is: will engage russian invasion of ukraine. will engage russian invasion of ukraine. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york. it is wednesday. joining me, scarlet fu and brendan greeley. adam johnson is on assignment. to get us briefed on our morning brief, here is scarlet fu. >> a lot of economic data in europe. u.k. industrial production rose less than forecast. in italy, gdp falling. >> this is the first day of way to the economic data -- weight to the economic data. >> a lot of red as a result. not a lot in the u.s. that will move the needle. --kly more glia educations

mortgage applications. >> old news. trade balance is ancient news. >> it is not employment news. you go. janet yellen is not paying that much attention. >> hey, she is watching everything. [laughter] she has the star trek enterprise of dashboards. >> we call that the bloomberg terminal. continue. >> we have time warner in the next hour. chesapeake and aol. cody for century fox. -- 21st century fox. what a shock that was yesterday. wow. topic at be a major "bloomberg surveillance." we look at the transactions of media.

let's look at the transaction, which is your data check. weight to the screen here. we will talk about that. the euro was weaker. on to the next screen. the vix shows some of the tension. the ruble is a big deal this morning. over 36.l out . 105. is under brendan, help me here. you spend a lot of time in brussels. what is nato going to do? >> something interesting. more and more people pay attention, the foreign minister of poland, he is the one willing --say that european leaders

things that make european leaders uncomfortable. this shows that his pronouncements carry weight. has about 20,000 soldiers massed at the ukraine border. front page this morning. we look at the newspapers, we look at the web. mna bids are falling through -- m&a bids are falling through. sprint is giving up talks about t-mobile because of regulatory concerns. >> i never knew what people thought that would work. >> exactly. totally agree. to me, the shock is that wall street and the financial people actually are not listening to washington. washington says something in there like, yeah, but. >> softbank was determined that

he would be able to provide an argument to change regulator mines. he backed off that stance. >> the original starter of the was-- charter of the sec about ensuring cop -- fcc was about ensuring competition. it is nice to see that they are willing to do this. they are saying, let's make competition happen and we will let the market figure the rest out. the airlines. where were they? >> thankfully, the fcc is not responsible for the airlines. [laughter] >> 21st century fox dropped its bid to takeover time warner droppedfox's stock after word became public. we will follow up on that in a bit. it is interesting how these both can together. we have breaking news. walgreens is looking to buy the

remaining 55% of alliance foods that it did not own. this is valued at about $5.3 billion in cash. >> this goes right over to our next front page. >> walgreens has decided not to use tax address overseas. >> we are not going to invert. i swear. >> are your fingers crossed? this is a political climate against inversions right now. if they want to do this, get it done right now. wait until everything passes. maybe do it quietly in three years. >> dick durbin wrote to the walgreens ceo arching him not to go through with the texan version. inversion.version -- o'shaughnessy, a shameless plug kabul walgreens with a $3 billion share buyback

plug, walgreens with a $3 billion share buyback. >> we cannot forget about geopolitics. has ordered his government to respond to sanctions. they could limit or ban flights over siberia by european carriers that are bound for asia as retaliation. >> it seems like he feels confident that in the future, they will not have to rely on international commerce as a part of the russian economy. it is beginning to some iquique and whether this indefinitely. >> the correction is coming. this is directly linked with the geopolitical news. yesterday was the first day where the geopolitics clicked in. the red circle is a correction down 10%. you can see how far we are. we have a ways to go.

we have a ways to go. same time, we have passed key technical levels and we are approaching. once we get past the point, the losses could accelerate. >> then we get to talk about the death cross. [laughter] >> don't make fun of the death cross. you have to take it seriously. >> are you kidding me? accept an will not trpoly or try our fully -- iopoly. alec sherman is with bloomberg news. walknly did we see sprint away, but there are changing so the guard in the c suite. what happened to the management last night? that becauseut

sprint is not going to go after t-mobile, the new strategy is to replace the ceo. that is a story we broke last night. that sprint isut going to hire the ceo of a ,ompany called bright star which softbank also has a stake in. he is close to the founder of softbank. that is going to be sprint's new strategy. changing a management. >> what is the why behind this? why was he shown the door? i think part of the reason was that he had made the decision to leave. we thought the ceo of the merged company would be john leger, t-mobile's ceo. the writing was on the wall that dan hesse he was going to step down.

it is not a surprise that regulators did not like this deal. that has not been a surprise since day one. >> did we have any sense of what the plan b was going to be for sprint? drop prices orer invest in new infrastructure to expand the network. do we have any sense of which they are going to choose? >> not yet. sprint is going to have to lay out their plan b at this point. there is a plan c i suppose. they could do some sort of partnership with another company. i know that dish network has that they would love to do some sort of network hosting, sharing, and have them pair up mobile and video, similar to what at&t is trying to do with directv. quickly, we have craig

moffett with us in the next hour. is this a massive victory for theington in just saying to entire industry, listen to us carefully, we want competition? think it probably is, particularly in the backdrop of comcast-time warner cable, and att-directv. both of those deals are likely to be passed. at least washington can look and say, this one did not go through. they can say, we are not just patsies for total industry overhaul. >> thank you so much. >> our guest host for the hour he served as a member of the ipo task force

that provided a report to treasury in 2011. as we take stock of the deals that have fallen apart over the last day, fox for time warner, sprint and t-mobile, does the unraveling of these deals in this very hot sector, media, telecoms affect the market? >> i do believe so. i think we are starting to see momentum in the m&a market. both of these deals were not high likelihood to happen. i don't believe there any signal to a trend. >> is it something with the players involved are going to come back when things quiet down a little bit? >> i don't think so. on the 21st century fox-time warner deal, the market reacted very negatively to that deal. the stock was down. i don't think they could pay anywhere close to what time warner was looking for. >> is it possible that we are

not looking at the financials of these deal, but culture and competencies? >> maybe not with sprint and t-mobile, but with 21st century fox and time warner, i think the culture clash was pretty big art of that. -- was a pretty big part of that. we have seen a huge uptake and large transactions. in large transactions. what will be interesting going theard is the uptick in number of transactions. >> our twitter question of the day, the unraveling of to jen or nourmousdeals -- big, gi m&a deals, does that signal the top of the market? let's get to company news. >> we start with more media companies.

