will hear from a manufacturing ceo. erik: fixing the olive garden with breadsticks. my conversation with the ceo, jeffrey smith. olivia: south carolina senator lindsey graham is about to become the seventh official republican candidate. he will make his announcement this hour. olivia: good morning and welcome to the bloomberg market day. i'm olivia sterns. erik: i'm erik schatzker. manufacturing and construction. numbers looking better than some of those we saw earlier today. the personal spending numbers that came in worse than estimates. gain.f a percent

manufacturing index coming in and 52.8 above the 52 that was estimated. anything above 50 dozen cigna -- does signal expansion. orders growing at the fastest pace in five months. we are seeing manufacturing start to emerge from its first-quarter slump. 49.5 or yet was estimated to be at 43. prices not above 50 but nonetheless, coming in higher than had been estimated. the mixed data we haven't seen recently. this number coming in -- we have been seeing recently. this number coming in. they are saving more of that money enough spending. erik: i was just thinking to myself as we look at the manufacturing number, we have seen strength in some of the

wholesale indicators. manufacturing, housing starts and weakness in the consumer and retail indicators. olivia: i heard something on bloomberg radio this morning, the high earners who are not yet rich, in particular, are not spending enough money. erik: a quick look at the markets to show any reaction and stocks. we do not see much. stocks are trading at the same levels. they are pretty much trading. they are increasing a few basis points. outia: jobs report coming on. we are seeing a reaction in europe to the greek debt negotiations which are ongoing. they do not appear to be going very well. you're seeing greek yields up i-24 basis points. -- up by 24 basic points. the italian yield up seven basis points. i would say that the spread between german and spanish debt

is where it has been over the past year. that contagion is pretty well contained. erik: let's show you what is making news this morning. americans made more money in april and they saved those gains rather than spending them. a new report says consumer purchases stalled while personal income grew more than expected. savings rate increased for almost 70% of the economy. for the economy to grow, spending has to pick up. olivia: a deal in the semiconductor industry. intel is buying altera in a deal valued at $16.7 billion. agreement togo brought,. trying to signage will be our guest. it not want to miss that interview.

the offer is 28% more than oh m's may 29 sharing price. a merger in the health-insurance industry might be in the works this morning. bloomberg news is reporting humana was approached by cigna. medicare advantage insurer and could be the leading company for medicare part d drug coverage. erik: the senate failed to extend programs for yesterday's deadline that means, for now the national security agency cannot collect phone records in bulk. a bill that would keep spy programs in place. going greenwald -- glenn greenwald gave us his take this morning. >> mass surveillance inherently is wrong. why should the government be in

the business of collecting data about what we as law-abiding citizens do and say and the people with whom we are speaking? it is corrosive to basic liberties. erik: senator rand paul's opposition notwithstanding, the senate is likely to approve a bill to extend spying programs. dems has to cost -- dennis acceptedalma mater has the former speaker of the house's resignation from its board of directors. week, he was indicted by federal authorities and is accused of lying to the fbi and making it illegal bank withdrawals to conceal past behavior. latest isamd the manufacturing report. let's bring in someone who runs a manufacturing business. drew greenblatt is president of

martin steele. olivia: some of his clients include caterpillar, pfizer and american airlines. we are joined by mr. gleam -- mr. greenblatt from his offices in baltimore. how does this iso number match up with what you are seeing as a producer? drew: this matches what we are seeing. we are growing our factory floor and bringing in seven times more power because we are bullish and optimistic about the future. what is happening right now is the american manufacturing renaissance is real. we are poised for great growth. things are coming together. i'm optimistic about the future. erik: what makes you so optimistic? drew: a lot of good things going in the right way for american manufacturing. energy prices. they have been going down for years. we have this wonderful

opportunity with fracking that is going to keep the prices down in america. that makes american manufacturer is or competitive against other countries. olivia: i did not mean to interrupt. drew: there are several things we are excited about. president obama is pursuing aggressive trade deals with the pacific nations and the atlantic nations. this is going to open up a lot of new markets for our exporting and manufacturing powerhouses. america needs consumers to sell to. we need new clients. by opening up these new markets, what is going to happen is we are going to have to hire more talent in america in our factories to sell to these wonderful new customers that we have not been able to approach yet. we have high taxes when we tried to sell overseas. olivia: a bunch of things we

