america is in a state of change, english and spanish less spoken here. good morning, everyone, this is "bloomberg surveillance." it is tuesday, may 27. tom keene and joining me is scarlet and adam johnson. the only problem with starting in the tuesday is somehow you feel like that week lasts longer because -- >> it's a four-day week where -- work week. >> service company confidence in the u.k. rose which indicates continued expansion. economic data in the u.s. starting at 8:30 a.m., global goods orders and then 9:00, the case schiller home price index, and then richmond fed manufacturing at 930. >> it's a busy week but then we

go on to a second look at first-quarter gdp later in the week which may decline. >> that's a rear view of the first quarter but radioshack is the only company of note reporting. >> their store were i live is gone. >> it's a train wreck. let's do a data check. equities are better than good. a record high in the s&p 500 and we advance further. the euro is off the key elections. vxx shows the good news in a quite markets. goal begins a decline, still and arrange but nevertheless $1284.

but weaker yuan and the indian rupee turn as they have a new government. here is the minimizing shareholder value of astrazeneca. >> that is painful. table,as a deal on that 53 pounds, 50 pence and now it's trading like 42 because there is no deal. we looked at the newspapers and scarlet fu did that. >> there is a lot to go over with the elections. i want to start with ukraine which has a new president ends in his excess on the battlefield. the governments of the military has significant significant losses from rebels. the its helicopters to retake an airport in eastern ukraine and 30 rebels were killed. -- the newident president is a billionaire and

vows to step up operations against separatists. there is no continuity between the different rebels. some stand for aligning with russia and some say we don't trust russia. >> the bottom line is the guy starts strong with military action. there was a real mystery to the morning after. is noblunt, there mystery. they are attacking separatists and eight. -- in eastern ukraine. >> he won with 55% of the vote. >> a lot of people were not voting. >> in the eastern half of the country, they said they could not get to the polls. >> we will check in with ryan chilcote in a moment. page story isnt pfizer ending its takeover bid for astrazeneca. the $117 billion not enough and

astrazeneca says it does not take into account the drug it has its pipeline. there is a three-month cooling-off. before anymore talks can take place. pfizer's are hoping that they can push the deal for next time. fascinating the way the by sideline is up on this. one group was for it on the other group was are you kidding me. price was within 1-2% of breakeven. in other words, you can only pay so much before it's no longer adding to pfizer earnings. outou wonder how this comes if they revisit this. do we have a third story? >> of course, this is about china pushing domestic banks to

replace ibm servers with chinese made ones. it's some retaliation after the u.s. charge five military officers with cyber theft. the chinese government is now reviewing whether their reliance on ibm servers compromises the country. >> talking about consultancies and china might be pushed out. there are ramifications. >> it's effectively a trade war without being a trade war. the dominoes start to fall. >> we expected some kind of pushback to happen and this is what it looks like now. those are the front-page stories. >> we are trying to get our head back into it. marketvery international . ukraine has held elections but

can he all the people and the nation together? ryan chilcote was in st. petersburg, russia and is now in kiev, ukraine. what is the single thing i need to know from you now? it was what you were talking about earlier that the new president elect of this country is upping the ante in this country's conflict with the kremlin. the kremlin warned ukraine from escalating its military action in the east of the country and that's exactly what the president-elect has done. we have not just sing ground troops but fixed wing aircraft, helicopter gunships and active military combat in the eastern part of the country as the ukrainians try to expel the separatists in that region. that is a president-elect indicating he will not be rolled over. he will not give up on the eastern country. >> what is the support or dialogue between the separatists and russian? >?

>> that's a good question. the kremlin says it does not have control over the separatists though it has not condemned them. we saw over the last 24 hours was very interesting in that we actually have pro-russian fighters coming into ukraine from russia itself. these are fighters that described themselves as chechen volunteers, irregulars if you will come in a part of the regular russian military but that's not how the ukrainian government sees it. the ukrainian government is accusing russia of intervening militarily in the complex. the chechen fighters are battle hardened guys who would have thought in at least one war between russia and chechnya before russia effectively took control over chechnya. that is a ramping up of the conflict on the separatists side as well. >> give us some color on the president-elect.