walt disney pushed analyst estimates. they had to box office hits from the marvel studios unit. "malein america" and ficent." "frozen" continues to deliver. >> ♪ let it go, let it go >> all right, tom. apple has accused samsung of copying iphone designs. samsung says apple is using pieces of its wireless transition. zillow reported record sales. it boosted annual sales forecast. zillow announced it was buying last a last week -- trulia week. >> 3:00 p.m. this afternoon. bloomberg television. "streetsmarts."

at -4. scarlet? >> rupert murdoch withdraws his bid for time warner. for thes that mean future of the media industry? this is "bloomberg surveillance." we are on bloomberg television. we will be right back. ♪

>> good morning, everyone. "bloomberg surveillance." i'm tom keene. scarlet fum keene -- and brendan greeley. adam johnson is on assignment. be onmstrong will bloomberg television, "in the loop with betty liu." look for mr. armstrong at 8:00 a.m. >> rupert murdoch, 21st century

fox withdrawing its offer for time warner. time warner rejected the attempts to reshape the media industry. matt campbell has been following the deal closely. a rare defeat for murdoch. selloff and fox shares -- in fox shares. implicit "for now" in the statement? >> i think he has shown that he is a deal maker, he is someone who has gotten what he wants over time. i don't it we can roll this out forever and ever. is 83 years old. presumably, he will not be at this game and definitely. that this deals is back on the shelf for the moment. that maybe thele

fundamentals did not look as good as we thought they did? maybe this idea that we thought this could be $1 billion was not feasible? it sounds again nice thing that is not necessarily rational. >> there was an enormous amount of scrutiny of all of the numbers and the suggestions that fox made about how this new business would be run. there is also a culture clash, as he were discussing previously. time warner tends to be a differently run company that fox and news corp. there were financial reasons, regulatory obstacles, there was a cultural issue. this was a very hard deal to pull off an rupert murdoch has admitted defeat for now. >> for now, but you wonder what this does for the rest of the industry. yesterday, jon erlichman spoke with the disney ceo about the failed bid. >> the offer that was made was not well received. thatt must have determined

unless time warner was willing to engage, he was going to have a hard time accomplishing what he wanted to. it is a tough thing to do under hostile circumstances. that rupertpeculate did not want to pursue it under hostile circumstances. i don't know that for sure. >> there was a lot we don't know for sure, but time warner remains in place because of what rupert murdoch did. as disney, cbs, or google have a play? >> i think that is a very interesting question. the genesis of all this was a rumor that both google and fox were looking at bids for time warner. time warner has been very attractive. there was no brand in the american media like hbo, in terms of turning out hit television over and over again. that is a big part of the story with warner bros., of course. if we do take the view that content is king, time warner is sitting on some of the best content. you have to assume there could

be others out there. >> we will keep an eye on that and come to you if there are any developments. thank you so much, matt campbell, our senior deals reporter in london. that brings us to our twitter question of the day. does the unraveling of two big signal the top of the market? maybe the top of the market for certain sectors, like media, tech, and telecom? we want to hear from you. we will be right back. ♪

>> good morning, everyone. "bloomberg surveillance." markets continue lower after what we saw yesterday afternoon. let's get right to our top headlines.

here is scarlet fu. >> new concerns about president's exit strategy in afghanistan. in kansas, senator pat roberts turned back a key party rival in the republican primary. wolf.t milton he's the fifth republican senator to stave off a tea party backed challenger. the cease-fire in gaza is holding. cairoators are meeting in to come up with a lasting solution between israel and hamas. now we get to afghanistan. new concerns about the president's exit strategy. green iseral harold the highest-ranking u.s. officer to die in the war so far. >> what a loss. an exceptionally distinguished general.

they are doing it everyday. they don't make the headlines. he was in charge of a lot of the training of people in afghanistan. career.istinguished this and this and this. he started out as a platoon leader. >> rotc general. >> exactly. a huge loss for the nation. we will have more on that on bloomberg television worldwide. the have been watching conversation online that began week inolumn last "forbes." stop calling people names. you will feel better about yourself. >> boston university. >> i think that is a core sample. -- horseapple.

oncan we say horseapple "bloomberg surveillance"? >> let's go with hogwash. >> i think it's hogwash. this goes back to milton friedman and "newsweek." you can't do it by being bland, firing up the public. >> that is something we will discuss on "surveillance." are we in an ipo frenzy? ♪

>> good morning, everyone. "bloomberg surveillance." there it is in hd. new york city. it continues.

it is by far and away the nicest summer in new york city in ages. since time began. it is gorgeous. it is gorgeous. why are they rushing? this is "bloomberg surveillance." brendan greeley is with us. adam johnson is on assignment. >> it does feel like back-to-school. >> i know. i would like to rotate out of my summer suits. i'm ready to move. >> he is ready for the fall. let's get a data check. we did have a little bit of a bump up on monday. that disappeared yesterday. the s&p 500 closed at a two-month low yesterday. 2.4366. >> we have seen that yield come down about 14 basis points since yesterday at this time. euro-dollar. euro weaker versus the dollar.

>> the ecb is coming up. nato headlines within the last 20 minutes. nato says russia might send in troops under peaceful "pretexts." >> troops are coming in under peaceful pretexts. >> it is good they are using the word pretexts. that is strong diplomatic language. >> dow futures down. speaking of peaceful pretexts, that would be investment bankers within the m&a frenzy we have got today. it is led by cheap money. maybe not the year 2000 standards. is uniquely qualified to speak to us about this differential between 2014 and another time and place for severn cisco finance. you were at montgomery for years. -- san francisco for years.

