vladimir putin. russia's oil future is threatened. in bunes areas, we have a problem. argentina confronts default. >> argentina's debt talks collapsed. they're going to resume today and this is the deadline to avoid default. so this is a big deal. spain up .6%. that was the ugly duckling and spain is back a little less ugly. we're going to get our own read on gun point. -- g.d.p. >> deutsche bank staking out that. we'll talk more about that. >> and a.d.p. is at 8:15.

>> very quiet. >> yeah. and followed by the rate decision at 2:00. >> no press conference today, right? >> no. no change expected. but they might change a wording. we'll get geeky on it. earnings before the bell, he is in that deal potentially. and -- hess is in that deal. whole food and yelp. president obama speaking. >> did you make note on the fed coverage. betty and i will speak with alan greenspan. i've not some tough questions ith him. let me do a quick data check here. looking at stocks, bonds, currencies and commodities. we fluttered around 1966 on s&p futures. he euro, 133 handle. on to the next screen.

in the vb6 pop yesterday, -- vix, pop yesterday, further lattening. all in all, a weaker ruble given the new sanction. one of our theme today. and yen is weaker as well. let's go look at vladimir putin's world. this is the volatility of the ruble. and we've redone that year with a weaker ruble in the last one, two, three days. this is the market voting on the sanctions. and particularly that impact on the oil economy. >> in other words, the dollar is buying you more ruble which is a weakening ruble. >> let's get to our front page where we start with mr. putin. looking at the newspapers and the webpages, we welcome back scarlet fu. >> i'm back, well rested. the thing with the sanction is even though they were announced

yesterday, people have been anticipating them for days. some of the reaction that we saw, a delayed reaction. russia reacting to those news sanctions, part of an ongoing attempt to get putin to change his behavior on support for rebels fighting in ukraine. i know we talked about the weaker ruble, but following the news, the ruble strengthened a little bit because some were saying that rally to be short-lived. it's down about 5% for the month. >> peter baker in the "new york times" really emphasizing the oil impact here. , give you an idea, exxon where siberia comes into the end of russia, it's like where santa claus is from. and they're going in there right now to drill offshore on the dge of the arctic sea.

>> there's an irony because european companies, because european governments are not allowed to effectively export equipment for the oil and gas industry to russia. and yet europe needs russian oil. it gets 30% of its oil from ussia. >> let's get to our next story. >> ian bremer will be here to analyze our sanctions. ore attacks on gaza overnight. israel is looking into the report. in terms of the death count, more than 1,200 palestinians. >> somewhat -- i hate to say this, a quiet day versus the horrific sunday we saw. >> yeah. but nevertheless, still fighting. >> and more people dying. >> we will continue to monitor that situation.

and moving to the corporate news front. twitter. shares of twitter soaring in the market. up 27%. and rose as much as 35% because the second quarter report seem to ease concerns that growth was slowing at twitter. user growth of 24 hkt to 271 million. second quarter revenue more than doubled. but twitter not profitable. >> the morning i thought it was the world cup. you were riffed to the world cup, tweeting out on 69th street. >> i was. and following the tweeting -- >> adam johnson tweeting. i had my fourth -- today. >> it got really hot. >> twitter doesn't say that the world cup did anything for its results. you're looking at more sustainable drivers on growth overall. that is our front page for this morning. >> over to adam. >> let's go gio political here for a moment. the death count rising about

1,200. have these overnight deaths done anything to bring either side closer to the bargaining table? >> they haven't, adam. and that shedding of a u.s.-run school in gaza was actually about 3,000 palestinians, more than 3,000 have sought shelter there and 220 were killed and more than 50 injured. it happened about 4:30 a.m. local time. so we're talking about some seven hours ago or nine hours ago. i don't think it's going to change anything at all. any hopes that we're inching toward the cease-fire, we thought we were going in the opposite direction. >> there were some doubt as to whether that shell is from the israeli side or the hamas rocket. do we have any clarity on that? >> the israeli armed force are saying they are looking into it.

there was a shelling the other day which hit a school in which the israeli said was the fault of hamas militants. it's not said that it wasn't responsible for this morning's attacks. it is looking into that to see exactly what happened. >> we spoke to the minister to the israeli government. they were going into the security cabinet meeting. what was discussed there? what is new of the leadership of him? >> there's nothing new yet. there's another meeting to discuss the next steps of this operation in gaza. there are some course such as former president stepped down just the other day saying that the goals of this mission in gaza, namely the destruction of these tunnels have pretty much been completed so it was just a question of what kind of cease-fire is to had. and he said to prepare for a long campaign and he looks for that front to be delivering. >> is it beneficial for secretary kerry to visit israel

right now? is that a good thing for the united states? is that a good thing for israel? >> it depends how thick his skin is. he said he dealt with the criticism he's received. i'm not quite sure what it would add at this stage. you clearly need to have someone to mediate some kind of cease-fire. perhaps the palestinian authority holds the main cards here. maybe the solution to what's going on and perhaps have him in charge of the border with gaza. right now, a lot of misinformation about a cease-fire about to be agreed and whatnot. always seem to come to -- i don't think a cease-fire is on the table right now or any time soon. >> while the world hopes out hope, thank you, elliott. i think it's time to ask our twitter question of the day, which is what should john kerry's priority be if what should he be focusing on right

now? is it israel? is it argentina? is it ukraine? >> what is he going to india for? >> new government and to shore up elections, literally, to show the flag. >> isn't it a little late? he's got fires to put out. >> and maybe one to stoke in india. that's a big economy. it matters to the u.s. >> our guest host this morning will make you smarter and more prepared for this busy wednesday. us.iam janeway is here with and a chief invest p.m. officer with a wonderful overlie of geo politics and investments rights now. are these sanctions and investment gamechanger for the billons of dollars moving back and forth between europe and russia? >> i think it is a gamechanger in that what they create is

opportunities. and where we see opportunity is to an asset profit is reacting more strongly than what's implied in the sanctions. it's really up to finding value. really, i think the opportunities in europe because there's been sell-offs there but there are understand merging which are not impacted by this sanctions. >> what have you seen as the moral investment in russia? jim graham was quite eloquent. he's got a look at these stock tradings and he did debate. there's an issue about the when of new investment in russia. is there a moral issue for investment professionals like you? >> in terms of it being a moral issue, for us, it's more about finding the value and find the -- finding the opportunities. it's the legal issue and the investment issue and is there an opportunity there? >> all right. we want to get to our other top

