islamic state takes ramadi. retail sales slide. everything must go on sale. this is "bloomberg surveillance." we are live from new york. i am tom keene. joining me, brendan greeley. our guest is on spanks and body enhancing. brendan: it will be all dad bod all the time. i am going to put a dollar in the jar for bringing up my children. tom: we regress into further dad bod and into the top headlines. >> the prime minister of greece

won not take a deal to get money at any cost. they clock is ticking. greece banks are running short and that may pressure tsipras. he plans to forge the discussion at any summit later. a major setback for iraqi forces. they have taken control -- militants have taken over ramadi. they have raised the black flag in triumph. there have been reports of civilian massacres. john kerry was asked about ramadi. mr. kerry: they have the ability to inflict great damage. notice what they have done. they have destroyed. sent in huge numbers of vehicle -borne ied's big trucks, and

they have destroyed the place. >> in waco, texas, members of rival motorcycle gangs opened fire on each other. nine of them were killed. police were at the restaurant when the shooting began. alibaba rejecting claims that it is making it easy to -- last year, there was a similar complaint after they agreed to cite sales of fake branded goods. a speech from tim cook told seniors to fight in justice. they must use their values to change the world.

tim: people that have values can change the world. an individual can, too. that can be you. that must be you. >> you guys give a commencement speech on surveillance every morning. tom: i would never use the word passion. brendan: hey did a noble thing coming out publicly, but apples's value, it makes a value statements with its public speeches and its use of cash. morning brief.

u.k. parliament meets for the first time. there is going to be a lot of retail earnings this week. urban outfitters reports. tom: let's frame the monday morning for you. futures are flat. 10 year yield back to 114. a weaker dollar. crude at 60 a barrel. euro churning. the greek yield, brendan will have a lot of this. housing starts existing home

sales. we do not need to spend a lot of time. here is a boom and here is a crash. we are nowhere near where we have to be. brendan: there are so many charts that tell this story. we have recovered, but we are not where we were. tom: this one off here i do not hear anyone saying we are getting back to this here. we have a ways to go. the federal reserve bank of chicago making the case for a fed that will delay. we will not delay on greece. hans nichols considers the

collateral damage. what is the word out of germany. hans: greek leaving -- greece leaving the economy can withstand a greek exit. if you're worried about greece leaving, it comes from mr. gabriele. brendan: hasn't had always been a political question and not an economic one? hans: you get denials from the finance ministry.

it is an emerging consensus here . there is a way out of that. it is to have referendum here you are starting to hear more of that. >> it shows the tension as we begin the week. brendan: the rest of europe was reluctant to endorse. what has changed? hans: they believe they have a mandate. what everyone is saying is that this undercuts what tsipras

thinks his mandate is. i am looking for some polls out of athens. tom: we will look at retail later in the hour. our guest host, mortimer singer. we talked to him and you do not do that. what to you see about the american consumer? mortimer: it is easy to blame the consumer for what is happening. there is a disinterest in

shopping. tom: are our garages full? mortimer: they are competing with the mainstream guys. the inventory that is out there -- brendan: it would not fit in my garage. we were talking about radioshack. one of the things that i could not figure out how to disentangle, how much of that, people do not like radioshack and people are not going to the mall? as that resolved itself? mortimer: the amount of malls that are there to stock retail

stores are not enough for the consumers. they want excitement, bars, cinema. it is about retailtainment. tom: we have yet to discuss the elephant in the room, amazon and the internet. people are saying retail is going to get along with internet and a small group is saying you're out of your minds internet is killing them. mortimer: brick and mortar is 90% of the pie. it is growing 15% in a year, online, and that will not stop. the connectivity and both will be the winner. the customer is five times more valuable. brendan: brick and mortar is 93%. i would not have guessed it was

that high. mortimer: they are the best retailers on earth. they have organized themselves from a perspective to be able to take the company offshore. i do not believe they have stumbled. they have to focus on private brands. they have an amazing arsenal of private brands. brendan: g.m. unveiling a brand-new camaro. will it be enough to beat the

mustang and save gm? we will discuss it. streaming on your tablet, phone, and bloomberg.com. ♪

tom: good morning. let's get to our top headlines. bonnie: amtrak has resume service after facing track damage in the fatal derailment. it forced service to be halted between new york and philadelphia. the investigation continues. a record number of passengers this summer. the reason, the improving economy.

u.s. carriers will fly to a 20 million passengers from june through august. that is 4.5% more than a year ago. the world's top ranked golfer made it look easy. rory mcilroy one in charlotte north carolina. -- won in north carolina. he is the american hero of golf. tom: thank you. the rangers tonight, looking forward to that. much to talk about. francine lacqua will brief us on london. we will go to london with francine. we look at housing. charts showing housing trying to get back to some form of normal. mortimer singer joins us.

we look at retail. everything must go on sale. even the cars are on sale. brendan: g.m. unveiled a new chevy camaro. they want to overtake the ford mustang. matt miller was there as he always is when cars are unveiled. he joined us with highlights. you talked tomorrow a borrower i want to get to that in a second. when we talk camaro-mustang, has nothing changed in the last 50 years? matt: a lot has changed. for the people that care about this muscle car segment, you want a big, powerful engine, you want to have a fairly light body. muscle cars are not as light as other sports cars, but one thing mary was telling me this weekend is that the people who started

out on crews in these lower dollar segments that are used to turbocharged four-cylinder's, they are willing to accept that in a camaro. i got a chance to drive it. they are offering the 6.2 liter v-8. tom: the most uncomfortable car i get into is a cadillac. brendan: i would say you are doing well is the most uncomfortable car is a cadillac. tom: what is the panic level on cadillac if the sales are not that good. matt: they are investing over $12 million into cadillac. there is a little bit of panic. a man said they need to do more than just investing. the problem is marketing. i talked to mary about the camaro.