want to talk to their. everything from the trade deal to u.s. gdp. since you did mention the trade deal, what you say to critics who say this is going to cost american manufacturers their jobs? drew: 95% of the world's consumers are overseas. what that means is, that is where the big markets are. it is not domestically. the future of american manufacturing is to sell to more people overseas. right now, we are inhibited. we have all kinds of obstacles to sell it into japan, peru and other countries. if we get the transpacific partnership done, all of a sudden we will be able to sell to these countries that never before. that means factories are going to have to ramp up production. we will have to hire more talent. we will increase the number of people in the middle class. these are great jobs. the average american manufacturer place $77,000 a year for employees.

these are the kind of jobs we need and this is going to happen . what we need is for washington to come together, president obama to lead on this and washington to sign off on these deals. erik: what percentage of your revenue is international? drew: 25%. what if i percent of our sales. we sell -- 25% of our sales. erik: you're not feeling the impact of the strong dollar? drew: it has been tough. the last couple of months. we lost a big job into southern europe. the client's perspective is we raise prices 25%. compared to our german competitor, we look very expensive. this is been rough on us the first couple of months of the year. erik: isn't that going to continue being the case? the ecb is engaged in quantitative easing, beginning to do with the united states

started doing in 2009. bank of japan is doing the same thing. then make a lot of steel in japan as well. it seems that at least from your perspective, you are in a steel manufacturing business, isn't that good to be challenging for years to come from a currency perspective? drew: you are correct. the currency is a headwind. it is not helpful to manufacturers. we make everything 100% in the usa. that is the reason why these trade deals need to happen. it will give us new markets to access. it will lower the barriers. it will make the obstacles lower so we will have more prospects. one of the things that will happen is we will have more intellectual property protection . that is our secret sauce in america. by having these trade deals, it makes foreign countries not able to pilfer intellectual property as easily. the currency is a headwind. it is not helpful to us. let's try to find other ways,

like trade deals, so that we can enter into new markets and grow our economy. olivia: i want to press the issue of the manufacturing jobs. a chart that shows that manufacturing jobs pt in the u.s. in the 1970's and has been to -- and has been declining. you see it slowly picking up. i recognize that the trade deal would be good for exporters, but what kind of jobs are you creating? we were showing video of robots producing steel. are you actually going to be generating working-class manufacturing job or are you generating jobs for managers and downstream opportunities? drew: there is no doubt that the jobs -- the complexion of the jobs is different. when i first bought marlon, we had eight employees that would hand and wire. now we have a series of employees were getting paid five times when i started the company

who are now running anti-machines -- fancy machines that are 20 times more productive than they ever were. there do more into dust they are doing more interesting things. -- they are doing more interesting things. we have gone 2300 days without a safety incident. it is because our employees are not doing scary things anymore. they're doing very healthy things outside the cages. the jobs are changing in manufacturing. they're not dirty. their brain jobs. -- they are brain jobs. when you have really productive employees, you can pay them better. erik: thank you for spending time with us. drew greenblatt. olivia: much more here, including an activist hedge fund that says more breadsticks is the way to save the olive garden.

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olivia: good morning and welcome back to the bloomberg market day. i'm olivia sterns. erik: i'm erik schatzker. julie hyman has a look at what stocks are moving. julie: some of them are moving on that big deal in the chip industry. we are seeing a lift in semiconductors. some of the best performers. xilinx was raised to a strong by over raymond james. raymond james says there will be significant customer angst from some who will now have to work with intel by virtue of being

altera client. xilinx is most likely to benefit. the semiconductor index is now trading at the highest we have of 2000 threeober at all of these deals have benefited the group. i wanted to look at another deal we have been looking at today. group agreed to be acquired by apollo management for $1.30 billion. platform specialty products will be buying the couple of units. those shares are higher than 2%. was -- that was julie hyman with the latest. olivia: there is a complication in an attempt to reach a deal with iran.

