gold is below $1100. commodities cannot find a global bid. coke and pepsi -- actually neither as coca-cola deals with a kale punch watermelon. it is a watermelon-ginger world. please drink something. this is "bloomberg surveillance ," from new york. i'm tom keene. joining me vonnie quinn and brendan greeley. it is like a normal day greece-three. brendan: do you have a kale blender? tom: we tried this juice thing a whole three years ago. brendan: it did not work. tom: i made it the lunch. vonnie: you secretly were -- tom: vonnie will have coke

earnings in the 7:00 hour. here are top headlines. vonnie: investors want to know if the hits can keep on coming for apple. they appear skeptical. shares have fallen $.50 in premarket trading. apple reported iphone sales up 35% but still missed estimates. a sales forecast came up short. bloomberg estimates sale of the new apple watch were less than what analysts expected. tim cook says the company is pleased. tim cook: sales of the watch exceeded expectations and they did so despite supplies still trailing demand at the end of the quarter. to give you additional insight, through the end of the quarter the apple watch fell -- was higher than the comparable launch periods of the iphone or the original ipad. vonnie: cook says one bullish side is that 73% of old iphone users have not upgraded to the

device. in greece parliament will vote on the second package of austerity measures demanded by creditors. greece cannot get another bailout unless legislation is approved. alexis tsipras will have to ask for support from opposition lawmakers. his own party has rebelled against tax hikes and pension cuts. at&t's proposed takeover of directv has scaled an important hurdle. tom peters has -- the fcc could vote on the at&t deal this week. it was all in a day's campaigning for donald trump. in south carolina he blasted senator lindsey graham, read out his phone number, and urged people to call him. he took another shot at senator john mccain. donald trump: he is totally

about open borders and all of this stuff. he called these 15,000 unbelievable people. unbelievable. i know crazies. these were unbelievable american people, and john mccain -- who are supported for president -- and he lost. he can lose. i do not hold that against him. vonnie: a pair of lame ducks got together last night on "the daily show" host jon stewart and president obama. he said he would ask you -- he would issue an executive order to keep viewers from leaving the show. >> you are on your way out. president obama: i cannot believe you are leaving before me. i am issuing a new executive order, that john stewart cannot leave the show. i am sure the republicans are

enjoying dominance of -- jon stewart: anything that makes them look less crazy. vonnie: it was the president's seventh appearance on comedy central. can you guys believe he has been on for 15 years? tom: everybody worldwide needs to read tim o'brien's effort yesterday. he is the donald trump expert. brendan: it is a thing of beauty, what he wrote -- how difficult it is to assess donald trump's wealth. he was sued for libel by donald trump because he failed to properly -- donald trump, as he was writing about him, in the same conversation he would say i am worth $6 billion, $2 billion, $7 billion. tom: an important read for those of us trying to get up to speed on the path to president, maybe the future for mr. trump.

equities, bonds, currencies commodities -- negative earnings. euro advances -- on to the next screen, if you would. the vix, 12.22. the ruble weakening on weaker commodities. oil -- rarely do this on the terminal -- two series on top of each other with those -- with two different axes. brendan: why are you allowed to break the rules? tom: this is gold rolling over, and here is the dollar strengthening. which is the horse and which is the cart? brendan: are these classical dynamics? are these to be expected? tom: gold leads the way on the dollar. brendan: we keep throwing gold

in as a commodity. is it a commodity or a currency? tom: that is dead on. that is the major debate that we will be talking about for months. gold is -- goals -- is it a store of value, an inflation hedge, or is it something that you do not want to spend money on? apple -- let me get your attention. 73% of apple iphone users have not upgraded. they have not upgraded their old iphones as apple tanks over what is next. for those looking to the december quarter and beyond to the iphone 6 plus. from bloomberg intelligence, our guest knows visible cash increased over the last 90 days 178 million per day. there is no other company we can say that about.

their cash generation, you and i have never studied. >> they are in an enviable position right now. there is conflict trying to bring that cash on shore and to try to do something with it. it is a very strong position, and a good one to be in. tom: within that in the pullback, the chart is clear. it is back to a standard deviation. bring up the chart of apple. it has come back this morning right on that. i know you don't do buy or sell. anand: the question is, is this china-macro driven weakness, or is it something -- is it temporary or is it structural? we started to season movement on the metrics that tim cook goes to on the call. we are seeing more android share gains.

let's face it, the iphone franchise will never be a shared leader, right? it will be very big it will be very profitable. it will grow, but it has never been about i want to have the most amount of share. in the last two quarters, we are starting to hear more about that. number two it is all about china, and the quarter on quarter iphone shrink was something concerning. they did not have a great -- they did have a great quarter last quarter, so it is coming off a great number. that is concerning. it is all about china, all about iphone, and the next leaf is not going to be that revolutionary -- the next release is not going to be that revolutionary. brendan: i find it interesting that you say it is all about china, it is all about the iphone. let me read you something that

the chief financial officer from apple said during the conference call. "we feel very good about the start, and we feel particularly happy about the customer response, the feedback we are getting." i read that we are getting feedback that it is not good and we are going to fix it. anand: one of the things that we continue to rely on is the numbers. if you look at the hundred 75 million increase in the -- at the 875 million increase in the category that the iphone watches lumped in, and if you believe what apple says i watch growth or apple watch growth -- it is slightly shy of 2 million units. that is way below what the street was expecting. so, sure, on a gross basis compared to the iphone and the tablet franchises, it is growth

but is it sustainable? is this creating a large franchise that other things can be added onto? tom: let's go 10 years -- apple becomes utility like which i cannot believe i am saying. they still generate a ginormous amount of cash. they have a responsibility to carl icahn to redeploy at $200 billion? anand: they may not necessarily have a responsibility, but carl icahn and others are going to force that in. that is what we have been seeing all across corporate america right now. cash has to be deployed, whether it is buybacks m&a, more debt. tom: debt is 5.8%. their cost per debt is 1.8%. brendan: i want to take what our guests are saying and put it into context. apple is taking a hit in europe,

but, julian isn't this an earnings report that any other company would be thrilled with? julian: it is but what we have seen this particular quarter more than most is if you disappoint in the slightest on revenue expectations, you are going to be -- tom: is that what you are seeing in technology echo? anand: there are very few lustrous spots in the technology food chain, and one of those is the cloud franchise. so google is strong, google data center is trending strong. tom: does apple do the cloud? i am paying 19 bucks a month for some cloud. anand: apple is one of the largest cloud vendors. the icloud franchise, the itunes franchise -- tom: can you fix my apple id?