the only goal of camaro is to be mustang. listen to what she said. mary: the market was telling us when you look at every aspect of the vehicle, yes, i think we will and that is our goal. matt: that was an exclusive look at the car. i got to see it before anyone else. she wanted to focus on just the camaro. there has been a lot of talk but she has overcome that. they spent $3 billion for the ignition recall and are making $2 billion a quarter and profit. they are doing well. tom: citigroup is adamant gm will outpace ford. his forte afraid of g.m.? matt: they are not winning in segments like this.

gm owns this market share. 28% of the car market in the u.s. i asked why performance was important. >> it is developed around the track and these cars. you will see cars through the top of the line. they will have technology to do that. racing improves that. it is an important part of our dna. matt: a goes down through the silent. tom: did they make money like they do on a pickup truck? matt: not in a pickup truck. this is a $35,000 car the ss so that costs a lot. they are making bigger margins. they own the big suv market with

85% of the market. brendan: thank you. he is never not testing a car. matt: i enjoy testing the product of the companies are report on so i can see how they are doing. tom: we will look at the cash in the market. where are you in this market? are you in the market? vix is stunning. stay with us. ♪

tom: we celebrate the good

people of amtrak who got their trains running. this is the first train moving to philadelphia after the crash. you see the news and you see what amtrak needs to do. he took a 1958 train to miami. brendan: artworks like picasso called positional goods. don't think about picasso, but think about income inequality -- income and equality paying a

role here. the pros with the real money look for positional goods. >> the major luxury brands, they are far broader than aspirational customer. tom: within this idea of luxury versus positional. they spend 11.5% -- tom: they were having a greek salad and shaquille o'neal walks in.

>> it opened three months ago. it is an exquisite monument. tom: shaquille o'neill was positional within the restaurant. coming up, an important conversation with the chairman of the president's council of economic advisers. must listen, must watch. stay with us. ♪

[baseball crowd noise] ♪ ♪ [x1 chime] ♪ ♪ [crowd cheers] oh! i can't believe it! [cheering] hi, grandma! ♪ tom: good morning. futures a little red. let's go to the bloomberg terminal.

top headlines, here's bonnie quinn. >> the prime minister of greece says he will not compromise on any of his key demands. greek banks are running short on the collateral they need to stay alive. that may pressure tsipras to seek a deal. he plans to force a discussion at in a summit later this week in latvia. in hawaii, a marine corps osprey killed one marine and injured 21 other people in a crash. can take off and land like a helicopter in flies like an airplane. it was nearly scrapped years ago after a series of mechanical failures and fatal test flights. secretary of state john kerry threatening tougher sanctions on what he calls the grizzly north korean regime. he was in seoul and he says north korean president kim jong-un has said no to every effort to hold talks on his

nuclear weapons program. he referred to reports that kim may have executed's his defense minister with an antiaircraft gun. charles evans chicago fed president, says the fomc rates should state near zero. >> i think the fomc should refrain from raising the federal funds rate. we should be looking for the target to be near 2%. i see no reason to be in a hurry to tighten until then. >> the fed will raise the benchmark rate when they see improvement in the labor market and when they are confident that it will rise. in the nba playoffs, the houston rockets are on their way to the

houston conference finals against golden state. they beat the los angeles clippers 113-100. james harden had 31 points. houston overcame a 3-1 deficit to win the series. those are your top headlines. tom: thank you so much. greek spreads going out to new wives and that's the story on the move right now. greece is front and center. it is not congress but parliament. the queen will not make an appearance this year. the victorious david cameron will and the majority conservatives who rule the roost, it's different than america. francine look what is in london. 1776-1341. to us francine, we really don't understand the control prime minister cameron will have. what does he do in the first days of the new majority? francine: he has a very slim

majority, about 16 more votes. that means that if there was some kind of vote of confidence he has to worry about how he keeps his own party happy in this slim majority scenario. you mentioned the queen. she will deliver her speech which lays out what the new parliament will do next wednesday. today is just the first day of the house of commons. this is part of the ukip parliament. it will be bureaucracy, swearing-in -- this is part of the u.k. parliament. the new majority is very slim. he's already been talking about scotland. we may have something on the referendum and a new to be revealed. brendan: he will be making his first address about the national health service and increasing

funding. what's the significance? francine: this goes back to the budget. what he laid out is that he would be cutting a lot from service to give back to the nhs. he's promised to deliver 30 billion pounds and spending cuts by 28 teen, 12 billion and welfare savings. -- cuts by 2018. he thought he would have to be in a coalition and have to negotiate them down. now that he has a majority, we will have to see where he takes and where he gives. it is clear we are in austerity. tom: francine look while from our desk in london. $8 billion -- breaking news -- in the pharmaceutical industry. endo pharmaceutical -- excuse me. i'm fighting the plague. and a pharmaceutical of dublin and will take apart this generic drug deal.