he is a billionaire, we know speakst he also ukrainian and russian fluently. what is his backstory to work with different groups of people? he's very interesting in that sense. he has made a pile of money. we estimate his fortune at about $1 billion from selling his chocolate which is the biggest brand in the country and does pretty well in russia, too. he was foreign minister under he wassident and then the economic minister under the next president. streethat, he joined the jantests to expel president ecowas from power. he has worked with everybody out there. coming away with a 54% vote is a very impressive showing, the closest other candidate in the polls got 13%. he avoided a second round and

has a lot of support going into this conflict which continues. >> thank you so much. our guest hosts this hour is stanley cower. he is an expert on your nation's fiscal budget, it its deficit on the way to a surplus. joining us as well is stephen whiting. with you.t it's almost a non-event for this three day weekend up up and away for equities. why are equity market still driving higher? >> record high corporate profits are still growing. >> is this once again wrong? >> yes, in the first quarter it was not a brilliant quarter but for an economy that sequentially did not grow much at all, we talked about the revision earlier. it was a real frostbitten quarter and we still managed to grow over the past year for just

over five percent. we will continue that. with threeshows percent over the next few quarters, we will have good earnings news. >> you were always out front on what the market signals. does the market doing better signal better gdp growth down the road? >> yes, this is a market that essentially discounted a great deal of confidence last year. this is signaling there is more to come but we are requiring a follow-through in the real economy. if the economy were going to stall out from here, we would have difficulties in the equity market at this level. you have a bead on washington, what do you think of president obama making a surprise trip to afghanistan? >> he has done this before, he and the vice president. you would not announce something

like this ahead of time. day, itwith memorial was in part political and in part sincere to show the troops that you support them. >> in their a, we are going to pull out troops by the end of the year. >> i'm not sure that is circling the wagons. >> it could be a victory lap or the fact that we have so many americans who have died in afghanistan -- what are you saying? >> this is as much toward the families -- this is personal. >> i think the last time we spoke to you, there were headlines about a military going back to 1940. gote i've seen you, we've ukraine, china, vietnam, the chinese sunk a boat overnight off vietnam -- how does our military shrink when i see a president with a tableau behind him? >> it's very important not to

find -- not to define military might is numbers of people. the way we fight these days, the military contingencies don't require more people on the ground as much as they do a more technologically proficient military. don't just count the number of troops. you have to look at spending on other things and what the capabilities are. >> can we afford to give up one carrier? >> sure, it just depends how you will substitute. carriers in many ways our tech knowledge ease of previous wars at this point. if you got missiles and drones and god knows what else, there are other ways of a compass and the same thing. collender is with us and we are getting you prepared for a four-day workweek. >> i have never seen you this excited. >> i got more than four hours sleep. and a beverage of my choice.

i went on instagram. this is proof. >> last night, presumably, not this morning. >> we've got a full two hours of "bloomberg surveillance coming up. >what language should your children or grandchildren learn to speak? that's eric twitter question of the day. ♪

>> good morning, everyone. important -- you wonder what will be said -- anja jyane

is with deutsche bank and he has challenges and they will be discussed with stephanie ruhle 10:00rket makers" live at a.m.. is the most important interview of the day. 10:00 hour.t in the this is "bloomberg surveillance." we are going to london right now. . big transaction in england falls apart another gets high-level attention. iser abandoned its bid to buy astrazeneca. the biggestbeen deal ever in the drug industry imeltantime, ge's jeff is getting ready to talk with the french prime minister. ge got an extension of the deadline for its land purchase by through a so what is jeff imelt going to do with this extra time? groundworklaying the

for a charm offensive. , have seen people from ge jeffimelt will a dress the french parliament tonight. this is about getting the french government comfortable with this push themoralthom and away from backing off their rival from siemens which could come any day now. >> one common denominator in the ge transaction and the visor is job guarantees. are these considered bloated companies that have rooms to -- room to cut costs aggressively? >> not particularly, the job guarantees are really a symptom of the political environment in europe right now. and the u.k. and french, the populist right wing did well in elections and that has

politicians nervous about how voters perceive their economic management. i think we will be hearing a lot more about demand and these kind of guarantees when deals happen. >> you mentioned charm offensive. we saw a complete lack with mr. reid of pfizer when he went to the u.k.. what does jeff imelt need to do to turn up the charm? >> he has something on his side which is significant which is that target once the deal and has agreed to this do with ge. it's a totally paid-up french company so they can make the argument that this is a good thing for them and for france. in the u.k., this was a situation where astrazeneca did not want to be bought. most people would also agree that gef has played this reasonably well in france. it's a hard country to do business where you have to be prepared for politicians to perhaps say one thing behind closed doors and turn around and tell the press and other thing. getink ge and jeff imelt

