we will discuss this with david bank of rbc capital. this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. ♪ >> good morning, everyone. the government of the united states shut down at 12 noon today. will be watching usa-germany and we hope you enjoy the game. this is "bloomberg surveillance." i am tom keene with scarlet so and adam johnson. there is an informed conversation on aereo. decision isme court likely to be a fatal blow to aereo which will upend the economics of television. markets managing director david bank said this is a big win for the broadcast networks and their owners and a bigger win for tv broadcasting companies. is it now business as usual for rulingsters since this was widely expected or will it embolden them to be more aggressive in pursuing more revenue from cable operators and distributors? >> i think it's business as usual. i think the biggest impact is for investors. this was a big overhang for investors

he's managing director at rbc capital markets. good to see you again. >> good evening. >> let's start with mcdonalds, give me one strength and one weakness for them. >> the strength is that their brand has an incredible presence in the developed markets and that platform has held them in great stead adding sales layers and with those came strong earnings per share in the past. the weakness has been that it seems like the scrutiny of the generation and the way that they reach the consumer, largely through tv, they have had to think about changing those ways perhaps changing the type of food and then in most importantly in something you can get excited about in the future, the use of digital and mobile payment, things of that nature might be a way for them to win in the future. >> david, correct me if i'm wrong, it seems like the main battle between yum and mcdonalds will be in china, and if that is the case, who has got the winning strategy? >> well, yum has over 40% of its profit from china. it's a company owned business for them.

fans that own a kindle, the tablet spend about 30% more than those who don't according to rbc. they know that a lot of consuchlers shconsuchl -- consumers shop using their smart phone. retail sales will jump 25% to 18%. they stand apart from the competition, we have to wait and see whether consumers agree. josh lipton, "nightly business report", seattle, washington. >>> coming up, a landmark decision, the u.s. patent office cancels the trademark for the washington redskins. the cost could be huge for the third most valuable football franchise. >>> and finally tonight, a major blow to the washington redskins. the u.s. patent office cancelled the nfl team's federal trademark, a big step in what some hope will pressure the franchise to finally change the name. hampton pearson has more. >> reporter: the patent office ruling says the washington redskins should lose federal trademark protection because the name redskins is disparking to native americans. the campaign to change the team name has gained momentum with statements in recent months from president obama, civil rights groups

. >> on the federal reserve, thomas porcelli, rbc capital markets joining us as we moved to 2:00 him this afternoon. also with us on consumption in the spirit of retail, the chief executive officer of marvin trop associates. two different worlds linking. i look at the raging battle in my conversation with lagarde in what is this subdued potential gdp or actual gdp and there is a set of optimism that pushes against us. where are you? >> over what time frame? over the short term, i think it will make an argument for trend growth of about 2% in the united states. once again be on the next 3, 4, 5 years, trend growth will shift down materially in the u.s. got closer to 1.5% because of the demographic dynamics. >> is there any expense of any central bank or the federal reserve able to gain that shift? >> the reality for any central bank is, central banks don't really respond to structural issues. they respond to cyclical issues. even in an environment where i can easily build out a scenario where shifts to 1.5% in u.s., even with that growth, you could still have some inflationary impulse

my experience at rbc or bernstein or working with the people at goldman sachs. people have spent a tremendous amount of time in understanding this conflict. where you can route for a rebate and not harm your client and where you route for a rebate and you do harm your client. it is one where because it can toggle, for example, if there's 100,000 shares on offer in intel at $21 and they rebate someone who will pay me to route theirs offering 10,000 shares and i have 200 shares to buy, i can route it there, buy the 200 and get the rebate and no one is harmed. if i have 100,000 shares to buy, i can route it to one venue because they are only showing 10,000 because i'll ruin my experience in the rest of the venues. there are times you can get a rebate and fulfill your obligation and times you can't. it's up to every broker to understand where that inflection point is and to be very transparent in terms of how they route. >> so i guess my point is, if those companies are already present in the marketplace, the trade the way you are suggesting without a conflict of in

