says intense work is still needed. and too big to jail banking. graduates follow their dreams are just do not expect a raise for the first, the second, or the third job. good morning, everyone. this is "bloomberg surveillance ." it is friday, may 22. i'm tom keene. joining me, brendan greeley. let's go to the single best chart. brendan: it is a huge deal because what you were when you get out of college, that sticks with you the rest of your life. so we are talking about the cohort and the consequences of that cohort for the rest of their careers. when i say cohort, i mean all of the people in the control room. tom: we're seeing young lads and women in their gowns and they are walking around and you are looking at them like really? brendan: they still win because

they are young and they have a smile on their lives and a song in their hearts. tom: unlike friday, on a cynical "surveillance." vonnie: angela merkel is stamping out any optimism of a solution to the greek crisis. she met late in the night with leaders of greece and france. merkel says there is a lot to do before that can happen. angela merkel: i will have some bilateral talks and have already spoken last night with the french president and the greek prime minister. it was a friendly, constructive exchange, but it is clear further work between the institutions is necessary. vonnie: merkel is referring to the imf, the ecb, and the european commission. president obama says the u.s. and its allies are not losing the fight against islamic state but he says more needs to be

done to help iraq. he told "the atlantic" several days after -- he told that to the atlantic several days after ramadi was captured by isys. -- by isis. >> maybe this is a prediction but i say it with full confidence. the president will not be comfortable with a full-scale preinvasion of iraq -- a full-scale reinvasion of iraq. vonnie: in washington, d.c. police have arrested a suspect overnight in the gruesome killings of four people in a mansion, all because of a pizza. a man and his wife were found dead in the house. one of the victims' employees had delivered $40,000 in cash. the suspect was identified

through dna on an uneaten pizza crust in the house. he had worked for the victims company. uber may taking another step toward an ipo. "the wall street journal" says the service is seeking a credit line from lunch banks -- from large banks. in the nba playoffs, steph curry scored 33 points to lead the golden state warriors to a 99-98 win over the houston rockets. that gives the warriors a 2-0 lead in the western conference finals. game three is tomorrow in houston. brendan: the best part of that game was when his two-year-old daughter crawled up onto his lap , james harden, a completely ruinous a press conference for him in a most beautiful way. we will take a morning brief at a: 30 a.m.. the use -- the price consumer

index comes out. at 1:00 p.m., janet yellen speaks. tom: you have to believe she will advance the dialogue forward. let's look at equities bonds currencies, commodities. yesterday uncommonly quiet. pretty much we continue the wage bound trade rating for the world of economics to link back into the world of finance. still very elevated equity prices. the vix 12.11 stunning complacency. for your memorial day sport we give you three obscure cross rates because we can do this at bloomberg. how about euro, swedish krona. how about japanese yen, swedish jan.

we have never done this on surveillance this morning. stephen will make us smarter on this strange and obscure world in the next hour. let's consider greece. chancellor angela merkel stamping out optimism on greece with a vengeance. this of course at the eu summit in latvia. she said greater -- i have no idea what it means. guy johnson does. guy you carried the story forward. we saw the market move about an hour ago. why did spreads widen? guy: i think people are assuming the little bit of optimism the saw previously was dissipating. yet merkel in the room and homeland -- and francois hollande in the room. all angela merkel could say was they were constructive and friendly, and these guys are going to stay in touch. francois hollande, who has been

talking up the story with greece was not there. tom: as we go into the weekend the german people are behind their chancellor. brendan: is the bad news with angela merkel, who has been a more reasonable partner with suppress -- with citrus -- with tsipras? guy: nevertheless, she is still very much aware that she needs to look after her domestic constituency. she therefore is playing the game cautiously. what the germans keep doing is pointing the greeks back to talks and saying you have to get this right. the greeks keep saying we want to see this at the highest levels.

and the tension ceases to exist. we still have a few days to go before the deadline, the next deadline. we will wait and see. a lot more cars are still to be play particularly by the greeks. brendan: the reason the european leaders keep going to latvia is the presidency -- is it fair to say as we keep watching leaders returned to riga that that is completely overshadowed and latvia's presidency has been the great failure presidency? guy: i think that is probably not the spin the latvians would like to put on it, to be honest, but greece is pretty much shadowing -- overshadowing everything. i was talking to the greek minister and she was pretty aggrieved that her country is being overshadowed. i think you probably have a little bit of a point, though that may not be the spin they are looking for. tom: this story never ends.

where is this going to be? brendan: it will end before the next 90 days. tom: guy johnson in london. it is the friday before memorial day, a time to turn to july's children's summer camp's. people like chris whalen are not looking at dandelions in the front yard in july or august. janet yellen is stumbling toward september 17 or even the 90's before christmas. we have not talked about this in an age. we have to get to september. how do we get to september if you are janet yellen? >> the same way you did last year. you predict where a change -- you predict rate change, but we may not see a rate change all year. tom: when people revise, do you look them that do you look at them as a seasoned pro? are they "wrong" or misinformed

or is it part of the game to revise and adjust? chris: i think that the street has an image of what they want and the fed's tension is trying to achieve something in terms of policy while at the same time managing market expectations. the market wants validation. they want to be told that everything is ok. tom: morgan stanley went from next year into december. is she going to reverse and go back into next year? chris: we started out with housing and other indicators looking good in the first quarter, but now we are seeing slowing. mortgage applications are going against the grain in an industry that is really -- brendan: i like what chris whalen says. markets and five-year-olds pine for validation. i want to quote from your notes. you open it with act i, scene

ruin -- seen one of "henry v." 's counselors wonder that he has moved from a drunken person to a king. what is going on? chris: i think the fed is trapped, painted into a corner. the time to gently raise rates was when chairman bernanke was on his way out the door. now you are in a situation where they need to raise rates to restore income to the system. the system is dying for lack of income. at the same time, they do not see the growth they want to see to validate that change. tom: i just did this out on twitter. chris whalen's one volume on american history is wildly accessible. none of this present-tents stuff is in your book, is it? to a phrase, this is all original territory.