i have, like, three. can you fix that? if i visit you on the 12th floor, can you fix my apple id? do you have this problem? brendan: i have the problem where i think apple is a hardware company and are not that good at software. that is a subject for another day. it is time for our twitter question of the day. is apple out of ideas? tom: that is un-american. brendan: tweet us @bsurveillance . ♪

tom: good morning, everyone. "bloomberg surveillance."

we are greece-free today. almost greece-free. here is vonnie quinn. vonnie: workers at new york city's airports are going ahead with the strikes tonight. they will walk off their jobs at jfk and laguardia. the union representing them say -- says their workers want their pay raise to $15 an hour. transport officials are taking steps to prevent travel delays. five people are being charged in connection with a damaging cyber attack against j.p. morgan last year. suspects were arrested in florida. investigators say the hackers operated for two months without being detected. two software developers proved they can remotely seize control off and moving car. the so-called white hack hackers were able to disable the

accelerator and breaks and tune the radio even though they were 10 miles away. a bill introduced in congress aims to keep internet connected cars from getting hacked. that is exactly what we need, a bill to stop this. tom: this is a big deal. michael riley will join us in the next hour. why is that important? brendan: the hackers are getting more sophisticated. with a car, connected to the internet, the temptation is to do everything. it has to be autonomous. the problem with that, when they are trying to protect themselves from hackers, the good guys talk about a sneaker gap, keeping your hardware away from the internet. cars do not have that. tom: coca-cola. what do we have? brendan: coca-cola reports results in over an hour here in -- over an hour. in the future everyone will

drink tea or water. can shape, we do not know -- ken shea, what do they drink in china? ken: mostly tea. this is going to be accorded that in the company's own admission, it is a transitional year. it is tough to be multinational right now. it is going to be reflected in today's numbers. brendan: you are talking about this like there is no secular change going on in the market. they have mistaken monster beverages. kerry -- keuirig as well. how are they using these acquisitions? ken: unlike pepsico, which are investigating -- which are investing in new products while

it is great to participate in another company's equity, you are not going to get the list on sales from those investments -- you are not going to get a lift on sales from those investments. what is coke' plans to generate sales on energy? vonnie: is it all about marketing? we have seen the secular change over the last 10 years. it is known for a long time that tastes are changing. why is coke making such a big deal of it now? ken: the u.s. is about a 37 billion dollar market for carbonated beverages, so the big market is still profitable, but the strategy for coca-cola and pepsico is to build around it. rather than alienate customers that like carbonated soft drinks just add to the product mix. crick say coke is moving more slowly than -- critics say coke

is moving more slowly than pepsico. maybe address some of the benefits from the products eroding from its sales. consumers are going for fresh, natural, vitamin-enriched water. that is at odds with a carbonated soft drink that is sold on a pallet. tom: all the product is great chitchat. what we have here is two ceo's at coke and pepsi who like to smile a lot, use big words, get in touch with their inner feelings, and talk about consultants. that tells me they are sweating bullets about the financials. how much is coke management sweating about financial trends over the next 12 months? ken: the pressure is on more now than it has been in a wild. the balance sheet is more leveraged. the balance sheet has been edging up in terms of debt and credit fix -- in credit metrics.

tom: they are doing and ibm because they do not have an answer to what to do because vo nnie wants to drink kale juice. brendan: and there is a downgrade, too. ken: they are still at an a or so rating. tom: thank you so much. you wonder if they will be like mcdonald's six or eight or 12 months from now. we will have coke earnings in in the next hour. robert nardelli will join us in the next hour as well. a lot to talk about with him particularly the industrialization of general electric. he may know a little bit about that. we will do that with bob nardelli in the 7:00 hour. with gold under $1100 an ounce

1094. ♪

tom: "bloomberg surveillance." i could say this is the worst use of excel better. brendan: lisa pollock wrote about spreadsheet in.

this is the ugly truth about spreadsheets. how good you are at them, how likely you are to make serious mistakes is a function of the culture and practice in which you learned to use them. in absence of formal trading at a university or later, this seems unlikely to change." julian: you have to apply yourself. it is a function of practice makes perfect, or at least less imperfect. tom: brendan, you have nailed it with this. we see this every day at bloomberg. those who can do spreadsheets and those who cannot look in their coffee cup and go, ok. brendan: the dividing line is if you can do pit -- if you can do pivot tables are not. tom: courtney donohoe's killer. julian: i prefer to defer that

to others. tom: this says something about the technology skills required on the new wall street. vonnie: where is she when you need her? she can speak spreadsheet. brendan: it is something that we all deal with. moving on how a bank in mclean virginia, has become the epicenter of campaign finance. we will talk about spreadsheets during the break. good morning. ♪

tom: we welcome all of you worldwide and nationwide particularly those in new jersey watching on trains and listening to "bloomberg surveillance."

