secretary kerry and republicans battle over a unicorn arrangement, a complete capitulation of iran. in this hour, america's future and foreign policy. amazon controls the destiny of retail america. good morning. this is bloomberg "surveillance" vonnie quinn and michael mckee. amazon just turned on the profits. michael: 0.004% went to revenue. and that is a big deal. tom: was it 18%? vonnie: the stock -- tom: he nailed it yesterday. again we will have some on amazon through all of our "surveillance" hours this morning at right now, very interesting set of friday top headlines. here is vonnie quinn pit vonnie: in lafayette, louisiana, oregon

man opened fire and a movie theater last night. he killed two people and wounded nine others before killing himself. the shooter tried to escape and then turned back when he saw police entered the theater. governor jindal: when these acts of violence happen in a movie theater, when there is no real good reason why this kind of evil should intrude on the lives or families were out for a night of entertainment, a lot of us were horrified and shocked. the great thing about america is when any of us suffer, we all suffer. this is a time for us to come together. vonnie: and we have breaking news. anthem will buy signet -- cigna. this had been telegraphed. we're waiting for this to become official. anthem is buying cigna. that would work out to $48 billion, creating the largest

health insurer in the united states. a year of talks. tom: and a moment in our financial history. i wish chris halen with you - chris whalen was here. i've never seen a headline that says anthem combined company sees accretion approaching 10% year one. that is not in any financial curriculum. michael: this is all a byproduct of obamacare. what you're seeing is companies wohho have different specialties merging to provide additional economies of scale. the question is, who is next? tom: there they are within the consolidation. one more headline. vonnie: an unaffected premium of 38.4%. we will get results next week from both companies. cigna is previewing a strong second quarter. tom: our guest with us, investors in health care. they have enjoyed the affordable care act.

i know you're caught unawares but is it good for investors that we see a mass consolidation in any given industry? when we get to three or four health care providers, what is left? >> in general, any time you have got disruption within an industry, that is going to create opportunities, winners and losers. to the extent you have the right platform to exploit that, yes, we can benefited tom:. tom: you and rebecca patterson are good at this. james has banned the word synergy from the curricula. >> it is to cliche. tom: synergy is terrible but you have to love it. anthem and cigna. part of this is they take out 10% of costs? >> i think all of these mergers these acquisitions is consolidation. that in itself -- tom: they can't admit they have to be sir petition -- be surreptitious about the because of regulators. vonnie: you have to wonder if

son of this is being done before the 2016 election cycle -- you have to wonder if some of this is being done before the 2016 election cycle. both chambers are under republican rule. tom: i want you to dovetail this in with janet yellen and the search for nominal gdp. the headline is cigna sees total revenue growth of 8% to 10%. mike: we have got a lot more people using the health-care system now. and the government is paying for it. it is a much better situation for the insurers. the question is do you buy united health on the idea that they will pick up one of the other companies? the big five are down to the big for. there is some speculation we will end up with two or three. >> you look at a lot of these hospitals, clearly what is happening with the affordable care act has changed the entire dynamics. what we tend to focus on and health care, for example, be fine -- beyond insurers is

looking at a lot of innovation focusing on drug companies. we think health care there will be a ton of opportunity. tom: you are part of the boston community. boston led the way with the tufts health plan. not related to the university but it is related to hospital research. in new york city or any major city, really, worldwide. for where you sit within the boston community, is this consolidation good? there has got to be some rater up -- radar up about too few players? >> how does this tie into biotech? you see the connections there between the down select of the providers and the tech base working together. tom: our coverage of this over the last few days -- and bloomberg news has worked the lead on this edward has been writing up a storm on this health care merger. a very large transaction.

within these details, you are good at what the surprises. what is the surprise in th headlines this morninge? ed: about this way this will be structured managementwise. the one thing this companies have said, sticking the deal and the thing that complained about -- this is going back a month. they said that they agreed on price and there was not too much antitrust or the thing that could not get comfortable on was who was going to run the company and the management seems to be able to run the company. the chief executive of cigna said unless i get to be chief exec, chairman and the head of integration, the combined company is not happening. tom: the integration company is 80,000 employees. this is not jpmorgan merging with bank of america, but that is a lot of bodies. we have been talking about synergy. you know the details on this. how ugly will this be for the employees of these two firms? ed: the interesting thing about

integration is these companies work on a local basis. they are state by state or region by region. where these two companies have market share in the same state there will be, we talk about synergy. that means job cuts. but i think this will be a very long process for them to work through where they overlap. tom: i love that idea of hyper local. in new york city, there are hospitals for blocks away, and the people involved do not even know each other. that's hyper local. mike: you have aetna-humana and now you have anthem-cigna. we are going to have insurance companies for all of obamacare. ed: that is a really good point. and we have already been talking to the doj. we had an interview a couple weeks ago where this was

going to be an industry that will get a proper look. there are five companies. we have now seen him go down to three. prices have gone up dental digits -- double digits. the thing is interesting now is how does this affect the humana-aetna deal? itss the fact that there are two mega deals, does that make it -- tom: 35 and 40. help me. i can't do the math. is it $100 billion. mike: 83. tom: can a as the pregnant question of the morning. what does this mean for doctors and nurses, people that take care of us? ed: i fyf you believe the rhetoric of the industry, this is a good thing because it means they have a rationalized base of insurers which means in theory less time and less effort is spent in

people picking out insurers. and you have a more centralized service we have just three to choose from. but as we know from any industry where you have matters of consolidation, the things that tends to happen is that costs get passed on to suppliers, the doctors and nurses. vonnie: thank you so much for joining us. it is interesting. we are back to the old pattern where the acquiredrr ids down and the acquiree is up. cigna up and anthem down. a lot more on that coming up. amazon. find out why the e-commerce giant smashed estimates when we come back. this is bloomberg "surveillance" streaming on your tablet, phone and bloomberg.com. ♪

tom: good morning. bloomberg "surveillance" a merger anthenm and cigna. other top headlines. vonnie: the obama administration got an idea of what the next -- will be like on capitol hill. senator bob corker told john kerry that the u.s. got fleeced on the iran deal. kerry, meanwhile, said it was "fantasy" to think the u.s. can persuade iran to give in to all demands. turkey is to -- is expanding its role in the battle against islamic state. turkey is adding patrols and sending more planes on raids. u.s. planes will now be allowed to fly missions from bases in turkey. the change comes after a militant attack killed the turkish shoulder -- soldier.