chris: it is. what chairman bernanke was focused on was spreads per he was concerned about restoring the function of the bond market. he was looking at things of this nature. i do not think it is really appropriate for the situation, simply because we are not going to achieve 2% inflation while we are taking over $1 trillion a year from the system at zero rates. even the europeans understand this. it was fascinating to hear them talk about their version of qe2 and how they realize they have to do other things. we are not doing that in the united states. brendan: there was an article looking at denmark and how they are having trouble maintaining liquidity. it's overnight rate has gone negative. can we learn to adjust to a

negative interest rate world overtime? chris: negative interest rates are great for economists to talk about in conferences, but the real world cannot survive with negative rates. tom: can i ask a basic question? it is memorial day. the newspaper is telling me that what i do on memorial day is buy a $20,000 watch. is that what you do on memorial day? brendan: here is what i am being told by the control room. let people know that in the next lock -- next block people need to buy a new listing. this is bloomberg surveillance on bloomberg television. good morning. ♪

tom: may you and your loved ones travel safely this memorial day. it is an early memorial day. i did not even know we were off memorial day. -- that we were off monday. it is appallingly early. going back to 1865, becoming memorial day -- it is about those who have fallen serving this nation. good morning. we go to our top headlines with vonnie quinn. vonnie: in california, the oil spill has led officials to ban spacing -- to ban fishing in a section of ocean off santa barbara. the spill has caused a nine-mile oil slick in the ocean. fewer than half the 21,000 gallons to reach the water have been cleaned up. companies are spending more on computer hardware. that is offsetting the continued slump in personal computer sales .

quarterly profits beat estimates thanks to spending on servers. one business will sell pcs and printers, the other selling technology to businesses. officials in ireland are trying to decide whether to legalize same-sex marriage. roman catholics make up 85% of the population and 22 years ago ireland became one of the last western nations to decriminalize homosexuality. increasingly becoming a secular country. tom: vonnie quinn, thank you so much. coming up, an important conversation with chris whalen. why the banks are too big to jail. the strange word "criminal." what does it mean? we have an expert on the nuance of law at finance, mr. whalen, with us this morning. this is maybe the chart of the year for parents -- higher wages

for recent grads is not happening. and an important new book out on bit coin. you know i am skeptical. we will find that when mr. popper is on the great bit coin debate. brendan: shopify is now worth almost $2 billion, but overall it has been a slow year for a lot of activity. companies have not raised this little cash on the open market since 2010. leslie picker is with us. here is where -- here is what i am wondering. i took a lot -- a look at the last month. it is experiencing artisanal gravity. our ipo's for suckers? >> investors are not making their returns on the ipos that have come forth so far this year. they will not be buying any

more. that is part of the reason you such little activity this year. other aspects of it are just the overall markets are not up that much. so ipos -- it is a major outlook play. investors use it to surpass the market. tom: the distinction i think is the word "investors. investors are not in the ipo game. the ipo is what you do with your best friend at your firm -- i will give you 1000 shares. brendan: chris whalen, is what we are looking at, what we used to call an ipo, is that will we call the fourth or fifth round of funding? chris: a lot of the companies we have seen going public in the last year, it is an exit strategy for private equity. leslie: when you look at something like uber, raising $1.5 billion, that is 10 times

what shop if i -- what shopify raised. i am talking about mutual funds and hedge funds and private equity funds that are buying into for the ipo. why would you need to go public is the mindset of the ceo. brendan: and without that amount of capital, you are standing outside waiting for the ipo. this is exactly what happened to spotify. they brought on goldman to consider an ipo. goldman said we will give you some money instead and why don't we all stay private instead. that is what is happening. tom: it is completely a changed environment. chris: we have had a number of cases where we have rated an

institution, thought they were going to market with debt. instead the banks revised their line and give them more money on better terms. tom: thank you so much. coming up in the next hour chris whalen this hour. it gets better. stephen england are. this is truly -- we will speak with him about what you need to know about the dollar and the foreign exchange market. we will do that in the 7:00 hour. on this friday. it is "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." i'm tom keene with brendan greeley. brendan: coming from "the

financial times," "bring back the bubonic plague -- financiers need to fully embrace the idea of maximum transparency. then they must show that they view the tool as a risk management device, not just a technique for regulatory arbitrage." chris whalen, is that possible? chris: swaps enable you to show a security that you cannot borrow but do not own. they have used this market in the past mostly for speculative purposes. it is the most efficient way to trade a stock or a bond or anything else because the cash is sufficient. tom: this is the high ground. this is must read on "cds." are you suggesting that this is a cds derivative market that has not changed one iota from cbo

squares? chris: it was originally set up to get around regulation. coming out of the great depression, we all agreed that exchanges and multilateral risk was the way to go. this is a bilateral market. it had certain structural inefficiencies and it is the reason we have too big to fail. it is about protecting the payment system, including all the people who trade over the counter. tom: is the world changed? is it the same world it was asked number of years ago? chris: we still have a bilateral market. one counterparty is facing the other. that is the essence of the issue. brendan: is it possible for you or for anyone to look at a trade and say that it definitely a hedge, that is definitely a bad -- a bet.

chris: no. you ask four different people about exposure and you will get four different answers. tom: it shows the complexity of this debate right down at the micro levels. fascinating. brendan: our twitter question of the day is about the dollar, watching it slowly pair off some of its gains. we asked you, what is the future of the dollar. tweet us @bsurveillance." this is "bloomberg surveillance" and currency report. ♪

[beeping] ooo come on everybody, i think this is my grandson. [lip syncing] ♪little girl you look so lonesome oh my goodness. ♪i see you are feeling blue ♪come on over to my place ♪hey girl ♪we're having a party happy birthday, grandma! ♪we'll be swinging ♪dancing and singing ♪baby come on over tonight tom: good friday, everyone. "bloomberg surveillance." futures are turning red and green on the screen right now. here is vonnie quinn. vonnie: germany and france have a message for greece -- "we will

be in touch." angela merkel threw cold water on any optimism on a deal. francois hollande met with the greek prime minister last night in latvia. germany and france said they had agreed to stay in close contact with greece. greece needs the $8 billion in bailout money to avoid default. in saudi arabia, where life is centered around oil for generations, the government seeks solar power in the country's future. >> i do not know when -- 2040, 2050, or thereafter. so we have embarked on a program to develop solar energy? why? when we look up, we have the sun every day. vonnie: the senate may take a