-- finance. you are at montgomery for years. >> i don't think we have got close to the ipo and m&a activity that we had back when i was at montgomery securities. focus on in the ipo task force that i was involved in is that we had over 500 ipos for years throughout the 90's. we have got to about 150 ipos through the last decade. what we were trying to do was record rack -- resurrect the small ipo. we are seeing signs that that is coming back. the ipo market anymore. the real ipo market is in fancy sure structuring -- share structuring. maybe they sort of get a little bit -- give a little bit to the public. is that like a different ipo market?

the ipo market is really not happening with ipos. >> i don't think it is a different ipo market. we have seen smaller gap ipo's comeback. securities, that is what we do. so far this 28 ipos year. that is the largest we have done in our history. we focus on small cap stocks. that is an indicator they are coming back. >> it is fascinating, the data you give us. we are looking at average size per ipo. tois down your today -- year date. those are from real numbers that tell us that by focusing on facebook, we are ignoring the real story. the real story is 197 ipos. >> we had 240 ipos last year. that is getting back to a more reasonable level of ipos.

i think the reception to those ipos has been quite good. we have seen very good performance in the ipo market overall. >> i have to ask you about alibaba. you the big bang corunna? >> i wish. [laughter] not going tos happen now. in the lead up to alibaba actually listing, is there going to be a dearth of ipos trying to get ahead of it or is it an instance where once the alibaba ipo goes, then everybody comes in? nowhat we're seeing right is the traditional slowdown into august. we usually do not see a lot of activity, especially in the second half of august. alibaba will probably suck a little bit of the air out of the market as everyone focuses on that deal. it does not feel like it did with facebook and twitter. it does not feel like it have -- has as much focus. rip up theg to

script. i want to know how on the ground, how stupid it is in san francisco right now. [laughter] whether it is really safe. how silly has it become? >> how stupid is that? >> based on home prices, it is starting to get pretty silly. we definitely feel like we are in a different economy when we are in the bay area, given the amount of activity in the tech space. tech firms moving into the city. commercial rates going up for real estate. havefinitely feels like we a very booming economy right now in the bay area. 2000ow does it compare to -- >> how does it compare to 2000? >> i don't think we are there. everybody was talking about their pre-ipo company. everyone was taking new companies public. it just is not feel like that.

>> the best criticism i have heard is that you have all of this energy go into one business model, which is eyeballs for ad sales. do you see evidence we're moving past that? that there is money going towards companies that have a real plan for a real role in the economy? of the sectors that has continued to be a good space for is a time others innovation in the software on demand. look at some of the recent deals we have seen. >> give us an example of one of the deals you have done. >> we have done a lot in the biotech space. >> really? >> stretch valuations. yellenyou advise chair on her comments that she made? >> no comment. [laughter] i think she should stick to being fed chair rather than

focusing on different sectors of the stock market. >> that is the bloomberg break-sclusive. us.lease tweet does the unraveling of two big m&a deals, fox giving up time warner and 21st century fox signalup time warner, the top of the market? we will be right back. ♪

>> good morning, everyone. "bloomberg surveillance." futures, -10. s&p futures, -8. brendan greeley and for adam johnson today. let's get to our top headlines. here is scarlet fu. >> a united airlines flight making an emergency landing in canada after a fire in its galley. it landed in halifax, nova scotia. a gang of hackers in russia may have made the biggest tall yet. billioners stole 1.2 sets of usernames and passwords. thatecurity firm

discovered is not saying what websites were hacked. great. between gangs and hackers and the kremlin is permeable and hard to define. [laughter] good point, brendan greeley. the second aid worker with ebola is admitted to an atlanta hospital. both patients are being treated with an experimental drug. >> the high point of bloomberg surveillance. four hours of broadcast. single best chart. it is a convoluted single best chart. [laughter] >> one chart for four hours of "bloomberg surveillance." come on. lucrativebeen very for banks. the single best chart is courtesy of our guest host carter mack and his company jmp.

the blue line is a price-performance 30 days after the offering. it is a little more volatile, to say the least. why is that? why is price-performance more volatile? >> the type of ipos that are coming up. we have had a lot of activity in the biotech space. we have seen a pullback in biotech stocks. we have seen some of the more recent biotech deals not perform as well as we have seen in the past. overall, the trend in that chart shows that ipos have performed quite well one month after pricing. 17.5% on average this year. >> tech has done better? >> tech, over 25% one month after pricing. >> the israeli company. >> exactly. software for automated driving. that was quite well received. >> how does the one month after return or stock price compare in

this volatile period to historical periods? is it possible to draw a comparison? back thatnot looked far. in general, deals were doing quite well. probably in 1999, 1998 timeframe. deals were up much more than that. moree seeing a much rational market environment than we saw back then. >> we have transactions securities and ever going after iconic market economies. what does it signal to an industry? >> it is a really interesting deal. the market did not react well to isi group.uying deal over is a smart

time. people are worried that they killed her multiple. over time, i think this deal gets them into the whole equity underwriting, equity commission business. >> ever core gets into the world of jmp. isn't the reason for the price decline distrust that the talent at isi will stay as they migrate out the door? >> i don't think so. so much of it is in burnout. -- earn out. there are operating margin hurdles they have to meet. to get the rest of the consideration paid. it is smartly structured. the folks at isi are going to be highly incentivized to stay and perform. they are making a long-term bet that i think is very interesting. >> carter mack with us. he has been up since 4:00 a.m. preparing, here is brendan greeley with our top photos.

how does one begin? >> let's take a look at a picture of a helicopter. [laughter] a helicopter dropping water on a forest fire. this is not the american west. this is near sweden. this is the worst forest fire in sweden's history. i think it is a sign of end times. fires. forest i had a terrifying conversation with a bloomberg sustainability desk yesterday. buy a gun. >> there is international cooperation. france and italy are helping fight that fire. >> this is serious. >> it is a huge deal. of southnother picture korean police swat team members. this is a drill. it is for the 2014 asian games

west of seoul. this is preparing for the games. we have another photo. this is not a drill. an israeli tank drives back from the gaza strip to an israeli .ank -- >> we are in the middle of a truce and we are waiting for friday morning. there friday morning. >> this seems to be the most successful truce so far. the last couple humanitarian truces were unable to hold. both sides could not hold back. >> david kirkpatrick had a smart story on the nuances of thomas. hamas.a >> the question is whether israel feels it has a hold on all of the tunnels. whether it does or it doesn't. >> the israeli military pullout of gaza. >> great photos.