it says a lot about cheap money. brendan: and about what's going on in of the eu. we see ireland has recovered. it's often ascribed to policy differences, but a huge difference between those two economies. these are issues that the irish economy has that the greek does not. tom: we just assume in five years the entire drug community is in dublin? why not? brendan: it's entirely possible. the thing we're having trouble disentangling is, again, is it the high level of university degrees were the tax advantage? you confide over that still going on. whether or not they are allowed to go over that. tom: par pharmaceutical taken

out by endo pharmaceuticals. brendan: one positive sign here in the u.s. for the housing market and the possibility we are returning to the old normal. home vacancy rates are back down. the return in housing to the old normal after the break. this is bloomberg surveillance streaming on your tablet, your phone, and bloomberg.com. ♪

tom: good morning, everyone. futures like the euro. better in the last hour. single best housing chart. brendan: we're going to get a better idea on the housing market, a few key data points to be released. we are focusing on the old normal -- home vacancy rates. that's the focus of today's single best chart. we remember these pictures, tom from the crisis. empty homes being strip of their copper and appliances. particularly in florida where you had these high home vacancy rates. we are back to where we were before on trends. tom: this shows we are back.

interesting. brendan: i could not figure out an answer to this. i was surprise that it was up over time. i've looked at some research and hoped that this would happen but with the advent of the internet, transaction costs have gotten lower. it would be easier to make sure there is a lower vacancy rate at that has not been what's happened. tom: we are right back to where we were in terms of being on trend. 15 housing indicators all have their own story. vacancy is different than how starts. brendan: it was the long-term destruction of value. tom: is there really a linkage there to all of this housing mumbo-jumbo? >> a designed to express oneself through one's home and not just through what one is wearing. consumer products like vodka and beer. it is beyond how you where and

home business is really started to pick up cousin of that. tom: does home --it has started to pick up because of that. tom: does home business work anymore? mortimer: the check size is so much larger but the specialty stores, restoration hardware crate and barrel, are doing incredible. tom: have you seen the restoration hardware catalog? it's that sick. brendan: i don't understand the distinction -- it is that th ick. mortimer: they're creating consumables through consumer retail and they have increased exponentially. the ability to decorate one's house with one's own taste using pinterest and other ways to

express oneself has never been there before. tom: is the cartel on fancy stuff breaking down? mortimer: the luxury end is doing very well. brendan: the barrier to entry with pinterest is much lower. you don't have to get into the catalogs. you can get on pinterest and make it possible. mortimer: the consumer is really trying to differentiate them cells versus being told what to do. tom: can everyone look at the ecosphere of this. the new york icon sleep ease is expensive. is it doing well? mortimer: there are two concepts whereby you can buy a temper predict -- tempurpedic-esque

product straight to the consumer. that is under $1000. they can push the value right on. tom: that's a scary thought -- buying a mattress on amazon. mortimer: people buy cars on ebay. tom: mortimer singer is on and you never know what you're going to talk about. brendan: when we talk about mattresses am always concerned about how the quality of mattress goes into the marketing. do you get quality of sleep by setting aside time to sleep. looking at photos in the news today. photo number three, just outside of newport, leg seven of the volvo race began. now we are going to do race analysis. call the hockey game. they have just rounded the bowie and they are on their way out to the ocean -- roudnednded the buoy.

there is economics in this. the two boats in the league right now, abu dhabi dongfang. tom: why is different from the america's cup? brendan: the america's cup is nations competing against each other. it is our kiwis verses your kiwis. if you look at the organizations that are paying for this, abu dhabi and wrong thing, a chinese team, we are -- and dongfang. the rich guys have changed. that's what's different. all right. but racing. taking part in the red bull cliff diving world series with a leap off a 90 foot high platform . 13 divers competed 70 5000 fans

watch in the streets. it's amazing what red bull has done with marketing with extreme sports is extraordinary. tom: 90 feet, eight or nine stories high? brendan: all right. this is definitely not a dad bod. in sochi, vladimir putin playing hockey. he scored eight goals, i think. tom: i'm sure he did. brendan:what's the difference in presidential golf? he is doing it with hockey. brendan: a lot of mulligans in presidential golf. three goals is a hat trick, what is 8> tom: his skates are too big. brendan: has any pro-scored

eight goals in a game? tom: the first hockey player of russia doing it. brendan: he was so good they gave him a cup. twitter question of the day -- have we reached the real deadline for greece? there's the real deadline, the real deadline and then the -- no, seriously. there are several different indicators. the does feel like this week something is important. let us know. have we reached the deadline? tweet us. tom: did we do enough ocean racing? ♪

tom: a good monday morning. futures at negative three. the year it wrote -- the euro spread and here's the top headlines. >> as a prize announcement from the white house this morning. president obama banning the government from preventing the military providing police equipment. a government study found there is a risk that they might misuse

items like armored vehicles and high-powered weapons. target wants to freshen things in its food aisles. they will deemphasize brand names products. pushing healthier foods instead of canned and package foods. its chain grocery is one of the 10 biggest in the u.s. "pitch perfect" hitting all the right notes in the box office. "pitch perfect 2" hit with more than 70 million dollars. in second place, "mad max fury road" a remake of the 1980's film taking and $44 million. those are your headlines. tom: i love anna camp in pitch perfect. brendan: it is an amazing success story. known expected it to do well. the first one had an

unbelievable dvd and streaming following. now $70 million. tom: how do you know this? brendan: i read about it. $70 billion is twice what it cost to produce. "mad max -- $70 million is twice. "mad max" cost twice. tom: "mad max" is getting really generous reviews for the immense challenge of re-creating that iconic set of movies. so there it is. futures down 11. let's look at what we've got forward here on bloomberg surveillance this morning. the endgame for greece. this is serious, folks. we will talk to hans nichols. we look at technological progress with some of the effect out that then jason furman will

join us from the white house on the nation's true retirement funding crisis. we have much more on retail this morning. mortimer singer with us. i'm taken by the decline of gap. we are just not doing well. it's flat and boring. how desperate is gap? mortimer: i think they have an amazing footprint. they have three brands -- old navy, banana republic, and athleta as well. zara, to most people, there's a lot of competition. tom: are they closing stores? mortimer: it is about 3500 feet per capita and its too many stores. ultimately the globalization of these brands is where the competition is happening. it's not happening here. it's overseas. brendan: let's start with

