will day, but i think we have actually had a pretty good record of that, and that is something we will continue to be very focused on. it is in the best interest of our clients, it is the right thing for the shareholders. we have to run a very compliant business. >> my take away from that is banking is not a very fun place right now. we are not doing anything wrong -- >> he said -- what? >> i do not know. i just thought it was great ceo speed. >> i counted the word compliance or compliance, some variation, four times in the space of 20 seconds. very clear. >> what do we got on earnings yesterday? >> microsoft, apple, electronic arts, and earnings out tomorrow, boeing, at&t, and facebook. that is part of the bloomberg earnings edge. willnot know if anyone mention compliant. >> some apple, news on their new iphone -- are we calling it an iphone6? is that accurate?

>> i believe so. these will be bigger screens. >> the "wall street journal" said 80 million -- >> yes, the biggest order ever and apple's history. i have a samsung galaxy, and i like the bigger screen. >> all of my children's iphones -- >> i am going to go with the big one. >> all about big screens here. we will be back on "surveillance ." we will discuss when will the fed raise rates with jeff rosenberg of blackrock next. ♪

>> where are you in the equity markets? tomorrow, a study putting money to work, really looking forward to this on television and radio, 7:00 a.m., bloomberg "bloomberg surveillance," allocation on sectors and just the sheer courage to be in the markets, dow at 17,052. look for that tomorrow. >> let's get you company news, i am scarlet fu your tom keene and adam johnson, our guest host is jeff rosenberg of like rock. he is the chief investment strategist for fixed income. netflix is reaching 50 million subscribers worldwide. the company's second quarter earnings doubled even though television watching slump for

the summer. more than half a million customers joined the internet video service. anotheraking move. a deal is worth more than 300 lane dollars. lori analyzes data from smartphone users to help develop target ads to mobile devices. and viacom wants to harmonize with spotify. the "wall street journal" says they are proposing a partnership. music from mtv and vh1 will be streamed free on spotify. that is this morning's company news from the files of "bloomberg west." first command tv and vh1 have to play some music. >> yeah. >> it seems odd company news for the economy given all that we have had to face. >> i know. i almost feel out of phase when we talk about some of the stuff. so many people are dying. >> the markets have been largely ukraine,d the agony of

israel, gaza. the federal reserve as a foundational call to make on when and how to take away an historic punch bowl. simply dash cam the bond markets survived janet yellen's best intentions? jeffrey rosenberg with us from blackrock. just come i am fascinated -- we saw a number of augusts ago, it was ugly, do you just presume it will be ugly for your bond market? >> it is hard to say. clearly there is a debate out there as to how the bond market will handle it, how will the signal occur, and what kind of environment? certainly right now, and particularly if you go a week back, the word of the day come of the week, the month was financial complacence. you had very low levels of risk pricing going into the market, which means it is very hard to introduce a change to the outlook when the markets are so complacent. that is what the geopolitical environment headlines were about. you added janet yellen, i think it will be hard --

>> my finance 101, which you know as well, his bond investors behaviorally act different than at the investors. everybody learns this when a price goes down in the yield goes up, how will be bond market behave now versus our day-to-day focus on the equity markets and vix? >> i want to go back to what you said about why the bond market behaves differently. you think about bonds and somebody's portfolio. bonds are the safe sock. it is different to lose money in something you expect to be risky. it is very different when you lose money and something that you expect to be safe. your threshold for change is much lower, and that is what you get these knee-jerk reactions. the other critical difference is liquidity, the ability to transact in the bond market is much lower. we do not really know what it is. we have had significant structural change coming out of the regulatory response, the financial crisis. we have not really tested the liquidity. you add those two things together, and it is a recipe for volatility. >> that surprises me because we are so trained to think about

how much money moves through fixed-income. we believe it is a broader market in equities. why is liquidity such an issue? specifically within fixed-income? >> we use the word liquidity a lot. when we talk about liquidity, quantitative easing, it is about the amount of money in the financial system, so certainly the amount of money is very high. the second definition of liquidity is -- what is the price of trading? what is the price of transacting? here it is the second definition we are focused on. here we see is many bond markets are fragmented. you think about one share of stock is one share of stock. it is the same. and more markets, you have a lot of fragmentation, so you do not have a lot of issues, and that creates a higher price of transacting. >> i want to step on something, i do not want to do the for those at your shop called blackrock, but jeff rosenberg, should we have confidence in this new regime that our mutual funds will act as they have always acted when we confront a market?r