defense secretary ash carter is in in iraq today. it's the second stop on his on ainto ira -- his previous visit to iraq. he met with leaders. it is his first trip since taking office five months ago. those are your top headlines. tom: admiral servetus with us with the fletcher school in tufts. we love to have it when you dovetail with the headlines. "the new york times" leading with the turkish bases. is turkey part of the e.u. are not? >> turkey is absolutely not part of the e.u. they would like to, but the rest of the e.u. has questions and concerns about immigration. the europeans are to be trying to pull turkey toward them. tom: how much of this decision by turkey to allow our fighting men and women to land planes there and attacked the islamic

state comes from a panic over the migration over the border? we are taken aback by the hundreds of thousands of people. >> it is really two flows. migrants coming into turkey. it is also the jihadists going out, fueling isis, which has lead to terrible bombing which has catalyzed the situation for the turks. mike: what has taken the turks so long? >> it has taken them that long because of ambivalence about the assade regime. they want to crush assad. they have been reluctant to step on islamic state as a result. tom: iw would be remiss if i did not ask you the money question. i think of this discussion and i think of senator mccain of arizona. could you comment on what mr. trump said about mr. mccain? >> outrageous.

senator mccain, we think of john mccain is an american hero in every sense. to say he was not because he was captured is really pretty ridiculous. his heroism came after he led prisoner of war resistance. tom: what is the distention between senator mccain and george bush sr. pulled out of pacific ocean. george bush was not captured because the navy was there to rescue him. what is the difference between those two? >> no difference at all. when you go down, it is because you are the one taking the risk. you have flown the most dangerous mission. both president bush and senator mccain are american heroes for roughly the same reason. tom: thank you. i was stunned last night by amazon, just stunned. this is huge news. vonnie: the shares would be on a rip if amazon turned a profit. they searched 19% after the the e-commerce giant smashing

estimates. a director of equity research at standard & poor's joins us now. he had a hold rating and a $400 price target. changing that call? >> the results were spectacular. that might be an oxymoron when you're talking about amazon. there was a lot to like in those results. they beat the top line and the bottom line number. they provided guidance. i think that when you look at, the takeaway was from aws, which is amazon web services was phenomenal. we saw margin expansion in retail international continues to gain traction. vonnie: cash return on capital invested is still negative. is that a big concern? tuna: it remains a concern but i think more important companies right now at inflation, wall street has become trained to give the company the benefit of the doubt while they continue to investin in aws prime services.

the takeaway that all of these investments are starting to come together, and that is why you're are seeing free cash flow continue to accelerate. vonnie: why the $400 price target? tuna: we were very skeptical as many investors were regarding amazon's ability to sustain this kind of pace of revenue growth as well as bottom line. so the main concern here is the ability for them to balance the top and bottom line and generate free cash flow on a sustainable basis. what they've started to do now is to manage those expectations. they're syaing,aying, those are not mutually exclusive. mike: is that what happened here? just they trying to keep people from getting too worked up about no profits. the prophets were so small. did he forget to spend the extra $92 million?

tuna: it comes down to the expectations here. so, in terms of profits and margins, amazon, last quarter they came in at low single digit operating margin. that was great news for wall street for a company that had -- tom: i don't mean to interrupt but this is great. we've got the sell side and the buys side. oil and water joe, how do you look at his world in a $400 value on a company with no free cash flow? is he out of his mind? joe: not at all. from a top-down perspective -- tom: why are you wearing a bow tie? didn't you get the security memo? joe: i tend to look at things from a top-down level. we look at things through a different lens. i will say o ur belief and one

of our biggest convictions is this windfall the consumer has had. i think we look at a lot of consumer oriented names across the market not only in consumer stocks but also in technology stocks, that can benefit from that. tom: 20 seconds. is jeff bezos manipulating the income statement like jack welch used to do? is there any difference? tuna: i would not use the word and but manages probably tom: there we go. mr. welch, if you're watching, it was managing the income statement, not manipulating. thank you for coming in on short notice this morning with s&p capital. in our next hour, michael mckee and i looking forward to this. a conversation with richard claire. on the raging debate -- i say there is slack in the economy. it is terrible. with some you look at jobless claims? richard clarida in our next hour. ♪

tom: good morning. bloomberg "surveillance" let's get to a smart morning must-read. that must mean michael mckee is with us this one. what you have? mike: a lot of news on china overnight. the purchasing managers index falls to 48 point two, lowest in 15 months. they are widening the band on the u.n. the imf is telling them to take up controls on the stock market. this leads me to something that at most of you just brought up the other day. henry kissinger said, writing in "world order," " american told that every problem has a solution; chinese

think that every solution is an admission ticket to a new set of problems." kissinger goes on to say "we look for outcomes responding to immediate circumstances. they look for evolutionary change." tom: i think it is great. i think it is absolutely dead on. james to be this wi -- james st ravetis with us this morning. it speaks to english philosophy versus an asian -- >> if you speak to the chinese they will say that we have been an enormous, powerful civilization for 2000 years. we have had a couple of bad centuries. and it is a difference in timeline. so i think at the end of the day, world order is a very good book. a terrific book is his previous book on china. mike: basically what he is saying here is that you have to think differently when you are dealing with china. and china is going to be a lot

of people say, the diplomatic issue for the united states going forward with its projection of its economic and slowlyl military power. >> as you see pressure building inside china as they deal with economic fallout, stockmarket manipulation huge overhang in the real estate market bad demographics, too many men, too few women to deal with internal pressure, they are going to press hourly into the south china sea. stand by for more aggressive action from china. tom: you remember gorbachev and the underestimation, how much we got wrong. the strength of russia. do we get wrong the strength of the chinese navy and their projection into the pacific? >> we have excellent intelligence. i would characterize them as very strong in the south china sea. they are a regional naval power. they are not yet a global naval power. but they clearly have the potential to be one. tom: james stravetis with us.

we will speak of the issue of the moment. also, a special topic with admiral stavedis. the president making a case for a deal with iran. what is it safe for our allies? a complex question -- what does it say for our allies? futures up five. down futures up 25. this beautiful friday in new york. ♪

♪ ♪ ♪ get excited for the 1989 world tour with exclusive behind the scenes

footage all of taylor swift's music videos interviews, and more. xfinity is the destination for all things taylor swift. tom: good morning. bloombergtom: "surveillance" michael mckee with us today. our top headlines. vonnie: a blockbuster transaction this morning in the health insurance industry.