joining us is george garoe at rbc capital.f people say this was a short-cover rally, so it's not sustainable. what's your take? >> oh, no, i think this is totally different. first, i think this is a prepricing of gold. i believe the last time i was on this show, actually, with messily, it was very interesting. we were below the 1300 area, and i talked about too many bears in the woods. i think that was interesting that it turned out that we finally had this rally that call the fund's eye. >> what's so different now? >> ah, yes. from the last time i was here to today, we've had a number of things coming together to give this a new meaning. number one, before, we only had russia and ukraine, which meant that with sanctions there could have been a possibility possibility of russia not exporting material. namely platinum. rockets. and then of course we have a major problem with iraq that also kept crude oil from selling off and in fact going way up. every $10 in crude oil means at least 25 cents in your local pump. now we have the

and "squawk" market master jeremy siegel will join us along with jonathan gallup of rbc capital marketse stock markets. "squawk box" will be right back. >> up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your list of stocks to watch, right after the break. ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. ♪ >>> probably not going to run either. look at some stocks to watch. you running for president? >> condetemplating it. >> i want tv news to run that. on the record i'm probably not running. >> only if you get an endorsement? >> i might. >> you're kind of a blue dog, aren't you? >> i'll take that. >> the new york -- you're a business guy. all right, wisconsin energy is buying -- you say it. >> integrys. >> you say it. >> integrys. >> it's great. >> integrys. >> energy. interjies? anyway, for 5.7 billion in cash and stock the deal will unite th

kindl owner, for example, spend about 30% more than non-kindl owners, according to mark mahaney of rbcit's an data. amazon wants as much data about their customers as possible. strengthen that ecosystem with a phone, tablet, other hardware, you have data. then cross-sell your customers that much more effectively and efficiently. a broader long-term strategy. if. is a phone, though, obviously amazon would be entering a hypercompetitive market, one dominated by apple and samsung, combine to have about 46% of the market. they'd have to introduce a product different than the competition. in fact, amazon's invitation to this event was a children's book. "mr. pine's purple book" all about the character who painted his house purple to distinguish it from his neighbors. they clearly think they have a product they'll introduce today that stands apart from the competition. we'll have to wait and see whether consumers agree. guys, back to you. >> josh for now in seattle, thank you. >>> recap what we think we know about amazon's big unveil today. at&t, the exclusive character. capable of displayin

it was lowered to sector perform from out perform at rbc although some believe it could benefit fromations of an order by the emirates airline for its rival air bus a-350 which does compete with the dreamliner. boeing one of the leading losers among the dow 30 components off 2%. we want to highlight ge as well. reports say that mitsubishi and seamens are mulling a joint bid for some of the assets of [ inaudible ] france. ge has bid for it ps power assets. the two companies expected to decide on a competing bid next week a week before alstom's board is supposed to vote on ge's bid. we are seeing strength in semiconductors, the only group moving higher. we did have micron upgraded over at b of a to buy on expectations of stronger growth in europe and the u.s. back to you. >> thank you very much, mary thompson. wanted to get to the allergan/valeant deal not to talk about the various tactics being used both sides as they wage that war with each other, if you will, but perhaps to crystallize what may come out of this regardless of whether valeant wins or loses as the single issue for inve

the dow down 109 point led by boeing which was downgraded today to rbc.irlines are down across the board. you've got weakness in united and delta. american jetblue is down more than 1%. so there's weakness in the transports today, and that's helping lead the declines on the street. >> tell us more about this big movers. >> kelly, scott, we're going to start with boeing, the biggest lag-yard in the dow. rbc capital is doing it from -- to a sector perform to outperform rating and cite valuation at least for boeing. a very turbulent day for them. also for the airlines on news that germany's lufthansa issued a profit warning due to labor strikes and unexpected weak revenue growth in its passenger and cargo business which is translating over to other airline stocks here in the u.s. also nq mobile is falling. insiders said price waterhouse coopers resigned as the auditors but the validity of a twitter account and the fake account was taken down and nq mobile shares recovering a little bit of that downside move. we'll end with h & r block moving higher on better