that but this is a bumpy road. >> the french government and the u.k. government have played prominent roles in road blocking both transactions. would this be as big of an issue if the buyer were not an american company? fire ands is the rival this is an offer that has been solicited in the case of alstom when it elements of the french government, the idea creating a european champion. there is always a bit of baggage around having an american buyer. i don't think it makes a huge difference. there is enormous nervousness out there among politicians out or threatening jobs and that is pretty much buyer agnostic given the broader political context. >> thank you for your time this morning. upve got a lot more coming

in the next hour, the former deputy director of the consumer financial protection board will be joining us. "bloomberght here on 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 bloomberg surveillance," futures are up nine on a strong friday close. checkre four-day workweek -- jeff -- top headlines. >> the military is trying to figure out how to rescue the nigerian girls.

pope francis is wrapped up a three-day visit to the holy land. he mourned the victims of the in israeland attacks and pope francis called for the establishment of a palestinian state. in the nhl playoffs, the los angeles kings are now one game away from the stanley cup finals. they meet -- they beat the chicago blackhawks last night and lead the best-of-seven conference series three games to one and bring it back to new york tonight. the new york rangers have a chance to get to the first stanley cup in 20 years. >> it's exciting. the los angeles kings and the rangers, nobody would have predicted this. >> although the western conference teams are stronger than the eastern conference team so i am worried. we have to get through tonight's game first. >> there is not nearly enough attention paid to western

conference hockey. there is a huge bias of coverage in the eastern teams and you forget. >> we are talking about the original sex. that counts for a lot for it. >> here's our morning must reads it -- >> i was actually cooking this weekend. why can't washington figure this out? and do-nothing congresses, why cannot we balance it the way i we balance our diet? >> people don't like diets. it's the same thing. people say i want to do this but

when it comes down to the hardware, it becomes impossible where they don't want to exercise is not -- as much. . >> has the government proven ability to eat less? >> no. goingtionary spending is down as a percentage of gdp. >> we are just getting started on this conversation. stan collender is with us for the hour. will the deficit turned into a surplus? ♪

good morning, all of you worldwide, this is the view from the hamptons of manhattan. entire control room was in

the hamptons as we can. no, that's gorgeous manhattan on a perfect day. it is like summer today. good summer morning to all of you in the northern hemisphere. a perfect day in new york city. this is "bloomberg surveillance," scarlet and adam johnson are with me. let's do a quick data check. we were up friday. let's get to adam johnson on washington. >> we have new evidence that this is not a do-nothing congress. it's just to do very little congress. washington is on track to pass the fewest number of laws in a given year since 1988. -- 1948. collender what is this record gridlock mean? >> we are not doing a budget

this year. are we going to do a budget in the next couple of years? the country has survived without watches but the better question is, does fiscal policy or anything else washington is doing have any rate -- any ability to respond to the economy? the answer at the moment is now. -- no. it's entirely political and the private sector is on some. >> if we are not responding to fiscal policy can what is driving it now? this is fundamentals working. >> there is a growing population , they are growing hours and there is more productive labor force. you have to hope that you're not in one of these crisis moments where you are just about over a cliff and government needs to step in and it's not there. >> we want to bring you to disparate views.

how critical is economic growth to our fiscal policy? to me it is everything. >> absolutely critical and unemployment has a powerful correlation with near-term budget performance. and does notatters have a close correlation is the long-term structural performance. that depends on whether we want oflive in ever larger share our life in retirement and provide benefits at a level consistent with people who are retired. are we reaching up to get to the plug-in? >> at the moment, we probably need 3.5% real gdp growth to have an impact on the budget, to have the deficit declined further. whether we will get there is a more interesting question

without government intervention. the government is withdrawing from the economy and given the politics, there is no chance this will change soon even with elections coming up. president obama the most republican president we have had in ages on fiscal policy? >> voters would never say that. >> look at the trajectory -- three percent gdp. >> and the deficit continues to fall perhaps for the 2016 election. who benefits the most from this? >> it looks like nobody is benefiting. the president is not getting credit for it at all. >> why is that? deficit or billion 450 that it will be this year is still a deficit. it's clear that no one wants to take credit for the fact that this is the largest four-year drop in modesto -- in the deficit since world war ii. >> at a percentage of gdp is about three percent.

