will have some kind of encounter. no long lines for the apple watch. an hour ago, 5:00 in beijing, we look at china jk drinking problem. this is surveillance bang." i am brendan greeley. joining me, olivia stearns has another job to do. tom keene is on a beach. he is on a beach. let's get the top headlines. francine: it -- president obama is and panama. he will have his first opportunity to meet with cuba's president. in jamaica, president obama said

the u.s. has not backed off its position that cuba must include human rights. president obama: we are committed to human rights around the world. engagement is a more powerful force than isolation. this will be good for the united states and the entire hemisphere. john kerry met with the foreign minister. it was the highest -- between those whotwo countries and half a century. an announcement will come on sunday. hillary clinton signed a lease in brooklyn. that started a 15 day window. a tornado slammed into a small

town overnight. more than a dozen buildings were destroyed. fair dale does not have --. brendan: the settlement with u.s. and british regulators may be finalize this month. general electric about to sell off a real estate portfolio worth $30 billion. a deal would continue the goal of shrinking ge capital. in golf, jordan spieth takes a lead. he shot eight under par. he birdied eight of his first 14

holes. the name that is still important tiger woods 40 fourth place. he shot a 73 in his first round in dose co-months. those are your top headlines. president obama in panama city. one summit matters. the one between the u.s. and cuba. peter cook is in washington. with the summit, it is a little bit like high school. you never know what the meeting is going to look like. are they going to shake hands or me by somebody's locker? what is the nature of the meeting? peter: it is going to be like high school. we do not have a clear picture about the scope of their engagement. they are both there.

there is a likelihood they will cross paths. we know that we have had this high-level engagement between the secretary of state and his cuban counterpart. direct talks between the dose co-companies. there is a lot riding on this. it is taking the air out of the room. the meeting between role castro -- raul castro and president obama will dominate the conversation. francine: what are the meaningful words they have to tell each other? peter: it has to do with the conversations between the u.s. and cuban delegations that are trying to bring about a thaw

in these relations. the first being getting cuba off of the terror list right now. cuba has been there since 1982. that is a stumbling block. cuba sees this as a symbolic gesture before they can continue the conversation. the president talked about this yesterday in jamaica. he is close to making that designation to dropping cuba from that list. members of congress suggest the decision has been made. brendan: let's move back to d.c. from panama city. what will the reaction be if he removes this designation? peter: some lawmakers and marco rubio, a likely presidential candidate is opposed to it.

robert menendez a cuban democrat, very opposed of it. it is clear that congress is not going to stand in the way of this. there are enough members of congress who see the opening of cuba as a business opportunity that they will not oppose it. there will be a lot of criticism. the president is more likely to achieve his successful outcome with cuba than he is with iran. francine: is it a failure or a success in certain ways? peter: it depends on who you talk to. if you talk to marco rubio, the isolation is necessary, given the treatment of the cuban government by its people. president obama made the case in a town hall with students across

the caribbean, that the policy has not worked, do not keep doing the same thing. brendan: i cannot tell you where tom is, but he is in a place where you would not expect him. kate more is on the desk with us from j.p. morgan. i am glad francine is here. over the course of the week, we have had new highs on the europe stocks. what does that say to you?

kate: there has been a huge amount of hot money flows. almost $60 billion of new money enter equities this year. that is about $50 billion out of u.s. equities. everyone is betting their flows on monetary policy. you add to the equity market. if you are cautious we are going to have a normalized policy in the u.s., we do not have a fundamental followthrough from europe at this point. it is very popular. the question is, are we going to see a pickup in terms of corporate activity. we have to remain skeptical.

francine: are you talking about mn day? -- m&a? it seems to be that european stocks are undervalued. kate: it is about buybacks and increasing dividends. are we going to get that business activity we saw go hand in hand with monetary stimulus in the u.s.. brendan: how do you break down -- the way german industrialists are going to see this is different. kate it is difficult to say one set of bond buying is going to be the answer.

i am a little bit skeptical. i need to be cautious about which companies and sectors can do well in this environment. from our perspective, it is not just what is happening to the equity market, but what is happening to the currency market. it is very important for us to take it into consideration. francine: what other sectors do you like at the moment? kate: some stuff may get a bigger bid. we like high quality. we are thinking about the quality and growth story. brendan: it is important to remember that is a currency player. i want to bring up a chart we pulled up from gary shilling. it is pretty straightforward.