secretary john kerry broke his leg in a cycling accident over the weekend. .hat will limit his travel the u.s. and other world powers want to curb iran's nuclear program. in exchange they would agree to ease nuclear sanctions. senator lindsey graham will formally announce his launch -- his bid for president. will insist on the need to strong arm iran over its nuclear program. we will have live coverage of his announcement, coming up on bloomberg tv. hillary clinton is still the overwhelming favorite among iowa democrats but bernie sanders has been rising quickly in the polls. a new des moines register poll shows that clinton is the first choice of 57% of likely democratic caucus attendees. sanders is now at 60%, three

times where -- 16%, that's three times where he was. vice president joe biden has not said he was running. he has 8%. erik: olive garden unveiled a new logo and menu today. it's new ownership, the parent company of olive garden reports to have been bought by starboard value. the hedge fund that's what about all directors last october. stephanie ruhle and i start -- spoke with jeff smith and dave george about the new era and the notion that store board star board runs the show. >> we did not come into control. the board is an independent board. we think the board is more qualified. nominees but they are independent thinking and they are not going to do what i say. they're going to do what we think is best.

stephanie: you took control of the situation. jeff: we made a change to make sure the board was doing their job to better represent the interest of the shareholders. to make sure they are doing the job for the company. part of that is listening to management and allowing the best ideas for management to come through with the guidance of the board to make sure we coming up with the best ideas from everyone to make sure we are doing it great job. erik: what has been easier than you thought and harder than you thought? jeff: on the upside, one of the things that is wonderful is when we got involved with the company we realize quickly every board member worked inside of a restaurant. every single board member took a night and worked inside a restaurant. stephanie: how undercover boss of you. jeff: everyone knew. operating within the restaurant. , was serving some food

greeting guests. he felt as board members, how will we make good decisions with really knowing what is happening inside the restaurant? one of the great things we were -- we learned was, the employees that are inside the restaurants are working really hard. it is about making sure we are giving them the tools so that they can do the best job succeeding for us. what we wanted to do, the canaurants are great, how we make sure that we are providing the best opportunity for success inside the company? which means coming up with better items that are focused on our core guests. making sure -- erik: what is tough? jeff: it is a large company and you have to make some decisions. the people part is always the most time-consuming part. it is also the most rewarding. one of the things -- what is

darden, in the situation, it is worked really well. the marriage between the board and management team has been working really well. it is a good team environment. erik: that was jeff smith come a ceo of star board value. the new olive garden this morning. olivia: doubling down on breadsticks. erik: i ate the chicken farm sandwich. -- chicken parham sandwich. olivia: the best returns in the art world could be in soviet era sculptures and paintings. ♪

olivia: 80 years ago joseph stalin created socialist realism by decree.

he wanted to glorify soviet communism through art. russian capitalists these days cannot get enough of it. andre filatov says these works offer bigger returns been european masters. care is ryan chilcote. -- here is ryan chilcote. ryan: charles phyllis -- socialist realist art was created to glorify communism. rush's cannot get enough of it. russia's rish is -- translator: it is the most profitable investment you can imagine. a french impressionist can cost up to $300 million. an average masterpiece, over $100 million. a soviet painting can cost $1 million. the price can go up tenfold. ryan: depictions of world war ii

to the sochi gallery in london this year. in the future, the plan is to open his own museum. up in the: i grew soviet union. i saw how people meet art and i want to show the work of soviet sculptors and artist to the world. ryan: many collectors sean soviet art -- shun soviet art. rise. nostalgia is on the translator: some by what they like from childhood. some buy because they want to show their kids the time they grew up in. ryan: the former german chancellor bought these paintings in the 90's -- in the 1990's. back.v just bought them

i suppose there is an enormous amount of irony in russian oligarchs buying up soviet art as an investment. erik: big market for anything. it does not appeal as much to me as it does to the stuff that preceded it, russian modernism. for those of you in new york, there is an amazing exhibit at the gallery on fifth -- the know your gallery on fifth avenue. olivia: thank you so much. erik: you're welcome. i will see you tomorrow. olivia: a hong kong-based investment bank getting a boost. ♪