you cannot get to new york this morning. the trains are shut down. it is said to be a new york power problem. later today, donald trump will blame chris christie and give out his cell phone number. i would not put it past him. brendan: stay home in new jersey and pretend to work. tom: we need to look at other things like apple. here are top headlines with vonnie quinn. vonnie: apple just posted its best third-quarter profit ever, and investors are pounding the stock this morning. shares are taking a dive premarket by as much as 6%. the sales forecast missed estimates. so did iphone sales. they rose 35%. tim cook defended the company's performance. tim cook: the 35% growth with iphone is almost three times the market. if you look at it at a narrow the -- at a narrower regional

level. four times market in japan growth, five times market. we doubled in korea versus a market that was shrinking. vonnie: bloomberg estimates apple released -- sold close to 2 million of them, apple watches. the head of the firm's commodities research says gold will be over $1000 an ounce falling to its lowest level in five years. the positive outlook on the dollar means there will be less demand for gold. john kasich has outlined a plan for economic growth. the ohio governor has become the 16th republican to formally announce he is running for president. he also wants to return u.s. corporate profits from overseas.

he says that would be the biggest stimulus program we have. shares of yahoo! are falling in premarket trading. the company forecast sales that missed estimates. yahoo!'s ceo, marissa mayer's, is trying to turn the company around with social features and -- and video. microsoft wrote down one and $7 million from the profits of the new kia unit. -- of the new kia -- of the nok ia unit. and 007 is back. daniel craig returns for "spectre," the 24th in the james bond series. it will feature some spectacular chase scenes.

it comes out in the u.s. november 6. brendan: vonnie and i are going to high-five. the you get that? we are excited. vonnie: i cannot wait for the first 20 minutes p review know it is going to be -- brendan: the three daniel craig movies actually hold up. i believe in these films. vonnie: he is very athletic. [brendan laughs] brendan: we have got to move on. tom: if i said that, it would be an hr violation. brendan: the surest way to avoid nhr violation is not to utter the phrase "hr violation." cambridge bank has 40 employees and more money on its books for

presidential campaigns than any other in the country. bill, how did this happen? bill: the bank was started in 2007 and was supposed to be a traditional community bank model. it has become a branch bank. it was started by a former republican senator, peter fitzgerald, who was pretty good friends with john mccain. in 2008 john mccain was banking with walkover you. what kobe a was having problems in this -- wachovia was having problems in 2008. the bank said they wanted to transfer the accounts over. they did. the bank doubled its deposits in one month in 2008. since then it has started a tradition. at this point, 99% of the bank's liabilities are in deposits. some of the biggest presidential

campaigns, including jeb bush his super pac and your favorite donald trump. tom: hillary clinton does not have her money with them? phil: it is all gop. brendan: just plain vanilla deposits banking good how are the services it offers different? if it specializes in managing campaign money, what does it do differently? phil: i have talked to a ton of compliance people, treasurers. it is those relationships that make this bank what it is now. think about campaigns. they are immediate startups with millions of dollars within a couple weeks but nothing before that. a bank would traditionally want credit checks before handing out three dozen credit cards to campaign staffers throughout the country. this bank ok's them completely. another key component is its

willingness to keep its wire open as long as the fed wire is open to a lot of banks close around 2:30 or 3:00. in a single afternoon, if you need to transfer millions of dollars, that is two hours that can make all the difference in the world. tom: they do not give out toasters. i get it. is any of this illegal? is phil mattingly saying these guys are criminals? phil: not at all. it is just the model. this is not a lucrative model. the bank itself is extraordinarily deposit heavy, but they have keep the majority of those deposits, the cash on hand, because of how quickly the campaigns move money in and out. they are not making a ton of money off this. they have a conservative lending portfolio. they have an amazing texas rating. they do not have to do with a

ton of shareholders banging down the doors asking for more loans and for more risk to be taken. they are doing this in a way that does not make a ton of money to develop their business. brendan: this is what jumped out in the piece that you wrote. the bank puts most of the money from campaigns into excess reserves at the fed. that earns 25 basis points and it may not be around forever. don't they have to think about a new model in the future? phil: i was talking to peter fitzgerald, and he pointed this out in the last real for annual letters. the low interest rate environment is not good if you are deposit heavy and are keeping all your money in short-term accounts, so they are getting 25 basis points. that is before the fdic fee and the occ fee. the thought process at the bank amongst top officials is, when interest rates start to rise

you can invest that money in treasuries. say you get 5% on your treasury, 2% or 3% on the interest you are paying back, then it becomes a valuable business. that is not part of their model. it is the tradition of the fitzgerald family. brendan: what are the politics of the bank you choose campaign? where is hillary and why? phil: she is part of one of the best-known union banks that exist. martin o'malley uses the bank itself. one of the interesting things on this that i figured out is it really is all about relationships between the bank and the compliance people. the campaigns lock in these compliance people to handle the is an teen mays that is -- the byzantine maze.

that has created this massive republican pipeline between all of these big campaigns, all these big congressional campaigns and the small blank -- and the small bank in mclean virginia. tom: -- brendan: phil mattingly is excited about the new james bond movie, but not as excited as vonnie quinn. coming up simple economics of bull markets. that is the subject of today's single best chart. ♪

tom: good morning everyone. we want to keep you up-to-date with what is going on on wall street. brian white is apple optimistic saying stay the course with apple. china is ablaze. he loves the growth. we just heard that that is the story. brendan: goes back to what we heard from julian emanuel, that a lot other companies would be completely thrilled with this earnings report. tom: cantor fitzgerald reaffirms on apple. brendan: it is like the oldest child you would expect too much from. stock indexes are very simple. they price for supply -- they price where supply meets demand.

it is that easy, and that is the subject of today's single best chart. they have a demand-supply framework for equities. the trick is figuring out what supply is and what demand is. demand is inflows in mutual funds and etf's supply is net equity issue. money going into equities meets equities looking for money. in the u.s., the story is by fax, -- is buybacks, less supply. tom: what is so cool about that chart, bring the chart up again if you would. the smooth curve of those buybacks, julian emanuel of ubs you and i know if you take that long that will screen persistent trend. the number one thing is the inner shell force -- is the in ertial force of the buyback.