kate: are you talking about the european market? i think it is difficult for me to look at equities relative to equities. for us, it is not the equities asset classes are expensive. what is the least expensive of the group? we see less opportunity in bonds. it is ok to own equities even if the valuation metrics because it offers the best longer-term opportunity. brendan: tom keene is on a beach. we are going to be here. linkedin going after its third acquisition. jeff explains why he has gone on a shopping spree. this is "bloomberg surveillance." ♪

rendon says this is "bloomberg surveillance." you are looking at the rain and fog. somewhere a man drinks his coffee and thinks about his life in the fog of new york city. francine: the united states and cuba another step towards closer ties today. president obama is in panama city. he will provide his first opportunity to meet with route will cost rope -- raul castro.

hillary clinton may be a candidate for president. her announcement is coming sunday. she just signed a lease on an office space in brooklyn. a gunman killed a garnering kidnapped a woman at a census bureau office in maryland. the suspect was caught. the woman is safe. an intruder slips past guard houses and crashes a car into a fence. perimeter security has been breached but none of the incidents involved terrorism. rand paul became the first major presidential candidate to take contributions in bitcoin.

there are accepting the currency to back his campaign. a mass exodus from the university of kentucky men's basketball program. the top seven scores are leaving school to enter the mba -- the nba draft. also entering the draft, a national champion from duke. brendan: it is not amateur athletics. it means business. coming up, connie versus yellen -- carney versus yellen. which countries are hitting the bottle the hardest.

it is launch day for the apple watch. there do not seem to be any lines anywhere. will their latest gadget be a success? linkdin's purchase of linda.com will be it's biggest acquisition so far. >> we have been successful at generating traction. we take these skills miller and we go beyond the data to understand skills our members have. we can offer the content to acquire the skill. this is the last piece of the puzzle. it is just a question of scale and time. brendan: we have kate moore. we were talking about linkedin

and how it is a different kind of network. kate says --kate: it is not as intrusive as some of the other social networks. i do not need to be on it all the time to connect to people in a useful way. francine: people publish stories and groups that discuss the way the world goes and getting into e-learning is a great step to encounter the un-affordability of education those countries. brendan: they have grown, they have reached -- facebook seems to be flattening out. facebook is using its messenger to open it up to developers.

this seems to be -- your current and future net works are a great feature. it makes a lot of sense. it is going to be a real challenge for all of these networks. how much value can we add to your life? brendan: my first reaction was it is another bit of m&a. it is its own economy. kate: we have talked to our partners. we have seen so much money flow in. everyone wants to get in their first investment into the next

big thing. this is going to be a period of strong growth. francine: the thirst for online education. brendan: our twitter question of the day, it is possible that president obama and raul castro will meet or encounter each other. what should top the agenda for the two of them? this is "bloomberg surveillance." ♪

brendan: tom keene is on a beach. it is time for our morning must-read. francine: it is a must listen. listen to the hip-hop trio, de la sol. >> you rhymed over beats that were being cut back and forth. sampling was just moving the dj out of the way to loop continuously. we were experimenting with james brown and any other record that normally we would rhyme over from a hip-hop perspective. we did not think about the fact of who you have to pay for a writing charge or a publishing charge. we learned quickly. francine: i love their business

model. they create the beats and push them out. brendan: they point out how it is for business to catch up with innovation. we are still arguing today about licensing rights on spotify for the people who wrote the music versus the people who created the beats. kate moore with us today. i heard her, watched her mouth the words -- "i love de la soul." if i do the be, can you saying "groove is in the heart?" i have heard interviews like this from a lot of musicians.

when you start out as a musician you borrow stuff from everywhere. it is difficult to work without feeling something. the legal regime does catch up with you. francine: can the saidfed six forward guidance? "bloomberg surveillance." ♪

francine: let's get to our top headlines. the highest level meeting between the governments of the u.s. and cuba. on the eve of the summit john kerry met with cuba's foreign minister. it sets the stage for president obama and raul castro to meet at the summit. yesterday, the president was asked about the relationship. president obama: in terms of the

process of establishing diplomatic relations with cuba they are proceeding as i expected. i never foresaw immediately overnight everything would transform itself. francine: there are reports hillary clinton is close to announcing she is running for president. the announcement will come sunday. she signed a lease on office based in brooklyn. that starts a 15 day window in which she can conduct campaign activities before entering the race. police have released a video that shows an encounter that started a white officer killing a black motorist. michael slager shot at scott

eight times. brendan: economic sanctions must be listed -- lifted as soon as any agreement is signed. that contradicts how -- that contradicts the framework of a deal last week. crowds in tokyo could not get -- could not wait to get inside to see the new apple watch. it is the first new products since the ipad five years ago. troy polamalu is retiring. he spent all 12 years of his career with the steelers. he changed hairstyles in the nfl forever.