we've run a series of tests on this using our own capital back when i was at rbc and they confirmed the findings that the professor outlined in his paper. >> can you repeat that finding in your words? >> sure. that routing specifically with the goal of maximizing your rebate lowers the probability of getting filled and it leads to adverse execution quality -- worse execution quality for t. >> does that create a conflict of interest? >> yes. >> let me just go back to professor batallio for one moment. is best execution a subject of determination at least in part? >> at least in part. we would argue more so subjective for market ordered because a lot goes into figuring out if you have a good price or not. standard order rs are a nasdaq order. we will certainly use that to see what best execution means for nonmarketable limits. fill rate is paramount. >> but is there also subjective factors in that determination for both? >> you're pushing the balance of what -- >> all right. you can't answer it. >> is there subjective factors in determining which market to go to for the ones for the order

at rbc or bernstein are working with the people at goldman sachs , people spend nature men this amount of time understanding this conflict, where you can route for a rebate and not harmed your client and where you route for a rebate and you do harm to client. if there are 100,000 shares on intel,n and tell -- on and someone is offering 10,000 have 200 shares to buy, i can route it there and by the 200 and get the rebate and no one is harmed. if i have 100,000 share to buy, i cannot route that 100,000 to that venue that will pay me. are times when you can get a rebate and fulfill your obligation, and times you can't. tos up to every broker understand where that inflection point is and be transparent in terms of how they route. if those companies are present in the market place, the trade the way you are suggesting without a conflict of interest so an individual investor can buy tooth that -- $2000 worth of stock, does not have to worry about being charged $.30 or $.40 , the free marketplace system has provided that investing model. getting back to part of your opening statement, you sai

rbc's data indicates 60% of people who intend to buy a new smartphone this year will likely get an iphone. they say consumers are prepared to pay more more for a phone with a larger screen, the krooen iphone 6 is rumored to have and out perform rating on apple with a price target of $100. actually screen size according to the survey, jon, is one of the most important things people look for in a phone. >> arguably a miscalculation by apple. they got to sort of thread the needle between people who want to be able to hold this thing in one hand and people who want the larger screen. exactly how large the body is here will be important. there is a difference between what apple has just a modest upgrade cycle and a strong upgrade psyche until hardware. that is absolutely going to be key. i want to ask spencer, since wwdc and all of the new software hooks that apple rolled out, how much harder is your team at zillow working versus any other year? are you going to try to take advantage of those? >> we are. every time apple upgrades the system zillow is all over it. i can't wait for a larger form

deutsche bank, rbc, sanford bernstein, some of the big players in the business, clearly used the dark pools of our clays. they have pulled their business. likes of goldman sachs, morgan stanley, jpmorgan did not use barclays lx. a small street known as wall street in a closed club, usually people talk about various businesses. eric schneiderman spoke to bloomberg about the issues at the heart of the situation. >> one of the things barclays was doing was changing the data and misleading clients about how many trades were actually filled in barclays on dark pool. they were saying they had this elaborate -- they had this elaborate propaganda about always going for the best price, the best phil. in fact, the data that this director was preparing showed that 75% of all the trades were filled in barclays dark pool. >> he did go on to say that it is up to what barclays does to directly affect what happens. for me, this is about relationships. you breach relationships, you breach trust read in banking, relationships plus trust equals these. >> anthony jenkins came almost two years ago. six mo

thomas purcell he with rbc capital will be joining us.n this new vector in inflation. the back and forth on what gartner -- governor carney will do. >> yesterday in the u.k., we have data showing inflation coming in a 1.5% year-over-year, the lowest level in nearly five years. interesting to see how that factors in to mark ernie's thinking. the message from the bank of england this morning am a still surprised that when markets are pricing and a rate hike st. nick unlikely, and 2014. could likely be 2014. >> i don't think there's been a great reaction that i saw. you see sterling, 1.6946. -- 169.46. i think it is this ferment of a very low base of inflation where up we go, is it enough yet? no. but do you pull forward from 2016? you see the raging debate with what bill gross is adjusting and imf and what those more .ptimistic are suggesting these people are more optimistic than the imf. >> it really looks like the u.k. is pulling ahead in the same month the imf downgrades its forecast for u.s. growth and also says they got it wrong on the