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fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. olivia: welcome back to the bloomberg market day. let's get straight to this morning's top headlines.

manufacturing in the u.s. grew more than forecast last month. the factory index rose to a three-month high. those production gains will probably help the economy bounceback after shrinking last quarter. progress may slow down because the stronger dollar could be hurting exports. gambit pension plan investment u.s. is in talks to buy private equity lending business. to shedcelerating plans most of its financing operations. a deal that would value ge post unit equity at more than $4 billion. operating beste it is a -- it is acquiring the mitch green unit from pioneer natural resources and reliance industries. the price tag, $2.1 billion. the deal calls for pioneer to 20 the pipeline system for

years. warren buffett us richer hathaway has replaced the ceo of its air travel unit. -- berkshire hathaway has replaced the ceo of its air travel unit. the company has been locked in a fight with pilots overcompensation. jettional ownership -- net tols fractional ownership wealthy clients. i want to start by heading over to europe where hans nichols has lucked out with the market wrap assignment. hans: did is my gain as well is yours. we see mostly a mixed picture in europe. the dax is down a little bit. we saw a few big movers. we have henkel trading up. athens is closed today so i want to make that.

, we see muted numbers. not a whole lot of movement. i want to bring you to the euro. let's take a look at what is happening in the currency market . we saw a sharp drop-off. the swiss franc. we see a little bit of movement but let's take a look at what happened to the euro. throughout the morning it was trending upward and there was some negative news. we are all the way up. we came back up again. quite a bit of fluctuation. last time i checked, this was not there. let's see what's happening with the pound. it looks like the pound has not recovered like the euro. you and i know what that means. when you are an american in london, that means you can go shopping. my perfect transition to julie. julie can tell us what oil is doing.

julie: if you take a look at what is going on broadly in the u.s. equity market today, like last week we are not seeing huge movement. we have a mixed picture across the board. it seems as though discussion has come back around to valuations. i know olivia has been loving the story about peter lynch on the bloomberg terminal as it talks about the so-called peg ratio of the s&p 500. measure of valuation price-to-earnings but tries to factor in growth. on my terminal we have the peg ratio of the s&p 500. this goes all the way back to 1995 and we have seen it climb. this is a ratio that was come to buy bloomberg data. in some camps there is a lot of concern about the valuation we are seeing on the s&p 500 now.

concerned about the bull market being too long in the tooth about valuations getting extended. despite all this concern, he keeps going. -- it keeps going. not sure if there will be a catalyst to stop it. if you look at oil prices, we are seeing a pullback in oil. it is down about a third of 1%. 6/10 of 1%. and it the opec meeting looks like the prospects are not good for any kind of significant change" is coming from -- any in quotast change coming from opec. we have the dollar index up about 6/10 of 1%. up as much as oil is down. we did get relatively mixed economic data this morning but in particular we had that manufacturing number from ism.

you can see the dollar going higher when we got that data. the prospects of the dollar look stronger when economic data looks better. olivia: i love that lynch story. i think it is significant. it does suggest that perhaps valuations are a bit long in the two. ooth. the shanghai composite climbing the most since january thanks to manufacturing data. a third month of expansion. the benchmark has gained 49% just this year. one big story, shares of hong kong-based investment bank reorient group soaring more than -- david engels filed this report. reporter: back by none other

than jack ma will take a benchmarking entry international services in hong kong. it is about a $350 million investment. 56% stake. reorient is a group of about 70 employees reported about $100 million in income last year. the fund is seeking exemption from a rule requiring it to make a mandatory buyout offer. olivia: david engels reporting from hong kong. still ahead, yet another m&a monday. is go.ise buying eac -- eagle. details, next. ♪

olivia: welcome back. here are some top stories crossing the bloomberg terminal. more finger-pointing in the grease talks -- in the greek talks. article in the french newspaper le monde, alexis tsipras says the problem is not his government's fault. under him an official said it is not their fault either an recently do -- a german officials as it is not their fault either. this month, greece has to pay