final vote today on the fast track train bill, allowing president to speed up passage of trade agreements on the asian trade deal that is negotiated now. the senate voted 62-32 advance the bill. democrats have tried to block legislation that they say that because they say the trade you will block american jobs. david cameron says -- david cameron's government was promoting open source software. microsoft office software has a dominant position on british government computers. and the anaheim ducks have the upper hand in the western conference finals. they beat the chicago blackhawks and lead the series two games to one. i know you will be watching. tom: they had 12 goals in the less two games. it will be interesting to see what the rangers do. never would i have thought that

they would score six goals a game in two games. we will know more on tuesday when we all come back from our eight-day weekend. let's talk series. should jamie dimon -- the question is whispered -- have american fines and wrist slaps migrated from civil to criminal nature? it barely describes his contribution to the debate. should bankers go to jail? it is financial stability, a managerial one volume. is there a civil/criminal distinction in your reading of american banking history? is this something new, that we are shifting from a debate from 70 -- from civil to criminal charges? chris: in the 1980's we had

aggressive prosecutions of fraud. in this most recent crisis, we did not go that route because people like larry summers and tim geithner said you could not prosecute because it would hurt the system. i take the opposite view. tom: which people were hurt in the process? there is a whole food chain. where in the chris whalen food chain do we send somebody away behind bars? chris: i think you look at people involved in transactions that were clearly fraudulent. you look at their advisors, the lawyers who provided opinions that enabled these transactions. we have not done that. we prosecute corporations. corporations are admitting criminal liability, but i do not know -- tom: what does that mean? chris: the shareholders pay. i think that is wrong. if you want to inoculate society against doing stupid things, you have to hold people responsibility.

-- you have to hold people responsible. brendan: "bank finds credit for culture shift," says the "financial regulator." has that culture changed? chris: i don't think so. the fear among policymakers that you cannot go after the largest institutions prevents them from doing the right thing. i think you actually strengthen the system, you rebuild investor confidence. if you let everyone know that there are rules and they will be enforced -- look, if you are a bond investor, you want to know that the state of new york will enforce the rules because that is what the market uses. you do not want to see them sloughing off violations. brendan: even without this, we are talking about the libor and the forex scandals. particularly deutsche bank, it does not know what it wants to be when it grows up.

it is a reasonably successful investment bank. what is the right shape of a bank now? chris: all these large institutions are going through essentially the same process withdrawing from retail banking. deutsche bank is closing down the postal bank, selling hundreds of bandages -- selling hundreds of ranches. i do not think this is unique to deutsche bank. i think all the large institutions are looking at the cost and the risk return of retail, and they want to get away from it. tom: there is a huge variance among these banks. you look at the shares of deutsche bank versus jpmorgan and it is just like mars and venus. brendan: is that good perhaps for financial stability? the one regular debate seemed -- the one regular that seemed to have gotten it right is retail operations three should we leave retail operations to the fdic

and the rest to other regulators? chris: i think you should have two regulators, the occ for the bank unit, and the fdic for the entire organization. there is a conflict between monetary policy and prudential regulation. tom: is there a sheila bair in washington right now? chris: tom and martin worked together very well. tom: they are pushing against the fat cats, that is the summary. chris: during times of crisis when sheila bair was there, fdic had to be public. they are a consumer protection agency at the end of the day. when things quiet down, they step into the background because you do not need to hear them. brendan: he is effective because of it. chris: it was interesting you

had paul volcker coming out and say we should give more power to the fed. they are counterattacking against what the fdic wanted in the dodd-frank debate, which is much more power. tom: i never thought of it as criminal with big banks -- yet, who goes to jail? how do you send a bank to jail? brendan: coming up, if you are graduating this month, i am sorry about what we did to the world while you were growing up your it but good news, it gets even worse. we will talk about how bad wages are for recent graduates. this is "bloomberg surveillance" on bloomberg television streaming on your tablet, your phone, and bloomberg.com. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." we have a kindle -- we have a killer single best chart. here is brendan greeley. brendan: good luck, class of 2015. im sorry about global warming and your paycheck. that is the subject of today's single best chart. this is an amazing chart. you see the divergence very clearly. the low -- the yellow line is

wage growth. the white line is wage growth of college grads 21 to 23. you can see a cyclicality. it has taken in the past longer for graduates' wages to kickoff. unprecedented. super bad news for an entire group of people entering the workforce right now. tom: the arch debate is ok this is 23 and 24, but at some point it is supposed to click in. brendan: we already know that if you graduate during a recession, it is bad for you your entire life. we are looking at wages, too. you step on the wage scale. if it starts lower, it punishes you until you retire. tom: pushing against this is the banks that are paying more. if you take up medicine and

banking and that, that is even uglier. chris: it has behavioral consequences. this cohort is driving less. in many cases they do not even get driving licenses. you think about auto industry, future demand for vehicles, what does it say? they do not want cars. they want to live in the city and they have different priorities for spending. it will change the entire society. brendan: every time we have this this cushion about what millennials want, you realize why are they not buying houses? they are not getting paid as much. there is an economic consequence. chris: the price of homes are racing ahead faster. tom: a major partner in a major law firm says managing that millennial expectation clearly with substantial salaries is a

huge issue. to me, so much of it is not 23 24, 25 -- whatever anyone's capabilities -- what will it be when they get to 30? it was just a given. brendan: the real difference generally only -- generationally i am focused on a work-life balance because my spouse works full-time. women and men entering the workforce are more likely to marry someone who has a career. you are not saying i am too lazy to work hard for you, you are saying i have a bunch of different priorities. tom: we say congratulations to all of you in may and early june. brendan: we will take a look at some photos per nubber 3 -- in reno, tesla is building what will be the world's largest battery factory.