. >> moments ago published at rbc in a nomarkets, "vix way signaling complacency here." totally goes against consensus of complacency in the market. >> a different world, when you think about it. central banks supplying capital. what we considered normal back then is different. >> running us is "in the loop" anchor betty liu. >> a lot of action happening. is almost the- it 1-year anniversary since edward snowden came out and disclosed information about what the nsa does. joiningmichael mukasey us, the former attorney general who has spoken out and been very forceful, saying that the nsa is needed and that the surveillance, less buying, so to speak, is needed to protect america. greatly appreciate it. liu."e loop with betty don't forget erik schatzker and is coverage from brazil. look for those packages through the week. kevin roberts with saatchi & saatchi. very quickly here, the world cup -- it is all about tv, isn't it? thehis is going to be biggest tv event of the decade, the century. 3 billion viewers. 784 million -- maybe a billion -- >> who wins, adidas or nike? >>

rbc capital. they turned bullish in july of 2012.o keep cutting it and cutting it. stuart: that was tough judgment. back to you, keith. the 10 year treasury. it stuck around 2.5%. what do you make of this? >> i think the bond market is $800 billion worldwide. this tells me that traders are not ready to let go of the risk. i want to be cautious here. it tells me to be very, very cautious. stuart: thank you very much, indeed. that is the real halftime report. we have brett there with us. he has a new book coming out tomorrow. it has nothing to do with politics. it is about his sons battle with heart disease. during the very first days of his young life. welcome to the show. >> thank you, stuart. can you give us a brief outline? >> sure. it was a journey. we did not know it at the beginning. he started turning pale. we had this diagnosis right off the bat. twenty-four hours in. he had to have open heart surgery at 12 days old. a surgeon reworking the way his heart worked. a little walnut sized heart. it was essentially pumping the wrong

shares are falling after getting downgraded by rbc capital. >> the provider of touchscreen technologyive supplier of display chips for the iphone. they will pay $475 million to the japanese chipmaker. chips, ibm at number three is nearing a deal for its chip manufacturing business. ibm, which has been unloading less profitable businesses has been searching for a buyer for the unit since last year. >> number two, altra salon reporting first quarter results that topped estimates. they said earnings rose nine percent from one year ago. >> and number one, aig. the insurer named peter hancock as its new ceo, succeeding bob benmosche, who stabilize the insurance company and pay back eight 2008 government bailout. oncock will take over september 1. now to the call on the markets. i want to bring in the head of equities at usaa investment. his call is that now is the time to get aggressive with banks and life insurance companies, including, john, like aig? >> yes, we would agree. two of oure, favorite names. we did a transformation continues under peter hancock canthey have to show they execu

and the price target was raised from nine dollars to $11 by rbc.ht on nokia today? >> it is pretty stable. this area from eight dollars to $10 has provided significant resistance in the past few months. if you look year to date, the stock has been pretty combustible almost. it is up almost 2.5 times. i think we hold here for quite a while. i am not nearly as bullish in the near-term on this stock. we have to wait to see what the transition is from the three g lte. at as their main driver right now. 4gfrom the three g to the lte. that is their main driver right now. we could see some significant distance. >> especially right -- especially that we are right where we were at the start of the year. but get to some other traits. starbucks is going to allow their customers to charge their mobile phones on these wireless charging mats, but your trade has nothing to do with this. >> not at all. that is another added benefit of going to starbucks. it is another reason to get people in the door. but my trade is technically in area.3.50 that is where you want