the imf a total of $1.8 billion. the country is rapidly running out of cash. a solar plane trying to fly the uelld without a drop of f is making an unplanned stop due to bad weather. the pilots left china for what was to be the longest leg of the journey, a five day, 5000 mile flight to hawaii. the flight began in march and is the seventh of 12 scheduled flights. microsoft will come out next month with the latest version of the windows operating system. windows 10 will be released in time for the back-to-school personal computer season. it will be available for pcs and tablets as an upgrade for people using windows 7 and 8.1. consolidation this morning. intel will buy altera for nearly $17 billion. the second big chipmaker deal in

two weeks. we have check -- we have jeff mccracken with us. more consolidation. is this from a position of strength or defense? is intel trying to compete with apple and samsung or is this a constructive both on acquisition? intel has a dominant position in the semi conductor chip space. this is looking down the road. the pc business has been slumming since 2011. sliding year after year. intel dominates that. this allows them to buy a company that is more into mobile centers, the centers providing information to tablets or smart phones. they're trying to get out where the industry is going in five or 10 years. they are still in a position of strength. olivia: what about the price? share which-- $54 a is what they offered in april and they got turned down. jeff: when the deal fell apart,

that was the price that intel offered. after the story came out, the altera shelled hoarders -- shareholders said, $54 is a good price. it is going to be months, probably years until you get to that. the shareholder pressure on altera got them back to table after the deal fell apart back in april. olivia: i want to bring in cory johnson who is joining me now from san francisco. what is your take on the deal? -- the think intel markets they will be addressing our markets were intel has not always been strong will give them more to sell. intel has had a presence in the data center. in telecom equipment, they've been pretty weak. in mobile, to the degree that altera is there, that is beneficial to them as well. i think it is interesting from a

technological stat. these are dumber chips than intel is accustomed to making further down the chain. this puts them in different businesses they have not been in before. they have the high-margin, high-end chipset of gone into pcs and data centers. not so much the chips designed for individual tasks such as automotive, military and so on. olivia: body think intel shares are trading down today? cory: they are spending boatloads of money. mergers we arehe seeing are accretive to earnings. from a financial perspective, they're buying revenues and buying earnings growth because it is harder to come by in the economy now. theiries try to make

earnings-per-share go up by buying back shares or transmit their business get bigger by buying businesses because organic roof is hard to get to -- organic growth is hard to get to. olivia: i will eat it with you, cory. i will leave it with you, cory. we will hear from the ceo of intel just a week after radcom and of our go merge. pipeline has agreed to buy pioneer resources for $2.2 billion. enterprise says the transaction is expected to close in the third quarter. jeff mccracken, still on set with me now to discuss this. i want to bring in alix steel who is joining us now. expert.the oil and gas we have to bring you in on this.

why is the deal makes sense? jeff: pioneer said they had talked about selling this asset and trying to get whatever money they could for it. they got about 2.1 billion. they're going to use that to balance -- both of the balance sheet. olivia: we dragged alix steel out here who is prepping for her show because she know everything about oil and gas and so excited to see this deal come across this morning. pioneer gets money from this. through that, they are able to do more stuff. they said they are going to be increasing -- can you hear me now? shale is back. that was my take away. pioneer has said it will bring , two horizontal rigs per month.

increasing cap x by about $350 million. this is the trend. pioneer had to sell their infrastructure assets. shale had to bureau $60 a barrel. we are getting both of these now which means show producers are able to continue their production. next year we will see 36 rigs for pioneer. that is what it was before oil prices crashed which means the growth rate of production is 15% from 2016 to 2018. that means the old price did not destroy shale. worth all the microphone cup locations. -- complications. alix: massive amount of they have to spend across the board. the decline rates are so steep. there to keep pumping money into it. this is a way that they get money. jeff: the falling of oil prices

over the last six or seven months will lead to more deals. we have a $50 billion deal a couple months ago when bg was bought by royal dutch sale -- royal dutch shell. we are at 50 something dollars a barrel. olivia: are we going to see megamergers? it is not 1998 again. we will not get a repeat of exxon mobil. jeff: i think you see more of the sub $10 million deals -- sub $10 billion deals. you will see more of the couple billion dollar deals. alix: what we see is specific to national gas -- natural gas. the issue is, you have big guys like exxon wanting to buy something cheaply but the small guys do not want to sell now that we are at $60 oil. these kinds of access -- these kinds of assets are more

strategic. pioneer going to be putting in -- in 20 years they will be using the pipeline system. it is not necessarily a full out sale. a really strategic decision to help them export condensates. olivia: thank you so much, alix steel. back.shale is olivia: jeff mccracken, thank you very much. want to be careful about throwing out your old computers, they could be worth hundreds of thousands. details, next. ♪

olivia: welcome back. today is the first day of hurricane season. there will be fewer storms the normal this year.