nice job. >> thank you. i took them all myself. [laughter] >> we will stick with geopolitics coming up. tensions are escalating between russia and the rest of the world. prepares atin response to sanctions by the u.s. and europe. how does the white house move back now? we will talk to an expert on diplomacy, michael rubin, next on "bloomberg surveillance." this is "bloomberg surveillance." streaming on your tablet, smartphone, and bloomberg.com. ♪

>> this is "bloomberg surveillance." i'm scarlet fu with tom keene and brendan greeley. it adam johnson is on assignment. apple is the u.s. tech company latest to be excluded i chinese government services. the ipad and ipad mini were left on the final procurement list last month. china is concerned about security. the -- >> secure -- concerned about its own market. >> that's right. >> the iphone is set to launch next month.

tom, get ready for the tablet. shares of groupon are down as much as 17% in the premarket. the forecast have missed analyst estimates. they are trying to move to e-commerce retail. investing in that strategy has eaten into profits. that is the company news. have you ever purchased anything from groupon? >> no. i don't know groupon if it hit me over the head. >> i purchased something recently from amateur on local service, not groupon. groupon is in a mating business model that the -- is an amazing business model that they cannot patent. >> futures and dow futures down. the stock market, look at the chart. it fell off the cliff and reaction to comments from the foreign minister of poland. russia may invade ukraine.

michael rubin is a resident scholar with the american enterprise institute. he is the author of "dancing with the devil." wonderful to have you back. what do we need to know about mr. putin this morning? whatu were to want to know he was doing, what with the question you would ask be? >> the west is very good at bluster. it is not so good at follow-up. ifin gropes for weakness and he does not think the west is serious, he is going to act. that is what we are seeing on the border to the ukraine right now. >> it is an easy question. what is the likelihood he will take square footage in ukraine? already taken square footage in the ukraine and gotten away with it. angela merkel making a secret deal over the crimea, a gas for oil deal.

putin figures he has the crimea and he wants eastern ukraine. what happens in ukraine does not stay in ukraine. there are a lot of russian populations outside the russian borders. that is what we need to be worried about. >> i want to bring in my morning must-read. you said that the idea that diplomacy with rogue regimes is a relatively new idea and is less durable and reality. policymakers advocate this because other options seem unattractive. is the problem with russia right now that russia is a rogue regime, but washington and europe have not got up to that? >> increasingly, i think russia is a rogue regime. book, ipurposes of my took the definition of clinton's national security adviser. a state which does not advise -- norms of diplomacy. that is what putin is doing.

it is very evident that the west is not got onto this. we still think it will work. he is banging us over the head with the evidence that the strategy does not work. >> i'm having trouble understanding that -- whether you believe that russia is or that a rogue regime it might always have been a rogue regime. channeling george en. the diplomat. i spent -- >> i spent 14 years in a quaker school. thated to recognize different people need to think in different ways. we cannot project their own sincerity onto the russians. i don't think the russians have always been a rogue regime. it is almost as if vladimir putin has been emboldened by the fact that he has been able to get away with what he did in

georgia in 2008 and in the crimea more recently. ultimately, we see a situation where it is almost as if vladimir putin is out of control. >> you are saying it is bad to talk, but a kind of seems like we're talking because there are no better options. what is the alternative? >> i most certainly saying it is not that we shouldn't talk, but we need to recognize that talking is not a panacea. if putin is not sincere and coming to a solution, we need to recognize that the talks are not doing ourselves any good. >> but what happens next? what is the plus? which plus is coercion makes putin recognize that there is a cost to his action. but when you have the french talking about selling ships to russia, when you have the germans making deals over oil

and conducting business as usual, that is not a good model. >> 2014 nato. what is nato about this year and what can they actually do? >> that is the $10 million question. the fact of the matter is, ukraine is not part of nato. crisis, notn a real only for the identity of nato, but also for the european union. if vladimir putin become so emboldened that he figures he can get away with this in the confines of the former soviet union, then we have to worry about the baltic states. thee are members of european union and of nato. the foreign minister of poland is sounding the alarm on this. >> thank you. >> thank you. >> let's get to the foreign exchange report. rubel i have been watching. a weaker ruble. it is a big deal.

it is worth watching. >> we want to thank carter mack for joining us as guest host this morning. >> thank you. >> safe travels back. willming up, craig moffett be joining us with his analysis. ♪

>> this is "bloomberg surveillance." >> they call it mergers and positions, not. sprint steps away from t-mobile. there is a sharp market reaction as poland gauges well. companycan the modern keep miserable employees happy? from our world headquarters in new york. it is monday, august 6. -- wednesday, august 6. adam johnson is on assignment. our guest host for the hour, aaron hearst, author of the purpose driven economy. >> let's get to the latest. german factory orders dropped by the most in 2.5 years. that, italyf

reported second-quarter gdp falling, shrinking by 2/10 of 1%. by zero .2 percent. mortgage applications just cross and we had an increase of 1.6% last week. numbersrade balance looking backwards in the month of june. time warner has just come out with results in the second quarter, beating the consensus of $.84 at $.98. and on top of that, time warner setting up a $10 million stock buyback program. of 3% in sales from a year ago. chesapeake will report in the morning. and after the market close, 21st century fox.