. >> peter joining us from rbc capital markets., the information we got is the violence is in the north and bp operations are in the south and they're not concerned. do you agree with that? >> that's shutly correct from a ghee gravityical point of view. the major producing areas remain in the south. remember, the north is around 10% or less of iraqi production. 9% is in the south. those are not directly affected by this, but obviously with the back drop of this escalating hostilities there's always a concern that once operations, which are not easy in the first place, would become more difficult in the medium term. >> and how significant are the current oil moves? we're approaching now $114 a barrel. from a technical perspective, are we at any important levels here? >> i think we're very, very close. we've been in a trend for the the last 2, 2 1/2 years at narrowing tops and raising support levels and narrowing the volatility on the oil price. a lot of people very comfortable with the forecast around 100, 105, 110. the market is ac

rbc. >> how does that help us? >> my producer at hq put this together. estimates on credit suisse, $$750 million in cost synergies. assume 18% tax rate in fiscal year 16. we wrote them up, guys. why not put them up? let's roll through the next one. credit suisse, earnings accretion of .88. you can see it there. wells fargo, 3%, 7%, we believe there is an opportunity for multiple expansion and deutsche bank, same thing. there you see it. raising the price target to 17 times 2015 estimates. >> write these down. this is the list. te connectivity. i thought it was pennsylvania. no. they are right there in switzerland. pen air, you thought they were in minneapolis. they are a swiss company. >> these are the addresses of u.s. companies. >> chicago bridge and iron is not in chicago. they don't make bridges or iron. they are in the hague. cbi plaza in houston, dead wrong are. here's one. jazz written up positively today. they are in a house which is on one burlington road in dublin. >> don't the forget applied materials and. >> you would have thought it was in h

the nasdaq, the rbc decathlon raising money annually for cancer research, and that will take place this >> it's the only way i can skate. the skate is like this thick. you know, it's like walking. i love it. if i had the thin skates, i, like, fall down. >>> speaking of stocks that killed you, garden under performed the s&p by 15 points this year, 84 cents misses by a dime, red lobster comps down six after almost down nine in the previous quarter. >> i think about what dan meyer told me. they are fuel, that's all they are are fuel when you go to olive garden. >> meaning the food? >> yeah, never thought of it like that. i think the places are tired. they have a specialty group that's doing better, but this is one of the things, carl, you keep thinking the atavists say that red lobster could be run better. they throw it away. the numbers are not good. protein is loved. we know when we go to nice restaurants, a piece a fish is what you order when you want to be good, and nobody associates them with health and wellness. that's a problem. >> yeah. >>> the journal has a state today, i think th

this morning, both pacific crest and rbc downgraded saying there's little upside, that it sells at 12est of any of the companies other than fire eye. david, my prediction is this. the ceo, spencer, is probably behind me saying how can you mention this? spencer is one of the most activist ceos and someone i have to tell you a great spokesman, the zillow ads are everywhere. he told you he'd carpet bomb in order to wipe out true leo, although maybe there's enough room but zillow is the most expensive and i would be careful speculating right now that you have a bottom when two firms downgrade. what happens is then the salesmen will get on and say listen it's not too late to sell zillow but they should also add one other thing, until spencer comes on and says it's cheap. >> and he will. >> are you kidding me? i think he's booking himself right now. >> there he is. what do we have on that? >> alliance data systems is a stock that isn't talked about enough. it is one of the best barometers of retail sales. ed heffernan, i love him, he gives you the known. gary evan has teamed up with relatio