something i think you said over the break. brands don't have the poll for millenial's as they do for boomers. the older you get, the more likely you are to be attached to a brand. mortimer: with the blood it time you were --once upon a time, you were wooed by a brand to be living a certain lifestyle. today, the millenial's don't feel that way. they were to define their own lifestyle with what they buy -- ibrand. brendan: i was struck to look up and see none other than kim kardashian west talking about her game on our network. there is this idea, again that celebrities are not just endorsing but getting actively involved in these products. mortimer: they have to not just

do royalty and licensing deals which get them wonderful deals but they need tonal value. if they can create an enterprise, they can have sustained power beyond their career. tom: what's an example of best practices? mortimer: dr. dre had a huge exit to apple with beats. jessica alba created the honest company which has a $1 billion valuation and then you have dita von tease and maria sharapova. those who care about product first will be able to create amazing businesses with the celebrity is the insider. brendan: it seems obvious. you do not just want to collect the cash for endorsing but you want internal value as well. it seems obvious that i wonder why have they not always been doing it? what has changed? mortimer: the realization they can go straight to the consumer.

20 years ago, everyone had to go through a retailer. today, anyone can go straight to the consumer. brendan: it is but tom has been saying all morning. you find the internet at all of these trends. tom: the business of fashion appear in the european conglomerates that have bought 20-30 companies. is that yesterday's story? mortimer: they will continue to strive because they have the efficiency of scale. but as they say, technology is vital and not enough are doing it in luxury and the whole retailer. tom: i told someone you would be on and they told me to ask you about michael coors. is that how you blow up a brand? -- michael kors. mortimer: he was the confluence of many wonderful things happening at the same time. they have an amazing designer, an amazing brand. they followed a model akin to

aspirational luxury -- what coach was doing and other things. they have this hollywood jet set mission and image they pretrade whereby the airplane the man, the handbag where the accessory together. brendan: if i'm coming out of f.i.t. right now with a brand-new degree in design, what is my next step? mortimer: designed today is in the boardroom for the first time. the last five years, steve jobs ensured that. there are a lot of companies insuring on the talent they hire within their companies not just within fashion design but all forms of design the it architecture, etc. whether it is f.i.t. they are learning the business of fashion, as we call it. tom: mortimer singer, thank you.

from marvin traub on retail. use of the data last week as well. let's look at the mortimer singer, thank you. yen under 120. euro-yen insurance here. stay with us. jason furman in the next hour of "bloomberg surveillance." good morning. ♪

tom:tom: this monday, greece tries to get the friday as the endgame approaches. markets are on the move as we speak. the islamic state takes ramadi and the pentagon calls it a propaganda victory. the white house says the american pension has failed. good morning. your life from our world headquarters in new york. it's monday, may 18. i'm tom keene. greece was there and now it is more there. brendan: the movement over the last three days comes from the economist conference where they spoke. they did not give the answers at the markets were looking for. >> my opening script to get to friday is valid. brendan: we hear the words

"capital controls" in greece. tom: let's get your top headlines. >> that could force agrees to make a deal with their creditors. economists say the collateral problem could force alexis tsipras' hand. it might be maxed out within three weeks. is expected to bring up the crisis at a meeting of european leaders in latvia. a major setback for iraqi forces. the islamic state now controls the capital of the largest province ramadi. they overran security forces and raise the black flag in triumph. this is the third or fourth civilian massacre ensued. secretary of state john kerry was asked about it while traveling in south korea. >> there are targets of opportunity like ramadi or anywhere else where they have

the ability to inflict great damage. notice what they've done. they have destroyed. they have sent in huge numbers of vehicle-borne ied's, big trucks, massive amount of destruction, and they've destroyed the place. >> it is just 68 miles from baghdad. in waco, texas, rival motorcycle gangs opened fire at a restaurant. nine people killed, 18 wounded, all gang members. police were there and said they shot several bikers. alibaba rejecting claims that they make it easy to sell counterfeit luxury goods. the parents of gucci and you saint laurent says alibaba profits from the sales of counterfeit merchandise. a rare public speech by apple ceo tim cook to graduating

seniors at george washington university telling them to fight injustice. they might use their values to change the world. tim: we believe a company that has values and act on them can, really, change the world. and an individual can, too. that can be you. that must be you. >> it is his first commencement speech since five years ago at his alma mater auburn. his heroes in life where robert f kennedy and dr. martin luther king. tom: there were way too many causes in that speech. i was like -- brendan: commencement speeches everyone is just sitting there in the audience to wait to get their piece of paper and go out to dinner with their parents. we are only people who listen.

the morning brief 930 a.m., the u.k. parliament meets for the first time since the tory won this prize majority. we talked about that earlier this morning with francine look what. at 10 a.m., the national association of home builders releases their outlook for homebuilders. 4:00 p.m., a list of retail earnings. we start with urban outfitters. tom: equities, bonds currencies, commodities. greece two-year explodes. the euro is at 1.13. again, a quiet monday morning. and then there is greece. bond yield spread moves as we speak. they have to figure out payment 2, 3, 4, 5 ad mdnd on. the math simply does not compute.