julian: if you look at the markets and the angst we are suffering as the market goes sideways, the cash america is throwing off for buybacks is getting through some of the concerns like china, like greece. brendan: what is interesting about this report from deutsche bank is that they have taken this approach and applied it to other indices. they have looks to europe as well, and the story there is different in that demand is going up. it is a different dynamic producing the same result. ken:julian: and our work has shown that the inflows in europe have expanded from outflows into u.s. equities. so the buybacks are offsetting all that, and you keep the markets moving. tom: very good. it gets granular. speaking of granular, we look at the photos today. vonnie: number three top 40, --

number three top photo american pharoah is not done racing yet. keep your eye out for american pharoah in the fall. number two top photo, in honor of the 30th anniversary of the two-time academy award-winning film "hoosiers," the indianapolis pacers will wear hickory-inspired uniforms. the team plans to where the jerseys throughout the next few seasons. brendan: for those of you who do not know in the control room because you were -- because you are 23 years old, that was a historical film about basketball. i'm sorry. i am being corrected.

there are some 25-year-olds in the control room. vonnie: number one top photo -- ms. two dogs escaped -- these two dogs escaped. the image was posted on facebook just hours before they were scheduled to be killed. it was shed thousands of times, and it took two hours for the two to be rescued and adopted. they were adopted together. he is either hugging him or strangling him. you think he was saying, if i kill him first, maybe they would spare me? brendan: that is just a gorgeous photo. i am on ironically -- i am un ironically moved by this picture. we would have run this picture in the middle of a greece catastrophe. we who have -- we would have preempted and ecb rate change. tom: coming up, an important

conversation. bob nardelli will join us. really looking forward to talking with him about the new generous electric. it looks a lot like the bob nardelli general electric of eight years ago. we are watching gold down a good $10 as well. our twitter question is on apple. is apple out of ideas? $14 billion in cash generated. we need your response on apple @bsurveillance. good morning. ♪

tom: good morning, everyone. new york city, we have the new jersey train back up and running, singletrack through the tunnels. there are a couple tunnels under the hudson river that gets new jersey in and out of new york. this morning it is a mess but they are back up and running the subway. the new york giants are burning their offensive playbook from last season. we look at connecticut from the great political family of connecticut -- not the bushes --

christopher dodd will join us talking about five years on from dodd-frank. i want to talk about wall street and mean street. chris dodd in our next hour. right now we get to top headlines with vonnie quinn. vonnie: eli lilly has made a big -- on an experimental drug for -- a big bet on an experimental drug for alzheimer's disease. it is estimated the drugmaker is spending hundreds of millions of dollars. some consumers may be balking at chipotle's higher prices. the restaurant chain posted second-quarter sales that missed estimates. they raise prices last year to offset the higher cost of the. -- the higher cost of beef. warren buffett says that he did not buy his own greek island. he denied reports that he bought

the island of st. thomas off of athens. i think that guy is taking lessons from yanis varoufakis. tom: he is going to buy a greek island? did julia roberts -- to julian robertson buy new zealand? brendan: there a bigger mountains in the south island. tom: he is going to be in the next "lord of the rings." let's go to commodities. and greek drama -- equities do well. julian emanuel synthesizes all of this. he is optimistic on equities and it's this nagging backdrop of -- amidst this nagging backdrop. is u.s. equity and derivative

strategy and director for ubs. you have a lot of commodity experience. is this about selective commodities in plumbing, or is it about the whole -- him floating, or is it about the whole space? julian: this is against the backdrop that the dollar has been rallying for most of the year, but at the same time you kick the can in greece and that has caused pressure on gold. you have reached and is stored accord with iran and that has affected oil. there are still concerns about china. tom: vonnie is looking at dana craig. all of these commodities are out there. -- at daniel craig. all of these commodities are out there. julian: and the backdrop is that there is nagging concern about whether growth is sustainable in the nagging economy. brendan: we are looking at one line, all commodities together.

the thing that is compelling about the notes is you call it a perfect storm, but maybe there is no signal in the noise. we call them all commodities -- gold, iron, oil. julian: that is entirely possible. the people most concerned about right -- about that right now is the fed because they are trying to figure out if this commodities implosion is a broader signal of weakness we do not see. tom: i note a forecast cut year forward. that is what we have seen with apple, yahoo! and i certainly do not want to overplay that. vonnie: revenue missed estimates at enc as well. tom: can you link that forward from equities over to commodities? a lot of people say you cannot put them together. they are linked somewhat, right? julian: they are definitely

correlated, and the string here is that we need to see more proof that the economies are on solid footing. there are still questions about china. tom: but even further, the new mediocre, does the emerging market new mediocre of weakened economies come to the dow in the united states? brendan: you talk about the vix and complacency -- you define the vix and complacency as nine and 11. what was complacent about last summer? julian: basically china developed as a story, greece developed as a story. there have been concerns about europe from teen years. it was -- from up teen years.

brendan: is it possible to look at what happened in chinese equities and what happened with european politics as geopolitical accidents and now we can return to fundamentals? julian: in her manner of speaking, yes. -- in a manner of speaking, yes. tom: your ubs offices -- you hear the cathartic screams when there are margin calls at the london metal exchange. are we at that point yet, or does that come when jeff curry -- where does he work? goldman is it? i am trying to make a joke. you have ubs concerned as well. do you end up with margin calls at lme? julian: gold under $1000 is not inconceivable. think about it, the british sold

their gold at $250. tom: thank you so much for being with us today, julian emanuel. the euro is stronger 1.0922. ♪

telik boy at -- tom: apple

enjoys a modest miss. tim cook says wait for the upgrades. commodities cannot find a global bid and in this hour, a conversation with senator don. this is bloomberg surveillance and where life from our world headquarters in new york. greece today -- what is your update on germany and greece? brendan: i think it is a breather where everybody is quietly assembling their new plans for the structure of the european union. tom: what are they debating about? somebody wrote them a big check? brendan: this is a step ladder that they have to work their way up and this is the second series of reforms they have to pass again. they had the defections and he refresh -- reshuffled his