story of the day because you're seeing plenty of opportunities in twitter. shares are up 29% to 4982 in the premarket. we want to bring in bill janeway. with twitter, what i found really interesting is dick cost low talking about the search is larger than the monthly user because a lot of people use twitter without actually logging in. and he says that's a very valuable demographic. >> we're in the early stages of experimenting. now that we've spent 50 years trying to construct computers that work and that are distributed and that are mobile, we've got the infrastructure, now is the time for experimentation. twitter is a prime example of experimenting on the frontier. we know one of the killer apps is advertising. mobile advertising, where the locationle services are, are integrated with social media,

it's clearly big. it's clearly going to grow. it's going to go way much further than it already has. places in china and in some respects are already ahead of s. but anybody who is looking for some kind of deterministic predictable path forward whether it's the level of the individual company or total advertising spending is in dream land. the way i think about this, it's like -- >> are these non-viable business? twitter is only making pennies. >> what matters is positive cash flow. that two cents, sure, it's after all sorts of accounting stuff, stock option charges but positive cash flow. >> right. >> and they're at the point when they get there, they then have choices. they then have choices. they can crank up the cost of consumer of getting consumers or they and build more structure. >> we have a lot to talk about on this wednesday, particularly

looking at the american economy with that g.d.p. report out of 8:30. >> we got a lot coming up. e u.s. and e.u. increasing sanctions on russia. we will be speaking with ian bremer. this is "surveillance," tom, a.j. and i will be right back.

>> this is "bloomberg surveillance" in new york city. coming up later this morning, betty lui and i will interview alan greenspan. i want to ask him about are we going to see interest rates go up quickly or will they be up in a measured manner? 9:00 a.m. this morning on bloomberg television and bloomberg radio, worldwide,

greenspan as we can do it with some tough, tough questions. this is "bloomberg surveillance." good morning. i'm tom keene. lots to talk about. let's get to russia. sanctions only work when they effect the foundation of an economy. the european union and the united states coordinate sanctions and go after russia's very heart and soul, russia's energy future. ian bremer is the author of "every nation for itself." is russia now a nation isolated and for itself? >> for itself, yes, but that's not new. isolated, absolutely not. markets went up on this. i kind of see germany, britain and france a little bit like those three monkeys, you know, the hear no evil, say no evil, see no evil. the germans don't want to do sanctions. the france don't want do defense sanctions.

and even after you have almost 300 civilians dead, knocked down by this plane in southeast ukraine, there's still an enormous unwillingness to hurt their economies. and the russian know that no one's going to go after them sufficiently to move them off the diamond, ukraine. that's why we're on this pattern of very long playing out. >> without the incrementalness and the study of your angsts, would you suggest russia will retaliate as soon as today or will mr. putin counsel patients? >> it depends on what you mean by retaliate. i think they do not want to engage in tit for tat sanctions. the putin strategy has been working more effectively with the plane going down the europeans have move closer to the u.s. policy but putin's game is a long game. so he's going to want overtime. the europeans are a lot weaker than the americans on these

issues and he's going to want to ensure there's as much delaet on these sanctions. i would be surprised that he puts a lot of sanctions there. but his actions on the ground especially with elections coming if hee to show his mettle wants to win. the russians are going to react i think more strongly there. and that means more weapons to the separatist on the ground and probably more fighting across the border as the americans have >> said they've started to see. >> it's a hypocrisy in it that the european governments have told exporters of energy equipment you can't sell to russia and yet the europeans need russia because that's where they get 34% of their net gas. how does that resolve? >> there was a movement here. despite all of the economic desire of the europeans to do as

little as possible with russia, they felt the need to respond heavily. and let's face it. for the dutch government, this is a 911 -- 9/11 moment. this is all you see all day, all night in the dutch press. it's a national tragedy of such an enormous gale scale. d the europeans thought they are going to react for that. and the strong unwillingness of the european industry to continue on this path and the difficulty of get the europeans to coordinate on anything given how many governments, how many different interests puts putin in a stronger position. >> i want to get your thoughts on what's happening with gaza. david brooks of the "new york times" wrote something indicating this is more of a roxy war than a contained struggle between the israelis and the palestinians. to what extent do you see this as proxy war between egypt and

hamas in which they take shots at israel to gain advantage over each other? >> well, i take david brooks's point that if you want to understand israel palestine, you have to understand it in a better process but the timing of israel going after hamas is in part because it's become less of a proxy war. the old egyptian government with the muslim brotherhood and mr. morsi was much more sympathetic to hamas. they consider hamas a terrorist organization. they have given them less because the saudis have whacked them. and they haven't soon as much support from all the checks they've written. so i think there's a little less of that going on in this very direct consulate. >> ian bremer, thank you very much. adam? >> coming up, we are going to be counting down to argentina's

default deadline. you're going to hear from our reporter on the ground. it's all coming up in the next hour. this is "bloomberg surveillance" on bloomberg television. we are glad you're with us. good morning.

>> food fed day. let's get to our morning must-read and scarlet has that this morning. >> it's from l.a. clippers interim c.e.o. dick parsons. he's had quite the storied career. he was talking yesterday to our trish regan about the sale of the l.a. clippers and here's what he said about shelly sterling.

>> one of the things that the judge found was that shelley had the right as the sole trustee to commit to the sale to steve ballmer. she gave the nba a blanket indemnity that says if we get this sale done, you know, donald continues to sue and carry on, the trust or the assets that were in the trust will stand wind and indemnify the nba. so he's really suing himself. >> so this deal should be completed by the end of next month. steve ballmer will be the new owner of the l.a. clippers? >> what is the final price? >> it's move the valuation of the knicks way up high. >> one cannot help but wonder what's happening to the miami heat. you're a stone thrower from miami. i guess that makes you a miami fan. what's the word about losing lebron and what it's worth? >> we're still worrying as to

whether the miami hit will make it to the finals. that's the worry. >> it's now 50-1 odds. right? literally, it's 50-1 odds. >> no lebron, no title. >> yeah. no lebron, no title. period. >> i'll take the other side of that. >> interesting. >> it is a fed day with the press conference free fed day. we will speak with greene depreen in the 9:00 hour. betty lui and i in a conversation with the former chairman of the federal reserve. stay with us worldwide. it's "bloomberg surveillance." good morning.