we have not had a surplus since clinton but running a deficit is somehow acceptable? deficit can be acceptable when you think about fiscal policy relative to the economy, sometimes the deficit is important like in an economic downturn. for every one who complains currently that the economy is not growing fast now, when you have monetary policy and fiscal policy not helpful, the economy is not growing as fast as it might. >> it's difficult to say that monetary policy is doing nothing we have very accommodative monetary dollars he the fed is expanding its balance sheets. incremental a, there is less going on to stimulate the american economy and fiscal policy has been a significant drag. >> is this the worst news for

democratic primary nominees or the republican set of nominees? who likes this world least? >> probably my wife. democrats hate what is going on and reducing the deficit and not getting credit for it and an economy that's improving. probably the most republican president since bill clinton had four surpluses in a row. >> it's fascinating. the president's approval rating right now is like 42% which is the lowest of his presidency. what is he doing wrong? >> where do you want to start? he's got a republican minority in the senate and a majority in the house that's been after him since the beginning. obamacare, the ukraine, the fact

that housing is still in bad shape, unemployment is still higher than people would like although it has come down -- the deficit was always a surrogate. he was never the issue. if the economy were booming and unemployment was 3.5%, nobody would care about the deficit. it's just a surrogate. >> when it comes to washington being productive, what are you most hopeful about? >> not much, i'm sorry. i most optimistic about the yankees but we will talk about that another time. [laughter] you got to keep in mind that even if there is a republican majority in the senate, after the next election, the majority will be narrow and they were -- they will not likely get a lot done. >> what about immigration reform? >> will not going -- will not happen. will discuss our single

best chart when we come back. it's the most commonly spoken language in the united states besides english or spanish. it's a doozy and this is state-by-state. we will tell you what that means about immigration and that brings us to our twitter question of the day -- >> sanskrit. can you speak it? >> it depends on a beverages there are.

>> we are starting in eastern ukraine where the military used helicopters to attack probe russian rebels holding an airport. at least 30 rebels were killed and the ukraine newly elected president is, sing to wipe out the separatists. sec wants to shift more stock trading out of the exchanges and away from private trading venues run by banks.

among those being targeted are operators of the so-called dark pools. office, clash of the titans -- no contest -- the x-men movie took in $111 million on memorial day weekend. comicthe latest in the series grid last week's champ was "dodd zila." -- godzilla. >> i saw a polish movie that's phenomenal. it's about a girl who is a nun and her family in poland. it's fantastic. i saw the one with mark wahlb erg. that was an intense movie. >> i don't watch movies anymore. >> let's get to our single that's chart. >> this one is a map. it's from data from the census

bureau's community survey to determine the most popular languages by state. a lot of surprising answers. in new york, outside of emotions spanish, is chinese. in california and nevada it's tegala. in new england, russian. virginia and georgia, it's korean. in virginia? >> in arlington, virginia there is a large korean community . i did not think it is more prevalent beyond that. speak english so i guess the arlington area more than represents them. it raises questions about immigration reform and how the

demographics of the country is changing rapidly. is washington up to speed? with the rates of change of demographics? >> immigration is an emotional issue, not substantial. are members of congress who steeped in the facts but for most people, this is an emotional thing. as a result, the facts will make no difference. about laborrry supply and worry about skilled labor and what you can bring in terms of creating additional jobs. the fastest-growing employers are new businesses, new immigrants, new businesses, new opportunities for americans were nativeborn. the companies in the s&p 500 were either founded by an immigrant or the child of an immigrant? and yet we had a very restrictive visa situation and

those of the guys bringing the money in. >> that's a competitive advantage that's important to think about relative to other countries. >> within the polarization of where would you presume this will be in 2017? in january of that year, there's an inauguration speech and then what? >> the answer is nothing will change. >> don't be that cynical. which party is more opportunistic and taking advantage of this america where the foreign language is spoken most in california is tegali,. >> at the moment, the democrats have the ability to have more credibility. they have talked about openly and republicans have not pushed for it is much. it would be difficult to get it by the republicans. >> that's why some say they are

not resonating in parts of the country. >> then you have the president nominating julian castro for hud secretary which will be important for the latino community. >> what language should your child learn to speak? that's our twitter question of the day? >> can i throw in english? what should they, like, learn? like, you've got photos. >> we will go around the world starting with a serious one at home. students at the university of california santa barbara and the university of california los angeles are holding a candlelight vigil for so many people killed in a rampage near uc davis over the weekend. seven people including the sugar were killed and seven others were wounded.