>> equities, bonds, currencies, commodities, the job that we saw starting at 1.37 yesterday afternoon, the futures were -10 earlier. a lot of movement. time warner with a slew of press releases, including forward view as well. >> let's get to some company news headlines as well. we will talk about a shakeup that sprint, which is the third biggest wireless carrier in the u.s. the founder of bright star will now replace dan hesiod as ceo. firstar and sprint are controlled by bank of japan. at the same time, t-mobile plans rejected $15 billion offer from french telecom company iliad. iliad has proposed buying a 15%

sake in t-mobile. for partnersooking to increase -- early it is looking for partners to increase its offer. but that is really disruptive in the market. >> you are a genius. >> rupert murdoch giving up on time warner. with trying to $75 billion takeover bid because fox's stock as dropped since word of the time warner bid got out. is -- foxx is announcing a $6 billion share buyback. >> i'm looking for a word search for murdoch. i did not see it, but it's really good to see a single line on "hangover part three." did you see that? >> it tends to be about game of

thrones, but that is good. >> paul sweeney saw i like hangover three. >> paul sweeney is director of intelligence at bloomberg. paul, the earnings report that time warner is publishing today, is that the sideshow to what is going on with time warner not going forward -- or i should say, foxx not going forward with this it for time warner? >> absolutely. in the earnings call later on today, the shareholders will want to your a five-year long-term growth story strategic vision from time warner management, about how they will create value in the next several years in spite of the fact that they are not going to do a deal with foxx. they were very adamant to rupert murdoch saying, no deal, because we are confident in our longer-term growth strategy. >> how will institutional shareholders react to this?

stock ran up on the deal, obviously. the stock is going to pull back. it is still higher than when the deal was announced. time warner was very straightforward that it is a cable network business and it is a big movie and tv production studio, both of which are performing very well. this is a management that works for shareholders with buybacks and dividends and so on. >> ring up that chart, colby. or those of you on bloomberg radio worldwide, it's very simple. 60 up to 73 and then near 90 and to 75 76.op -- $75.76. what is so non-foxy about time warner that it would not have worked? what i keep hearing is that cnns more conservative and is more liberal.

to me, that is not the issue. media company deals have to be friendly deals. larry haverty was on last night -- >> why? >> because this is a creative business. these people work together every day. >> yes, but scarlet and i aren't even on speaking terms. [laughter] if they don't work out well, the cultures don't work. how would you put the two studios together? how would you possibly do that? explain the you peace, love, and dope to jeff bewkes? >> in the 1990's, rupert would have done that deal. he would have diluted his shareholders and hurt his bondholders with a downgrade. this is a new, different rupert murdoch. he's actually been working for shareholders in the last decade and the stock has done great and

he decided he could not take the dilution. >> let's go to a transaction in the moment. washington will not accept a duopoly or try out fully. the president and his administration want a four-way competition, and that is what you have where sprint will not go after t-mobile. from moffett moffettnathtanson joins us by phone. what is what we need to know about the future of sprint? >> that is a tough question, because sprint faces a tough road now. we never thought this deal had any chance to happen. i cannot say i'm terribly surprised. but it seems like in the run-up to trying to deliver transaction with t-mobile, sprint all but abandoned it -- it's plan b, which is to run the business. they've got a lot of wood to chop with respect to fixing the network, they're pricing, their brand.

it will be a long road. whichfar as service, describes 105%, do we really need for competitors? >> the trade-off that you always make in a businesslike this is, do you want more consolidation that might theoretically lead to higher quality service? or do you want more fragmentation that is more likely to lead to lower price service? thatis always the balance regulators are trying to strike. in this case, evidence suggest that carriers are pouring capital into their networks at a pretty good pace, a respective of the fact that -- regardless of the fact that there are four instead of three carriers. in that case, what we really , as regulators, we

need to protect consumer price. kindly --ot look cool they did not look kindly on consolidation because it would likely raise consumer prices. you are likely to have lower prices, at least, even if you don't get it on suitably better -- a demonstrably better service quality from sprint. fromat we are seeing is the sec, no, we want for carriers. you cannot do this. is there any evidence that it will beat a carrot -- there will be a carry it down -- is there any evidence of a carrot down the line, to? are comingm auctions up next year. is there any sense of committing to that in a -- in exchange for merger?ing this murde >> i think you're right, the sec when they were setting the rules for the auction, very much

wanted to carve out a significant portion of the spectrum to be set aside for all carriers who are not named at&t and verizon. unfortunately, because the sprint-t-mobile transaction was looming and they wanted to send every possible to sprint saying, don't bring this deal because we will have to reject it, the irony is that the rules that they said were much less favorable for sprint than they otherwise would have been. >> i would agree with that. craig moffett, thank you so much. and thank you paul sweeney. >> our guest is aaron hearst. we will get his thoughts shortly. we want to get to our twitter question of the day. treat us. -- tweet us. ♪

>> good morning, everyone. i'm tom keene. with me is scarlet fu. brendan greeley, we dragged him out early this morning. adam johnson is on assignment. futures are at negative seven. collect federal regular hitters are stepping up pressure on banks to make big changes to their so-called living wills. essentially, 11 of the nation's lip -- biggest banks have yet to prove they can survive in the

event of a crisis. this the same as a stress test? >> no, they are totally different. this comes down to what was required in dodd-frank. was so taxpayers wouldn't have to bail out wall street in the event of another financial crisis. the only way it's going to happen is if the banks are not too big teeth -- not too big to fail. is ifly way to prove it they have these living wills outlining how they would be wound down in a so-called disorderly -- so-called orderly fashion. >> the gym give you a living carpet? is that -- did jim give you a carpet? is that in his living will? >> what it is becoming is a systemically important financial institution, so he will have to confront this issue.

the problem is, the fed and the fdic will have to determine the case of these 11 bank that these living wills were not "credible." we don't see be living wills. they are private. we only see 35 pages. in case of emergency, break glass. break glass and then what? read a 450 page document? [laughter] >> what i love about the sec rules is that they expected the next him around to establish a less complex structure. that is regulation at work. they are saying, you have to change. >> you have hit the nail on the head. this is a backdoor way to force banks to be less complex. and the fed can put a gun to the head of the banks and say, sell units, break this up,

etc. >> have you seen a living will --m jpmorgan echo >> jpmorgan? >> i've only seen 35 pages, because that's the public part. >> what does it look like echo >> it's not impressive. part, "we will a you know." >> thank you, erik schatzker, of market makers. it's bloomberg surveillance. i'm not happy. ♪

>> good morning, everyone. it's bloomberg surveillance. brendan greeley has four children. are you kidding echo under the age of four? we met late and we just got started. >> a moment of silence for misses greely. >> that is dr. greely.