>> good morning, everyone. futures up four. new york city's trying to get up on a perfect summer's day. there's a new building there that's on park avenue.

it's gorgeous. it's controversial. >> it's gotten so tall now, it goes right out of our shot. >> it's like -- it's getting bigger. there's another tall building over there, changing the landscape of new york city. you've seen me out on twitter calling it the ugly. subject to opinion. some people don't agree with that with me. in the middle of the shot is the famous skyscraper from the movie, "network" from many decades ago. >> well done. i didn't know that. . it's from the movie scarlet fu has company news. >> we get started with mcdonald's vowing to fight a government ruling saying it would hurt thousands of small businesses. the decision coming from the national labor relations board saying mcdonald's should share liability by franchise owners. the policy could switch the way of unionizing.

a state regulator wants to see if there's manipulation. deutsche bank and barclays are targeted. people close to the investigation in new york say that early findings point to problems at both of those institutions. and barclays bounce back to profitability. it posted income of $273 million, reversed a large loss in the same period last year. they cut cost as well as 7,000 jobs. that is this morning's company news. >> scarlet, today marks the final day in a 13-year battle over argentina. the country has a few hours to make good on u.s. bondholders. if not the country could trigger default on its entire $29 billion worth of current debt and that would send ripple effects. we have a chief investment officer based out of the bahamas. he knows a thing or two about global cash flow. if this happens, if there's

bankruptcy tonight, how do u.s. banks conduct business tomorrow morning? >> it's quite a separate issue. and there's an issue with argentina's default that we need to address. and that's not on the u.s. bank but investors globally need to realize with some of the risks associated with it. and particularly at the moment, those assets have gotten quite expensive. >> so is this potentially a catalyst that becomes a wake-up call in a larger sense? >> absolutely but there are other catalysts that will coming as well. we've got the fed meeting today the fed which is reducing liquidity across the world and liquidity growth across the world and we know that the clock is ticking for emerging markets for commodities. we know that's happening over the next at least 12 months and

probably for longer than that. so that declining global liquidity is is what investors have to wake up to. >> i know this is fancy finance. it's about hedge funds. argentina is 2,300 miles long. it's long, long, long, away from buenos aires, away from the banks. does anybody in argentina care about this debate and its potential default? >> i think they care about it in that they're already in economic recession. economic regulation is very weak in argentina. is this going to be a nail in the koch? no, but it will -- coffin? no. but it will -- >> tom, this is an episode in something that i think we're going to learn to live with. i agree it to completely. we've reached the peak of global liberation of finance in 2007.

this is another step back towards whether you call it more balanced or more restrength tiff. you're going to see capital ontrols. >> is this a reputation of the i.m.f.? >> i have shifted gears. they are sympathetic to the notion that national governments have to have some ability to fashion policy without being dictated. >> and the professor with a paper two years ago, signaling that radical shift. >> it's their bedside reading. what is what argentina does next? how will that affect other countries that could be facing similar situation down the road? >> it's more of a wake-up call in terms of the argentina specific issue, it's a technical issue where you've got the holdout, etc. one might look at the proord picture and there are companies

that simply haven't taken the liquidity conditions to restructure their economies. now, argentina is one of those economies that didn't have all of these liquidities to restructure at the right time. and when you're trying to introduce fiscal tightening, you don't do it when a time you're experiencing fiscal decline. and other countries such as turkey are going to face the same situation because they haven't taken advantage of what is a lot of fame. >> it almost seems like you've got two very distinct markets on one hand and american markets held in place by the fed. and if you're not in one of those two areas, are you effectively out of luck? that's where the crises happen? >> potentially? >> well, those are the two major areas which you're seeing in the global liquidity coming. it flows into all the other economies.

but the money that's flowing in might not last forever. the federal reserve is going to reduce the dollar quickly. always janeway, there's been a rap that argentina plays by a different rulebook. coming from world war ii from germany. in your experience, does argentina play by a different rulebook? >> argentina peaked about 1900. >> yeah. they were dominant economy. >> the national income has been high. >> so you're not going to pin this on the german sport out of world war ii? >> they already have moved into a kind of sort of corporatist balanced, which undermine -- economic frothe even before world war ii. >> scarlet, i recommend it all

of next week. >> we'll report first hand. >> that would be nice. >> night time -- evening starts at 10:00 p.m. down there. >> yeah, yeah. >> how are we going to do the show then? we're going to be discussing argentina in the next hour. but coming up on "surveillance," we're going to discuss innovation and technology. facebook an almost $200 billion behemoth. this is "bloomberg surveillance."

>> we welcome all of you on this fed day to new york city. scarlet fu and adam johnson with me as well. mr. johnson has our top headline this morning. >> bolla kills the doctor who was fighting the disease. he was working with other doctors. and this is in sierra leone where the virus is spreading. this is the worst ebola outbreak ever. the death toll is nearly 700 people. and the national security agencies is building a huge facility to store data for phone

tracking. and the ncaa takes a step to protect athletes from head injuries. it's setting $70 million aside to diagnose brain trauma. former and current college players will be covered. >> bloomberg view of the lovely column on that a few days ago. and this heightens the world cup where they were not doing any kind of concussion when they were banging heads together. >> i don't remember where i read this but it was during the world cup that there were more concussions in soccer than in football. >> they have no equipment though. >> hit the ball. you've got to get a concussion hitting the ball. >> scarlet fu is back with facebook. >> facebook had a banner week last week after the company's blowout second quarter results. investors showing they liked what they heard and sent the

stocks up soaring. if you look at the market cap of facebook, it's approaching $200 billion. that would make it a bigger company than say coca-cola, intel or disney. facebook is a bold white line that you want to pay attention to. and as a result, it's getting very close to surpassing bynum - i.b.m. >> think of all the naysayers that say facebook will never make the transition to mobile. >> it's almost double the market cap by the way of what it was worth when it debuted a little over two years ago. >> and now folks from -- trees don't go to the sky. the valuations are still low. how do valuations turn? >> well, they turn when there's some sort of catalyst. it doesn't just usually deflate.