anthem has agreed to i cigna for more than 48 l.a. and dollars. a deal that creates the u.s.. -- for $48 billion. this morning's announcement wraps up the year of contentious negotiation. police in lafayette, louisiana, say the man who opened of fire in a crowded theater was a 58-year-old with a criminal history. they say he killed two people and wounded nine others before killing himself. investigators believe the shooter was trying to flee the theater when he saw police officers rushing in. hillary clinton will lay out her vision for corporate america in a speech today in new york hurt the democratic presidential candidate will warn of the dangers of focusing too much on short-term results. she also wants to review a second and will call for an increase in capital gains taxes. meanwhile, the justice department, do has been asked to open a criminal investigation into the controversy over clinton's e-mails while

secretary of state. that is according to "the new york times." the case is a do with whether sensitive government information was mishandled. at&t is on the verge of winning regulatory approval for its $49 billion takeover of directv. bloomberg reports that a majority of the sec's commissioners have voted in favor. earlier, the justice department said it would not challenge the acquisition because it does not pose a risk to competition. and nearly a century after the -- are getting on redesign. the new design ghashas more padding. that is what we want -- our converse to last longer. mike: be comfortable as well as iconic. tom: i am going to buy a pair this weekend. mike: i would love to see that. vonnie: you have to wait for the new ones. tom: the original are iconic.

no question. let's look at our international relations. no your enemy. know your allies. for the united states of america, the eastern middle east, this is the arch question as to ron and washington nurse forward their newly minted agreement. our secretary of state tried to sell the senate yesterday on his deal. secretary kerry: the deal we have reached is not what i've s een ads on tv suggesting. it is not "a better deal," some sort of unicorn arrangement. that is a fantasy. plain and simple. tom: john kerry. admiral stavridis: the former supreme allied commander of nato. he does one course as dean at tufts. unicorn 402. what is the unicorn in your world diplomacy?

admiral stavridis: a chimera is something that you search for but never materialize. i think that is the nature of this deal. it is not going to get us where we want to go. tom: you have been critical of it but respectful of the process. how should republicans respond to an executive trend -- transaction? admiral stavridis: i think they should be respectful but at the end of the day, we have legislation on the books that says they are going to take a very serious look at it. i think it is going to get voted down. but i do not seen the votes to override a veto. i think the deal goes through the end of the day. mike: opponent say this is going to give iran $100 billion windfall one sentence are lifted and they will put that money right back into sponsoring rebellion, sponsoring terrorism and things that are inimical to our interests and our allies. tom:admiral stavridis: the bottom line will be $140 billion as

well as a 6% growth in gdp. an enormous trench of economy -- of resources dropping on the economy. mike: is the secretary of state correct in saying you could not get a better deal, but this is overall good for us? admiral stavridis: i did not negotiate the deal, but as i look at it, it is not a good deal. tom: at tufts you have harvard people going through the backdoor because you are embarrassed by them. the saudi arabians going to the backdoor of the white house. i was thunderstruck i that. first of all, why did that occur? admiral stavridis: i think it signals the extreme discomfort in the relationship of the moment between the u.s. and saudi arabia. they are so upset with the deal. almost as upset as the israelis. you will see some lipservice about diplomacy and this might be a good thing, but at the end of the day, this will drive them toward a nuclear program. tom: can they use oil as a marginal weapon? admiral stavridis: absolutely.

do not forget we are dealing with the war of reformation. sunni vs. shii. saudi arabia leading the sunni camp. iran leading the shia camp. tom: who plays queen elizabeth and brings them together? admiral stavridis: it could be you and a pair of chuck taylors. i think the united states will have to continue to be involved in this. as much as we want to pivot to the pacific as the administration articulated two years ago, we may not be interested in the middle east but the middle east is interested in us. mike: let me bring joe into this. with all the additional oil that is going to come onto the markets, from a macro, broad perspective, how does that affect markets and economies worldwide? joe: we are seeing the impact on oil markets, the anticipation of this deal coming to formation. saw oil take another leetgg lower. taking a look at prices over the

course of the year, had a huge impact for investors. one of the beneficiaries of all this has really been oil importing nations. think of the consumer and think of the impact that is having on their balance sheet. vonnie: do you see nothing positive emanating from the discussions of the still, assuming it does go through -- do you see nothing positive emanating from the discussions of this deal? admiral stavridis: it is like a second marriage. it is the triumph of hope over experience. i look at what's going to happen, and i find it unlikely we are going to see a sudden shift in iranian policy. tom: have you been to one, and obey? -- to guantanamo bay? what do americans need to know? what is not reported? admiral stavridis: first of all it is a place where prisoners are in fact treated very humanely. it is visited constantly by the red cross. it gets more visits from journalists than any other person in the world. tom: why can't we move those

prisoners to america? admiral stavridis: i think we should. there is political opposition to doing that, but i think now we are down to 120 prisoners in the detainees in the facility. i think there is a more realistic chance of doing that. we ought to do that. vonnie: the president did promise -- admiral stavridis: i think he desperately wants to close it. he's doing everything he can to he needs authorization from congress to bring those detainees to the united states. it would be a good move if we did that. mike: what else can the u.s. do with cuba at this point, given the state of the embargo? how close cnan the two countries,? admiral stavridis: we can do humanitarian operations. they are quite capable and medical diplomacy. number two, we can do carter. carter -- counter narcotics with them. they can be information sharing it key west, were we look at the flow of narcotics.

we can take on time of day, internationalize it -- take on time obey and make it into a hub of humanitarian response. -- we can take guantánamo bay and make it into a hub of humanitarian response. tom: we need a briefing on john snow. what is going to happen? admiral stavridis: john snow was coming back. have him on the show next season. tom: it is amazing to me the dovetail these geniuses have done with that show of the diplomacy and the history you study. admiral stavridis: let's face it. just like "game of throws," it is a tactical world. -- just like "game of thrones." you see event piled on event. tom: do we have control of our foreign policy? admiral stavridis: we are kings landing without question. but i think we are thinking more

holistic lee as we look at these events in the middle east because we have got to have a strategy. we cannot execute what is happening there in a tactical way. tom: we could go on for hours. vonnie: i think the admiral just told us the end -- spoiler alert. tom: admiral stavridis: thank you so much. i will be reading up on china on henry kissinger for markets as well. vonnie: american refuel. we will see how the airline american is cashing in on cheap crude. this is bloomberg "surveillance" ♪

tom: it has been a spectacular week in new york city. i sat on lexington avenue two nights ago an outdoor café. it was perfect. it was just perfect. mike: today is going to be just as good people this morning came in and said it is 5:00 somewhere. can we sit outside? it was 5:00 in the morning. tom: perfect weather in new york city. we welcome you worldwide. any of you flying this weekend. vonnie quinn never travels without three pieces of luggage. vonnie: i get them all on my back. american airlines reports and 15

minutes however, it could get used due to lower fuel costs. that is the subject of today's single best chart which you created admirably. you did. lower oil prices have definitely, you see the stock price going and contrary motion. when oil is lower american airlines gets a big advantage. even though they hedge. tom: they hedge. you're shaking your head. mike: i do not think they hedge. they're one of the ones that you're not, which means they are able to take advantage of the lower prices. tom: this is a really big deal because theoretically, joe, theoretically there is a point where the hedge does not work. mike: it's definitely a gamble. vonnie: we are going to get results and a few minutes. matt miller will be here to break down with us as well.