cabinet. tom: i am para scoping it -- periscoping it. vonnie: apple shares are falling by up to 6% and iphone sales fell short of estimates. bloomberg estimates that apple watch sales also fell short of expectations. >> sales of the watch did exceed our expectations and they did so despite supply still trailing demand at the end of the quarter. to give you additional insight, through the end of the quarter, the apple watch itself was higher than the comparable launch period of the original iphone or the original ipad. vonnie: cook is optimistic because three fourths of iphone

buyers have not upgraded to the latest model. the greek parliament's debating right now and will vote today on a second rule of austerity measures. greece can i get another bailout. prime minister alexis tsipras is once again seeking support from opposition lawmakers. at&t's plan to buy directv is getting a blessing from regulators. they might vote before the end of the week but the sec west remind people to work harder on expanding broadband use. it was all in a day's campaigning for donald trump. trump blasted lindsey graham and read his phone number to the crowd and urge them to call graham and took another shot at don mccain. >> he is totally about open borders and when i went to

arizona he called these 15,000 unbelievable people -- i know crazies, these were unbelievable people, and john mccain who i supported for president, i raced him $1 million, and he lost. vonnie: trump's name came together is that when a pair of lame ducks can together on the daily show. the president issued he would issue an executive order to keep stewart from leaving the show and commented on the white house bid. pres. obama: i'm sure that the republicans are enjoying mr. trump's current dominance. >> anything to make them look less crazy. [laughter] vonnie: it was the president's seventh appearance. stewart's 16 year run will end in two weeks. tom: a lot of the american

public get their news from comedy central. brendan: i think the thing that john stewart did was made it ok to express incredulity. when you're looking at something in the newsroom and you say i can't believe it. tom: we never do that. brendan: of course we do. he put that on air and it resonates. sometimes you see things that don't make sense at all you can do is slap your four head and say i cannot believe this is true. tom: equities, bonds, currencies and commodities. welcome. let me get your attention. futures at negative nine and the euro advances and oil is holding up a bit. let me get your attention. 73% of apple iphone users have not upgraded. it is like what is next -- worry? john butler is with us this

morning with a bloomberg intelligence. what is the number one message you learned from tim cook? brendan: the one thing that i learned is that china could represent some speed bumps in the near future for apple. that i think is what investors are reacting to. the specter of a weakening china. much more than 20% of iphone sales come out of china. to me, the watch is not a big deal. i am with tim cook when he says it is going to take time and it is a marathon and not a sprint. tom: what it is is an embedded ecosystem. everybody is more and more using this stuff. brendan: by everybody, we mean you.

tom is producing his own tv show on an apple product. this is a quote from the chief financial officer who says that we feel very good about the start. what we feel happy about is the customer response. so far what we know is that customers are dissatisfied. will we see a better iteration? >> that is a great point. it is the first model year. the first launch of a new product in a new product category. it will take time to get the right formfactor and the right apps. for the watch category it needs to get untethered from the iphone. >> i jumped in on tim's comments earlier. i thought he did an excellent job in laying out phenomenal growth.

most companies would be overwhelmed. what is amazing to me is an analyst sets out a number and has no knowledge of the company and then accompany gets punished. vonnie: is that the reason? they also mentioned the fx impact could some of this be the idea that it will hurt even more? >> everybody rushed to china because of the growth opportunity. then, there was no contingency plan if the dollar got stronger to take that impact. tom: bob nardelli is with us. for years at home depot and chrysler and a modest electorate

lightbulb company -- with great respect to bloomberg intelligence that they have to worry about 90 they forecasts, your world is the ugly soup of unit dynamics and price dynamics. >> i think that today, the ceo's our challenge more than ever. tom: tim cook's headache is bigger than jack's? >> by an order of magnitude. when you hit the desk in the morning, the broad range of constituents that you have to satisfy is overwhelming compared to 20 years ago. you tear up a five-year plan. you are lucky to get 18 months with any kind of authority. tom: three years is the new five years. brendan: he jumped in as the passion of a ceo who has to deal

with that. when you have an internal estimates and you look at what analysts are saying, where do you aim your goals? >> i played college football. you know when you score six points or extra point, today they are like ice-skating. they go on the sideline and they flip up a card. tom: bob nardelli taking a shot at butler. >> no. tom: take it from the other side that you have a responsibility to game the ceo's. do you get straight talk from the ceo or cfo from apple? >> in my experience, sometimes management can get too close so when things begin to weaken on the margin which is how stocks get priced they don't always see it in time. they see china unraveling and

they say what does this mean for iphone? it could mean not great things. brendan: in our sympathy on the table for tim cook, we should note that he took this new category and hid it in another category. that really goes to the twitter question of the day. we are looking at the watch and the headphones and wondering -- is apple out of ideas? we trust it to be an idea company. we assumed they would always invent the new category. can it continue to do that? let us know.

tom: good morning everyone. bloomberg "surveillance." let's go to greece. writing this up as america's. here is matt optimistic on greece. how could anybody be optimistic about the economic prospects of a country with 26% unemployment and a debt load equal to 175% of the country's gdp?