he was 33. he had two years left on his contract. breaking now, the deal we told you about earlier has been confirmed. ge capital real estate assets being sold. ge taking its aaa rating out for a ride. it went into financial services and now we are realizing that was not the best idea. francine: a lot of conglomerates are not to the scale, but have done the same. the fed and the boe face a similar challenge on how to tighten monetary policy. they need to tighten moll and terry -- they need to tighten

monetary policy as the rest of the world eases. our guest host is kate moore. when you look at the different styles, who is more clear? kate: the fed has been clear. we are data dependent, we have made up our mind. we are not hiding in the answer. we actually do not have an answer when we will lift off. the said does not have a plan. they are going to wait and see how things evolve. friday's payroll report muddled things a little bit. there is a lot of confusion about how fast the fed is going to move.

brendan: watching people in the fed reminds me of people that don't want to be with each other. kate: the market is from mars. brendan: i like to think that the market is just not into you. mark carney says the bank excepts to return inflation in two years and make increases in bank rates over the next three years. the pace and degree of those increases will be affected by a variety of factors. she said the decision about when to begin reducing will depend on

how economic conditions evolve over time. kate: and is going to change the way the market behaves and how businesses think about using leverage and tapping markets. we wanted to be a gradual realization of normal policy. francine: he is trying to raise rates. our next interest rate should be up. kate: inflation has been fairly

mooted. it will pick up the calculation for all central banks, how they think about easing. brendan: minutes press conferences, which one do you pay attention to? kate: i pay most attention to the dots. you can come off with a hawkish or a dove this -- or a dovish message. the dots give us a good snapshot in time. francine: -- brendan: the dots do not lie.

our single best chart next. this is "bloomberg surveillance." ♪

francine: this is "bloomberg surveillance."

brendan: china is going on a bender. the trends of international alcohol consumption. the white line on the top, that is south korea. the blue line is the u.s.. coming up from the bottom is china. you see a rise around 2000, when they life the taxes -- lift the taxes on alcohol. the data looks at the percentage of the percentage that actually drink. this looks worse and you end up with a health problem. francine: when you speak to ceos, they think it is luxury status to be seen buying

expensive drinks. brendan: this is a basic wealth effect. as companies get more richer they consume more things alcohol being one of them. kate: we are going to see more consumption of branded products. beverage companies have a great time growing outside of their countries. brendan: we can two things there.

kate: may be at the start of the cycle, there is an opportunity for a lot of these companies to continue to grow their earnings. brendan: there was a chart about your consumption. they look at the brand in every country. it was branded differently. it was roughly the same product. it was a light lager. beer tastes are universal even if we call it something different. francine: i am not sure that is true for the real alcohol stuff. it does not translate so well. it is something you have to have from a young age. brendan: if you cannot pronounce the local lose, you are likely

to get in trouble. kate: a lot of times we talk about looking at craft beer and boutique brands and moving into cool tastes. we all just really like a light locker. brendan: germans drinking less beer. ships are stuck in lake superior. it is supposed to hit 68 degrees today in new york city. that is not what we are seeing in the ice. eight teen ships are stranded in lake superior. there is iron, grain, the great lakes are experiencing their biggest ice cover in decades. the coast guard is trying to get through to the ships.

climate change is complicated. one of the things it has done, we think, moved the jet stream to make parts of the northeastern united states and canada colder. kate: and has not hurt ski season. i am not complaining. brendan: number two, residents have been demanding the removal of -- that is i love lucy. residents claim it looks nothing like lucille ball. she is trying to reenact a scene from i love lucy. this is the vitameatavegamin. do you remember this.

francine: at looks like a gremlin. brendan: a new installment. a 39 foot god villa head. that is on top -- a 39 foot godzilla head. you have a claw coming down from the top of the room. if you say you are staying at the marriott, you never know which marriott. all you have to do is say i am in the godzilla hotel and they know exactly where you are. kate: we expect the yen to weaken further. i am going to travel back.

brendan: apple's new gadget makes its debut. is it the must-have consumers were hoping for? this is "bloomberg surveillance." what you are looking at is the big line of nobody waiting outside the apple store on 5th avenue in new york. this is "bloomberg surveillance." ♪

brendan: the relationship between the u.s. and cuba could take a step forward today. john carey talked with cuba's foreign minister. it was the highest meaning between the two companies -- the two countries and more than 50 years. hillary clinton has leased an office space in brooklyn for her headquarters. california is hitting utility with a record raking fine -- a record-breaking fine.

they could also face a huge fine. personal computers sagging. sales say it -- sales fell nearly 7%. retail customers prefer mobile devices. samsung smartphones hitting stores today. samsung hopes the phones will recapture market share. for the first time in nearly two years, alex rodriguez hit his 65 55th homer, but a loss to toronto. francine: coming up, the summit of the americas. will president obama meet with

cuba's leader. brendan: a quickwitted -- a kwik -- a quick surveillance beat. there were several people who attempted to correct me and i insisted i knew who had written the beat. i cannot be -- i cannot let it go. i am being told i need to let it go. francine: apple's latest gadget will go on order. so far, it has been getting mixed reviews.