i think that was us who did this. we now know what a $5 billion factory looks like from the air. it is called the giga factory. it will supply more efficient batteries for electric cars, and hopefully ultimately that technology will be applied in homes as well. the real changer will be if we can have batteries in homes. i am not yet ready to put something that will explode in my home, but in general it is a good idea. next photo -- number 2 -- what are we looking at here? that is the george washington bridge. it is also a part of david letterman's set. fans are waiting outside the and sullivan theater, distraught to see that the set was immediately carted off. carpenters started dragging the set out there and it is going to the smithsonian. a lot of the iconic bridges and

the buildings on the set behind him, they took a saw to them and threw them in the dumpster. tom: it is amazing. brendan: california disneyland celebrates its 60th anniversary today. they are marking the occasion with three nighttime presentations and host neil patrick harris and mickey mouse will. tom this morning did a classically tom thing. he asked raise her hand if you have been to disneyland. i said yes, i have been to disneyland as a child. he said you have not been unless you have been to disney world -- to disneyland and not disney world. tom: i have to say that orlando

disney world is the antithesis of disneyland. i have to say disneyland is the only one. brendan: i will let you explain it to me at length. coming up next, can this be something that your mother uses? we will discuss the digital currency future. the bloomberg surveillance disneyland report. this is "bloomberg surveillance ." good morning. ♪

tom: good friday morning. "bloomberg surveillance." i would give you a data check, but it is the friday before memorial day screen. let's get to vonnie quinn with top headlines. vonnie: in baltimore, a grand jury has indicted six police officers in the death of freddie gray while in custody. his death triggered riots and looting in baltimore last month or he was injured while being driven to a police station. the officers have been charged with homicide and assault. a big takeover in the cigarette industry. reynolds american is about to win antitrust approval with a 25 billion dollars -- with a $25 billion takeover of lorillard. reynolds has offered to sell its

blue e-cigarettes. americans will party like it is 2005 this memorial day weekend. aaa says 37 million week -- 37 million americans will travel 50 miles or more for the holiday, a 5% increase over last year. gas prices are down $.94 a gallon since last summer. i was not planning anything. i think maybe we need to take "surveillance" on the road. brendan: i am not going on the road with tom keene. we have a babysitter and i will go to a hotel and sleep. we will have a nice meal. tom: it is un-american that this memorial day is this early. it is way to bank early. it should be may 29, may 30. let's look forward to "bloomberg surveillance." in our next hour, john deere is out with earnings. we will look at important

earnings and export statements. steven englander is with us. this is much watch -- this is must watch and must listen. i will address his work on cross rates. and lloyd brown is with us. we will talk to john brown about tim cook as well. brendan? brendan: if you believe that bit coin is a thing mark zuckerberg launched facebook in 2004. now back to bit going. the new york stock exchange has announced a bit coin price index. where are we in the history of bit coin? tom is going to hold this up in just a second. that is a history of it coin. help us out here. in the long-term history of what will happen in the future of bitcoin, that is a ridiculous

question. where are we? >> i think you are right that a lot of people maybe a year ago thought we were a year from facebook and netflix, and people were expecting this to be something that was going to be used for online purchases and we are not there yet. this is a very immature system. the market cap of the whole system is like $2 billion, three billion dollars. we are still much further than many bitcoin aficionados want us to be. brendan: is this the bitcoin of the 1980's? in 1989, it was easier for someone to use the internet. is this that same moment? nathaniel: we are waiting for someone to find a way to easily use it, and that has not happened yet. there are a couple of early companies, but you are exactly right that this might be more

like darpa net than the internet. chris: why does the value of the coin -- of bitcoin fluctuate? is it purely speculative? nathaniel: right now it is purely speculative. the term virtual currency is not a great one. right now it is a commodity. my book is titled "digital gold" because i think at its core this digital token is a scarce digital asset. that is where you start by thinking about it. there are a lot of things underneath that. tom: i give you the highest credibility for talking about that. i spent a serious amount of time with an economist a number of months ago. how can you have innovation if you go from 800 to 239?

do you just assume we will enjoy bitcoin as $10 a coin? i do not how -- i do not understand how you can instruct a system on a depreciating asset like that. nathaniel: right now you need a boost wrap -- a boost -- a bootstrap. a lot of times people did expect it to go back down to $10. i think as a currency, as a commodity, as you pointed out, it is still almost entirely speculative. the question is the question that susan ac and others talked about, is whether that token, that asset, the network that it sits with -- whether that can be harnessed. frankly, the metaphor i sometimes think about for the future of it is that these tokens are more like bandwidths

sort of radio bandwidth, where you want to own them because you want to use them for a short amount of time. tom: can you do that with a depreciating, volatile asset? nathaniel: as long as people are willing to continue buying and holding it which they have so far been willing to do -- tom: the stock is just -- brendan: i would argue that you are looking at the wrong measure. i'm looking right now at transaction volume. instead of looking at the value of it as a store of value, look at whether or not people are using it. that is not dropping, but it is also not rising. that says that nathaniel is right. tom: you are correct unless you are taking a loss from 236 down to -- brendan: if this will make transactions cheaper it has to figure out a way to hedge the currency risk, and that costs money.

you had a nice moment in your book where bill gates is convinced of the value of bitcoin. i hear from it coin enthusiasts that this is really going to change development economics. when you talk about development economists, they say the pace of digital services in kenya is fine. they are not waiting for bitcoin. where do you fall on that? nathaniel: there are 10% transaction costs -- 10% transaction charges. bill gates went when he was sort of argued into this from where he was before. part of it was recognizing how expensive the system is. it is a lot better than what you had previously. tom: i love what adam davidson says. "digital gold" on this immense debate on bitcoin.

the first of don't look we have seen on it. nathaniel popper. looking at the euro, 1.1193. it is "bloomberg surveillance." ♪

announcer: this is "bloomberg surveillance." tom: greece is close to sealing

a deal. wait -- angela merkel says intense work is still needed. the dollar, euro, yen, and wrubel are dead in the water. we will talk of foreign exchange before tim cook, there was a glass closet. john lloyd brown on the suddenness of gay acceptance. welcome to "bloomberg surveillance." i'm tom keene. with me is brendan greeley. brendan: john deere -- the news has broken. do we go to vonnie quinn for that? they were expected to miss. when you look at john deere, you are looking at a bet on the global agriculture market. we are seeing net sales $7.4 billion projected at $7.5 billion.

it was a miss, but not huge one. vonnie: in terms of revenue, we barely beat estimates, but the earnings-per-share number was a much better one than forecast. john deere coming in at $2.03 which is interesting because many analysts had pointed to a difficult quarter, saying there were plenty of tractors on lots that needed to be sold. people were buying them anyway because farmers are suffering. corn had not been doing well this year. tom: sam allen providing leadership. i love his phrase -- "adept execution." that is exactly what john deere is doing. we do not see much talk about use of cash. look at the number there -- john deere sees year company equivalent sales down 19%. that is a stunning headline.