it's usually some broader correction. but these phenomenon, these valuations in the social media world, these are very limited. this is not like 2000. -- the not like the.com t-com -- >> these are the names of the companies that look like there's an option. you're buying an option that they could be generation long winners. and there aren't very many. and where you've got to put your money now is when you think, if you're in the market. if you're in a liquid investor because if you miss that, they take the money away. you don't get to play anymore. >> where are does twitter hit into -- fit into all of this? >> twitter is a candidate for this kind of play. we've had some candidates that never got through the gate like zynga. you remember zynga?

you remember groupon? think of this. this is darwin's world. this is hopeful monsters. drive and survive a lot of them don't make it. >> this is not in our text books. these are not in the finance boogets how do you adapt to that knowing that one's trading at 20 or 25 times sale? >> at the moment, we think the single best opportunity globally is technology cap x and companies that can help them become more productive. anything that can help companies become more productive, whether consumers g with consuming out more readily. >> which? >> it could be both. when you look at a facebook or a twitter, if it allows a company

to get their message out at a lower cost, if it allows them to be more productive, that's something that we can all take advantage of. >> this is new technology and it's mostly -- the value asks the software, the hardwares commodity, this new technology is abling us to do work that people getted to get paid for. the biggest open question for the fed is how do you weed the productive numbers? when the wave of -- between work and measurement. >> we will talk productivity with janeway here. but to stay on this, can you shift it over to the hardware people who were saying will not participate? can they shift through the cloud that you're shaking your head no. bill, pick this up. >> does the company shift? >> high pressure spent 30 years missing the ship from hardware to soft ware. all the values starting moving

but then it was clear that if you were in the hardware business, then you were in a commodity business with margins tropping, being undermined -- -- did i.b.m. sell its p.k. p.c. business to the chinese? > right. >> it's been there to a lot of financial engineering, not to real growth. they did a brilliant job -- brilliantly. >> they went to services. they pivoted but look at the idea of ballin' shade over the last 20 years. nd relate that to the e.p.s. growth. >> a shout out to tony sock november. he is a neutral. >> we're going to continue this discussion on productivity and innovation later today. who's winning the battle for the

most innovative companies. we will discuss right here on "surveillance."

>> coming up on bloomberg

television, an interview that you will want to tune in for. former federal reserve chairman alan greenspan will be "in the loop" joining betty and tom. they'll be discussing the g.d.p. report and jobs. the feds rolling providing liquidity. >> and i want to turn about being measured. can this fed afford to be measured? >> i would love for you to get asking on fed chairman about markets. he was the one who made the exuberance -- >> good question. i like that. brilliant. >> >> all right. this is "bloomberg surveillance." i'm scarlet fu with tom keene and adam johnson. let's get you some company news from the files of bloomberg west. twitter says soccer fans helped its second quarter search bringing in millions of users. the social networking company topped forecast easily rising 20% more than doubling.

it has 271 million members. that was a higher than expected number as well. amazon stepping up with its battle over publisher cutting ebook prices by $5 each. the online retailer says book sales surged when the price dropped under $10. and super mario losing friends. nintendo posting its third decline of almost $100 million. gamers are switching to smartphones or rival consuls like sony or microsoft xbox. >> and i just tweeted out to scarlet fu. i used social media. i said what's up? >> all you really need is -- what did apple say? >> yo. >> on the economy, an economy's well-being is based on labor, capital and a society getting smarter each and every day. the three are wrapped into all

that strange concept called productivity. but there's one problem. today's productivity particularly, our nation's labor dynamics are not what we once knew. it is the challenge for janet yellen and william janeway to discuss this. i look at productivity today and dale tain it's not what sees it. how has it changed? >> i'm a big fan of these guys at m.i.t.. >> great book. >> yeah. a great book. and their work and a lot of other work is showing how the deployment of this new kind of technology, which is different in kind from what we've had before is shifting where work gets done. once upon the time, you had a lot of bank clerks. you're talking about amazon, you have a lot of bookstore clerks. we do that work now. so we're the productivity numbers and remember, productivity is the result of

taking two very big numbers, total output, total hour's worth and dividing one by the other you get any little tweak in either of those numbers because output doesn't get measured and the productivity result can be all over the line. >> the heart for this matter for alan greenspan and janet yellen and others is do we blend together in america or would you study is it really too american? is it an america that's damaged by productivity and an america that will be left behind? >> i think you're right on it, tom. i think we had this in the second industrial revolution when the impact of mass production had an enormous impact at the top end, at the 1% level. and on the other, turning people into the charlie chaplin figures in modern times. and part of your movie, "tour." i do think it's relevant in this discussion. nobody predicted that the book

is the first half of this year was going to be by a french economist about inequality. who predicted that? it tells us something about what you just said. >> even better than a one-week vacation. >> that was my bedtime reading. >> i did it up in maine this summer, too. >> something else i read is a column from bloomberg's view is a by virginia. she said many part-time workers is like jurisdiction. who's working and balancing better labor cost and demand? and at the end of the day, they need to be on call all the time without knowing when to work and how much they'll earn. it's very difficult to have a full-time work schedule. this productivity has helped companies but burdened workers. >> well, and you know, with this long slow recovery, profits have been at an all-time high.

what goes around tends to come around. i don't think we should think of this as equilibrium. we are going to be responses. it will take time. there are places. -- germany emy -- came through with great regulation. -- recession. it paid companies to keep continuity with their own workforce, maintain those schools. that's why germany is the greatest exporter in the world. >> the op-ed is the must-read yesterday. >> refresh my memory. >> the one that scarlet just said. >> yeah. >> as i listened to you, bill, what dawns on my mind is there's a policy decision. we need industrial productivity and then we effectively need service sector productivity. how do you blend the two? >> they're working on it. and it is really hard.

there are a lot of sumlins. at's why i never take the -- assumptions. that's why i never take those numbers seriously. and look at the employment numbers and the income numbers and look at the average hourly earnings. break the productivity apart into what the components are for it. >> i think it's really hard to decide that part-time workers are finding it difficult. but we're in the early stages of a u.s. economic recovery and a global economic recovery. we are starting to see the early signs of wages beginning to rise. and as that wage starts to build, you are going to see better times coming for part-time woveragetse you are going see some of the benefit offense the change actually being eroded away. and we will see a merging of this kind of industrial productivity and service productivity. >> thank you. let me do a foreign exchange report. i want to lead with a russian

ruble. some weaker movement there. 35.61. yen way out over 102. >> it's a geo political morning. so we are posing our question -- what should mr. kerry's priority be? tweet us at "surveillance."