sam, and do i want one or need one? sam: people seem incapable of making the point that while the apple watch may be the test smart watch, the smart watch is not necessarily a product everyone needs. i do not think apple has shown they have broken new ground with that. it is a little reminiscent of the ipad.

francine: is luxurious, you can preorder. sam: it is new territory for apple. you refer to the sales strategy where you can preorder. part of that is because there is more complexity involved in selling this product than any other apple product prior. this is his new thing. they use the same language. this is the first product developed outside of the influence of steve jobs. brendan: what does it say about tim cook's tenure?

sam: apple wants to sit at the high-end of the market. there was some concern that they might have to move to the lower end. you have to get your lunch eating by higher and manufacturers. they continue to make a lot of money whereas a company like samsung has felt the pressure from lower-priced manufacturers. francine: you speak to people trying to make smart watches. let's push apple out and let's start refining. kate: fitness trackers the watch is different.

it is not something that is jewelry but will also add value to your life. there is a huge value in being able to disconnect. sam: the watch only works to the fullest capability if it is paired with its phone. for many people, a lot of people are saying our to have my phone why should i also have another screen to distract me, to your point. brendan: it sound like you are not going to get one. kate moore, thank you for sitting in with us where it francine: it is time for the forex report.

the first week we gain in a month. on the week, 1.3% drop. i'm next, and other -- another hour -- up next, another hour of "bloomberg surveillance." ♪

brendan: a meeting with cuba. oh mama -- obama and castro will have some kind of encounter. i rate at the irs. you think paying your taxes is bad, try working for america's most unloved agency. this is "bloomberg surveillance." it is friday, april 10. let's get to our top headlines. francine: president obama taking another step towards improving relations with cuba.

president obama: we are committed to supporting human rights. i believe engagement is a more powerful force than isolation. the changes we are making can help improve the lives of the cuban people. this will be good for the united states and the entire hemisphere. general electric will shrink its finance units. ge is selling off almost $27 billion of capital real estate assets. blackstone and wells fargo the principal buyers. ge will buy back up to $50 billion worth of talk. the company will bring back $30

billion in cash. it's troubled during the crisis put ge in peril. in northern illinois, a tornado slammed into a town killing one person, injuring seven others. the national weather service issued a tornado service. brendan: hillary clinton signed a lease on an office based in brooklyn. that started a 15 day window in which she can conduct campaign activities before entering the race. deutsche bank to write a check to settle a charge on interest manipulation. the settlement may be finalized this month. key in sarah's rate -- key interest rate is tied to mortgages and credit cards.

jordan spieth is the leader. he shot an 8 under par. he birdied eight of his first 14 holes. tiger woods is in 40 first place. he shot a 73 and his first competitive round in two months. those are your top headlines. president obama in panama city for the summit of the americas. only one matters, the one between the u.s. and cuba. peter cook is in washington. peter do we know they will meet? what will that mean? peter: they are participating in the summit of the americas. they could come together during a welcoming ceremony. there is a dinner between the

leaders. there is no one-on-one meeting planned, but it is clear that raul castro and barack obama will cross paths with each other since they met at nelson mandela 's memorial service in 2013. a big moment as the u.s. and cuba try to improve relations. everyone is going to be watching as it becomes the main show during the course of the seminar. rendon says the u.s. designates cuba as a state sponsor of terrorism. why is a big deal that be lifted? peter: it is a big symbolic issue for the cubans. president obama acknowledged it yesterday that he has recommendation from the state department. it is a big deal because it has economic implications for cuba. for example, the ability to

engage with the financial institutions. it is a stumbling block in the conversations between improving relations. do cubans want it lifted? the state department has conceded cuba is not in the same league as iran and other countries on the list. a lot of people say it has been outdated for some time. the president could make the announcement at the summit or wait to come back to washington. brendan: we have alberto with us. he knows more about latin america. he has a question. alberto: what could be the impact on other countries? the situation between the u.s. and cuba has been used as an excuse by other countries like venezuela and argentina to maintain not fully friendly relationships with the u.s., what would happen there?