>> the more i read about this, the more heartbreaking it is. >> his parents raised in their car trying to alert police that they think their son is about to do something horrible. can you imagine? >> you would not expect it there. >> every parent's worst nightmare. >> our number two photo of the date is the world cup protest in brazil. they are still happening and members of an anarchist group hold us -- held a somewhat diesel protest while burning the brazilian flag for the world cup --ins on spurs day, june 12 on thursday, june 12. they're protesting the fact that the government spent so much public money to build the stadiums and limited infrastructure that will entertain the world when there are so many others -- >> they are not quite ready for it yet. they need another month or so. >> that's what i heard. >> they need more time. star of the old world cup

for the u.s. did not make the team. , not that inovan know much about soccer. i noticed that watching espn. >> how about those rangers? >> our number three photo of the superman on a motocross bike at the world tour in japan. i cannot even fathom what that is like. you release the handle bars and grabbed the back of the bike. this is the real deal. miller north of his second drink. i guess you just get back on. re-brandingis itself this way. >> there is another way to do advertising. >> that certainly gets my attention. >> i saw one chart this weekend

-- newspaper ads inflation adjusted her back to 1950. >> in other words, what they cost? >> yes. >> does anyone really read a newspaper anymore? let's talk about stocks continuing to climb higher. what are some other healthy investments you should target as stocks continue making new highs? we will discuss that with stephenwieting of citigroup. this is " amber surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. ♪

manhattan, the empire downtown, the and new york harbor and out there is an error plane landing. adam johnson is hoping to be on that airplane. >> that would be nice. >> it's summertime. >> that almost looks like an instagram photo. that's the real deal. >> it's beautiful. it was a pleasant evening. . >> it gets a little bit cooler

at night. let's get you company news -- sony is bringing game console to china by setting up two ventures. china lifted a, 14 year long been on game consoles. a new first -- a new survey says twitter is hitting a speed bump. the number of twitter users in the u.s. should grow by less than 10% next year. asia is still a hot spot there. that's expected to rise 34%. apple wants a federal judge to ban u.s. sales of some samsung smartphones bridge here we go again. california agreed that samsung infringed on apple patents. it always comes back to the fact we are talking about smart but no one uses anymore. >> this twitter thing is a big

deal. earnings come out and of july and we will be talking about this with twitter and facebook slowing down. on the equity markets, it's a healing 201k, the standard & record high. at a the bull market is up 160% since early 2009. stephen wieting joins us. he suggests think emerging markets in the beleaguered commodity sector. are you saying move away from u.s. equities? >> it's a very mature bull market in the united states. we think financial markets made u.s. participation and we will have positive returns. this year is likely to be high single digits for u.s. returns that we have more beaten-down valuations and other parts of the world. europe is still, particularly

the periphery, we have severe fiscal tightening and a great deal of restraint from higher interest rates. they are beaten-down as markets that are recovering and will probably catch up. >> i had an extended conversation with mark mobius last week. how do you know when to step in to emerging markets? >> exact timing is quite difficult. last year, the local political events in the emerging markets created a great deal of turmoil. there is some bounceback impact with in these emerging markets, the same fragile five. there are emerging markets with good fundamentals like asia. it's good to have significant improvement with his trade linkages to europe and the united states. it has low valuations compared to a good deal of the rest of the world and a good deal of other emerging markets. >> what do you make of the elections held in europe this weekend for the european parliament where some i parties

effectively want to go back to nationalistic platforms? in financial markets, the effect has been minimal. political discord, parties being far apart, this has had very little affect on the american economic recovery fuss far and it may be a time where there is a critical need for cohesion in some future crisis. as far as the ordinary course of business, unless a completely breaks apart the eurozone which is unlikely, it's not that material an issue. election int the india? is that the long-awaited catalyst for that market? >> everyone is counting on that but what we need to be careful of his election your euphoria, there's a certain level of expectations build and use others in mexico that when you get desired political reforms and you get what the market wants come you get a great deal