>> aaron hearst, the author of a book about family. [laughter] scarlett knows a thing or two about children as well. >> let's get you president obama. safety procedures after man dressed in afghan uniform killed a u.s. general. he is the highest-ranking officer to die in the war. the 72 hour cease-fire is holding in gaza a day after it began. they are trying to come up with a lasting solution to the conflict between israel and hamas. and in kansas, senator pat roberts turned back a tea party rival in the republican primary. roberts beat milton wolf 48% to 41%. senator to stave off a tea party challenger this year. here forrespect brendan greeley. you and i were talking the

difference between the rest -- a west point general and an rotc reserve offers are training general, general greene, who gave his life for the nation yesterday in afghan was an rotc general. >> there are still a lot of cultural difference in the army between west point generals and rotc generals. i own grandfather was a west pointer. he refused at first to recognize the marriage of my uncle to my ad. my uncle was a decorated army officer, but an rotc officer. they bring important things into the army that will not come out of west point. >> i have read the generals the general's resume. terrific accomplishment in the army. >> let's talk about the link between happy and satisfied workers and shareholder return. do happy workers make for more rewarded shareholders?

it turns out that free yoga and on-site dry cleaning can lead to higher returns on company share prices. one man tested that theory and joins us from london. alex, your research shows that investing in firms listed in the 100 best companies to work for pays off. how do we know it is causation and not correlation, that it is employee satisfaction that is causing the good stock performance? >> what i do to control everything that might be driving stock returns. 100 best companies in the industry within the same size. i isolate employee satisfaction only. >> this happy worker premium you found out is not universal. it rings true in the u.s., and also in the u.k. where you are based, but less so in countries like germany. why? anyou have to think why

ploys satisfaction is useful as value. it is easier to recruit workers or to retain workers. but those estimations are more important in countries with flexible major -- labor market, like in the u.k. or u.s. in countries like germany where hiring is more difficult, that is where employee satisfaction matters less. the hours worked full into this? the fact is, we are all working 65 to 70 hour work weeks. that changes the calculus, doesn't it? >> hours worked is one determinant of employee satisfaction. at the institute of california, they do look at hours worked, but also other things adjust medication, management, and fairness and quality. the company may be rated high

because it is cornwell in other dimensions. for example, goldman sachs has in -- for years because of these other dimensions. >> does this intuitively make sense to you? >> i think the thing that we have seen is that the companies giving us perks that you have talked about are signaling confidence because they are spending money and they are spending resources and going somewhere. that gives a sense of hope, which is very different than the actual effect of those perks in terms of the happiness or well-being of those employees. the research out of yale -- actually out of west point, shows intrinsic motivations. but i love that. what is that? -- >> i love that. what is that? >> intrinsic motivation was done with soldiers and showed what gave them a sense of purpose, what drove them internally. and yoga and ping-pong,

those things are not as thoroughly intrinsic. those things in some cases have a negative impact. >> hold on. >> are you doing early morning yoga? [laughter] managers should want to do the right thing for your workers because it is the right thing to do, right? should it be driven by a moral sense of rightness and not just shareholder value? >> i think managers have a very little idea of what employees actually want. what employees want is often exactly opposite of what managers think they want. the trick is to focus on what the employees actually want and not one managers think they want. >> more money, lower hours. >> no, absolutely not. >> that is something to be discussed. alex from thenk london business school running us with the details of this research.

the debate continues. aaron, intrinsic motivation. >> a story we've been covering for an -- for a while, over versus cabs. -- uber versus cabs. ♪

>> this is "bloomberg surveillance" and i'm scarlet fu here with tom keene and i've been -- and aaron greely of bloomberg businessweek. adam johnson is on assignment.

in company news, walgreens will to do tax and version overseas. two box office hit in the last quarter, both from marvel -- talking about captain america, the sequel, and maleficent. angelo reported record second-quarter sales that beat analyst estimates. -- zillow reported second-quarter sales that beat analyst estimates. those are company headlines. this matters now to our guest host, aaron hers, chief executive officer of the purpose economy. synergies may be real, but the combinations lead to major disruption for employees that

survive the merger. this is the backside of the transaction. >> absolutely. if you look at why most mergers fail, it's the people, the coulter. but that is not taken into account because it's usually driven by cfo -- the culture. but that is not taken into account because it usually driven by cfo ross and ceo's. they emerge, they made, cookies and the rest of it, and one year later, you're out. 36 month in, boom. >> that is exactly right. because we get purpose from relationships, doing something greater than ourselves and personal growth. when you go three merger, all of those things go into disarray. your relationships become uncertain. >> i want to rip up this ripped -- the script. i love your idea of intrinsic motivation. what firm does that best?