peter: venezuela has played the same role as cuba and it will at this summit to some extent. the coolest trying to draw attention to the u.s. sanctions on venezuelans. it will put pressure on the countries to improve relations with the united states. the prime minister of jamaica told the president you are going to be on the right side of history here. a lot of folks want to see this happen. brendan: thank you. alberto, when they have this meeting, raul castro and president barack obama what is one thing they can do that would be of economic value to cuba? alberto: what we have today is a continent that is divided. we have countries that have friendly relationships with the

u.s. mexico colombia chile, the pacific alliance. we have argentina, venezuela and brazil in the middle. bringing cuba to the full would be positive for the region. it would be positive for cuba. francine: what are you seeing? this has to be a success. do they have to get to the crux of the matter and talk about lifting sanctions? alberto: i think they have to. everyone is expecting them to make it easier for americans to go to cuba. cuba has a huge potential for tourism. this is a first step in that direction. brendan: the situation has been difficult in american politics. the cubans from florida, they are chief among them from -- are

chief among them. we are looking at a poll right now. how are the cubans looking at this deal? alberto: i saw a poll where they ask cubans if they should normalize relationships with the u.s. and over 90% say yes. in many of the countries where the u.s. has been vilified in the economic situation is less than optimal, people are not stupid. they know there is a better life out there. they want that. you would probably find the same in countries like venezuela and argentina. francine: people want to learning list. they have been wanting this for a long time. a lot of them think it will make

their lives better. brendan: if there is trade with cuba, will it change the government? is it going to strengthen them? alberto: when full economic relations are normalized, that generates links, lobbying by companies and even though you do not go the full way into a market friendly country, i would expect some improvement. brendan: 89% of cubans say president barack obama should visit cuba. what would that mean? alberto says there is only one way to go.

argentina, venezuela, brazil they are doing very poorly with failed policies. francine: this would be a powerful message to russia. vladimir putin would maybe wake up and have a look. brendan: it will be interesting to see what happens if that can be opened. it is also our twitter question of the day. what should top the agenda for the meeting? this is "bloomberg surveillance." good morning. ♪

francine: plenty of breaking news this morning. the company made clear it will shrink financing at ge capital. brendan: ge needs to transform itself. it is moving back to its industrial roots. this is part of a process that

began since the financial crisis. for me, what is so fascinating is that there is only one buyer. blackstone is the only firm in the world that can pull off a real estate deal of this size. blackstone has a u.s. real estate fund.

that will buy access in southern california. this is an equity investment in real estate properties. it has a real estate fund that will buy this stuff. it has a debt real estate fund that will buy other loans in mexico and australia. it starts a publicly traded mortgage trust that will buy other loans. no one else can do it. and that is what stored of -- i hesitate to say turns me on. locomotives, term vines, jet engines, that is what you want. where is your growth?

that is a bet on the global economy. jeff emil has few options left. the prospect and future is predicated on global growth. coming up, try working for the most unloved agency. this is "bloomberg surveillance." ♪

francine: this is "bloomberg surveillance." the united states and cuba. two nations that could take a step towards closer ties today. president obama is in panama. he will get his first chance to meet with raul castro. john kerry met with cuba's

foreign minister last night. it marked the highest level meeting between the countries in more than 50 years. general election making clear its plans to shrink its finance unit. they are selling off capital real estate assets. blackstone and wells fargo are the buyers. they will buy back stock and bring back about $36 billion in cash that is overseas. crossing the bloomberg terminal now, a domestic dispute led to a shoot out outside washington. a gunman killed a guard and kidnapped a woman at a census bureau office. the suspect was caught. kidnapped woman is safe. intruders hopped fences, slipped past guard houses and crashed cars through gates at u.s. airports. perimeter security has been breached at least 268 times since 2004 at the busiest airports. officials say none of the

incidents involved terrorism. amazon's drone delivery test program back in business. a waiver allows flights up to 100 miles an hour and as high as 400 feet. approval under a new program -- under another program applied to a drum model no longer in use. the university of kentucky men's basketball program. the team's top seven scores are leaving school. six are projected as first round picks. they won 30 eight straight games before losing to wisconsin in the semifinals. also entering, a basketball player from duke. brendan: robots are replacing chinese workers. we will talk about deutsche bank nearing a settlement.

shares are up. venezuela struggling against u.s. sanctions. will the summit of the americas improve relations with the country? the budget battle between house republicans and the obama administration we have a loser. it is the irs. the revenue has fallen to $10.9 billion. that is the topic of the "business week" cover story. i have always gone to you to help me understand tax policy. why have you turned your attention to tax collectors? rich: it is almost april 15. everyone is paying attention to the irs. you have the general fiscal pressure the republicans have put on the budget on every agency and some specific pressure that has happened after

the tea party controversy in 2013. you have an irs where everyone is demoralized and frustrated. rendon says i am reading from the cover of the story, it does read -- "the irs sucks." what they mean is it sucks to work there. what is so difficult to work at the irs? rich: it is an unpleasant place to work. taxpayers are not going to like you. you do not want to say where you work when you go to parties. now, it is worse. the budget constraints have really limited them. employees lost a secretary and an office in philadelphia and they are all sharing the job. employees are calling their kids because they cannot get tech support from the irs.