of euphoria in the market quickly. >> you had the advantage of working with edward morris. -- morse. give us an update on the bill -- on the bear market? >> i'm not sure we want to call it a bear market. the amount of risk you face looking forward has come down but it is asynchronous. there are commodities in short supply and commodities in excess -- you cannot simply take a broad-based futures market view of an index and say this will generate a very good return. you can find individual opportunities and we have been moving away from an out right every should view of commodities. >> thanks for the up date. thank you both so much. our fourex reports -- there is the yen, weaker off the

last two days. remembyi. >> in the next hour, raj date will be our guest host on a quote surveillance." ♪

>> this is "bloomberg

surveillance." >> ukraine hold an election. a new president attacks separatist positions in eastern ukraine. pfizer might give up on astrazeneca. astrazeneca minimized shareholder value. bodies musty means go on wall street. good morning, this is "bloomberg surveillance." live from our world headquarters in new york. tuesday, may 27, a four-day work week. joining me is carl phelan adam johnson. our guest host is raj date, former director of the consumer bureau.l projectection adam johnson? >> u.k. service companies confidence rose to a record, indicating continued expansion for the service side of the economy in the u.k. economic data in the u.s. -- 8:30, durable goods. 9:00, the s&p-case schiller home

price index. followed by the fed manufacturing index. and: 30, the dallas fed manufacturing index. before the bell, radioshack. >> i look forward to squeezing and all the economic data. the negative statistic we should see -- that codifies how cold. 84 in new york. cold and freezing. >> so cold. >> it was frozen. >> every company blamed the weather. retail earnings were the weakest and 13 years based upon reported members of the forecast. >> let's get the company news. disputelout from the between the u.s. and china over cyber espionage. the chinese government pushing domestic banks to get rid of their ibm servers and replace them with ones made in china according to people familiar with the matter. lastly, the u.s. accused five chinese military officers of stealing secrets from u.s. companies.

the biggest proposed deal in the history of the drug industry is dead for now. pfizer has abandoned its $170 billion bid for astrazeneca, hoping investors will push astrazeneca to return to negotiations. u.k. log requires a three-month cooling off period before another offer can be made. abercrombie & fitch on a charm offensive. reaching out to institutions that control 60% of its shares. placate shareholders who are unhappy with the ceo's pay package. michael jeffries' pay has been cut 95% from 2011, when he made $48 million. that is this morning's company news. >> welcome all of you. let's go to ukraine. ukraine has held elections. piece a and the nation nation together? and chilcote is in kiev joins us this morning. was is the first to do for the new president? >> the first to do for the

president-elect, president poroshenko, is to unite ukraine. ratcheting up ukraine's military operations in the ease. we have seen that not just with ground troops but with helicopter gunships and fixed wing aircraft. thely heavy fighting in 80's, something russia warned him not to do. he is upping the ante. his goal is to clear the east of the country of all rebels. he said it has been taking too long and he wants to do it in hours. >> if the nation is broke, is the imf funding this military event? is a good question. you could put it that way. not spendingably an awful lot of money. a lot of these troops, for example, in the east, are guys t before, on the maidan they go through a one-month boot camp and that they are sent to

go five. old infrastructure and tanks and planes. i would not think they are spending too much money yet. that is a point that the russians would make. the russians would like the ukrainians to use imf money to pay the $3.5 billion the ukrainians of them forecast -- r gas, not funding military operations in the east. >> we learned that before the elections, vladimir putin in his own words would honor who ever was elected. have we heard anything now that we know who was elected? >> been making very accommodating comments ever since it was clear that poroshenko was going to become president. sergey lavrov said they were ready for talks. the one sticking point appears to be that poroshenko wants the eu and the u.s. to be at the table along with and as well as

the russians. the russians say we do not need them and we would prefer when speaking to ukraine direct talks. that is making the ukraine's anxious about one-on-one talks with russians. so far, they have been unable to find any kind of mutual ground on that. >> ryan chilcote, reporting from kiev. ukraine.n kiev, >> we are joined by the low byks -- we are joined william marks who just got back from ukraine. you were in donetsk, that is where some of the fighting has been. are the rebels pro-russian, anti-kiev, what do they stand for? but it depends to you talk to. has deteriorated since i was in donetsk. some separatists will say they believe in an independent state of donetsk, some will say we