let's turn to top photos. making news today, number three top photo. into heat-- in tahiti a surfer lights himself on fire before writing the wave. tom: matt miller did this last weekend on long island. vonnie: he spent months testing protective body gear? matt: i have been doing that my whole life. mike: the "hunger games." vonnie: another shipwreck found at the bottom of lake michigan. it sunk in 1889. when the lake was ice caked. the boat filled with water but the crew survive. gosh, how ironic is that that the captain drowned on the titanic. tom: gordon lightfoot with the wreck of the edmund fitzgerald.

what is not known about the great lakes besides their size and mass, there are a lot of boats on the bottom. mike: over 1000 boats. vonnie: number one top photo. president obama set to visit kenya today to address the six entrepreneurship summit. nairobi spend weeks. for the visit, spending hundreds of thousands of dollars in cleaning up, and securing highways. they are selling posters claling alling it a visit of the royal family. tom: first, admiral stavridis: as the president travels to africa, it is the forgotten part of our diplomacy. admiral stavridis: it is. there are enormous terrorism concerns from al-shabaab there. we ought to be thinking that only about posters and taking care of the president but his security physically. tom: to the economic policy of robert hormatz and secretary

clinton, do we need to project a morsel -- more assertive economic policy toward africa? admiral stavridis: we do. i would throw latin america into the mix. the chinese are very active in both regions. we have to get in front of them. tom: another top appeared we mentioned american airlines and oil. i'm going to l.a. next weekend. we don't even think about it anymore. matthew miller here from blumer television -- from bloomberg television on american airlines. what is the distinction of american airlines versus other airlines? matt: american airlines is the biggest airline in the world. when it merged with u.s. airways, this was the justice department kind of allowing an experiment that they seem to not like anymore. 80% of all air traffic in america is owned by four airlines. tom: is that true? matt: that is what the department of justice suggested on july 1 when they opened this

investigation into the possibility of collusion between these four airlines. they say they are talking too much to collectively drive down capacity and drive up prices. although that actually -- mike: the problem is the revenue is not rising at this point. matt: so capacity has been expanding. prices have been softening. in response to that american on july 10 said they are going to start restricting capacity, and try and rivget pricing power. the question is will that work? tom: i do not understand that microeconomics? mike: if you have -- supply and demand, fewer seats. tom: but they will lose capacity. mike: they are going to try and contract. matt: restraint capacity. but it is difficult for them because here is an acronym that is important to the. prasm. very. important we're talking about revenue per seammt mile.

it has been a real problem. delta had a drop in the last quarter, 5%. delta although they had great earnings, our problems are 50% in chicago, in dallas and a lender. the problem with that announcement was that chicago and dallas are two american helps. everybody is watching for prasm at american to drop 7% this quarter. tom: thank you so much. admiral thank you for being with the fletcher school of tufts university. in our next hour, from columbia university and from pimco, richard clarida will join us. michael mckee and i want to dive in to an intense discussion on what janet is waiting for. the claims number yesterday was remarkable. what was the song? mike: "tie a yellow ribbon" made the top of the worst song in 1973.

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tom: good friday morning. gold, let me look quickly, wow. 1079 down $15.00.

we are beginning to have trouble beginning to think where it is it is dropping so quickly. our top headlines. vonnie: firefighters in northern california are finally going -- getting the upper hand against a blaze that scorched-earth 11 square miles. dry conditions and gusting winds made the wildfire hard to control. now homeowners were forced to evacuate are being told they can return to their homes. the japanese media company the bought "the financial times" has pledged to respect its culture. pearson agreed to sell "the f.t." to nikkei. the third will be in the sharknado series did not have the bite of numbers. 2.8 million viewers to sci-fi channel on wednesday night. sharknado 2 drew 4 million viewers last summer. the third shark fest was

wednesday's most-watched cable program.there will be a sharknado four. i don't understand -- tom: have you seen them all? mike: no. um -- i'm afraid i'm going to have to watch this one. it;''s one of those everybody is going to watch. vonnie: i was listening to a summary of the plot. tom: there is a plot? people in the control room watch this garbage? vonnie: our executive producer -- what did you say ian zerring plays? mark cuban is the president. tom: you are kidding. vonnie: casting was golden. tom: let's move on to what is most interesting theme of this july. and that is the vioewew of earnings. earnings are on the income statement at the bottom. this strange thing called

ebitda. the top line is revenue, the spirit of the american economy. some people have to tuck money away for a long time. joe joins us this morning with a more long-term view. do you people look at earnings reports differently than the speculation hurly-burly of the moment? joe: i would not say that we look at it differently, but it is important to think about what is likely to happen relative to expectations. it is always relative to expectations. i think this quarter, we are seeing a repeat of what we saw last quarter. tom: is your underpinning -- we had a great chart this week from deutsche bank about the persistency of share buybacks. do you do business with rebecca patterson every day just assuming that party will never end? joe: share buyback is the decision to buy back stacks and

is a corporate buyback decision. if you -- in the midst of financial crisis, financial armageddon did not materialize and you have too much cash. mike: when you look at a company, are you looking beyond jus buybacks to what theyir top line is this going to be in the future, or is a dollar of earnings the dollar of earnings? joe: you hit the nail on the head. it is important that bottom-up security analyst look past the buybacks. these buybacks are going to have an accretive impact on your eps which is going to at the margin help your overall results, but you have to look at earnings. you have to look at revenues and profit margins. the competitive landscape within each industry. mike: when do we start to see profits, revenues go u went is the topline increasep? joe: you have to see better global economic growth. of course, focusing on the u.s. first half of this year, as we know, was subpar. heading into the back half, you

will have accelerations. tom: this is back to what we saw earlier with verizon about the yield hog. joe: i think there are a lot of investors looking for yields. you are not only seeing this in the equity markets, your sing it across bond markets. vonnie: the quality of earnings, how would you characterize them? the top line is dependent on things like buybacks and cutting. dividends. aall sorts of other things. joe: the topline is not necessarily as inspiring as we would like it to be. there are some fundamental things out there that look at a good prettied up profit margins. very elevated. if you'd look at corporate balance sheets, they look strong. we have not seen leverage come back. that is another leg up. tom: thank you so much. which leads to a four x report and some of the challenges and gyrations that we see in gold. -- a forex report.

that is a stunning number on ruble. euro 1.0950. gold down $15.00. richard clarida next. ♪