the tea party controversy --. they are hearing even more frustration from taxpayers. the lines are out the door. francine: there was a great survey saying 22% of people have said they want to leave the hmr see in the next 12 months. if it is so bad, how many people will leave? rich: they expect to lose employees this year. one thing they have talked about is the workforce is aging. a lot of people are eligible for retirement. we talked to a number of people who said i am eligible, it is time to go. they have been in a hiring freeze often on for four years. they want to bring people in and help them learn from the older workers, but the older workers will leave faster than people they bring in.

brendan: when the irs is underfunded, does it cost us? rich: if you give us more money for enforcement, we will produce two to four dollars additional for the government. the irs is not efficient. we can look at bonuses paid to people who haven't paid their taxes, rehiring employees who have not paid their taxes. the government is saying you have to clean appear act before you get more money. brendan: what are the odds this will get fixed this year? rich: tax reform? [laughter] brendan: never mind your

laughter has answered the question. what should top the agenda for obama and castro? they are meeting today. what should they be talking about? this is "bloomberg surveillance." ♪

francine: this is "bloomberg surveillance." it is time for the morning must-read. we are talking about china to buy robots.

it is raising an uncomfortable question. what to do with the workers they displace? it is tough being a factory in china at the moment because you lose out to competitors. introducing the robots, we may see unemployment going higher. brendan: is this an economics story that applies to every country or is this a china story? alberto: you need a certain level of technology and investment. one interesting angle in china is the issue of the effects. if factories are replacing workers, which are ample in china if they are replacing workers with robots, what is it telling you about wages? is china as cheap as the u.s. says china is? brendan: are they entering the

middle income trap? >> definitely. the big transition in china is over. the transition of a very cheap country that can produce anything and sell it to anyone at whatever price. i think that is over. china will face a much more challenging future going forward. francine: are we underestimating what robots will do in transforming western economies? >> i tend to think that this is more of a longer-term issue. i don't think this is going to be the digital revolution. i don't think this is going to be something that is upon us over and that --over the next 2-3 years. brendan: let's get straight to top headlines. francine: it is the highest meetings between the u.s. and cuba in decades.

john kerry met with bruno rodriguez to set the stage for president obama and wrote castro -- raul castro. yesterday, the president was asked about the relationship. president obama: in terms of the overall process of establishing diplomatic relations with cuba i think that they have proceeded as expected. i never foresaw that immediately, overnight everything would transform itself. francine: the white house is not saying just how the president and castro would interact. it is a major overhaul at general electric. they will sell the majority of the finance business starting

by selling off $27 billion of real estate bought primarily by wells fargo and blackstone. ge also announced plans for a stock buyback of up to 50 billion dollars. in south carolina, police have released a video showing the start of an encounter that ended with a white officer killing a black motorist. it shows officer michael slager walking back to his car after talking to walter scott. moments later, walter scott takes off running. brendan: a new roadblock on the way to the iran nuclear deal. the supreme leader of iran said economic sanctions must be lifted as soon as an agreement is signed and that military establishments will be off limits. what apple hopes is that it's next mstust-gadget -- must-have

gadget making its debut. in pro football star safety troy polamalu is retiring. he spent all 12 years of his career with the steelers. he was the nfl defensive player of the year in 2010. he is 33 and had two years left on his contract. those are your top headlines. let's take a look at a data check. s&p futures up a bit this morning. stoxx 600 has been hitting highs all week. it is an amazing indicator of what the ecb has been doing. the shanghai composite is up on

a high this week. equities all over the u.s. are looking amazing over the course of the last several weeks. brendan:francine: amazing. brendan: nymex crude down just a bit. this is "bloomberg surveillance." francine: deutsche bank is set to pay about $1.5 billion to resolve an investigation into interest rate investigation. the settlement with u.s. and british regulators may be finalized this month. hans kohl's joins us from berlin. great to see you. are we almost at the end of it? this goes back five years. hans: it goes back five years. what is interesting about this is that the new york state regulator has jurisdiction because deutsche bank has a charter in the state of new york.

it seems as though whenever he is involved, the settlement schedule of and a little bit higher. 1.5 billion u.s. dollars, they expect that to be the floor, not the ceiling. this could still go higher. as part of your grand two of new york -- grantor of new york you'd need to pay him a visit. i suspect a lot of european banks let alone asian and american banks, are concerned about him. brendan: but this story is not just about benjamin lough ski. help us walk through which regulators deutsche bank is answering. hans: you also have the department of justice, the commodities futures trading commission, in the u.k., you have the financial control the department of financial services -- it is the financial conduct authority. you have basically u.k. and u.s.