twitterverse are tweeting more. we are engaged. russia's oil future is threatened. and what a serius, we have a problem -- and in point of saris, we have a problem. argentina confronts default. it is wednesday, july 30. i'm tom keene. running the are scarlet fu and adam johnson. our guest host is michael pollan. argentina debt talks collapsed. today is the deadline to reach an agreement over trying to avoid default. we also want to point out that in spain, there is some good news for the second consecutive quarter of gdp deep -- gdp growth. analysts are forecasting a rise in three percent, which would

make up for the 2.9% plunge we saw the first quarter. also, adp, the unemployment raters all of by the fomc after the earnings decision. after the bell, craft whole foods and yelp. -- craft, whole foods, and yelp. >> we need to start with steve:, , aedge fund -- steve cohen hedge fund billionaire. his former company, sac capital, i -- date guilty plea and and paid a record $1.3 billion to settle. airline canceled -- and .irbus canceled an order and new status for radioshack.

the electronics chain is in the middle of a turnaround plan, but the investor service says the company might run out of money first. that is the latest news. itshe world is hardening stance on russia overnight. european government are russian banks from selling bonds and restrict industrial exporters and selling equipment. the u.s. follows a few hours later with heightened sanctions of its own on specific companies. now. cook joins us it seems like this is the one thing republicans and democrats can agree on, right? tougher sections on rock -- on russia. and there is, sentiment that the eu should go even further, but the bottom line is that the sanctions announced by the eu yesterday are the toughest sanctions we've seen and the first time we've seen the move as a group like this. it happened after the president's call the other day with several european world

leaders. he says the combine actions will have some bite, will cause but emir couldn't, he believes, to reassess the situation -- will cause vladimir putin, he believes, to reassess the situation. >> i want to bring in something tom dahlman said, president obama's national security adviser from 2010-13. about how vladimir putin is betting big. listen. downu have the aircraft where 300 people lost their lives. wooten had the opportunity now -- then -- putin had the opportunity then to cooperate and he didn't. down andhe has doubled increased support of the ukrainian separatist, including with material and other support. >> you can watch that interview tonight. oft are we seeing in terms

russian retaliation? if vladimir putin is doubling down in terms of support to separatist, what will we see in response to the sanctions? >> we have not seen a lot in response to the sanctions in the past 24 hours. there have been some threats out there. for example, the threat to sanction u.s. accounting firms doing business in russia. that was the most direct threat we've heard out there. we have these other side issues going on. we have russian safety concerns by u.s. poultry and european union fruit. is that retaliation? or are they safety concerns on the part of russian? it's not certain -- we are not certain. bp leading the group pointing out that they face risk down the road if this sanctions fight gets uglier. and if the russians aside to retaliate. it has not happened yet, but that is that a lot of big

companies are watching, including here in the u.s. >> most of the focus seems to be on banks and energy companies. are there more that should have made the list, according to lawmakers? >> there are certainly lawmakers that say the sanctions should have been in place sooner, and yes, a are urging aggressive action in the energy sector, particularly the gas sector. if the europeans were to do that, you've got countries like italy that are so dependent on russian gas. mainly targeted at the oil sector so far. when things get so bad that they have to go after the gas industry in russia, you know things are bad. i don't see that changing anytime soon. but that brings us to our twitter question of the day. very geopolitical day. what should john kerry's sanction -- actions and priorities be?

>> we will see that at 2 p.m. this afternoon. we need perspective. michael pollan has been a bull. i'm waiting for him to stumble. as well.son his 401(k) was destroyed six years ago and he's finally back to a to a one k with a twitter performance last night. michael, let me start with you. i gdp, is this a big deal to you? >> no. >> why not? 2.9%, growth, maybe it's -- >> maybe it's 2.1%. >> but the overall direction is flat. meanwhile, things are getting better here. they are not getting as -- getti ng better as quickly in europe.

that cannot be good for russia acrossopean countries the board. >> i took this lesson in diplomacy from you a few years ago. we've been through this before. it's not a small matter. mr. holland has a bit of experience. do you suggest just to ignore the front page of the new york times and the bloomberg talk page? >> at our peril. if this thingubt gets worse, it will have an effect on the u.s. stock market. what came about when the plane went down, the malaysian airline, it was a contained event. that is why the markets have been unbelievably resilient. smart friends of mine who have been short in the market in the past couple of years are not happy about the reaction of the market to all of this. >> not happy or out of business. >> overall what has happened is that this is saying

is going to spiral out of control. >> and the market is also saying, look at the winters in this market. cory johnson, you were looking at twitter when it announced its results last night. over you looking at? >> kind of everything. what are you looking out? >> kind of everything. i'm not talking about the stock valuation. that is bonkers. >> you are talking about the slow concert -- slowing returns? for everyone revenue is declining, especially for the user. but what you saw was a turnaround. particularly with user growth. up over the previous quarter and the quarters before that. they are figuring out how to

sell contextual ads so that the person is willing to pay to get to those users. >> the good news for facebook, the good news for twitter, will that change the dialogue and the confidence of these players on the west coast? now that they have done this, are they going to go on an acquisition frenzy? >> often wrong, never in doubt. that is sort of the motto of that company. think we have seen this certainly from facebook, but not as often from twitter. facebook is a machine. and they are crushing it. and the thing that they have done by figuring out mobile and monetizing mobile when they had virtually none two years ago when they went public is a true marvel. >> what will they do next? now that they have an interior confidence on financial performance?