the immediacy is here. the dialogue in the body language of eu leaders suggest they understand the immediacy. hans: there is so much bluffing and positioning on both sides. just to give you a tense of how frightened everyone is, 45 minutes ago, we had a great government spokesperson saying that they were not considering tsipras-style ends. the yield is up almost 323 basis points. that's the equivalent of getting pulled over by an officer and saying, i have not then drinking . the government spokesman just a night it. it's a remarkable move this morning. tom: those of you on bloomberg, radio, i will put this out and we are really breaking out to new tension points going out to late february. we are not back to the peak but

new tension points indicating stress. brendan: hans, i've seen the words capital control more and more often in news coverage of greece. once the possibility it might happen in the next few weeks? hans: you want to see what happens at the ecb. if they change their criteria for collateral and apply haircuts to the collateral they've been getting, capital controls could be likely probably not for another 45 weeks. is it $88 billion? under current collateral rules they have $95 billion. if they change, it gets to 88 logan dollars. they are already at $80 billion and that's complicated math. if they impose, they have half as much time. very complicated arithmetic. tom: think you so much. we look to the arithmetic of more payments required of billions of euros through june to the imf.

our guest host, julian emanuel, on greece and the skyhigh prices and we've barely touched. what was ubs saying about this over the weekend? julian: the fed's calculations are discounting the importance of greece leaving, perhaps, the euro. if you look at european stocks, which you've seen in the last month, it's a definite concern that there is risk. tom: you have a franchise george magness donovan, the rest of your london team. is the urgency about greece leading the combine or the urgency about the actual negotiation's? julian: the hope is that the urgency is about the negotiations, but as of get closer to the deadlines we seem to be getting more real. clearly, there is more urgency about what could happen. brendan: one thing we heard from hans nichols in berlin is that

they seem to be more comfortable that greece could simply leave. this is not the panic we sought this point in the negotiations for years ago. julian: no question and that's reflected in the euro currency itself. very counterintuitive and a lot of ways that the euro has been rallying as the headlines get closer. tom: 18,272 on the dow. you have said you have to be in the market. how much of this market has missed this move up? there is no enthusiasm out there at all. julian: none. the worry is that people seem to be focused, whether it's our economy, whether its corporate earnings -- which as we all know have been soft -- tom: the rangers power, important things. julian: one goal games get everyone very nervous. tom: there's no buzz in this

bull market. julian: if you think about it, it's very much like economy itself. the links of time is great but the amplitude is not. it's part of what makes this sustainable. brendan: julian, this is the question. change in the motion -- has there been a general regime change? julian: it's a gradual acknowledgment that things are working economically in europe. greece is obviously there and it's the 800-pound gorilla in the room. actually, the european a economy is moving. brendan: greece is a 25-pound gorilla. tom: deutsche bank bank is as adamant about ubs -- as ubs is. are they hedging their optimism? are they using derivatives to lock in the gains they have now

or is it up, up and away? julian: it has been a reasonably good your for hedge funds. from that perspective, less hedging going on and more use for upside. if you look at it markets like china and the salon, you have to protect against the upside to a certain extent. tom: julian emanuel with us from ubs and we will talk about the use of cashier. brendan: you heard hans nichols say greece was pulled over and said "no, officer. i've not been drinking. what's the real deadline? let us know @bsurveillance. good morning. ♪

tom: good monday morning. greece spreads are wider but on the move. let's get to our morning must. brendan: the season of commencement speeches, that time-honored tradition of. when 22-year-old sit for three hours slightly hung over to think about their debt. in an and or to be a with cnn, bill gates spoke about why making $40,000 a year is

different than what it's like today. >> overall it understates how much things have been improved. it does not thing we should and should does not mean we should worry about middle-class incomes but the comparisons overstate the lack of progress. brendan: i -- you know -- tom: i flied out disagree. brendan: i'm with you. one example he used his the internet has changed what it's like to be poor. that's completely ignoring, for starters, just how expensive it is to get internet access. above a certain income level you take it for granted. tom: whether it's zurich switzerland where you are headquartered, a middle-class or lower middle class income struggles. they do not care about all of the touchy-feely stuff. they're worried about basic stuff like getting their kids ahead. julian: it's a very difficult environment. part of this issue is how

technology has transformed the whole relationship between the presumed middle-class and the upper class. tom: in a two partition, may be those who can use the technology but at $40,000 per year, it ain't getting done. brendan: it ignores the role that technology has played sending jobs to india. it has been very disruptive for a lot of people. more generally suspicious that the poor have refrigerators and microwaves now so they are better off. tom: i totally agree. it's an important issue. look at these toys, the iphone 6 plus. a whole class of people take this garbage for granted and it's completely priced out of half of america. brendan: it's not half but it's about. tom: and that's mr. gates world. i think he's off the mark thereon $40,000 per year. that's all there is to it.

jason furman with us. he cares about someone making $40,000 per year, chairman of the residential council of economic advisers. his work with senator orrin hatch from utah on your lousy retirement plan. this is an important conversation. the euro 113. the 10 year yield 2.17%. stay with us worldwide on "bloomberg surveillance." ♪

tom: good morning totom: all of you worldwide. to our viewers and listeners in the northeast corridor, a train moving at the appropriate speed 110. brendan: such in a moment, the philadelphia mayor was on hand. he was there to provide reassurance. tom: i don't have it in front of

me, but the national journal hits it out of the park with a lengthy article on our train system and how we simply don't find it. i will get that out on social media. let's get to our monday top headlines. >>'s surprise announcement from the white house this morning. president obama banning the government from providing military-style equipped to police departments. this comes months after police in ferguson, missouri, wearing military gear roque out protests -- broke up protests. airlines expect a record number of passengers this summer. in industry trade groups as you as carriers will have 222 million flyers -- an industry group says there will be 222 million flyers. make it two wins for the top-ranked golfer.