bond prices go down, whatever the amount, and yields go up, do you get the same confidence you had in 1994 whatever the other bond slowdowns were? >> it is important to bring back the history and remember that in times of stress, you have stress liquidity conditions. we highlighted recently that you have areas within the bond market where those stresses can be higher. >> high yield. >> we talked about bank loans, and it is very important that investors have a clear understanding of what the liquidity is an underlying instruments -- >> i do not think they do. adam, you and i have enjoyed the high yield bond. it is where? >> wait, wait, what? three things that you like as i read your lines -- agency mortgage-backed securities, protected securities, and immunities. why those three? >> very different reasons. let's start with a focus on agency mortgage-backed securities, is the liquidity. this is the second-largest fixed income market in the world.

the value of liquidity in a fixed income portfolio is very important. we talked about transition. you want to have the ability to change her portfolio without large costs. on, it is really the idea, we will get a print this morning on inflation. the inflation ask rotations are rising. you were going to get a better attraction out of the tips market. and municipal has certainly had a lot of dislocation in the market that has created more value, particularly in the longer end of the muni curve. >> some more defensive stance here for investors. we want to get to our agenda also right now where we take a look at the stories in shaping the day. tom, why don't you get us started? >> i will go with anxious. the eu ministers cannot do much on sanctions. never the less, there we are. marginal moving sections for the u.s. and separately for the eu. those are two different sets. to me they are really

intertwined. it will be interesting to see if they can really affect sanctions against mr. putin. >> which is the argument of richard haass, president of the council on foreign relations, who joined us earlier in the hour. that tension between -- is much easier for the u.s. to take a hard stance than europe. >> and france, they are selling two warships, helicopter live from about whatever they are, france, germany, and the united kingdom are really divided on this. >> yeah, they are still doing business with russia. they need the money. unemployment is a problem in france. my agendaat is on -- maybe we'll get an indication of gdp growth in the form of existing home sales. this number comes out at 10:00 a.m. it is expected to rise 1.9%. that is way below last month, where it was up 4.9%. i should point out last month was the highest in three years, so it is a follow-through. >> it is a mystery to housing -- >> yeah. >> i do not know where we are. every other interview is different. >> yeah, and the amount of

paperwork you have to put through to get a loan, assuming you're not a cash buyer and a regular person. >> like you. >> i am not a cast wire these days, trust me. >> apple, the tech giant is asking for 80 million of its latest phones, which will be unveiled this phone. they will be phone/tablets. >> i do not want it to bait. >> it is not made for you. it will be really large. >> no, not a chance. >> you can get more of it. >> just put the earphones in your ears and you can hold it down here and you do not have to hold it -- you know what i mean? >> in any case, we also want to get to our reporter question of the day -- >> now your itunes are going into your head. >> we asked everyone -- as the world focuses on ukraine and gaza, what are we ignoring? what else out there is happening that we are not looking at enough? some of the answers -- south

china sea. this goes back to the idea of china's territorial disputes with its neighbors front and see center. richard haass of the council of foreign relations said this was the big when he saw. >> two issues, the japanese disputed islands and perhaps drilling too close to be enemies national waters. >> at the same theme overall, resources. not ignoring but forgetting iraq and syria and the young generation of kids who were going through this displacement. great answer. thank you. and finally -- we are ignoring the important domestic issues that plague our society. olence, # poverty. >> gun violence is horrific in chicago. >> jeff rosenberg of blackrock, what are we forgetting? >> our role in the bond world is really interest-rate and fed policy and we have a meeting asked week. we do not expect a lot of the meeting out of the fomc, but certainly one changing word --

acknowledging the improvement in employment. that will be a critical development. >> jeff, thank you. jeff rosenberg with us from blackrock. >> "bloomberg surveillance" on radio continues. "in the loop" on bloomberg television with alix steel is up next. have a great morning, everyone. ♪

>> good morning. it is tuesday, july 22. we will bring you the latest on the global standoff from russia

and just how is this political strife affecting gas prices back home. jack gerard will weigh in. first, the headlines this morning, punishing russia for meddling in the ukraine. about $28 billion in market value now have been lost in russia and crimea. is getting out of commodity trading. the companies is reporting its worst loss in six years. coca-cola announced the latest numbers for investors. -- coke is getting a boost from the internet hook up. nearly $2 billion.