vonnie: if you look at u.s. census bureau data, farm machinery down 55% -- that will give you an idea. it is not just john deere hurting. but that is a part of this. john deere was downgraded last week. tom: very influential on cat and deere. brendan: i don't think the proxy is a strong as it used to be. john deere is the largest manufacturer of agricultural machines, 40% of the market. it is being undercut by a company out of india, or atco, which has dominance out of brazil. tom: nevertheless, again in this global hour of "bloomberg surveillance," it is a snapshot of what is going on around the world.

let's go to top headlines right now on friday. here is vonnie quinn. vonnie: germany's chancellor during a european union meeting in latvia says there is much to do before a bailout to avoid default. >> i will have some bilateral talks and have already spoken last night with the french president and the greek prime minister. it was a very friendly, constructive exchange, but it is clear further work with the three institutions is necessary. vonnie: the chancellor was referring to the imf, the ecb, and the european commission. president obama says the islamic state is not winning, but that more needs to be done to help iraq. he talked to "the atlantic" several days after militants captured ramadi.

the president's spokesman underscore his point. >> i can say with full confidence that the president will not be comfortable with the full scale reinvasion of iraq with the u.s. military. that does not serve the long-term interests of the united states. vonnie: missiles are being sent to iraq to be used against islamic state car bombers. a suspect has been arrested in the killing in a mansion. police say the suspect had worked for their company. they may have been held for ransom. the employee of one victim delivered $40,000 in cash. "the wall street journal" says uber is seeking a $1 billion in a line from large banks.

companies frequently seek credit lines before going public as a way to build relationships with lenders. golden state takes another step toward the nba finals. they beat houston by a single point last night. stephan curry -- stephen curry scored 33. tom: what are we briefing on on a friday before memorial day? brendan: the cbi comes out at 8:30. didn't your eyes open this morning and immediately inform you of that? we get average weekly earnings. at 1:00 p.m., janet yellen speaks. we do not know what she will be speaking about, but as always when she communicates, we take notes. tom: i want to get through this very quickly. we will give this a foreign exchange spin this morning. euro, 1.1185.

i do not know what we are doing here. the vix 12.11, doing nothing. let's look at the world of steven englander. i would have put -- these are cross rates. this is the obscure and strange world of one steven englander of citigroup. the bank of japan says study -- says steady as the number x goes -- we go into a three day american weekend knowing there is no weekend in athens. steven englander is of citigroup and follows the euro closely. let's start with greece. how much is greece in pinching on normal urodynamics? steven: not very much right now. the market is holding on greece

and europe coming to a deal, with greece giving it a lot and europe giving in a little bit. tom: alan russman says greece is important. where do you stand? steven: the quantitative easing the tools europeans have right now, are important in terms of insulating the rest of the peripherals from -- if it were to happen that greece left the euro, i think they would rather have quantitative easing and be committed to making sure that there was no contagion to other european countries that had played the european game that had stuck to the program and gone the whole distance. brendan: i would have expected more movement off the news that angela merkel was less than optimistic coming out of the meeting because we have been used to watching the announcements. it makes me wonder, given how little movement there has been in the spreads of the other peripheral countries, is it

entirely possible that the possibility that greece will leave the euro is priced in right now? steven: i do not think it is priced in. the european market is comfortable with the idea that there will be compromised down the road. there are a few rumors in that direction. but also, the fallback is a lot more qe a lot more buying of peripheral bonds. greece would be in trouble, but the rest of europe would not. brendan: one of our bloomberg news reporters wrote that everything else is noise and you only need to listen to alexis tsipras, angela merkel, and mario draghi for what is going on in greece. is that what you are listening to? steven: there is a lot of posturing one or two levels below with consistent statements of optimism on the greek side. brendan: it is almost funny. tom: we will talk about cable

about your wonderful world of these cross rates and the obscurity of it all. let me ask a memorial day question. how is the strength of the u.s. dollar as we go into this three day weekend? is it a strong dollar, a fair dollar, a dollar that will not always be the reserve currency of the world? steven: it is a pretty strong dollar that can get even stronger because the market is lowballing what the u.s. economy is going to do. there is concern about the bounds that are expected. right now we are in no man's land and investors are trying to avoid stepping on landmines because there is no clear direction that you are getting from the data from policy statements. longer-term, the dollar i think will always be a reserve currency but not the only reserve currency. we could get some competition from asia. brendan: what has to happen to the yuan to put it in that basket of reserve currencies

that the imf has? steven: the criteria is somewhat flexible. it is also clear that there is a lot of demand from other countries, that the other countries do want it as a reserve. tom: let's look at our twitter question of the day. it is a steven englander like question. "what is the future of the u.s. dollar?" we need to hear from you, both cautious and those who are optimistic on america. stay with us on this friday. brendan greeley and tom keene. it is "bloomberg surveillance." ♪

tom: let's do a spirited conversation, a morning must read right now. i thought this was absolutely brilliant, as a writer at "the washington post" brings in a lot of british history. "britain's army will shrink to about 80,000. a report predicts the number could get as low as 50,000 which would be smaller than at any point since the 1770's

about the same size as the new york police department." i love that. for reed zakaria -- fareed zakaria hits it out of the park for "the washington post." how do you take the election and what zakaria is talking about a new britain, and folded in to what is the mother of all currencies back to the 19th century? steven: it is true that the sterling has been on a long-term decline. but now i think from an investor viewpoint, you are looking at -- people like the dollar, but it cannot be your only currency in your portfolio. what is the second-best currency? you have an economy that is picking up, and the bank of england --

tom: what is the cost to british leadership of a staff that diminishes their army? what is the cost to the financial system expressed through the currency if they do this policy over 4, 5, 10 years? steven: it is probably beneficial to the economy in the short term and the financial system. armies are expensive and costly, and it is better having people making things. down the road, the question is longer-term if it is a political issue, if you need an army, you cannot just snap your fingers and make a 2000-person army. brendan: we do not have enough time to tease this out, but i am unconvinced that it is necessarily a bad thing that britain will have an army the size of the u.s. -- of the new york police force. tom: nato and the pentagon totally disagree.