want russia. some will say i am still ukrainian but we want a better system. washeir w -- there journalists on twitter. give us a vignette of the real versus reporters reporting on reporters. >> i would say that i met a family there to try and understand a divisions in the city. there was a mother and a daughter who both had different opinions on what was happening. the daughter said these guys, the separatists have stolen weapons and they are bandits. i have nothing in common with them. woman,her, a soviet era said they are sticking up for our rights against a government we have nothing in common with. the fact that there is one family that has very different views on the situation is interesting. >> within ukrainian history, do you have optimism kiev can

reattach to those people dissected in eastern ukraine? that with every attack, the opinions on either side are going to harden. we saw violent fighting around the airport and donetsk yesterday. as the death toll mounts the blood going to say -- >> 40 this morning. >> should we be calling them armed rebels as opposed to pro-russian rebels? >> bandits or -- >> one of the guys i interviewed, he said i do not know what i am. i am no longer ukrainian but am i a pressure supporter or a rabble-rouser? keep it as natural as possible, i don't think they are all under the same brush. separatist is a phrase i like. >> would you state the russian .ngle on eastern ukraine when you visit and talk to people, explained the view from russia. >> russia likes to consider that

all russian speaking people are part of its umbrella. therefore when they see these people saying we do not want to be part of this other country, we want your support, they will say we need to support these people. >> willem marx, welcome back we are glad you are safe. >> breaking news. holograms pride has offered to buy health shyer -- pilgrim's pride has offered to buy hillshire. pinnacle looked to buy itself a couple weeks ago. >> three players, they also sausage. >> hillshire looking to buy pinnacle. pilgrim's pride looking to buy hillshire for $45 a share. pilgrim's pride is not trading in the premarket. >> raj date, former deputy

director of consumer financial protection. do you like hot dogs with dough around them? >> anything you can put a toothpick in. >> pigs in a blanket. hot mustard for those. >> they are the best. oh, please, you have never had one? >> no, not my thing. >> raj date on mortgage debt. you were the first head of the consumer financial protection bureau. amazing that it took so long to create one. two numbers came out last week that i cannot wrap my head around. americans are underwater on their mortgage. sandy and -- fannie and freddie back to 90% of mortgages. who is worse off?

>> no one is feeling great. when you have a housing market where values declined by 30% or 40% over a pretty compressed everyone time, almost is worse off. going into the crisis we had $20 trillion of value in housing stock. maybe 50% aggregate loan to value. if values plummet, everybody gets hurt. homeowners get crushed and city banks and bondholders. like your debt, my debt. >> all leveraged. >> we are leveraging, on leveraging, rely version. futures up 8. right,pe pivots pro-nationalist. what means for the eu later this hour. this is "bloomberg surveillance" on bloomberg television and radio. ♪

>> good morning, "bloomberg surveillance." i am tom keene. this matters now to raj date, former deputy director of consumer financial protection bureau. he is focused on the new new in debt, student loans. back, let's look for. it is grim now, how grim is it going to be in three years? lex never is to believe things are going to look better if we keep making mistakes we have been making.

just to ground everyone, student lending in the u.s. is a huge business. bigger than the credit card business and bigger than car loans. the difficulty is that it provides something that students need. tuition has been growing at a pace two or three times inflation for a long time. >> how do you respond to people that say this is about the kids or their parents to take out these loans? a publicss starts with that says i need this loan. how do you respond to those critics? >> in most markets you have a price signal that allows consumers, borrowers in this case, to figure out how much they want to take. the problem in student lending is that -- >> no pricing. signals are broken. everything we tell kids says get a college degree, period. kids do what they have been told to do, try to get a college degree. they get stuck with an average

of $30,000. >> and then a growing amount are saying just say no, one year or four years out. where will that i am ago? -- where will that dynamic go? >> not well. the majority is u.s. government-backed loans. it does not go well for borrowers, either. unlike other debt, this is not distractible in bankruptcy. this debt follows you around forever. it is a curious way in which we have structured the student lending market. we are all complicit. >> you were with senator warner you are with senator warren, what do you say to conservatives about a midpoint to fix this? >> you have two things that cannot coexist. no risk-based icing and then a1 noned our market -- risk-based pricing and a $1