>> they are going to milk it. we are starting to see the flywheel effect taking on and facebook where they are creating a lot of free cash flow. >> is this the we get -- the week of the pivot from amazon to twitter on facebook? , butn is its own thing twitter making pennies or losing pennies, it's got the eyeballs. >> michael, do you own any amazon? own somet i actually twitter and i feel so much smarter today. >> i'm in awe. >> more surveillance when we come back. michael holland and cory johnson are with us this hour. we will be back. ♪

>> this is bloomberg surveillance. michael holland is with us. what about mergers and it positions as a use of cash. it was all the rage in 2013. is that a good use of raising

cash? expression heard the it is cheaper to drill for oil on the new york stock exchange go out to the real fields. the private market value of a lot of these companies is substantially above where we are in the public microplate -- public marketplace. the answer is, yes. >> but with all of this cheap money we've got out there, can system,to gain the guess who would be next? >> you would have to be the companies that are smart. the companies that are buying smart are growing faster than you would expect. this is a constructive thing at this point in the cycle. at the point in which it becomes the structure -- destructive is

good for the acquirer as well as acquirees.es -- one of the wonderful things about the current reporting timeframe is not only three quarters of the companies reporting and beating, but the revenues are up two thirds. that has not been the case in the previous quarters. we are getting a lot of revenue growth and a little bit of constructive stuff going on in the u.s. economy. and china, a very big deal in china. >> we will talk about china later. the circle, this is part of frenzy to gather revenues? >> a smart way to do it. and the answer is, yes. michael holland, dovetailing

all of these different uses of cash. they come up betty liu and i next sunday,g up betty liu and i will speak -- coming up and 9:00, betty liu and i will speak to former federal reserve chairman alan greenspan. is the punch bowl being pulled away? stay with us. ♪

>> good morning, everyone. the euro is on the move. a stronger dollar is widely predicted among many. --re it is, one dollar $.34 $1.34. 0-0 on the euro. michael holland is with us this morning.

we made him get up early, like 2:00 a.m. in the morning. and cory johnson is here visiting us in new york. tom, 15 to 20-- palestinians were killed in a school run by the united nations. takesre saying is really -- tanks fired the shells. whetherfrom israel on they are trying to confirm whether it is one of their shells or from hamas. the worst evil outbreak ever in west africa. the death toll is approaching 700. acres of the national park are in flames. firefighters are trying to stop it before it reaches the giant

trees. visits from tourists are being limited. >> post earnings, one big theme for the what -- for the wall street banks is a slowdown in income trading, meaning more cost cuts ahead. jpmorgan saw a 12% revenue cutting i.t. positions. meanwhile, morgan stanley is raising salaries for its associates to improve retention. host, michael holland, is a longtime shareholder of jpmorgan. jason, i want to start with you. the bottom line, working at the big firms is not as attractive as it once was. what is the incentive to keep working there? >> it's still a very good business. markets business is quite profitable. there is still room to go as

banks adapt to the new environment, but if you think about the big picture, on average over time, capital markets will grow and become more global and complex. and investment banks are there to facilitate transactions and provide corporate m&a advice. >> and yet, you have this constant regulation. i talked to traders and they say, what is the upside to this? very often they come out with nothing. but i think they are beginning to adapt. we've gotten to the point where most of the dodd-frank regulations are known and industry is able to move forward. >> when you look at the phrase they gets," and i know upset when they are called boutiques, ever core, lazar, do they have a future where they can rekindle? >> there is a place for boutiques. and the firms that establish

good niches in certain parts of the segment for that. but in terms of establishing global capabilities -- >> are you getting a pay raise tomorrow? morgan stanley is giving a pay raise. his barclays next? why did they do that? why did they give those guys a bump? kantor, if you are listening, jason goldberg. >> 25%. >> i'll sign up for that now. you've seen an increase in some firms in the fixed tag, but that is not mean the competition will be change. >> i can understand wanting to make more money, but i also want to be a little geeky. we have seen some transaction about the two-year and the tenure spread. we have seen some impact on making loans. how does it impact your bank?

it will be the 16th year that there has been contraction. it is not a new phenomenon. the lower rate of exchange is more challenging. >> michael holland, are you going to acquire shares of banks this morning based on what young goldberg says? there, i'm already stuck but i would be interested in his answer to the question of how much or possibly is it for banks -- the big banks to be doing business right now? the simple question of return on equity. how much is extracted from them with all of this junk? when the return on equity was around 13% to 14% creek crisis,

it was running 20% -- and pre-crisis, it was running 20% or less. they have doubled their capital base. >> price-earnings are probably ok given the declining property. >> cory johnson, i want you to come in here. the biggest surprise i got from doorposts was the success -- from doorposts was the success of digital banking. every reporter told me they were flabbergasted at the success of israel banking -- digital banking. >> this is why we do the bloomberg west broadcast, because the changes in technology are affecting every single industry. seconds, are there going to be fewer branch banks? >> yes. the number of banks the u.s. has had in the past 20 years, some that have increased, we think

they will start to decrease. jason goldberg, thank you so much. the number of bank branches in manhattan just keeps going up. coming up, we will look at argentina. can it's all its debt debacle? ♪

>> this is bloomberg "surveillance," and i'm scarlet fu here with tom keene and adam johnson. let's start with the headlines. mcdonald's vowing to fight a government ruling that would hurt thousands of small

businesses. the national labor relations board said that mcdonald's withd share ownership franchise workers. it could make it faster for workers to unionize. the wall street journal says deutsche bank and barclays are being targeted. findings point to problems at those institutions. to barclays back profitability, it posted net income of $273 million last quarter h. overall, 7000 to be exact. that is company news. brilliant.ng was i'm glad you brought this to us. >> it caught my attention. brad smith is corporate counsel at microsoft. let me read you an excerpt of what he wrote in the wall street journal today. microsoft believes you own your e-mails that are stored in the

cloud with the same protection as paper letters. that means the government must have a warrant, a war and cannot reach beyond u.s. shores and we store e-mails in ireland. -- your words, you e-mails are safe. i go holland, you are a shareholder. on the one hand, i want to go by microsoft because i feel like they are setting up for me. on the other hand -- standing up for me. on the other hand, do you really want to go against the u.s. government? --i'm not particular to we particularly concerned that everything i have out there is not available for people to read. i appreciate what they are the messut we are in we are in. >> we see a lot of discussions with google, and microsoft as evidence in this story, about

concern about the nsa hurting technology businesses. citedhas specifically this in their conference calls. you see it in the numbers from ibm and hewlett-packard. are you changing certain investment with the notion that the nsa's policies are hurting some technology companies? >> it is hurting all of the companies. they are all in unison shrieking about this is the wrong way to do things. and to answer adams question before, we are all in this together. i hope to be pleasantly surprised, but at this point, i am not selling something because i think they are overly hurt. they are all heard. worst conversation of the year was with steve ballmer. >> i survive. >> it was difficult, because he did not want to speak to you. give us an update on the leadership at microsoft. >> steve ballmer's communication