there isall firm -- >> a small firm. erica carpenter at cornerstone capital asks everyday, how was your day? and she actually listens to the answer. if someone says, i had a good day, she says, what was the motive and -- the moment made it a good day? andshe listens their answer shapes the model around that. that is the future of management. >> the future of management and is around leadership. when you hear leadership how do you respond? >> i think it is not so much about management versus leadership. leadership is about control, but enabling potential. aboutabout in -- requiring the intrinsic motivation of the people you are leading. how can increase compensation

be a negative? >> certain people get distracted by that. they have shown studies around different pay rates and activities, and there is a negative drop off, because they fundamentally get distracted by that and are no longer focusing on the intrinsic motivations. >> what do the young kids who want to? we do a lot here on bloomberg on millennial's. want one thing first and foremost, and it's what defines their career, purpose. they want a career defined run relationships, making a difference, and personal growth. it's that simple, and most ceo's don't get that yet. >> jeff bezos and all he's done and the revenue builder. what are the best practices of some unlike bezos? >> he has the pieces that are -- ofl about those someone like bezos? >> he has had the pieces are special about those cultures. he has kept the pieces around

data and efficiency sub at that place is pretty tough as an employee. it's not a place where they feel loved. but they know their work is valued and they can make an impact. >> very interesting, thank you. urst on the purpose of labor. we look at what is going on in the premarket, brendan greeley, our guest host filling in for adam johnson for the day. media the numbers on the companies, but it's almost a sideshow compared to the dramas with the takeovers. >> i'm fascinated with all of -- i'mp -- top fascinated with all the conversation we had about why takeovers and -- why culture matters. i think it's interesting what aaron said about ceo's not understanding the business. we get caught up in the share price and what it's going to do. the question is, will it work

echo will it make a better product? -- will it work, will it make a better product? >> and within a creative industry, you can only have friend takeovers, not hostile ones. futures are down by five points at the moment. this is bloomberg surveillance. i'm scarlet fu with tom keene and bloomberg businessweek's brendan greeley. adam johnson is on assignment. our guest host for the hour, aaron hearst, author of "the purpose driven economy." let's get to headlines. flight 999 was a boeing plane en route to brussels next one on fire. -- the airportse says the fire was put out before it landed.

sold 1.2 billion sets of usernames and passwords. doctors saw that 1.2 billion sets of usernames and passwords were hacked. patients brought to the u.s. are said to be improving. they were treated with the next government will drug. in san diegompany called map pharmaceuticals has been working on this for ever. that is fascinating. you talk about the pipeline with the large companies, and what ad ignores is all of the little companies that have an idea and are waiting for someone to pay for it. this idea something that matt has had for a long time. why did it take so long for capital to get to them? >> at least it is now getting its moment in the sun. perhaps more attention will be paid. we are going to move on. buber and other ridesharing services have found tremendous -- uber and other ridesharing

services have found tremendous response. curve starts within the existing taxi industry. the co to talk to pat, of curve. he joins us from washington this morning. curve is approved by the tlc, and that certainly matters to the existing industry. does it matter to consumers? >> it does, particularly those who are worried about their safety. we have found, particularly with women who want to know they are getting into a safe and approved right, it has -- the fact that it has been accredited and there is a regular -- regulatory body that said it is safe matters. >> one thing that has stood out in the rest release from curve is -- press release from curve is constructive innovation. what is not constructive

innovation? what is the difference? constructiveon -- innovation is to say things we willand not saying do just whatever we want. some have said that huber has said, we don't care what legislation is and we will do our want. onthink society is based rules, and that is problematic. it is better to be working from within and trying to abide by the rules to be successful. >> if we go with that, what kind of impact our apps like curve having in terms of changing the business model for cancer right now? will it change up the way they get paid and the way they -- four taxicabs right now? will it change up the way they get paid and the way they charge customers? us create anhelped environment where there is a likelihood for taxicabs to get better, for service to improve, and the opportunity to be even better.

curve, for example, allows you to order a taxi cab. you don't have to wait outside if it is raining. the cap will show up right away will stop at the end of the ride, you can hop out and it will charge to your credit card. you can have the advantage of all of the convenience you want and still be able to use a taxi. with taxis inblem new york city where i live is that it cost $1.2 million to buy a medallion. you talk about constructive innovation. i don't think that is enough. it should not cost $1.2 million to become a taxi driver. is that something you are addressing? >> no, we don't work on that. i would agree with you. sometimes taxicabs get up black eye. the constraints put on them are difficult and make it hard to have innovation they want. our approach is to go from the consumer side and create a better consumer experience that allows drivers to be more

efficient. but i would agree that there are inefficiencies in the system that need to be addressed for taxis to be able to compete more effectively. >> pat lions gate, thank you for joining us from washington. to the break, our twitter question of the day. treat us. -- tweet us. ♪

>> good morning, everyone. futures are negative. at negative five right now on futures. brendan greeley will is with us this morning. mr. johnson is on assignment. >> joining us is betty liu. >>t do you have going today? mnj isvely, the co of joining us. as well as the co of aol. aboutsteaming mad corporate tax reform. and about walgreens not doing a taxi version. >> that is right. >> that is coming up at 8:00 a.m. we want to get to the u.k. because doris johnson says he plans to run for a seat in

parliament next year. guy johnson, anchor of the pulse in london spoke to him today. what was your take away with the london mayor? the speech here at bloomberg was around the eu, but the fact that you say he's going to run for harmon, that puts them in place to run for leadership of the conservative -- run for parliament, that puts him in place to run for leadership of the conservative party and pry minister. -- prime minister. we had a run on europe for 39 is.s, or whatever it the people of my generation have not had a chance to vote explicitly. reforms, i will campaign for a yes. if we can't, the future is transforming. if you look at britain today, the position in the global it could be just as

great and glorious. >> it will be amazing to see what happens next within britain. johnson hnson -- doris johnson entering politics. david cameron has welcomed the news. we will see how these two get along. it is pretty clear that boris would like to be prime minister. >> the conditions he set seem insurmountable. rescinding the agricultural policy -- these are things that would never happen. was he setting the stage to say, well, you did not meet our conditions and i will campaign against the? -- against it? >> many accusations could be leveled at him. and others are suggesting that the are is being set little too high. he said he still wants to see britain perform at reformed eu.

he's giving the skeptical wing at the u.k. party plenty to go on. ,here's a lot to think about britain leaving the eu, and potentially scotland leaving the u.k.. about johnson telling us doris johnson's political ambitions. up, we will discuss the deals announced next on surveillance. ♪

>> coming up tomorrow on "bloomberg surveillance" well-timed. we are joined by mr. kaplan from harvard business school. this is particularly timely after mr. bewkes from time warner has to move forward. >> this is "bloomberg surveillance." i'm scarlet fu here with tom keene and brendan greeley. adam johnson is on assignment. our guest host is aaron hurst.