the forecast calls for zero to two major hurricanes which has big ramifications for people in the disaster business. david gora is here now to explain. make: temperatures will fewer storms this year. the forecast is an in perfect science. below normal seasons can still have disastrous storms. the best example of that was in 1992. that is when a category five storm, hurricane andrew came ashore and caused more than $27 billion worth of damage. investors are paying closer attention to this because of the fact that there is more interest in what are called catastrophe bonds. these are high-yield instruments. you put money up. if there is no hurricane, you get a pretty good return. is a storm, you could

lose everything. investors have started weighing these. they had grown double digit every year annually. insurers are issuing them. hedge funds and pension funds are becoming popular. there is a lot of risk associated with these. three business school professors have released a new book and they are saying this is analogous to the credit crisis of a couple years back. investors are not aware of what they're getting into. olivia: i would say never trust the weather. how is this impacting the reinsurance market? david: there have been predictions that reinsurers will get into it. we are seeing cost getting pushed down for reassurance. warren buffett has been one of the most vocal. he says prices have gotten too low. he is sitting on the sidelines. olivia: potentially a lot more

money flowing into the industry. david, thank you so much. pimm fox joining the onset with much more. what do you know about disaster bonds? pimm: a slight disaster for a woman who recycled and apple one computer. this is a story from northern california. it turns out the woman was cleaning out her attic. she dropped off a bunch of electronic supplies at a recycling facility. this happened in late april. turns out that one of the items that was found was an apple one computer. there are only about 200 of these ever made by steve jobs and steve wozniak. this goes back to 1976. the owner of this recycling facility sold this computer to a

collector, price tag i believe was $200,000. he is currently searching for the woman who dropped this off because he wants to share the proceeds. to put this into perspective, this was sold for $200,000. if you go back to this past october, there was an auction at which an apple one was sold to the henry ford museum, price tag was more than $900,000. it is not known whether this is in working condition or whether it has the monitor but that original was assembled by steve jobs and steve wozniak in steve jobs' fateful garage. he sold his van in order to make this and wozniak sold a calculator in order to make this apple one computer. olivia: ira member you had a guest on for the auction house -- i remembered you had a guest on from the auction house.

pimm: this is a form of collecting that is getting more and more expensive. the artifacts that will go into museums to show the technology revolution in a way that you cannot without the actual piece of material. you can show pictures but when you see a keyboard, an actual computer encased in would, it does bring home the change that has occurred in the industry from 1976 to 2015. it depends on the condition of the computer. a previous one muscle in december for about $360,000. ina previous one was sold 3006ber for about 30's -- -- $306,000. olivia: it scares me a little because it makes me think you have to be careful and not throw away those power cords. is it just silicon valley guys? pimm: private collectors but also museums.

people that want to add to their museums. the henry ford museum collects these items that they believe are touchstones of entrepreneurship and engineering excellence. olivia: thank you so much. looking forward to seeing you in the next half hour. much more, including a big week with wall street. central banks convening all over the world and yet another great payment deadline -- greek payment deadline. we will discuss this with stephen wieting. ♪

olivia: pimm: good morning. pimm:welcome to bloomberg markets.

what should investors be focused on it? in rare earthom minerals is done. lindsey graham is about to come the seventh official republican candidate. he will make an announcement later this hour. olivia: good morning. pimm: we are 90 minutes into the trading day here in new york and let's look at the markets and see how they are trading right now. let's look at stocks, a little bit of a decline. no the dow has moved higher. is over 2100. the nasdaq has gained 1.3