>> this is bloomberg "surveillance" tom: gold continues to plunge.

putin's ruble cannot find a bed this morning. when do margin call start? what is janet yellen waiting for? the great american medical consolidation continues. anthem and cigna mate. good morning, everyone. this is bloomberg "surveillance" live from our world headquarters in new york. a lot ott talk about today. part of it is low nominal gdp means companyies mate. mike: we have a big deal with anthem requiring --acquiring cigna. $35 billion for aetna. that is a lot of money. tom: we'll will cover that. we are waiting for american airlines. mike: joutst out. -- just out. tom: i see sales revenue down. mike: on a per share basis --

they beat. your revenue question is what is important. tom: i would say the airlines are different than everything else you work on. vonnie: extraordinary volatile. the third quarter is anticipated to be weaker. but one of the interesting things about the airline in this environment is they're accelerating stock buybacks. if you look at each of the single airlines, american for example $2 billion. southwest half-billion. delta $5 billion. in this low rate environment and their stock prices -- american down 20% this year. tom: transatlantic flight prices were stupidly expensive and less stupid now. is there an emptiness of seats? mike: capacity is up. actual miles flown down trans-atlantic according to the folks at bloomberg intelligence. and now matt miller's prasm

-- passenger revenue per seam mit mile down. whether it is a conspiracy, you have to figure they're going to cut back on seats because supply exceeds demand. tom: american airlines. prasm is like spasm when you take an i.s.l.m. economics exam with richard clarida. we woke him up. ed hammond was drugged and asleep and we woke him up to go over the steel. $48 billion large. mr. hammond joins us now from bloomberg news. you had time to dive into the minutia of the report. if it is anything like the bank of american press report, this needs translation. ed: the main take away is the way this company is going to be managed. tom: it is about egos. ed: all egos.

this is played a ridiculously over the last month. the companies have been talking for a year. a month ago they announced that we have agreed that we can basically do a deal. today's price is a bump of $4.00 a share. very little. they had agreed that was not huge amount of overlap. the antitrust is overcome able. they could not agree who would run the company. joe sewedish, the anthem chief executive says that i want to do those jobs. they have come to a happy medium. mike: here is the question i have. you have got anthem and cigna at night and humana. we have gone from five companies to three. the hhs folks were already concerned about how much these companies were going to raise premiums. what does this mean for americans? are premiums going to skyrocket?

ed: if it goes through, that is possibly the case. the doj have telegraphed that they will be up on these companies severely over the next year or so. i think possibly -- there's no big deal left to do in the space. united is so much bigger, we thought it was unlikely they would play. they have been left out. you drop off by tens of billions of dollars. tom: mike mckee mentions humana. they do hospitals. let me ask a dump question. what to anthem and cigna do? ed: it is a good question. they take insurance from companies, very much like cars and provided to employees. tom: medical insurers. ed: they are much more weighted to private sector. whereas humana and aetna are weighted towards medicare. they derive their revenue from government funded health insurance. vonnie: are they doing these big

deals now because a, it's cheap or through fear of what is coming next, the presidential election cycle? ed: the two main drivers is the market is very favorable. it is very cheap. investors want rewarding deals. the other thing that is happen is obamacare came in. people wanted to wait a while to see how it affected their business models. realistically, they have done all they can in terms of managing that. so, the next logical thing to do to grow is m&a. vonnie: we will see you throughout the day. very relieved the ceo have come through. this is our twitter question of the day. anthem has struck a deal to buy cigna. are these mergers good for america? tom: that's a fair question.

we will focus on a very small corner that the federal reserve had boxed itself into. with us for the entire hour richard clarida legendary for giving out quality c's at columbia university in economics. he is one of the most for most economies on 2015 original monetary policy. i did a chart yesterday of claims as compared to employment. we are back to 1973. good news nrirvana. yet people like you are worried. has it ever been this dysfunctional? richard: the claims are very strong. the labor market data is giving mixed signals. on balance, it is positive but you have long-term unemployed and people working part-time full-time. yeah, we are getting mixed signal. tom: mike, do you assume a september rate hike? mike: that is the tilt.

that is what the market is assuming. it makes a lot of sense, if they're going to do it, do it when bond market liquidity is higher than december. get the process started and then you can take a look. richard: i completely agree. that is the logic. we had the statements by yellen last week which were more receptive to the idea that they would go in september. but this fed likes to maintain option alley. we will get a signal next week. vonnie: would a gradual pace signal another one for december? richard: yellen like to say every meeting is live, which is a stretch because they do not plan to go it every meeting like greenspan did. they are telegraphing a pace that is four hikes a year. if they go in september december would be logical. mike: when you look back to history, does inflation explode all of a sudden? they see no inflation right now

but is it possible they will end up having to change that pace because inflation suddenly bubbles up? richard: i think exploding inflation is very unlikely. in the u.s., we do not have exploding inflation. but inflation is now moving up towards the 2% goal. it could overshoot that. i do not think that is unlikely. tom: the money question off that is we now have -- the boston phrase wicked second commodities. this is ugly. which harkens to christine lagarde's new mediocre. how can we have inflation that pops up the rest of the world's basically imploding? richard: i would not say the world is imploding but we saw commodity markets -- soft commodity markets. the global market economy has moved down. in the u.s., the output gap is closing. again this is a fad that is monetary policy on a model. a model that says as the gap closes, inflation should go up. tom: what happens at 247 the

day they raise interest rates? is the answer nothing? richard: it will depend on the written statement and yellen will have a press conference. i think we will more at 3:30 on the day of the hike. tom: do we have another tangent? -- tantrum. mike: you have people that have never been through a tightening cycle. the rest of world buying u.s. treasuries. richard: exactly. this is a fad that was to avoid a a a taper tantrum. they're going to try to do that with a measured the stuff. vonnie: what happens to the u.s. dollar that day? because if it weakens, that could reverse some of the impact on emerging markets. richard: sure. i think historically, what i did a chart yesterday, within the last three fed right hike cycle there has not been a big pop in the dollar after the hike, it's

anticipated the dollar has moved. higher rates would be supportive of the dollar but not of another big bull move. tom: can you say all clear on greece? richard: i do not think you ever want to say all clear. think of greece as a patient in a chronic condition that is treatable with current application. so greece is a small part of the euro zone. they want to stay in the eurozone with tsipras accepting this deal. i think it is on the back burner. tom: richard clarida with us. yes, we will readdress the fed as we go through july and what they do in september. we need to look at margin calls. commodities implode. bart joins us. he has seen a few. stay with us. ♪