rbc and pacific crest and still having a pretty good time. big momentum stock holding up pretty well. >> guys, back to you. >> bob, thank you. speaks of real estate investment trusts, they are lapping the s&p 500 several times since january. >> with us now to talk about at "the new york post" 9 is steve wechsler, the president and ceo of the national real estate investment trusts who will be ringing the bell at the big board. >> good to be here. >> why now, why the outperformance now? where what does that say about where we are in the economic cycle? >> what it says is that we've been in some slow steady growth, notwithstanding the quarter revisions and that growth on a clowe upward basis is good for real estate. the economy is growing slowly, increases demand for fundamentals and for real estate and the properties that they can offer tennants. >> how much different kinds of investment trusts are there? >> there's about 250 publicly traded real estate companies at reits in the united states. the world today, there's 30 nations with reits, so

watching prices after running up 6 % since the beginning of june, prices pull back by half a percent, and rbcin a note this morning current rally prices seen as unsustainable because of things like decreased demand from exchange traded products and chinese buyers not fully participating, and speaking of china, the country's chief auditor uncovered about $15 billion of loans backed by falsified gold transactions so an interesting story there, certainly, gold is a focus today. back to you. >> dom, thank you very much, gdp jolted and trayed on, but what is the outlook for the second half of the year? essentially, they are telling you to get defensive. when you compare the top speed of dsl from the phone company with the top speed of comcast business internet... well, there's really no comparison. why pay more for less? call today for a low price on speeds up to 150mbps. and find out more about our two-year price guarantee. comcast business. built for business. >>> welcome back, i'm jackie deangelis reporting, and the department of energy out with the storage report. a build on our hands of 1 10

barclay's, rbc, saying use this as weakness to buy. skechers tells me that yoga is still very hot.w. do i want to go in and buy lulu. it is hard to make a determination if you do play lulu do it in calls. get stopped at the 40 level if you want to play lulu. >> all right. you heard it here. >> yeah. >> let's get to dominic chu on the floor, a little more on what is moving this morning. >> well, i mean kafdavid what w have a situation where we're running up to this resistance level. see the record high or close to record high for the stock market right now. backing off a bit. this is the same pat were we've been seeing over the past week or week and a half with markets. trying to find a reason to go higher and the path of least resistance is there yet we're still waiting to see if there is a downside move. what we want to note over the course of the past few weeks we've seen some notable moves better or higher in some of these more cyclical or economically sensitive names. think about industrials or financials or retail stocks, those consumer discretionary ones, they have been the b

flat out said yellen was wrong for her comment that inflation is just noise, and tom pore khellie at rbcs wasn't yellen's subprime moment, a reference to ben bernanke's dismissal in 2007 of the threat that subprime mortgages pose to the economy. one more point, the day after the fed meeting, the market's black swan index, which measures extreme fear, spiked to its 2014 high and is actually up 12% this year. so, taken all together, kelly, yellen will have to be very careful about how she approaches inflation in the future or face the market's wrath at some point. >> jeff, thank you. let's get more thoughts on inflationary concerns. we turn to a fed veteran. gary stern is a former bank of minneapolis president, and he joins me now. welcome. >> good afternoon. good to be here. >> so, what do you think about those concerns that this could be a subprime moment? >> i think they're probably exaggerated at this point. i think chairman yellen is right that fundamental underlying inflation doesn't look like it's getting ready to accelerate by any appreciable amount right now. inflation -- there's

joining us right now is peter schafrick, head of rate strategy at rbc capital markets.going to happen? >> good morning, first of all. i think we heard it before, but the clear thing is the interest rate thing. but i would stress and also the previous speaker mentioned it, is not only the rate decision, per se, that's going to drive it, it's whether they're going to promise to keep it there for a long period of time, and also whether they're going to keep the so-called downward bays in place, ie, whether they promise more. that's the key thing to watch out. and there is going to be more to come. the market is expecting more. what else could there be? a targeted road, further measures is the key thing to watch out for. >> peter, for the people playing along at home, watching this and the market reaction, at 7:45 what we traditionally get is a quick decision on interest rates. you'll probably not get much more until draghi actually starts speaking. so does the market potentially have a knee-jerk reaction or do they hold off and wait to see what he says to see if there is m