steven: you are assuming other people will do the job for them. tom: fascinating, and we will speak to someone with a little bit of knowledge on england. he was with british petroleum and then became the ep -- the bp former executive officer. looking forward to john browne. ♪

tom: good morning, everyone. it is always good to have steven englander onset. you make jokes during the break. let's go to top headlines with vonnie quinn. vonnie: that completely surprised me. as workers work to clean up the oil spill off the california coast, beaches new the site are closed. fewer than half the 21,000 gallons that reached the water

have been cleaned up. in greece hewlett-packard is beating top estimates. sales to corporations are up, helping to offset the slump in personal computer sales. the woman jailed in the airline rage case is free. her suspend -- her sentence was suspended for assaulting a fight attendant last december. she threw a tantrum when she was served nuts in a bag instead of a dish. that is not what you asked for. tom: exactly. vonnie quinn, thank you so much. very quickly, surveillance through the morning -- the futures of oil and gas. john browne joining us from the leadership of british petroleum.

then we go into the future and our twitter question of the day, what is the future of the dollar? they are definitely the tea leaves of the global financial system and they are called cross rates. they are the odd, the obscure the trend away from the less conventional the dollar yen the euro-yen. my team has been in chart camp. let's throw up one of the great tensions in the asian system now -- japan versus korea. it is an ugly point of tension that gets back to a financial crisis back in 2008 and in 1994. this also folds back into china. what is the tension that you see in these obscure cross rates as expressed to china right now? steven: what you're hearing about china the economy is clearly soft.

all the indications are that it is soft and below expectations usually. yet there is the sense that the chinese are going to liberalize their domestic capital markets liberalize their international capital markets, pumping money to offset the economic weakness. chinese assets are very exciting. tom: i have eight ways to go, and here is the citigroup money question. i eyeballed their currency to 5.1. that is a titanic shift. could we see that? steven: at this stage we would be reluctant to do that. i think that they would be reluctant to -- tom: they have a political mandate as well. steven: they will keep it steady because they want to be seen as a steady hand in international finance, but they will not do big appreciations. tom: these are huge effects with

japan and china and the rest. brendan: we call something that is not expressed in dollars or euros as a cross rate because we are not accustomed to thinking about that. when will we get to the point to instinctively say that i want to be looking at -- steven: right now, for now, jp why and why -- you look at this because you say honestly i do not know what europe is going to do, and i do not know what the dollar-yen is going to do. i want to x the dollar out of the equation. if something out of japan, korea, china, and i do not want the dollar to play a part there. tom: what is the price of abe nymex -- abnenomics. they think it kills hyundai and

the rest of their exporters. steven: i think the west is quite enthusiastic about it because japan is not huge -- is not the huge trading partner right now. if you are a high-end asian exporter, the yen is really important to your economy. tom: the yen-renminbi is just as curious. what will you tell people to buy or sell today? where is the romance in the business today? is it something in eastern europe? steven: i am looking at sterling because i like sterling. there is no real story. you look for the process where you think you know something. tom: i am asking -- where do you know something right now? steven: you look at the u.k. --

a strong economy. it is not the dollar, and people are concerned about the dollar. they say what is your second choice. political risk greatly mitigated. they have a referendum, and, but it looks like the major parties will be -- tom: but sterling-what? you're are not answering my question. steven: i would go the other way. euro-sterling. tom: fascinating. so mario draghi versus -- steven: there is every reason to emphasize -- to emphasize that the european -- tom: please come back. steven englander, with more than you wanted to know on foreign exchange and citigroup as well. coming up an important conversation and a lengthy conversation with the former

british petroleum ceo, john brown. we will talk to him about oil and gas. very interesting new ventures as well. john brown on the state of corporate america. it is "bloomberg surveillance." good morning. ♪

tom: ok, clinic time at "bloomberg surveillance." john browne will join us from british petroleum. it is always and forever british petroleum. let's go to a chart from 65 years ago. this is oil, adjusted for inflation, set in today's $2015, also adjusted with an

approximation of our rising income over 65 years. we are richer than we used to be. there is the great deflation. we are back to here, brendan, back to 1964. here is opec and the other key thing a lesson learned with the collapse of opec. brendan: the question we all have is, given this, what is the future of offshore? we are talking about ep -- about bp. tom: we will talk to john browne about this. this has to be opportunity to buy this stuff cheap. brendan: i love when you bring the price of oil back to prehistory -- 1950 -- because you see the effect of cartel pricing. this is not supply and demand. this is the cartel. this volume of money, that we just gave away.

tom: this is when my father bought the vw diesel that i could not fit in. brendan: i would say that it was here that i brought my vw diesel. tom: john tucker bought the hummer h one. there it is. that as an approximation of where we are on inflation and the rising wealth of the global economy. let us get to top headlines is monitored here is vonnie quinn. vonnie: germany and france are sending has a has a pessimistic outlooks on great. the chancellor says bristol has a lot to do. >> i will have some bilateral talks and have arty spoken last night with the french president and the greek prime minister. it was a very friendly

constructive exchange, but it is clear that further work on the three institutions is necessary. vonnie: germany and france agreed to stay in contact with greece. greece needs the bailout money to avoid a faulty the clinton foundation is releasing a list of its fees. the cleanse have been paid $30 million for speeches. hillary clinton stop giving paid speeches when she became a presidential candidate. one third of the speeches were paid for by colleges. the senate may take a final vote today on the fast-track trade bill. the measure would let president obama speed up measures of trade agreements. the senate passed the bill yesterday. democrats are saying it would hurt jobs and wages. a huge selloff is getting the attention of investors in hong kong. three companies lost $35 billion

in market value in just two days. regulators are being asked why they didn't step in. the stocks lost 500%. the traders on the chinese mainland can buy and sell shares through an exchange link. anaheim gets an underhand -- upperhand in the western conference finals. the ducks scored a 2-1 victory over the chicago blackhawks. the ducks now have a 2-1 lead in the best-of-seven series. tom: what is fascinating in the western series is that important for a global audience is that there is a huge mystery in hockey today. that is the new york rangers leading and six goals. i do not even know what the english football equivalent would be. would that be like manchester united let four goals? brendan: that would be the best goalie in the world leading in four or five goals. i have been learning at the foot of the master of hockey. by master, i don't mean you.