authorities looking into this and that is where they have arrived on the liable probe. -- libel probe. deutsche bank could have some charges or some sort of settlement, vis-à-vis iran. it is probably not the bnp paribas issue with iran -- they came to $9 billion. it is unlikely they will get that high. they still may have other stuff in the future. francine: how significant is this for deutsche bank? this was the one thing that was haunting the ceo. deutsche bank is one of the biggest banks in the world. can they turn a corner after this? hans: it provides certainty. that is what the notes are saying. the stock is up this morning. the stock was up on the news. you now have a dollar figure.

you have a dollar figure for germany's biggest bank on what their exposure is. at the end of 2014, the provision for legal costs was 3.6 billion euros, north of $4 billion. over the last three years deutsche bank has had close to 7 billion euros in litigation and legal costs. that is a remarkable amount. now there is certainty and we will see if they can return to focusing on growth. brendan: you could be excused for getting one of the names of the regulators wrong. it is a long list. if i remember correctly deutsche bank shed its consumer banking assets as well. it is trying to become a different kind of bank. what will it look like in five years? hans: the big bet that anshu jain has made is that they think investment banking that that

market will return. they hope to grow market share in that space. once the debt underwriting does come back, deutsche bank will be in a stronger position. they have taken a different direction than barclays. that is the big move you have seen from deutsche bank, doubling down on this idea that debt trading is going to come back. we have a sense that they are going to be announcing a big strategy review. we will get a little bit more on that and see what direction deutsche bank wellhead in. -- will head in. their stock has been punished. brendan: all right. thanks for stepping in. i enjoying the view in your new studio. thanks as always. francine: tax avoidance and possibly doing business with

countries that were sanctioned. brendan: moving to our twitter question of the day. what should top the agenda for obama and castro? what should they be talking about? this is "bloomberg surveillance." good morning. ♪

brendan: this is "bloomberg

surveillance." francine lacqua is with us. olivia sterns who do you have on today? olivia: i miss you, guys. i have ken hoffman coming on. he has just been on a huge trip across china. his conclusion is that it is a lot worse than any of us think. he said he saw tons of cities with abandoned construction sites, idle cranes, half finished buildings. he thinks things are going to get worse before they get better. brendan: this sounds a lot like what you are saying earlier. you have official data from the chinese government and anecdotal data. you trust the official data? >> we look at a variety of indicators.

obviously, you have to forecast gdp. that is part of our job. you need to guess what the government is going to deliver. we look at electricity, transportation, other indicators of data, retail sales. francine: you focus on whether the ghost towns mean we are going to see growth of 4% instead of the 6% we are expecting? >> are we going to see official growth at those levels? we are predicting official growth that 7% and we will predict that growth will slow down over the next couple years. olivia: we like to talk about the difference between main street and wall street in the united states. in china, it is incredible. the shanghai composite index is up 90% in the past year. that is wild. maybe are worried about the broader economy slowing down but equities are ripping.

brendan: it is always going to come back to the same question. when we talk about china, the answer is always, are they in for a hard or soft landing? there must be some kind of landing. olivia: and how far away is the landing? >> the same story has been around for the past five years, to be fair. you have had analysts divided. it could be a soft landing because there is ample resources. then there is a group who say, they will not be able to manage. so far, it has been soft. brendan: i have a secret. olivia sterns is really good with commodities. >> the commodities market is going to be in trouble for the next four or five years. olivia: apparently, randomly. i thought you were going to say i'm really good at golf. brendan: you are amazing at golf. olivia: im horrible at golf.

[laughter] olivia: you know who is crushing it? jordan spieth just finished first place in the masters at the first round. -8. nobody cares about tiger woods anymore. it was the best round of the gstaad in 19 years -- at augusta in 19 years. brendan: this is "bloomberg surveillance." good rainy morning to you. ♪

brendan: this is "bloomberg surveillance." i'm brendan greeley with francine lacqua. the united nations could move to closer ties. president obama will meet with the president of cuba. secretary of state john kerry met with cuba up a foreign minister. general electric is making it clear its plans to sell off ge capital.