run -- one reason is faith in the euro. if they stay in the euro they can get through this massive drama. brandon roy -- brendan: faith in the euro implies faith in the eurozone. the euro has stumbled along so far and i think people have recognized that the structures keeping it together are insufficient. >> is the short blood -- s cheuble going to get pushed aside? brendan: absolutely not. the chancellor has a good relationship with him and she knows that the hardline he took is incredibly successful in germany. tom: he stayed in a less fancy

hotel then you used to stay in. jeff is dealing with this integration, it is a lot easier to integrate within a euro system than a french franc or swiss franc or deutsche mark. >> i think that jeff is being challenged with the deal. in the u.s. he is moving forward and selling appliances and trying to streamline the portfolio and the greeks were put on that. and we see at&t getting approval for a $49 billion deal. who is making the decisions. tom: you are benefited as an industrialist by a combined euro. >> the deal is spot on relative to the turbine business getting

the benefit of a much more global footprint. a big install base, great capabilities. i said before that steve would do a great job. tom: we will come back and we will review general electric's new plan. coming up -- an important conversation with chris dodd. he is now in the movie business. ♪

tom: good news worldwide. you can stop worrying about new jersey. there is a plume of smoke across new jersey -- that is the new york giants burning last year's offensive playbook. there is a train at of service near new jersey and manhattan and there is selective service near a single track.

john tucker will have those reports by the minute. right now on television and radio worldwide -- top headlines. vonnie: workers at new york city's airports say they are going ahead with the strike tonight. security officers and wheelchair attendants will walk off their jobs. the union says the workers want their pay raised to $15 an hour or it five people are being charged in connection with that damaging cyber attack against j.p. morgan chase last year. suspects were arrested in florida and israel. investigators say they prowled the bank for two months without being detected. we will have more on the case in a little bit.

two software developers proved they can seize control remotely of the moving car. they demonstrated how it can be done for wired magazine. they disabled the accelerator and brakes and even tuned the radio from 10 miles away. they aim to prevent the hacking of cars linked to the internet. how can you introduce a bill and support a bill -- brendan: you can't, you have to not connect cars to the internet. tom: scary. almost as dangerous as new york city cab drivers. let's look at general electric. we have to speak to analysts like john butler about america's great companies. in recent days we talked with nick haman about general electric's transition to a juggernaut. now robert nardelli as they try to reshape ge back to the prime of nardelli. it is amazing that once the comp

full circle, ge financial back to ge nardelli. >> as we discussed before i think jeff saw an opportunity to segregate or take ge capital down. he is getting good prices and the regulations under the control and the restrictions -- he doesn't see the opportunity. he will shift his attention and focus to industrial. it is the legacy. tom: that is global. i will say that it is more global than when you were there. if it is global now how do you get revenue globally that comes down to the bottom line? >> jeff was just in china and if you look at ge transportation to get that globality in this business -- it will be significantly more global. if you look at medical and what jeff is trying to do with the internet, i think he is moving

in the right direction to reposition ge. brendan: when you talk about jeff repositioning in china that is part of rebalancing the economy spending infrastructure away from housing. that is something we need in the u.s. as well. what is the future of the industrial without infrastructure spending? >> what i am seeing in dealing with the chinese company is that there is a lot of inbound. they did win the mbta award. cnr, the chinese national rail said there are two companies and i will fix this competition and you are now one. it is big and formidable and could have a big presence here to get their share of this global market. vonnie: we are trying to sort out the economic data. where is manufacturing in america? >> i think it will be a

challenging second half. you talked earlier in the show about stock buyback and from that standpoint you see the stock of the larger corporations being propped up through buying revenue with acquisition or buying stock back. the margin challenge will continue to be pretty aggressive particularly as you mentioned earlier. think about caterpillar or some of these other international companies. tom: i thought that vonnie was dead on. we found out that ford and gm sub out a lot of manufacturing. does ge do that? or is ge like ford with a sub out the stuff across america? >> that is a great question. tom: my only good one this week. >> iwatch bloomberg for business -- i don't watch comedy central. brendan: a shameless plug for

us. tom: cool. do they farmout manufacturing? >> when i was there we stuck to core competencies. if we were building turbine plants, people did water treatment. we disintermediated water to -- water treatment. it depends upon the margin and the skill -- the contributive value you bring to the ross s and if it is recoverable. tom: we have to bring you back soon. -- ring to the process -- bring to the process and if it is recoverable. tom: we have to get you back on soon. gold is down from 24 hours ago. a lot more on gold and the commodity implosion.

coming up chris dodd with us as we talk about dodd-frank here five years on. stay with us. ♪

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but the best thing you can give your business is comcast business. comcast business. built for business. tom: good morning everyone. bonnie quinn -- vonnie quinn and brendan greeley with us. vonnie: apple shareholders seem hard to please. the stock is taking a hit even

though they posted their best third-quarter profits ever. the sale forecast missed estimates and so did iphone sales, even though they rose to 35%. tim cook defended the company's performance. >> what is going on with iphone -- the 35% growth is almost three times the market. if you look at it in a narrower regional level, western europe grew 30% versus the market 7%. japan grew over five times market. we doubled in korea versus a market that was shrinking. vonnie: apple does not give a breakdown of its watch sales but bloomberg is estimating that nearly 2 million were shipped. yahoo! shares are lower this morning after company sales forecasts missed targets. the yahoo! ceo is trying to reinvent the company by investing in mobile and video.

the second quarter sales as the business grew by 50%. microsoft is also trading lower. there was a $7 billion right down from a purchase of a nokia handset unit. goldman sachs says that the worst is yet to come for gold. prices could fall below $1000 an ounce for the first time in six years. gold fell this time to a five-year low. we have boeing earnings just crossing bloomberg right now second quarter revenue of $24.5 billion. earnings per share at $159. tom: a very nice beat.