style was to talk a lot and say -- no, shout a lot, but not say anything. satya nadella has the company focused on the future of computing. and the product has really improved. i spent some time with microsoft salespeople recently and the discussion about, we can finally go to our clients and say, there is a reason you want to own office 65 and we can cite you the upgrade this year that actually matters. that will help them sell windows, and especially office. cash from operations, 24 gazillion, 27 gazillion, 32 gazillion, and then they posit and backup to 30 gazillion in 12 months. , and then back up to 30 gazillion in 12 months. the old tech companies are still valued like old tech companies, and yet the

businesses are not thriving with cash. apple's problem is that they have too much cash, and this is a wonderful problem. >> i would disagree when it comes to hewlett-packard. >> o, sure. and i'm a shareholder. >> ibm is showing declining revenues on a consistent basis. >> she has a good steward -- a turnaround the way gerstner does. you're laughing. went from hardware to software to cloud. you don't think she can do it? >> that is what i'm betting on, and cory is appropriately skeptical and cynical. that is for the stock is, too. sexy not done much with that position lately. what would it take for you to increase your stakes -- >> you have not done much with deposition lately. what would it take for you to increase your stakes? >> the stocks to go down.

giants or dodgers? >> the giants are killing me right now. the second best eckert in the major league. but we have a big gdp report coming out. point -- 1.8% increase. >> good morning, everyone. look to the digital media for all of our work and interviews worldwide. i'm tom keene and with me is scarlet fu and adam johnson. michael holland joins me this morning. we have other news today. stealth. intoday marks the final year the 13 year battle for argentina. the country has to make good on deals from 2001. if not, it risks the fall. the film, i want to start with

you seen on your tour of the streets of what is our ace? aires?uenos >> there is a huge concern about the uncertainty of the economy here. >> there is the official exchange rate and the black market exchange rate. how does that make itself evident to you as an american walking around the streets trying to buy stuff? corners, youeet will see these guys in a jacket shouting out. and are offering dollars people are going up and changing money rather discreetly. it is par for the course here. outmaybe you can point that -- >> maybe you can without from

the respecter but the bondholders. will they work that out? >> last night, there were wonderful development in terms of progress. we were speaking with the debt negotiator appointed by the court to handle talks between the holdouts and argentina. we were out there until midnight, basically. they came out and it was the first face to face talks held between the two parties in this entire saga. the talks will continue today. everyone will be grasping at any information coming out of their foes of statements from all parties will be at -- coming out of there. statements will be coming from all parties. just those issues, but the process has to be put in place.

went on for 12 hours. they took a break. they have resumed. what do you think is the likelihood of success? >> i cannot do that. >> they are pretty high, right? >> the court has said that the -- that argentina needs to make good. >> the court is also pretty and printable. -- pretty unpredictable. can they do this without repercussions on the economy and get this done? >> there is evidence that the government does not want to participate in these discussions. do you have evidence that they have discussed this within the last 24 hours? >> the economy minister was there last night. >> he was there, but was he really they are? >> he was there for about six hours and said he was very tired, like he was actually doing things he did not want to do before.

>> what astounded me in reading up on this is that argentina has defaulted seven times since it declared independence from spain in 1816. this prospect of default is old hat. and recent polls show 47% of argentinians support default, up eight percent from june. what have you seen? >> it has been a politically popular move to say that these hedge funds are responsible for the woes that many are seeing here. we spoke to a lot of people who see it as crisis after crisis after crisis, people growing up with a succession of economic crises and people think of the dollar as their say peyton. everyone always -- as their safe haven. look at it spoke to as the temperature gauge for the economy's direction. >> i'm sure we will be talking

to you all day as things come to the wire. >> in an hour and a half, our conversation with alan greenspan as the fed meats with an announcement at 2:00 this afternoon. ts with anfed mee announcement at 2:00 this afternoon. ♪

>> good morning, everyone. is friday. it is the super bowl of bloomberg surveillance. hold my hand, scarlet. [laughter] >> wow, i'm excited. >> ok, the medication has kicked in. go. >> [laughter] .his is bloomberg surveillance i'm here with tom keene and adam johnson. betty liu is here to tell us what is going to happen on the loop. no important guests today, right? >> no. tom keene is joining me. and some guy named alan greenspan. >> it's a wonderful time, though, i would suggest to speak to chairman greenspan.

he has been beaten up for three years. lexi has been beaten up, and he up,- >> he has been beaten and he is not as optimistic just the u.s. economy, not around the world. he thinks there are many factors that people are sort of underplaying right now in the oil markets, for instance, and housing as well. to tell younot much other than there appears to be a temporary cease-fire in gaza. if i'm reading this correctly -- and let me be clear, this is just one very brief headline. it looks like a four hour cease-fire, but we will certainly take it. >> and we need to clarify, this is a humanitarian cease-fire. >> correct. which is the sadness. in theory, that enables the when to go in and provide some sort of managerial and -- some sort of humanitarian aid. and sadly, it's only a four hour window. >> it begins at 3:00 p.m., so in

about 15 minutes. >> this is happening truly in real time. deathsere a number of overnight, and particularly a u.n. school that was shelled. it is unclear whether it came from hamas or if it was an more peoplel, but were injured. that may be the catalyst. ofthey have had a couple these humanitarian truces. this would be the second or third one. it does not seem to do much in terms of permanence. >> i think the technology behind the rocket protection dome that israel has, you people have looked. it is military technology that we have that we assist israel with. >> and one might wonder how israel might be emboldened to take the actions that they have taken, because the actions of hamas have escalated.

they have taken a longer and more aggressive stance. we are seeing some horrible results. >> but again, confusion from those headlines. i have one headline is has two hours and another that says four hours. >> and in theory, it begins in 15 minutes. >> 8:00 a.m. new york time is when it would start, the humanitarian truce. our twitter question for the day, what should secretary of state john kerry's priority be? a lot tois certainly choose from these days. >> we will be right back. ♪