rory mcilroy easily winning, his sixth top 10 finishes in his last eight events. he finished 21 under par tom and brendan. tom: airline capacity is at 98% in sales are up 6%? i think people are out on the wings. i just don't get it. brendan: one of the things we cover here from airline industry analysts is they need to practice restraint. when i hear that, i hear cartel pricing. tom: b very true. we predicted predict that here on "bloomberg surveillance." the islamic state takes ramadi 68 miles from baghdad. we have a conversation on this important moment for iraq. retail -- everything must go on sale. with julian emanuel of ubs, the sustaining use of cash we see supporting the equity markets as well, brendan. brendan: almost as many

americans now say they can retire comfortably as before the financial crisis. jason furman does not share this confidence. he's chairman of the presidential council of economic advisers and he joins us now from the white house. thanks for taking the time this morning. recently appeared with senator orrin hatch on the subject of retirement savings. the question is not just what can we do but what can pass. how to we sold the retirement crisis? help me understand how this will pass in senator hatch's senate? jason: understand the problem we face. 40% of households between the age of 55-64 have no retirement savings. half of households don't have any opportunity to save at work. what we need to do is get more households into saving. we need to help make savings is year, more automatic, and make

sure you're are getting a better return. brendan: we are into defined contribution of. just to continue that trend to give everyone the opportunity to participate in contribution. jason: that's one very simple idea. it was originally developed by the brookings institution and the heritage foundation, a completely bipartisan idea. the idea is simple -- everyone in the country should have access to a savings plan at work and we should take advantage of research on behavioral economics and in rural people automatically unless they choose to doubt. it would only cost money if it works. -- they would enroll people automatically unless they opet out. tom: you came out of the policy think tank moat. pewter or zag was discussing this well in ss of 10 years ago. how close our politicians to

actually reading and think about the land of furman and orzag? are the politicians on board? jason: if something president obama has proposed but you ask about legislation. we would love to get legislation. this a lot of steps we can take administrative. we have taken steps to make it easier for people to save, for businesses to set up automatic 401(k)'s and a lot of businesses are doing it now than when peter first started talking about it. in part because more businesses know about it and in part because they have made regulations to make it easier. tom: we get to the point of 1974 starting with eisenhower and it did not start until jimmy carter was president. brendan: we have to engage in the level of panic. i want to move to the other side of the senate to senator warren. she suggested we not only avoid changes to social security but

that we increase the benefit. where does the president stan on social security? jason: it is the bedrock of your retirement security. it's the one thing you can count on. it's really important in the social security debate not be just about solvency but how we are strengthening the program, how we use it to better reduce poverty, to provide people with the types of income they need. really making our goal retirement security. to achieve that goal, we need it to be solvent and many to work on a bipartisan basis to do it but really keep our eye on the ball and that is to make the program as strong or seniors and retirees. brendan: dr. fuhrman, thank you so much. we returned to this debate many times over the next many years. -- dr. furman thanks. the islamic state takes the key iraqi state of ramadi. big alive to the middle east.

"bloomberg surveillance" is on bloomberg radio streaming on your tablet and on bloomberg.com. it's may 18. good morning. ♪

tom: good morning everyone. adjusting my goggles for the bloomberg terminal so we can go look at housing. we looked at housing this week. we looked at vacancies earlier. these are starts. here's the trend and here's the

boom. off the cliff we go. just have not gotten back on housing starts even though vacancies, each series is different. it shows this gap here of relatively small part of our economy but an emotional part. brendan: we're having trouble disentangling the importance of housing to the economy. something we've always relied on as an engine of the economy and the amount of houses we actually need including new houses. tom: julian emanuel with us from ubs going in first second, third order of effect for housing and things like it. what is the level of order of interest rate rising? if are found first order effect or second order? -- a profound first-order effect? julian: rate started rising in the market ground of a halt, you could argue -- tom: first-order. julian: absolutely.

it's a little different. two years in and rates are psychologically much lower. -- much lower. when our millenials going to have enough confidence to unbundle and create more demand? tom: d.c. that unbundling occurring? julian: they do you. like everything else and the posts crisis, the recovery is slow -- tom: you guys charted the first quarter, showing the winter affect going back to 1988. do you reaffirm a better second or first quarter? julian: second quarter is better but not as much as we would like it. close to 3% in the second half. brendan: is non-millenials trying to figure out what millenial start try to do, that is what the macroeconomic trend is -- tom: i agree.

i think there is too much focus, like you say. that people love it. you go to top headlines. >> good monday morning. the greek prime minister says he will not give in on his key demand just to get more bailout money. the country's banks are running low on vital collateral. it could force the prime minister to cut a deal. he is expected to discuss about this in latvia this week. and the hard landing of an osprey, one marine was killed and 21 were hurt. the crash killed nearly two dozen -- secretary of state john kerry is threatening tougher sanctions on what he calls the grizzly north korean regime. he met with the president of south korea. he says north korea refuses to

discuss his nuclear weapons program. the secretary also mention reports saying kim may have had his defense minister executed. the president of the chicago fed is in no rush to raise interest rates. charles evans say that interest rates are way below the fed targets and he thinks rates should stay near zero for now. >> based on this forecast and the outlook, i think we should refrain from raising the federal funds rate until there is much greater confidence that inflation one or two years ahead will be at our 2% target. i see no compelling reason for us to be in a hurry to tighten financial conditions until then. >> the fed said it will raise its benchmark interest rate until it says -- they're confident it will rise to the 2% level. in the nba playoffs, houston