i mean scarlet fu. that is not supposed to happen. tom: she has a tattoo on her left arm as well. you think you know what you're talking about and it trips away. that is what we have going into memorial day weekend. it is a real question about the rangers. i know you don't give a damn but this is huge. for the many who has been e-mailing us, scarlet fu has been medicated. let me do a data check right now. let us look at oil. back above $60. no it's not. it is at a nice range where a lot of people think it ought to be. move on to our second board if you would. the fix showing the equity markets. with mr. englander's appearance we showed of skier's -- obscure stock rates. thousand fascinating

conversation with mr. englander. i currently tears away from the majors. that is where we are on a friday before an american three-day weekend. brendan: this is "bloomberg surveillance." iron brendan greeley and he is tom keene. we are talking about brent crude. it is down a third from stability of five years ago. you can run screaming to the doors or you can stay seated calmly. that is exactly what lord john browne has done. he is the former ceo of bp. he now serves as the executive chairman of l1 energy. it is a private equity firm founded by two russian billionaires and is banking on low oil prices by more assets. i'm fascinated by this. what makes you think that right now in oil given the volatility that you can find a greater fold? john: you can't. i think everyone is aware of what is going on. what you can do is invest in

assets and companies. they probably have done too much and leverage to much. more particularly, there are a lot of opportunities that they can develop themselves. brendan: when we talk about assets, are we looking offshore or overleveraged shale? what are you buying? lord john: we are building and bits. we started by buying a company in europe that has great positions in europe and north africa. we want to now go on shore and the united states and canada. we looked at overleveraged shale and companies that cannot do everything they want to do. there are plenty of other places to go as well. brendan: this is a question we have been asking for the last six months. what is going to happen to overleveraged show companies? out west, it is john browne writing over hill. lord john: it is not just me. there's plenty money going

around. we have capital that is permanent and not temporary and we have a different way of thinking about returns than a normal private equity firm. tom: what are big oil companies looking like in five or 10 years? one of the big challenges was the brutal competition with chevron and mobile. these are younger names from your past and my pass. what does big oil look like in five years? lord john: i think there will be less of it and fewer companies i believe, that really represent the key motor of the industry. the reason for that is costs. political clout comes with it. tom: this is all wrapped into romance. did you read the book? lord john: i did indeed. tom: i could see you reading that cover to cover. brendan: let us move this forward. i heard what i think is that water should comment --

watershed,. this is from the saudi oil minister. i'm going to play this for you. >> in 2050 or well after it we have embarked on a program to develop solar energy. why? when we look at, we had the sun every day. brendan: he's essentially sa ying the saudi arabian sun as well. you're buying of all these assets. what makes you confident that anything is going to drive the price of oil backup? lord john: two different points. i think oil will be part of the energy system for a long time. i think he is talking about 50 years time. i do agree with him that we have to go the on petroleum. it is something that i have spent my life thinking about how you get there slowly.

i think there is plenty of things to do. while the world really does need hydrocarbon energy come principally gas and oil. brendan: what is the timeline for needed to go beyond petroleum?? lord john: that is the question no one can answer at the moment. three things can happen. it requires the world and we need to recognize that something needs to be done to reduce the amount of carbon gains in the atmosphere. it is controversial. no one is ready to make the move first because someone will lose out. secondly, it requires technology. i think technologies are getting better, but they are not perfect. thirdly, it requires then people to accept the fact that they can't get the sort of energy they get to the driving will be more difficult. brendan: i think that is a huge culture change that you're talking about. i think we have to think about how much energy we use. coming up next, there are only

four openly out lgbt ceo's. why lord brown thinks that more inclusion will better for the corporate world. ♪

tom: good morning. "bloomberg surveillance." iron tom keene. brendan greeley is with us as

well. futures are flat. would you think people have gone out to the weekend already? not possible. brendan: janet yellen is taking a weekend trip. as what we are talking about. she will be last of the major central bank leaders to speak publicly today when she delivers a speech on the u.s. economic outlook and providence, rhode island. she will get more data on how the u.s. economy is purported best performing. erik schatzker will look at that on "market makers. the headline is one will be get inflation? when will that happen? erik: do you know what it is supposed to be? negative 0.2%. a lot of that has to do with oil. if you exclude food and energy we only have 1.7% inflation. tom keene, i have a quiz for you. tom: 00. uh oh erik: what do sweden share in

common? tom: great. erik: they have relatively strong growth. they have aggressively easy monetary policy. furthermore, with all that, things that the rest of the development world would love to have, they have no inflation. 0.8%. former chief international economist for the treasury department and had a foreign exchange strategy for europe has turned this missing inflation. he is going to be our guest on "market makers pickup where is ." tom knows this very well. the trying goal model incorporates inertia. and demands full inflation. as people gets more jobs, big demand more spending. if oil rising, which it is a

little bit. it does not explain 50% of the drop in world inflation. he goes on to postulate that it could be because of the leveraging technological process, globalization and excess capacity, or perhaps demographics. what do you think of that? tom: we are talking to john brown of british petroleum and it goes to the physics of the moment which is velocity. we talked about brutal moves. that is what everybody is trying to stop. all the central bankers want to control things. do have confidence that governor carney or janet yellen can control things? lord john: i think we have a good set of people who are going to try. my view is probably yes. i do think that as the oil market is experiencing a demand structure that we have seen in the past, it is different. technology is making a difference there. we are seeing capacity coming from different areas. we have literally supply and

demand. it is not just a supply problem. i think we need to think about that. tom: some of the delicacies lifted -- there. brendan: we have john browne and erik schatzker is coming up next with stephanie ruhle. they have the former chief strategy expert. this for the moment is still "bloomberg surveillance." good morning. ♪

tom: good morning. let us get right to top headlines. here's vonnie quinn. vonnie: six baltimore police officers indicted in the death of a suspect in a grand jury returned homicide and assault charges in the death of freddy gray. prosecutors say he was fatally injured while being arrested in april. his funeral last month was followed by writing. i do medications upgrade could ease air traffic delays. a delay between planes and control towers get the go-ahead from the faa. they are being asked to use the system and set a radius. it is expected to save airlines but time and monday. -- both time and money. lower prices are spent and help drive will -- drivers as we can.