>> this is bloomberg surveillance. i'm scarlet fu with tom keene and adam johnson. our guests are michael holland and cory johnson. let's start with netflix. striking another deal to make sure videos reach customers quickly, the company breaching a connection agreement with at&t. netflix cut similar deals with comcast and verizon. netflix has been fighting with broadband of writers over who should be paying for -- broadband providers over who should be paying for traffic. amazon says it is willing to settle for three percent of digital revenue with publishers.

amazon says prices will surge when the price drops below $10. download live 362 track kids whereabouts. that is the latest company news tracke 360 degrees to your kids whereabouts. that is latest company news. news, the israeli army confirming a four-hour humanitarian cease-fire in gaza that will begin in just over 10 minutes from now, 8:00 a.m. eastern time. that is 3:00 p.m. local time. we will go to elliott gotkine. what do you think prompted this latest cease-fire? >> i don't know. they have been trying to get a humanitarian cease-fire, or any kind of cease-fire for a number of days. but i think this is the first one agreed upon by the -- by both sides said saturday.

it is only four hours long. cease-firesious have been breached with rockets being fired from gaza into israel and israel retaliating. is just part of gaza and not all of gaza. >> what happens in a cease-fire? technically, there should not be any rocket launches or fighting. but what does each side do during that four-hour break echo -- four-hour break? >> it's a cease-fire is actually holding, then you would expect no ground operations or maneuvers from the part of the israeli defense forces, no airstrikes, and no rockets being fired by militants into israel or israeli forces being engaged. previous cease-fires have said -- have is really saying they will still trying to seek out those tunnels and destroy them. but you would imagine a humanitarian cease-fire would be

of a similar find. >> the power plant in, a fuel tank was hit and effectively shutting off power and water for the entire region. it has been called the collective punishment of the palestinian people. i wonder if that changes the humanitarian issue dramatically. >> a couple of things on that. they did not says intend to hit that power plant, which i believe the gaza electric corporation says it could take up to a year. israel does provide electricity to the gaza strip come and it will not do anything for the monetary situation in gaza. there will be other forms of power, for example, diesel for generators. they will have to used off the grid. but you're right, the man attorney and situation there is already pretty desperate. >> what is the's -- the humanitarian situation there is already pretty desperate. >> what is the possibility that

something might happen the other thing that enables this for hours to become 12 hours, or even a couple of days? >> let's just hope that we get through those forced -- those four hours without it being breached. we cannot get ahead of ourselves. we have heard reports that the to hosts do not want both sides until there is a cease-fire on the ground. and until such time, there is no point in traveling to cairo to talk about a more permanent cease-fire. i'm sorry, that's not the most optimistic answer you were hoping for. >> we have certainly seen, as you have pointed out, the cease-fire has been broken before. elliott gotkine from tel aviv. michael, you have lived through crises like this. what is your take on this particular one? which usedword fat, before. this has been -- the word fat, which you used before. ords has been such -- the w

which you used before. this has been such a long and it issue implacable. but it is not something that affects our market. >> when might it? >> if some of the people got involved, talking serious or iran.- syria or those could be the unintended consequences. >> those threats are looming always. >> yes. >> think what a strange world we live in where we have all of those deaths happening in gaza and we can have fighting in ukraine and we talk about twitter being up and markets making new eyes. is there a strange disconnect? >> we have more information in -- moretimes

information now than in our lifetimes. the step has been going on. there is a book by a harvard professor and we actually have one of the most peaceful times. a crazy word, but fewer killings of all kinds of people around the world, because we've always had bad things happening. >> it's just that we have a bigger conversation about it. >> we know more about it, yes. but that brings us to the conversation on twitter. our twitter question of the day -- what should john kerry, the secretary of state, what should his priority be? ending the siege on gaza. israel is leading the world toward a global conflict. that is certainly one take. had made the point that he will be in india. >> yes, he will arrive tomorrow. kerry finally, john

should be calling asking hillary to help him out. that brings up a good point, because whereas joe biden been on all of this? he was supposed to be given this ration point person on all of the -- on a lot of the foreign-policy issues. let's not forget there are a lot of nuclear weapons in the u.s. and russia still pointed at each other. >> and this testfiring of a cruise missile yesterday in russia, which interior violated an agreement put in place by gorbachev and reagan. >> is not in theory. they violated. >> writes. -- right. gdp, i've never seen the disparity. now we have deutsche bank, among others, up over four percent in the american economy in the second quarter. over every number.

there will be revisions. it is a parlor game. >> i like what michael holland said earlier, which is that it is a wash in the first half of the year. >> and the year-over-year is as good. >> i am fascinated at peter hooper, who is an acclaimed international economist at deutsche bank saying, no, things are better than the glue. indicate what is going on. but companies are not telling us that. this --meless log after plug after this. we will have a conversation with alan greenspan. i want to talk about the word measured. gradual raising rates. do we do that, or go back to the time of pipe smoking echo michael holland used to have a pipe. -- of pipe smoking? michael

holland used to have a pipe. >> a smoking pipe, or a smoking gun, or whatever. something is happening in argentina, because it is literally d-12 hours. are they going to make good on or is thisllion going to go down to the wire and might argentina default for the first time since 2001? >> on my agenda, corporate earnings continue. 36 companies in the s&p 500 are scheduled to report after the bell today. it will be interesting to see whole foods, because we have seen a pickup on the organic thing, because -- and that has cut into their margins because they have to reduce their prices. >> again, they got through it. the world is going to end. >> no, we're going to live. >> i want to reiterate the breaking news that we got just 10 minutes ago, that is, there will be a cease-fire for four hours in the gaza strip -- we

should say, parts of the gaza strip. it begins momentarily. hopefully, a brief respite to get humanitarian aid to the people in there who need it. johnson, thank you. michael holland, thank you as well. don't forget, alan greenspan in the 9:00 hour. ♪

>> why he says we are still struggling to recover from what he calls a persistent lehman discount in the economy. he will explain all of that when he joins us. ceo will beeur and my guest host this hour. we will get the take on strong quarterly results and what money he is putting into it these days. first, a four-hour humanitarian cease-fire. this comes after a night of intense fighting. blaming israel for an attack on the united nations on the gaza strip that killed 20 people, including children. killed1300 children were in the fighting. a new round of sanctions and russia likely to rock european companies.