tom: on friday, let's have some fun. bloomberg "surveillance" morning must-read. richard clarida with us. forget about those two institutions. paul krugman writing on the mit gang. how about bernanke draghi. bob selden newly minted. -- obstfeld. hello mit gang. "being right is not enough to

change the world. it is better to be right, than wrong." we go to richard clarida on the third rail of this great debate. what is distinctive about the school down the river from your harvard? richard: honestly, a world-class institution built by paul samuelson 60 years ago p are think m.i.t. is at the intersection of rigorous economics and practicality. you see obtsfeld is a superb choice. tom: my non-phd take is there is a rigor for reality at m.i.t. less theoretical. and much more not mathematics but just let's observe the data. richard: the best mit economists have been at the intersection of doing rigorous economics and policy. you go down the list. mike: are they going to fall into the freshwater or saltwater camp? are they definitely saltwater or

down the middle? richard: i think those distinctions are less relevant than they were 30 years ago but if you have to pick you would have to say saltwater. tom: bart chilton with us. we'll talk all sorts of interesting things. bart, i need to go to you on this commodity implosion. how bad is it? what is different? bart: it is pretty bad. as you know, it has been going on for a long time. not just in the metals you have talked about this morning. in gold and copper. tom: live cattle. bart: hogs are down. tom: what is the signal to? bart: i think this is a global economic problem with demand. everybody looks at the metals with regard to china. overall, i think it is a slowing economy. some people say it is sort of defcon, we are headed for the abyss. i don't believe that is the case. tom: have you ever had a margin

call? bart:not personally. i couldn't trade as a regulator. mike: no, but you have kids. tom: you think that is funny. my margin call is to wish and. we will come back with -- my margin call is tuition. our twitter question of the day on mergers like cigna, are these mergers good for america? ♪

tom: we welcome all of you worldwide in new york. a bit of a transportation challenge this morning on two fronts. in the distance, new jersey again, as earlier this week, serious wire problems involving amtrak. restriction on train travel in new jersey. then behind the camera, for those of you on bloomberg radio looking east towards long island, not jfk boulevard yet having serious problems. wabc reporting power outages at

the major tournament at laguardia. terminal c. this is not the delta shuttle. the detlalta -- mike: the shuttle to boston. tom: it is confusing. laguardia having challenges. let's get to our top headlines. vonnie: turkey dramatically expanding its role in the battle against climate state. with militant strongholds in syria, turkey is adding patrols and sending warplanes on rates. in another shift, u.s. planes will be allowed to fly missions from bases in turkey. this comes after amount attack killed the turkish soldier. shares are perking up in the pre-market. up 22%.t he company is ranging -- raising its forecast as sales rose in the u.s., canada, and that america. nfl fans are pumped for tom

brady. despite deflategate, his jersey is the best seller. the patriots quarterback is facing a suspension because the nfl -- game balls were tampered with. all you need is the width of a scandal. tom: a great article if you decide to fight this, it could go on a long time. vonnie: the jersey selling? i'm kidding. mike: the union offered a settlement deal and the nfl turned them down. tom: i do not spend a lot of time on other than he is worshiped in new england. this is important that you get lucky. we try to do this at "surveillance" when you book richard clarida of columbia. but we have got a very special guest this morning, given where commodities are. they are coming, gold through 1000 an ounce, yes even corn rolling over again. they are coming. batrt chilton more than anyone

in america knows they are margin calls. this is serious stuff, where cash must be delivered now to make trades while bad traits less bad and allow commodity exchanges to get from friday to monday. mr. chilton is for years the regulator of these exchanges. what actually happens if gold goes $1800 to $1000 and goes souther? bart: the exchanges will make margin calls on the phone. that means that people are going to have to put up or shut up. and they will have to pay money. a lot of cash to the exchange. the great thing about futures and derivatives is you do not have to put out that much money. it is not like the stock market. so you can buy a lot with a little. but when the margin calls come and the margin call comes

because the prices may be rising so high that what you have in there, your margin, is not enough. they say you have to pay more -- tom: $84,000 by 4:00. bart: this happened in 2008. we saw it in a lot of the commodities, including cotton a lot of companies do not have the money and they went out of business. we saw 30 or 40 small companies go out of business. because they could not make the market call. tom: i will put this on a bloomberg radio. michael, jump in. it is the game of chilton. margin calls are coming. mike mckee, the second derivative is not pretty. mike: it is not. this is commodities are the ultimate cyclical asset. this has happened many times before. five years ago passed dodd- frank, how that markets change to make a safer if these companies start going belly up? bart: i'm not sure anything will

save them from a margin call. those of the province of the exchanges. at the agency we would get calls, what are we going to do? the bottom line is exchanges have to be protected from these things. but dodd-frank has definitely made us safer, despite all the criticisms from former senator phil gramm and others. the systemically important institutions out there, the banks, the large insurers, they are less systemically important. in my space in derivatives, all of these otc trades, the credit default swaps, those are now regulated. that is the biggest thing in the commodity space is the un-- are now regular. tom: richard clarida michael spence from nyu wrote a wonderful essay five years ago on be careful what you wish for in regulation. from an academic standpoint, in bart chilton's world, is there such a thing as too much regulation? richard: striking a balance is

tough. especially in finance when leverage and global factors are involved. i think that -- i have in numerous regard for his trying to point out that the sweet spot is hard to achieve in the real world. and there will be unintended consequences. tom: u.s. something from "the wall street journal." vonnie: it is from phil gramm who you mentioned a moment ago. the dodd-frank has empowered regulators. i think his point is that's not a good thing. producer you suggest that regulators are more qualified to set rules? bart: as richard said, it is a balance. it is troop he do not get me wrong. dodd-frank never would have passed if it was more specific. it would not of had the support in congress. quite friendly, the reason it has taken so long only 65% of the rules that were required to be done within the year are completed. so regulars have not done the best job. the problem is is that congress certainly does not know the specifics. tom: my phone is ringing.

it is a margin call. we will come back with bart chilton and richard clarida. there is a $48 billion question. there is a merger. anthem-cigna, are these mergers good for america? ♪