also on the bloomberg terminal california is hitting utility with a record fine for a deadly explosion. pg&e must pay $1.6 billion in fines. the faa is calling out united continental airlines for a systemic hazard. the wall street journal says regulators stepped over. united says it supports the program. jurors in the aaron hernandez murder trial are entering a fourth day of deliberations. he is accused in the 2013 killing of odin lloyd. a photographer from a boston tv station was banned from the courtroom after committing to following jurors to a parking

lot. a-rod hit his 650th home r in toronto. he is just five behind willie mays on the all-time home run list. francine: coming up on "in the loop," ge scorches gears -- switches give a president obama meets cuban leader rual castro. brendan: you say queues. it is delightful. no apple so far on the watch -- no action so far on the apple watch. it is not just cuba on the agenda. president obama wants to talk about venezuela. he wants them to quit buying

subsidized venezuelan oil. is this possible? he wants latin america to wean itself off of venezuelan oil. >> it impacts some countries in latin america. with the decline in oil prices subsidies are less necessary. for some countries in the caribbean, the decline in oil prices is going to make it more difficult for venezuela to provide the financing they need for buying oil. it is generating all sorts of ripples throughout the region. venezuela is facing a very difficult situation. next year is going to be very interesting. this year we have parliamentary elections. polls indicate that the government will lose big time. brendan: do you believe the

government will allow itself to lose big time? >> we do think they will allow the elections. that is the central scenario. if there is no policy change, they will lose big time, the elections, and we may have political change in venezuela and argentina next year. francine: is the next hotspot going to be between the u.s. and venezuela? he said he will demand respect from the u.s., which he blames for destabilizing the country. >> he is trying to find some theme to gain popularity, to hang onto. if you look at the polls, three quarters of venezuelans are indicating that they want him out. the system in venezuela is such that you have parliamentary elections and then you can have a recall referendum. if he loses the recall referendum, he has to be out and they have to call elections within 30 days.

brendan: we are approaching six months since the price of oil began to stabilize somewhat. can you give us a snapshot of what they are looking at? >> again, a recession. we think that gdp is going to contract 4% this year. massive decline in imports. they are forcing the economy through rationing and through controls of quantities to adjust to the oil price. if you look at imports 19 percent down year-over-year. inflation is rising very rapidly. we may wind up with inflation close to 2%. brendan: can they continue the subsidy to the u.s.? >> no. if you look at q1, they are drawing down assets very

quickly. francine: the price of oil is going down from here. this could shave off $15 per barrel over the next six months. >> we don't think the agreement if you'd -- is a done deal, but if you get the agreement and sanctions lifted you could see oil prices down five dollars-$10 over the next 18 months. brendan: we are going to take a look at our twitter question of the day. what should top the agenda for obama and castro? they are going to meet and there will be a handshake and words or something happening today. they need to avoid fast-track actions. a slow go and know philosophy. is that ecuador don? [laughter] francine: it is. brendan: agreement on how both

see the world best divided by a stretch of the atlantic ocean and not the russians or the chinese. that is very interesting. for so long, we had cuba as a client state of russia, but it is -- has been adrift for so long. >> that's right. i think it would be positive for the region if this issue gets resolved. as i said at the beginning, some of the countries in the region are using it as an excuse as their flag to hang onto. solving this issue can contribute to unifying the region. brendan: let's take a look. cigars and cigars. of course. the one thing we have been learning today is that we had always thought of cuba as a client state of venezuela and that is no longer an option. >> it is going to be very

difficult. we don't know whether the leader is going to be there next year. francine: that changes everything. brendan: we are going to take a look at our own agendas for today. i am looking at hillary clinton. we finally get to start talking about her as a candidate. it has been clear that she has been a candidate for president since 2006. we can begin using the word candidate. it has been so clear. in the u.s. politics, there is this dance we have to do where we pretend they are not running. francine: this is going to be exciting. she is a personality. narendra modi is the prime minister of india. he is in europe this week. he is going to meet francois hollande and angela merkel. this is a prime minister that means business. he has been traveling more than any previous prime minister.

he is there to do deals on talk trade. brendan: we are short on time, but do you think that he has the power to pull through the diplomacy as planned? >> i think they're clearly has been a change a very positive change in sentiment toward india. you get the sense that india is moving and the growth is accelerating. that is a difference from china. china is slowing, india is rising. india is as small in gdp as china was when china took off. if india manages to grow eight .5 percent per year, it is going to become a big player. brendan: my agenda is the apple watch. you can begin ordering it today. there are lines in some places, not on the upper west side. there were six people outside the apple store in beijing. sometimes, they will throw eggs at the apple store if they cannot get what they want. [laughter] brendan: thank you, alberto.

we have taken a tour around the world. fran it has been great to have you. francine: come to london. brendan: did you hear that? she invited me to london. ♪

betty: good morning. you are "in the loop. i'm olivia sterns in for betty

liu. you can now try on the long-awaited apple watch in stores if you have a reservation. we hear from one of our reporters who is getting a first look. gregg harper is with us. apple is not the only tech company making headlines. samsung releasing its new galaxy 6x today. we will be speaking about what to read into the incredible demand for chinese equities. plus a bloomberg's reporters scathing report about china's economy. general electric is confirming its biggest strategic move in years. the company is selling most of its finance business. ge capital sold for nearly $27 billion. the buyers, wells fargo and blackstone.