reaches the western conference vinyls against the golden state warriors. they won by 13 points. houston is the ninth team in league history to win a best of trailing three games to one. tom: thank you. a quick data check. ricci yields moving higher. other than that, futures negative. oil back to $60 a barrel. we leave it there. brandon, what i would notice this morning is the foreign exchange it greg journal about the greece movement. brendan: it is difficult to figure out what the euro will do. it is not doing the things it was predicted to do. tom: two-year yield over 20 some percent, showing how your yields in greece. all of this link into the news flow. stay tuned to our work out of

london and new york as the story unravels through their afternoon and evening. and into tomorrow night and tuesday in london. futures, negative five. >> this is "bloomberg surveillance i am brendan greeley with tom keene. a major setback for iraqi forces. the islamic state took control of ramadi. thousands fled the city. there have been reports of citizen massacres. it is 65 miles west of baghdad. secretary of state john kerry says he is confident the islamic state can be defeated. >> their communications have been reduced, as well as their communications and funding. their movements, by and large most certainly where there are air patrols in other capacities have been reduced.

brendan: elliott gotkine joins us from tel aviv. do you share his confidence that the islamic state can be fetid? elliott: i think the united states is sticking to the same line, that they are making progress and i hope to reverse the gains made by the islamic state in ramadi. this is a setback, there will be lips but ultimately, the u.s. and certainly john kerry, is confident they will win. brendan: contrast this with what happened over the weekend, where u.s. special operations forces on the ground in syria killed and isis commander. these are two different ways to fight the war. is this what the u.s. needs to do in iraq? elliott: i think what it shows is that airstrikes alone will not be sufficient and relying

on the iraqi security forces will not be enough by itself. there was a delta force, under rate, took off from iraq and took at the head of the oil and gas finances in the islamic state. they were hoping to capture him, but he got killed. there was hand-to-hand combat. they were only on the ground for 20 seconds. they counted his wife and a number of materials, from which they hope to clean -- glean intelligence. brendan: who is doing the defending in iraq? what is the state of the iraqi army? elliott: there were no militia there. only the iranian-backed shiite militia, who have been chomping at the bite to push back the islamic state. they did not get the green light to go in until sunday. they are concerned that the

militia are iranian-backed shiite and ramadi is a sewer -- a sunni city. so there is concern about that. what is going on there -- you could talk -- you could call a tactical error or they did not see what it is happening until too late but the militia certainly wanted to go in. tom: thank you. elliott gotkine joining us from tel aviv. we had a lot of mergers last week and it continues. and taylor will be taken over. the dress barn -- brendan: maurice's, justice catherine. tom: and taylor up 9% now. excuse me, up 19%. again, a lot of cash. they are looking for more things to buy. brendan: in the last hour

brands do not have the power they used to that is what we have heard. companies are trying to think what is the next step. tom: i think maybe 40 iterations of what ann taylor means. i'm not sure what it means anymore, but you will see more of those as we go through. julian emanuel, part of this comes down to cheap money. you see a driving everything. julian: use ash no question. the other aspect is that companies are turning out more cash than ever due to margin and efficiency. tom: there is the idea of -- i do not even know what justice is. >> did i say the word millenial again? tom: something to do with the millenials. ann taylor with the transactions this morning.

brendan: corporations have record amounts of cash. what will they do with this? we will keep talking about this on "bloomberg surveillance." this is "bloomberg surveillance" on bloomberg radio, and streaming on your tablet.

tom: good morning. "bloomberg surveillance."

tom keene and brendan greeley. futures are at negative six. brendan: a big week for retailers. we hear from urban outfitters today. we hear from home depot, lowe's, best i. stephanie ruhle joins us -- tom: i got a 90 -- you got a 90 inch television -- stephanie: i did not. this parade of data we are getting are key indicators for the debate of how healthy the economy is. when we got novi sad of macy's and kohl's, they were soggy. people have more money and are pockets, people in the mall. we did not see that. we need to take a closer look area home depot and lowe's. these are housing derivatives. tj maxx. are these consumers without when was the last time you are at a

tj maxx? stephanie: quite some time. you know i love target. when you're talking about walmart or others, they just had wage increases. many people saying it is the walmart employee shopping and the store. well, is he or see -- she? brendan: we use these stores as proxies for the american economy, does this will stand given the troubles they retailers have had? julian: i think so. these names are so big and pervasive that they definitely have -- tom: but the nominal gdp is part of stephanie's point. julian: that is part of what is missing -- tom: your out all weekend. what did you and olivia sterns doing? stephanie: we took a private fitness class, because nike is relaunching their women's line. olivia is pretty fit, let me

tell you. >> i know your completely up on this market segment. nike is relaunching its women's -- is that to compete with under armour? stephanie: yes, under armour has been ahead but they are really moving away from being a performance-athlete gear. when was the last time you saw me in jeans? you do not. it is that active leisure. >> i always assumed that you emerge from bed just as you are right now -- tom: can i thank you for not wearing a fit bit? stephanie how best stephanie: my side table is a tracking device -- tom: will they fade? stephanie: probably. i think the world of connected fitness, being part of our lifestyle, tracking these

things. i am not saying these specific devices now will work, but the fact that you are competing again, i like it. >> i argue these devices do the same thing as self-help books. we read the books but do not do the same thing -- do not do what they tell. stephanie: brandon, you're not a hard-core athlete, but you are improving a bit. brendan: i cannot believe she said that.

tom: good morning. "bloomberg surveillance." the top headlines. >> a deal it emerging in the drug sector. and her international agreeing to abide par pharmaceutical's. endo sees the takeover as a way to strengthen its this is in generics. target wants to freshen things up in its aisles. the company will be emphasized brand name products. they will look for fresh foods instead of canned and packaged foods. is horse racing history in the making? american fare has a shot at the triple crown.