apple will be the latest tech company to be excluded from chinese government purchases. that is, according to chinese government officials familiar with the matter. concerned about security. and speaking of apple, it is releasing its latest iphone. apple plans to launch two iphones. both will feature displays larger than on current models. ann shares of groupon down 17% in the premarket. the company reporting a third-quarter forecast that misses analyst estimates. investing in that strategy has cut into its profits. say, anytime i hear china say tech security, i hear the phrase "tech perfection is protectionism."

it appears that they are growing the wall and then unleashing them on the world. do they control alibaba? >> that is really hard to say. that is criminology. no one really knows. >> ok, very good. $32 billion, that is how much the president has pledged to invest in africa -- $33 billion, that is how much the president has pledged to invest in africa. we need to speak to hans nichols about what we see in the last two days. whether it is corruption and the price president speaking on the need for -- the vice president speaking on the need for africa to get its act together, there are many different emotions. i've learned a lot in the last 48 hours about africa. >> this was. lous on the potomac for africa. on purpose -- this wasdavos the potomac for africa. most of the interesting conversations were having --

happening on the sidelines. there were some great panels, but the goal was to get an investor rapacious at -- appetite interested in africa. but the question is, will there be government stability echo -- stability? respondid the leaders to the pritzker's pontificating? not sayld pontificating. there will be a time for lectured. -- lectures. they may not be well received. -- jeffrey immelt was talking about spending money. and by spending money, he is talking about getting a return on his capital and selling trains in south africa and being part of the railway line into east africa. there were more interesting conversations about competition we had with one of the african billionaires. he says he is fine with his margins coming down because there will be so much growth. he is fine with margins

shrinking, but there will be so much growth, paving roads, infrastructure, bridges -- he's comfortable with it. >> you had a conversation with the president of rwanda. did you get a sense from investors that rwanda is the model for what they want to see in africa, a tightly controlled, safe, singapore-styled economy? bond answer was that the market validates his approach and that the markets are never wrong. we will see whether or not investors keep flowing into rwanda. right now, it's pretty remarkable. right now, they have 7% growth and have had that for a couple of years. individual investors have new plans for rwanda. i did not meet up with many of them. the president they're clearly sees value from the market. and there is no criticism on the human rights charge. >> mr. nichols is in washington today and, brendan, you bring everyone up. great learned in a

interview was this idea of ivory coast and ghana flipping, where ghana is now the problem child economically in western africa. that is new, isn't it? >> yes, and no. the problem with ghana is that they have run a high deficit. they need an imf bailout because of their deficit this year and last year. when you look at their debt to gdp ratio, it's nothing compared to anything you see in southern europe. it is just that international markets -- that is, if international markets are willing to give them the time to figure it out. cocoa prices are up and there are reasons to be optimistic about ivory coast, because they have a real export driven economy. in ghana, you have a little gold, some cocoa, but you do not the really have economy like you have in ivory coast before the war. was aer, ivory coast center, culturally and economically of west africa, really, since postindependence.

then it shifted over a little bit to nigeria, but that was an oil story. it was always ivory coast. >> hans nichols, thank you so much. >> we want to bring in our guest host, aaron hurst. we wrap up the two hours of surveillance and we look at the end and a deals that have fallen howt, you have thoughts on health care will he be more moving forward -- will be moving forward? >> what we have seen is taking care of the yield -- of the ale, which is what we are all used to. but the new innovation is about how to stay healthy. hospitals are trying to figure out how to take care of the l and help with wellness -- of the ill and help with wellness. i've never walked into a hospital and select i was getting healthier. these are places that are taking care of people that are sick. deferred models are emerging and

-- different models are emerging and whether or not they can be together or separate, i think there will be a difference between old health care and you health care. your doctor will be promoting health and diet treating? just >> doctors are trained almost entirely on illness, not help. -- health. i think you'll see a new set telling a patient to stop smoking, and to exercise, too. >> tom, you are fixated on a lot of red on the screen. >> i'm fixated on how abruptly we moved yesterday. finally, the calculus clicked in with a vengeance with what we saw with poland with regard to ukraine. the futures are negative seven right now. down futures, -57. hysteria,where near

but yesterday, something changed. we've got to pay attention. >> today, i am watching the twitter feed of john legere, the co of t-mobile. he always has something mildly profane and very entertaining to say. and he's got something to say, suddenly not running sprint and t-mobile. and georgia telecom does -- deutsche telekom is not have an exit plan. run?day have a company to >> at all did they ever should have had a neck the claim. they want a company to run and -- i do not think they ever should have had an exit plan. they want a company to run and i think they need to do that. >> time warner reported earlier in the hour. rupert murdoch is dropping a $75 billion bid for time warner. there was no mention of the stock in the conference call. i'm sure there will be mention of the debra fox conference call this afternoon.

-- of the foxx conference call this afternoon. apparently, jeff bewkes wanted at least $100 per share. the unraveling of two big and a deals, does it signal movement in the markets? and the answer -- >> o, are we the two sparrows? [laughter] >> think on it. >> this is what happens when you have four kids in four years. echo >>ou kidding me where is johnson when you need him? >> here is this response -- >> thank you. >> there is some reason for you. not matter how many transactions, but how much each is. one could be one dollar, another

could be $1 million. >> i love your idea of intrinsic motivation. >> thank you. >> "bloomberg surveillance" on radio continues. "in the loop coast but with betty liu is up next. have a great rest of the day. ♪

>> good morning. it's wednesday, august 6. we are live from bloomberg headquarters. we are "in the loop" and i'm

betty liu. we have a great show for you today. be's of u.s. companies will joining us to talk about my guest in the 9:00 a.m. is steaming mad about corporate tax reform and what he has to pay in taxes. first, let's look at the headlines this morning and the 21st century fox his decision to withdraw from the bid of time warner. shares of time warner are down 10% in premarket trade. foxx shares are up. and another deal undone. sprint is dropping takeover talks with -m