5700 commercial plane orders. i think that employs them until i am in a casket. vonnie: they have had a phenomenal number of orders. deliveries more than doubled to your ago. coca-cola earnings out as well, earnings per share of $.63. tom: another beat their. can i give some scope and scale as you pile into boeing's earnings and coca-cola. cash in marketable securities at boeing is $9.6 billion and they are bragging. apple is $230 billion give or take. boeing is a juggernaut for america and -- bob the delly let me go to you -- bob nardelli cash has become gospel. how do you know as an industrialist when too much is too much >> having enough scar

issue from not enough cash. the uncertainty and picked ability of the market. i think that jim mcnerney has done a phenomenal job at boeing. he has repositioned. he is a great friend and a colleague. to your point if you look at the backlog, a tremendous exporter for gdp. boeing is well-positioned and well led. vonnie: boeing is reaffirming its sales forecast but calling into question its four-year sales forecast for the year. the stock trading higher in the premarket and is just trading off of that a little bit now but still up about 2.1%. tom: one of the great ideas here is record commercial delivery.

heathrow is putting in another runway. brendan: the story right now is emirates. they are not just a factor for boeing but a factor for domestic airlines here in the u.s.. that is a story to watch going forward. >> jim's great challenge is how do i produce more and faster? tom: a five-year dividend growth and 40% and a $2 billion share buyback. they are sensitive to the use of cash to say the least. vonnie: that is all boeing. and north american sales for coca-cola. the beverage volume is up 1% and still beverage up 4%. still beverage is doing just much better. tom: the gross margin is just ahead of the cola. want to make a big deal about that as well. let me do a data check as we

massage boeing and coca-cola for you. await to the market across all of the bloomberg tape and a little bit of a socket us. a stronger euro 1.0935. gold down about $11 per out's. -- per ounce. brendan: this is bloomberg surveillance with tom keene. tom: an original card-carrying watergate class member. christopher dodd served as senator for connecticut for nearly five decades and his crowning achievement is dodd-frank. five years on the senator joins us from washington. i know that you are taking a lot of victory laps, what is your biggest disappointment in the implementation of your dodd-frank? guest: the fact that you know i am from will manning is very impressive -- willow manning

connecticut is very impressive. lending institutions and financial institutions -- if there is one thing they love more than anything else it is certainty. as long as it is taken for some of the rulemaking to get into place has been frustrating. but most would agree that makes more sense to try to get it right then quick. the frustration is tempered a little bit by the fact that they are doing a good job and taking their time but if i could wish anything i wish they did it more quickly. tom: you and your father represented the bankers of greenwich, connecticut for years. with dodd-frank, are you guys on conversational terms? >> i have run into them on a number of occasions and they have had frustrations with this and costs associated with implications, i will not tell you which of the major banks

called, but they said i never thought i would make this call but i am a better bank because of your law. i have better capital and lower leverage. lending is up 30%. 64 months of generating jobs. this is working. that is not to say is working. there will be time down the road where we find that there were things we overreacted to or under reacted to. i have people on the so-called left who say we did not do enough. people on the right who said we went way too far. but there is greater stability today in the lending institutions. greater transparency. the consumer protection bureau is doing a very good job and too big to fail is over with. we believe that to be the case. we think that we have done a pretty good job and time will tell if corrections are needed. brendan: let's talk about time

saying if the securities are needed and writing regulations, but the oversight over time -- if elizabeth -- is elizabeth the right standardbearer? >> she cares about this and it is very knowledgeable -- most members of congress think they could easily be secretary of state or secretary of state of treasury or something but very few think they can do what she does. the education in terms of financial matters -- she brings a great deal of knowledge to the subject matter. i would have preferred self funding at the sec. when it comes to investment banking i think it is a mistake because you can starve these agencies. tom: i have to interrupt on the news of the moment.

donald trump did not go to the chris dodd charm school. i know this for certain. what would be your advice to donald trump to salvage the train wreck? i'm serious. to straighten this out? >> you can jump on and add all the adjectives and the accusations about john mccain and others are ludicrous but let me say something, we are taking too much time focusing on donald trump and his language. there is another participant called the audience. people are showing up. not because they want entertainment but because there is a tremendous amount of frustration. there is not a lot to similar between the people showing up to seat bernie sanders and donald trump. they are not taking note of that as strongly enough. there is good news about the economy improving dramatically but there are a lot of people not enjoying the good news. they are showing up and looking for answers.

i know everyone wants to jump on double trunk but there is another issue. brendan: i have to jump in their. thank you very much. chris dodd of dodd-frank. good morning. ♪

tom: good morning everyone.

we continue with the senator from connecticut, former senator chris. dodd. your comments linking mr. sanders to mr. trump, that is the third rail across the political landscape. what are we going to do to jumpstart labor america? >> this is a point i wanted to make. one more person adding another adjective contributes much to the debate. even though they are different approaches to solving problems that level of frustration -- you will not surprise me that the people showing up for bernie and donald trump are neighbors. they are feeling >> the same effect of what they believe is stagnation and their ability to retire with enough income to take care of themselves and their kids will move up. to educate their grandchildren.

that is critically important. it is not just creating the jobs, that has been the good news. with unemployment around 5.3% what are those jobs? are we providing jobs in the areas where they have health care benefits and pensions? i represent the motion picture industry as the head of the mpa. a. this is 2 million jobs in the country. i use that as an example. 96% of the jobs in that business are blue-collar jobs. tom: i want to bring it back because of time to dodd-frank. brendan greeley with some smart questions. brendan: with the execution of the law that there is your name the biggest challenge is what they call the blflob. the financial lobby.

how do you work against that power that is constantly working to shift that legislation? >> it is a great question and you are exactly right. i was involved in the health care bill but it has some financial advocates. the insurance industry and the pharmaceuticals industry likes the affordable care act. i don't have anybody on dodd-frank from the financial sector that loves the bill. it is very difficult. when you get into the conversation, a financial literacy is not very high with marissa congress. they don't come out of that world -- with members of congress. very few that run for congress come out of the financial services area. understanding a lot of this is complicated. that is why elizabeth warren is important. whether people like her or don't is not the issue. she is knowledgeable about this subject matter.