it has not been done in 37 years. he did not make that he did not mind the rain during the --he did not mind the rain during the preakness. tom: the official -- brendan: these forces get to the belmont stakes, it is completely different. watch longer. we always get excited when this happens. we get our hearts broken every year. tom: we do. it was interesting to see the conditions in kentucky versus the rain in baltimore. greece is front and center. it has become more so in the last hour with greece spreads moving out. we went out to new wide on great german spreads. gm out with new products. commodities on the move as well. looking at oil doing that are then good in their recovery.

the theme of 2012, 2013 and 2014. american companies aggressively piling money back into shareholder's hands. it is supposed to correct, but it has not. julian emanuel has been looking at the use of cash. let's start with the why. everyone says corporations will do something different. why have they not? julian: interest rates are still essentially zero. if you are a orbit manager, why send some thing three years, five years that kind of thing, return the money to shareholders through buybacks -- tom: is mna the new investment? we saw and a pharmaceuticals, and taylor, that is the new capital investment? julian: it is prepackaged capital, as it were.

the acids are there and are proven. there is less risk to acquire. brendan: we look at this kind of use. nobody sees organic growth, that is what we hear. julian: it is definitely difficult to come by. there are pockets of growth. health care growing strong layer. in this environment -- tom: what is a coupon going in january 1? if i have a shared and dividend growth over an annual basis -- i start the year up 6% or 7%, right? how could i not be in stocks versus a 2% bond? dividend growth, share buyback, you are up 5% or 6%? julian: from our perspective that is why people are concerned about the effect on the equity markets. the fed eventually raising rates. our point is even one rate list

it will be a positive signs of people that the world is normalizing. second, the competition at low levels of interest rates is still great -- brendan: but culture matters. you're looking at a generation of people that got earned twice, badly-- got burned twice, badly. how do you change that culture? join: it devolves. these things take 20 to 30 years to work out. tom: your s&p total yield has doubled through the crisis. what will cause it to go back to normal, whatever that is? julian: the increase in interest rates that causes corporate management to think about things like the age of the capital stock -- the age of the capital stock is old. tom: like that 1958 train.

brendan: we keep coming back to technology and what has done for us. their broader question is whether growth is over. office say technology will fix it. are you an optimist? julie: optimistic, yes. the transformation out there, part of the issue and why consumers may not be as confident, is this cognitive dissonance about understanding how technology is working its way through and boosting the economy. brendan: so you are seeing that technology is making a difference? julian: we were chatting off-line about the person who drove the car this morning, how he can make a six vigor income using uber. tom: let's go back to your wheelhouse, options and derivatives. our option still in play? our institutions using the julian emanuel product? julian: they are.

given this some dude level in the mix -- vixx. but also with the risks out there. whether you're hedging the upside or downside, it makes sense -- tom: it is cheap to buy derivatives -- julian: absolutely. tom: we have to re-business -- revisit greece. it is really heating up. must go be -- is speaking now. brendan: what are you looking at today? you cannot say hockey. tom: go rangers versus tampa bay. how about retail. retail is important. i know it is a focus of stephanie ruhle and erik schatzker. -- is america and consumption. last week was sobering. michael mckee is an optimistic guy and he was sobered by what

we saw last week. retail is truly front and center as we go into june. >> i am going to jump in here. it is housing. will millenials unbundle when it comes to housing. the national association of home builders are out with their survey. it is the first of the spring data. it sets off a week of housing data -- tom: a single-digit market. >> back to it. homebuilders consolidated in april. they were down eight percent. having shot up 25% to march. it is interesting what they say, the homebuilders. tom: the basic idea, there is january to march, and then you delay a little. is it into may as well? the first quarter is still going on now. >> yup. brendan: my agenda is greece.

we heard the endgame would be in may. we pay attention to the politics to what happens when 4 -- finance and prime minister's get together. greek banks are running out of collateral. a note from j.p. morgan chase. pressure is on central government cash flow, the banking system, and the political timetable are converging on late may. we see movement in spreads this morning. we are coming close to one endgame. tom: no question about it. you look at the tone of greece and it is happening immediately. you wonder what will happen wednesday. >> time for our twitter question. we asked "have we reached a real deadline for greece/" their greek odyssey will run until europe can safely dump them. ok. [laughter] tom: a monday tweet. >> the second answer, people of

greek remind -- people of greece remind me of union voters headed towards -- tom: that is a sophisticated answer. that is a really smart tweet. thank you. >> another smart tweet. greece is like kim kardashian. just like you talking about her everything else is baked in -- >> a little of that involved. varoufakis has been pushed to the sidelines? brendan: i think there has been a great deal of and patience -- in patients with them. usually these finance meetings are tightlipped. nothing comes out. they have broken the code of silence. he lectures like a professor, is what they say. tom: i think they have run out of patience. maybe we will see that in the

u.s. market as well. greece spreads, 10.4 percentage points. that very low yield and the german 10 year. we continue on bloomberg radio and television.

♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. stephanie: good morning.

you're watching "market makers" at our new timeslot. erik: greek banks running out of time again. oil arises as the islamic state runs over ramadi in iraq. stephanie: also, g.m. on the updated tomorrow -- camaro. we bring you up to speed with the headlines. here is our news in focus. >> the fbi will inspect the windshield of the derailed amtrak train in an attempt to find out what hit the locomotive before it crashed. the ntsb says there is a mark on the windshield about the size of a grapefruit. >> alibaba is being sued by the company behind rands like gucci ad alexander mcqueen. they accuse the chinese e-commerce company to -- of