♪ tom: good morning everyone. life going on this morning. i'm particularly watching gold 1079 ounce. let's get to our top headlines. vonnie: officials in louisiana not revealing the identity of the suspect blamed her killing

two people opening fire in a crowded movie theater. he wounded at least nine others before killing himself. police say he tried to escape but turned back when he saw officers. the governor rushed to the scene. >> when these kinds of acts of violence happen in a movie theater, when there is no good reason when this kind of evil should intrude on the lives of family, i know a lot of us are horrified and shocked. the great thing about america is when any of us suffers we all suffer. this is a time for us to come together. vonnie: police were searching a room at a hotel where it is believed the suspect stayed. anthem is agreeing to buy cigna. the company settled on a cash and stock deal worth 48.4 alien dollars. negotiations to nearly a year. anthem ceo joseph swedish would run it. hillary clinton will outline her

vision for corporate america today in new york. she will call higher capital gains taxes and a review of executive compensation necessary. the speech comes as the controversy about her state department e-mails is revived. the justice department is being asked to investigate. other agencies want to know if sensitive information was compromised when she used her personal e-mail account. regulator giving the green light to at&t's takeover of directv. the majority of the fcc commissioners that the deal. they do not see a risk to competition. nearly a century after they debuted, chucks are getting a redesign. converse is introducing a new design of its iconic sneakers using a more durable kind of canvas and more padding.

how many pairs have you guys had in your lifetime? tom: that was so many years ago. mike: i still have a pair. vonnie: you should wear them on tuesday in honor of the new ones. tom: let's look at the bloomberg terminal. let's look at some of the backdrop. we talked to part children about commodities -- two-part chilton -- bart chilton. we went through and we came back nicely. vladimir putin with a victory lap on better oil and more stable ukraine politics. that is quietly reversing this week. a foreign exchange cells signals. a weaker, plunging, aussie dollar. richard: the one common

denominator is these are all versus the dire and are pricing in higher fed interest rate. the fed call will be supportive of the dollar, and also folks expect u.s. growth to pick up whereas they are downgrading now. i think it is as simple as that. tom: vice chairman fisher are members the rubin dollar and ever stronger dollar. richard: the strong dollar really surged in that. . -- in that period. my view is we continue to get a stronger dollar but not a replay of that 1999 episode. bart: when the ruvell got up towards that redline, the bank of russia started raising interest rates like crazy. richard: later they cut them, so i do not follow the ruble day today cover the pain level.

certainly, at an extreme level you would get that moved. tom: bart chilton, in this is the fundamental ability of paper, we have become a financial world. when somebody goes wrong on gold they do not and up with a truck full of gold in the driveway. are we to fluid and fungible with our transactions? bart: i do not know if we are too fungible. i do know people that actually have taken big loads of silver. people take a delivery of silver. tom: why are the pork delis in the garage is mark -- in the garage? bart: there are people who would end up in that situation, very few, and cannot store it here it

tom: we will be back with bart chilton and richard clarida. one of the quiet stories is yields come in 2.28 percent on a 10 year. commodities front and center. look at west texas 48.7 a barrel. vonnie: this is bloomberg surveillance. >> wall street is proving very useful to hillary clinton as a target. expanding on the economic plan the democratic front runner will outline proposals to end what she calls the tierney of today's earnings report. -- tierney of today's earnings report. david: from what we know so far, this is going to be a speech with a general focus, not a whole lot of detail. there are about four things we expect her to go through capital gains rates, looking at how that could be lowered so

people can hold onto investments for longer. shareholder activism executive compensation, and stock ibex. -- by backs. there is a small-town quality to all of this. it appeals to this progressive base. bart: the interesting thing about using the capital gains tax was when her husband was president, he lowered rates and now she wants to push them back up? richard: so it seems. remember just how long this conversation has been going on so we will see if it gets any traction. vonnie: is this her attempt to take a little bit of the elizabeth warren vote? bart: and bernie sanders as well. clearly relying on wall street for a lot of campaign donation. there is that range of the party that she needs to win. tom: bart chilton wants to jump

in. bart: back in 2008, she said that she would not raise it above where president clinton had put it, and that was 20% on capital gains. there is some talk she might go higher, at least in the first two years and lower in the out years to encourage that, longer-term investment. tom: now we go to econ 101 at columbia with richard clarida. if you raise the rate, you take in less revenue? richard: historically what happens is when you lower the rate because you generate more activity and there are these gains, you actually typically pick up some revenue initially. it is more controversial over the long haul whether that nest out. tom: the republicans have a cogent response to what we will hear from secretary clinton? richard: you have 16 candidates. tom: are you advising donald trump on his campaign? richard: no. bart: the more important thing i

think is what is going on, on capitol hill. people are saying it is not going to happen but both paul ryan, chairman of the ways and means committee and orrin hatch are moving forward with proposals. i am not saying go ahead and bet on tax reform being done but you may have a bill in the house and senate, that could set the stage for a new president clinton or president bush, whoever it may be. richard: she is not talking about this as a way to raise revenue but as a way to get back growth. her campaign is focused on growth. mike: what is she going to say about stock buybacks? richard: they are too often used to boost share prices. tom: here is the reality. michael mckee, vonnie quinn, and tom keene cannot get home when

hillary clinton has a fundraiser with wall street because park avenue is shut down. >> catering to the audience. tom: how do the fatcats that was -- that support her respond? richard: they seem to be responding well so far. i think they know pretty well who she is. tom: have you ever been to a fundraiser for hillary clinton where all the fat cats stand around? richard: i have not. i have met hillary clinton. tom: michael, last comment, it is a bit odd to have her lecturing wall street. mike: the interesting thing as we do not know yet if she will talk about carried interest. she said she wants to change that tax code and that would hit a lot of people on wall street. richard: she is a smart person, she is a u.s. senator. she knows this stuff.

tom: david girl, thank you. this morning, a merger 48 billion dollars. we want to hear from you on your medical care, or mergers good for america? ♪

♪ tom: good morning to our economy

implosion. brent crude with a 54 print about three hours ago, that is what gets my attention this morning. vonnie quinn is looking at the combination of 2 -- this is impossible here. vonnie: i am not combining these two ingredients, but our next guest is someone who combines them all the time. the company that put butter in your morning cup of joe is going to open its first brick and mortar store. stephanie ruhle will be speaking with ceo, a self-proclaimed while hacker. stephanie: let's get one thing straight, i do not like coffee but who loves this bulletproof coffee? it is a fad, a craze. of course hollywood does. celebrities love it.

they raised $9 million from trinity, one of the seed earliest investors in starbucks and java jews, which is starting to make many people rumble, grumble. vonnie: there is a genuine argument behind this, this whole bio hacking argument. stephanie: without a doubt, saying this combination is going to break down everything. bart: it is going to break down my lunch. stephanie: to see one of these fads that we see in magazines it is going to change her life your mind, your body, and now raising real dollars and opening up a store, it is a big deal. vonnie: $9 million is not a huge amount of venture capital money. is this their first round? stephanie: it is not their first round, but to see an investor like this who has invested in major ventures. did anyone think starbucks would

get this big? rich clarinda, are you a starbucks guy? richard: i am not. tom: richard clarida, one of our experts in germany, we cannot export it to europe. what is the europe issue that they do not get about water and coffee? vonnie: i think the founders would disagree in berlin, tom. richard: i am not going to connect the butter and coffee to entrepreneurial spirit but obviously it is a combination of a number of factors. i think there are a lot of complex factors, education upward mobility, not one factor. bart: it is definitely a difference between the u.s. and the rest of the world, innovation here. richard: i think a lot of studies would suggest it is

historically the way we have had productive relationships between universities and the private sector which does not exist outside the u.s.. stephanie: quintess paltrow likes it. vonnie: next on market makers coming up. right now, you are listening to bloomberg surveillance. ♪