aaa says that 37 million americans will drive for the holiday. that is more than a decade. those are your top headlines. tom: we are trying to bring you the bombshells that are out there. this is an economic bombshell. this is out from bloomberg in our european newsrooms. this is the finance minister of germany starting to talk about a double barrel companies -- currency system with greece. this is something that harvard talked about. brendan: the game is always -- the brinksmanship that we are seeing between germany and greece is how clear can germany make it that they will be just fine if greece were to leave the euro gekko this is from our. -- if greece were to leave the euro? this is from our berlin bureau.

they cited the example of montenegrin. they use the euro, but is not in the euro zone. they are basically saying that you can have the euro if you want, but you are not a part of our union. tom: it is like turkey to avoid black-market disparities. the bottom line is that within the tea leaves of greece-germany, we are bored by. this is a huge deal. a little tipping point on a friday. brendan: the question i've had on this debate and the question that i post a month ago is are you a bad cop? is there a good cop? i think this is absolutely what is going on. we have a quote from kierkegaard. germany is "ready to take this excellent ship very far." he is not an attack dog. tom: we'll get that on twitter in regards to kierkegaard. that is coming up on

surveillance. let us which is with john browne with us today. it is 120 years from late victorian england when imprisoned oscar wilde to this weekend when alabama considered gay marriage. it was only a few years ago when dublin decriminalized homosexuality. it has moved none more so than the corporate world. that is personified by tim cook of apple. the physicist john browne he a 41 years at british petroleum has provided steadfast leadership in our consideration of this debate. we are honored that lord brown joins us today. you were updating your glass closet which is a seismic look in this debate. what is it new as we grudge from gradually to suddenly index substance in the corporate world? lord john: i would score it five

point something out of 10. it is definitely half-full instead of half empty. all the moves that change the way we look at a minority is constant vigilance is needed. we see great things happening at some corporations. other corporations getting nowhere. we are seeing fantastic movements of gay marriage equality in the states in the united states and in europe. and yet for example, when i tried to distribute this book in italy, which is not a long way from anywhere, it is regarded simply as too controversial to be sold. tom: you lived it and everyone knew you were living it within a huge containment. could you have been the john browne of 30 years ago now? lord john: no. what i did was fit for purpose then. it was not right, but i had to do. i've recall discussions on succession for people to senior jobs. they would say that would be a bit risky.

he has gone through a divorce. things have changed so much. you can't change today to yesterday. brendan: it is so hard to figure out when something has actually changed. you can look at polling data, but it is anecdotal evidence that is so powerful. you have a beautiful story about you giving up of lecture and having people come up to you. lord john: i had a middle aged couple, to me. it took a book and gave me a book and said, we would like you to sign this to our son because we would like him to come out. that is the tables reversed. this is parents getting kids to come out. tom: one of the responses here is that one of the big advantages and huge job stability like a tim cook is easy to talk about. i'm worried about the guy at british petroleum who is

employee number 84,322. what is your view on their opportunities and their visibility in 2020? lord john: that's why i believe this book is still relevant. it is about setting tone and making sure that you have role models to look up to. up until recently, people can look around and say can i be ceo? there were no out gay ceos when i started writing this book. role models are important. corporations have to be -- really want to have inclusion. they need to protect people and make it safe to be themselves. brendan: one tim cook came out of the closet, how much did that change? i think there are still only for openly out ceos in publicly listed companies. what changed when tim cook came out? lord john: very important because he is lead in the world's largest corporation. it says that you can do something with that profile while being yourself. i think everyone study the

progress that he made to come out. it was not instant. but it changed people's views that you can, in fact, have a gay leader. and the successful gay leader. tom: stay with us please. let us continue on "bloomberg surveillance" this morning. we have our twitter question. vonnie: i think it is going to be a theme for the day. the u.s. dollar. we asked what is the future of the u.s. dollar? history says it will collapse based on credit of government being not good. we also have dollar futures rocksolid. all the world leaders have the piggy banks jammed dollars. tom: a wall street answer if i've seen one. vonnie: we will have a new international currency. that goes to brendan's prodding of very different people. brendan: i'm fascinated that the imf can make this decision and

it has tremendous consequences for global markets. can the imf the ahead of organizing the yuan? tom: we will have to see what the market does. do you see any ending to the dollar being -- oil being a dollar-based transaction? lord john: no. it's not going away. tom: will you let us know if you see something changed? vonnie: lord browne's currency is liquid gold. let us get to our agenda. i'm taking a look at cpi today. erik schatzker was talking about it earlier. it is what will really decide the numbers today. it is going to be an influx of goods that we have not had. that may affect things. janet yellen speaking as well lunchtime. brendan: i'm looking at this bombshell from the germans finance minister.

he views privately in front of people who reported it that it is possible that greece may have to take on a parallel currency. i see this as another step towards the brinksmanship that he has been pursuing. the idea that germany is completely comfortable with greece leaving the eurozone. tom: it is a real bombshell that has come out from bloomberg. when my looking at? memorial day. if you get a chance this weekend or in your lifetime, maybe head down to washington or arlington and see the sacrificed made on memorial day. this happens on monday. i still think it is too early in the month. i think they should do it may 30. that is what i would do. we say happy memorial day. drive careful as well. let us leave you with the data check. greece widens out. they are a little bit better after an hour. john browne, thank you so much for coming by today. 41 years?

lord john: 41 years. tom: 41 years at british petroleum. stay with us. "market makers" is next. we continue on radio. it morning. ♪

>> live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. stephanie: good morning. it is friday, may 22. so close to the holiday weekend. you are watching "market makers"

at our noontime -- new time. i'm stephanie ruhle. erik: janet yellen yellen making her remarks while we are minutes away from the latest read on inflation. stephanie: across wall street alarms are sounding over liquidity in the bond markets. we are going to discuss whether these concerns are actually warranted. erik schatzker, good morning. as a mentioned earlier, it is a loyal day weekend, which means that no matter what you packing a suitcase this weekend, it won't be ready for the weather because it is always too cold this weekend. traffic no matter what time you leave is always went to be horrible. instead of having a a lot of disappointment in the next two days, enjoy the next two hours. erik: i'm doing a staycation. i'm avoiding all that. stephanie: i'm not. i'm wearing shorts freezing on the beach. i'm going to time when i leave. everyone is going to be crying a