i would hope that the rhetoric would call down a little bit. they are wonderful people. they don't need to be maligned. we to make sure we protect this law. tom: ok senator, we will have to leave it there. you could go on all day, i know but congratulations on your day to senator dodd. we will continue our coverage this morning. bloomberg surveillance. ♪

tom: gold imploding this morning. we are at 1190 the ounce. vonnie: bloomberg is breaking down the latest numbers from boeing and coca-cola. earnings-per-share and $.25 better than estimates. coca-cola's quarterly revenues are $12.2 billion.

the shipping company has options to buy 50 more. the oracle of omaha is the nine reports that he bought an island southwest of athens. they hate the report may just be premature. the real estate agent took lessons -- tom: do you think that warren buffett takes uber? he probably has a phone like john tucker brendan: i think that he is about to buy over. vonnie: you mean as in get in an uber? tom: everybody else does. this is a big debate worldwide. brendan: what is the nature of employment?

tonight, 1000 workers will walk off the job. security officers, baggage handlers and wheelchair attendants. the employees international union. we have bob nardelli on the desk. we have matt miller with us as well and met you work out at jfk yesterday talking to the workers who were going to strike tonight. >> i was at laguardia but they will strike at jfk tonight. the real issue is the right to organize. the workers say they they are being denied the right to organize and the contract company that they work for is not allowing them to do that. aviation safeguard says that

they are but the workers haven't followed the proper process. behind that is the fact that these men and women are making $10 an hour. dozens of these employees have been working with aviation safeguard for 20 years full-time with a family in new york making $10 an hour. they said, this is not a living wage. you cannot argue that. brendan: bob nardelli, they are asking $15 an hour, is that the new benchmark? >> we hear a lot about this and it is pretty simple what happens. if you increase wages you pass on that cost to the consumer all of us that fly commercial, or you have to find productivity to offset that. whether it was gap that voluntarily did it -- if it is a matter of employee retention you do it. tom: we're finally in a recovery.

the fat cats like you and me are doing great. we are finally in the gdp recovery and labor has to get there fair share. brendan: the airlines are doing great as well. they were not passing on the cost to consumers before when they were making billions of dollars he or someone with a have to do it now? tom: i have to interrupt. vonnie quinn is going to see gain a crate in london, can she go into heathrow? brendan: there will be no -- >> there will be no issue for passengers. only 1000 employees striking possibly. this company has told me that they will safeguard and bring in as many employees as it takes from other locations. beyond walking through a picket line, you have no problem. vonnie: daniel always flies delta, it will be fine.

so is that we will be talking about? >> there are a lot of small service companies. they will employ baggage claim workers and people who push wheelchairs and security. the guy asking for your id and ticket before to go to tsa that were only making $10 an hour. i would say that $10 an hour or $15 an hour may be fine in wyoming but it is really difficult in new york city. >> when you organize -- i have only been a big proponent of self representation. the organization should be listening to these employees. when you organize to get a flat rate across the country. tom: if it is a global problem, we have seen in portland oregon. uber's challenge has come to new york. brendan: the question with uber is what is an employee? how do you untangle this?

>> uber is a perfect example of the disruption being created by innovation. we will continue to see that. the only change in corporation today is the constant. . that is what we have to see. we will see this disruptive technology in innovation going forward. number two, uber is offering a service that is supplementary to what we have today in cities around the country. brendan: i want to go back to what we were talking about earlier. what a $10 an hour wage gets you in new york city. >> not an uber, by the way. brendan: you said if they raise wages they will pass it onto the consumer, but that is not necessarily true. there's another option to make a lower profit. >> we've heard this money from analysts that whack the company's for doing that.

tom: it is ludicrous to believe they want to lower the profit margin. they would be out of a job. i want to talk about uber, this massive technology that we all agree. how should the cab companies respond? one third of them cannot drive and are filthy? brendan: i would much rather get hit by a uber driver than a cab driver. right now they are using the mayor and the tlc to warp the market and stop the influx of uber drivers. they offer a better service and a safer service and more convenience to the consumer. that threatens these cabdrivers. what they are trying to do is use the city. tom: we're seeing the medallion go from 1.1 million to 700,000. brendan: it is not the cab drivers threatened but the medallion holders. >> the 2 million to 3 million

medallion holders. tom: am i right that cabdrivers want to become uber drivers? >> you just made a point, cleaner, safer, productive ability. tom: if stephanie rule has to get her kids to piano lessons -- all take piano, she throws them in an uber. >> [inaudible] [laughter] vonnie: some of these points would be contested. there are cab drivers that would come on -- tom: but the piano teacher comes to the house in an uber. let's go after the smart discussion on uber. vonnie: we asked, is apple out of ideas? there are a lot of ideas to be developed and the tv and car displays will be next. tom: apple music in a car is huge. brendan: it is not just the

display. apple is working on an entire car. tom: bob nardelli do you have the opportunity to put apple in your car? >> we did that it chrysler. why have the duplication of a radio and -- radio and gps. tom: would you learn about apple? >> you could use it and replace a lot of redundant benefits. tom: -- brendan: you carry the computer wherever you go. vonnie: next answer, the share price is being hurt by an initial over estimation of newer products. market predication -- penetration. the market is wrong on apple. third answer, they can buy five teslas with cash on the balance sheet. tom: thank you for that tweet. bob nardelli what does mr. cook need to buy? >> it is tough but i would encourage him -- don't get into

the full car business. tom: jfk next. right onto fire island. we continue on bloomberg radio.

collects live from bloomberg headquarters in new york, this is market makers with erik schatzker and stephanie ruhle.

stephanie: the party is about to start. good morning. i am stephanie ruhle. olivia: i am lucky because i get to sit like -- next to this one. here because of the actual news. so much to talk about. we will dig into earnings. apple, yahoo!, microsoft boeing just in the last half-hour. >> we have got the best analysts in just a few moments. why he says this morning is the time to buy. before we get to that, the top news stories of the hour investors would like to know whether the hits can keep on coming for apple. this morning, they appear to be skeptical. shares of apple have fallen after