♪ tom: good morning, let's get to our top headlines. vonnie: firefighters in northern california are finally getting the upper hand today against a blaze that scorched nearly 11 square miles. dry conditions and gusting wind made the wildfire hard to control but napa valley residents who were forced to evacuate are being told they can return. the media company buying the financial times is promising to respect the financial times' culture. pearson is selling the financial times. sharknado fell more than one million viewers short of

last summer's record. it was the top cable show that night and yes, there will be a sharknado 4. i have got to watch some of these today. tom: they should give these projects to michael bay. he would do something. vonnie: i watched "snakes on a plane." tom: you watch that? ok, this is important and i'm sure that michael mckee is with us this morning. america's unemployment rate is 5.3%. the unemployment claims are once in a generation wonderful. there's a chicken in almost every pot and yet the head is pricing -- the fed is pricing money in a panic.

the mass in the thinking, the theory simply does not add up. richard clarida is one of our greatest thinkers on monetary policy. michael mckee has read every single clarida paper and he is baffled by this as he waits to go out to jackson hole. what is janet waiting for? michael: that is a question i want to pose to rich. whatever you think of the economy right now, zero interest rates are not the proper ratesetting. what should we be at? richard: i think eventually the fed wants to get the funds rate up in the range of 2% to 3% roughly half a percent of real return on cash. that is what the blue dots show it as we discussed earlier, they do not want to get there that once. they say ultimately they would like to get the rate higher. at least 22 and half to 3%.

michael: do you agree that if they raised rates it would increase the economy? savers start to get more money and maybe they will get more. richard: what was striking about her testimony was that she said the economy "needs" higher interest rates and i think that shows the fed is coming around to that view. stanley fischer said after the hike the first time we will still have an incredibly accommodative monetary policy. it will take a very gradual liftoff. vonnie: we know that the fed does not have to see the whites of the eyes of inflation before lifting off. will we get to the terminal rate be cerise -- before we see 2% inflation? >> part of the connect between market pricing and the blue. is people are saying the fed may not to get the levels up to 2%.

higher inflation is a projection but not a reality so there is some down tail risk. tom: your latest essay for pimco is wonderful on reaction from dots. are they just an excuse for another crystal ball? >> we are better with them than we were without any information as i point out, there is a lot that the dots hide and a lot of misinterpretation of the dots. yellen is trying to use them as a signal to reinforce her notion of a gradual liftoff. >> there is nothing going on right now in the world. if you are looking for a yield, you are going to come to the united states. we are seeing a yield curve flattened. how concerned are you that the fed will move and nothing will happen? tom: well said. >> in terms of rates?

>> buildup he said we will have to raise rates more. >> the relevant interest rate for most people is five or 10 year yields. tom: can they control that duration? >> since the greenspan conundrum, we have grown to understand the fed has little ability to control the long and on its own. it depends on what is happening in china and opec. tom: the surprise in july is the second regular the -- second derivative of economy prices. that has got to effect their reaction. >> typically, it feeds through two channels, if it shows up in a stronger dollar that hurts exports and it shows up in terms of borrowing costs in the u.s.. part of the view that the fed will lift rates to a lower level than we saw in past cycles is

also a view that we will get back to a positive frame -- positive term premium >> pres. obama: is the conundrum back? >> i think it is still with us taking a somewhat different form. there is probably less of a savings glut but there is this gracious demand for safe assets. tom: the president has been original and his appointment. are you worried that the obama appointments of the governors of the fed within washington, is there not enough monetary policy experience on the committee right now? or do you applaud the different and varied resumes? >> i think there is ample monetary policy experience. lael brainard hasn't asked the english -- has a distinguished career. catherine dominguez, she was my student at yale. tom: is it true she may not get

approved by congress? >> based upon what we know now, that would be unsettling because she is definitely qualified. a nobel prize is not enough. >> it gets very hard when you have an election coming up, to get anything through congress. tom: we have to get our twitter question up and running. vonnie: back to the health industry, we asked are these mergers good for america? we are talking about the cigna-aetna merger. tom: look at the airline business, just starters. vonnie: the second answer, yes as a shareholder, what does the customer know? i am not going to even try to read that handle. our third one, sherman act equals bad deals for consumers. tom: this goes to the heart of

low nominal gdp and it goes back to andrew melded into 1930's, you get consoles are -- consolidation. >> you get another factor, low financing costs. with that combination of slow growth, the desire to shred cost and gain some market power ample funds available, it is all a recipe to get the m&a boom. >> is time for our agenda where we look at the stories shaping the day. i want to talk about the fed. they are meeting next week. no press conference so no decision expected by anyone. what you have to look for is what they say about the economy, do they ratchet up their forecast for growth ahead so that we get the hint they're coming in september? vonnie: i will be watching that and president obama traveling to kenya and ethiopia. it has been nine years since the president was in kenya.

the pictures so far are beautiful. they call them the royal family. tom: very cool. it is always important when we travel to africa. i'm looking at baseball today. the hall of fame inductions, there is always a big debate. this is the real hall of fame, it is hard to get in. vonnie: are you making hockey commentary? tom: know, but this is very tough. michael: pedro martinez goes and wearing a boston red sox cap. you have to be excited it is the only good news about the red sox this whole year. tom: this whole decade, it seems like, but pager martinez with a magical career. what was so great about him was he was a class act to the younger kids. >> and he is under six feet tall and weighs under 160 pounds. tom: and even better, retired with grace, which is the

toughest to do. vonnie: road trip to cooperstown. tom: richard clarida, thank you so much.

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

you are watching "market makers." matt: i am matt miller in for erik schatzker. ahead, another big deal in health care. amazon actually posted a profit is now the time for investors to jump in. stephanie: we were not sure if we were going to let him back in next week and he did it on live tv. wise move. hillary clinton wants to talk about the " tyranny" of today's earnings report. what that could mean for wall street and the economy, coming up in just a few. matt: top stories, it is a deal that may create the biggest health insurer in the u.s. anthem has agreed to buy signal for $48 billion in cash and stock or presenting a 22% premium. the deal caps on must a year of negotiations that frequently were