trillion market. you end up telling kids to do x, they do x, you know some fraction of them are not going to be able to make payments. then we chase them around forever. it is a very puzzling and bad set of outcomes. for theate with us entire hour. it is a deal that went bad over your three day weekend, pfizer and astrazeneca. decidedly dead. stay with us, it is a four day weekend i "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." our twitter question of the day. @bsurveillance. what language should your children or grandchildren learn to speak? english and sanskrit. seriously, what should they learn to speak? a used to be easy -- french, german, spanish. >> mandarin, if you really are -- >> no, nobody knew what that

was. >> recently. >> maybe everyone should learn russian. >> this is "bloomberg surveillance," i am tom keene. with become adam johnson and scarlet fu. eastern ukraine used the jets and helicopters to attack pro-russian rebels. limit.stop for a pro-russian, maybe some are pro-russian or pro-separatist. there is debate as to what they stand for. were killed.ys 30 the newly elected president of ukraine, petro poroshenko, is promising to wipe out separatists. has wrapped up a three-day visit to the holy land. he mourned victims of the holocaust and the terrorist attack in israel. he called for an establishment of a palestinian state. nhl playoffs, los angeles kings one game away from the stanley cup finals. the kings beat the chicago

blackhawks 5-2 last night, leading the conference series 3-1. >> a decisive win. tonight, new york decisive one, rangers have a chance for their first final in 20 years. >> they looks good throughout the series although the other night they were taking a lot of dumb penalties. a lot of bad penalties. stakes are high, i do not hold that against them. >> they have been playing disciplined hockey throughout the playoffs and then they kind of let things go. >> those are your top headlines. >> we will be watching. it is a big deal to scarlet fu. >> 20 years, come on. >> on europe and what happened over the weekend, ukraine is at battle. europe, alections in jumble of results. by far the most newsworthy is the conservative nationalist victories in france. is with the american

enterprise institute and has spent decades thinking on europe . what does this signal for france to see conservatives do so well? >> it is significant. in france, this is being described as an earthquake. they will shake up the political establishment. what makes this all the more ce,ortant is that fran together with germany, has really gone towards the integration of europe. we have one of the motors in that leadership is now a stuttering that her victory is certain to put obstacles in t way of economich reform. the is significant for

european experiment. this did not occur in isolation. you had other problems in the u.k. problems in germany and greece. this was really not a good day for europe. >> within the history of europe and the future of the eu, what does a pro like you watch? what should we focus on or which institution should we focus on to see where the european union is in five years? institution right now is clearly the ecb. how does the ecb interpret these results and what does the ecb do? we have a europe that is moving towards deflation and has a very high level of unemployment. to a larget has fed extent the discontent that we saw the polls. we need to see the ecb get its

act together and be more progressive and proactive in trying to get the european economy moving before deflation takes hold or where in deep trouble. glad you mentioned the ecb, it has to do with my morning must read. mohamed el-erian and "financial times" writes that voters are toling national governments act more forcefully on what most islize -- financial security necessary not sufficient for job creation. what does mario draghi need to do to put the onus back on european politicians? the ecb does not have that much control over what they do those countries are in need of ecb aid like we saw two years ago with italy. we saw that with greece and spain. ecb must bet the

doing is providing a good context of easier credit theitions to break dislocation and the mechanism in thehe countries periphery cannot get money and low interest rates. that is what the ecb's role is. i'm afraid that the election are going to slow down the move towards structural .eform or good fiscal policy otherwise, the parties and the center are going to fear that they're going to lose more onport to those parties either extreme. >> thank you so much, desmond with aei, read his work. >> in spite of the "earthshaking" though, as it was described by president hollande. french and german markets are up, the euro is up.

>> saw that in thailand as well. >> mario draghi is there with whatever it takes. bankers are losing wall street in droves, how banks stack up to hedge funds in the war for talent. ♪

>> did you know the markets are at a record high? 8. jones is not, futures up no one cares in new york, is a perfect post-memorial day. we hope you had a great

three-day weekend as we look forward to a four-day work week. >> unofficial start to summer. this is "bloomberg surveillance." tom keeneet fu with and adam johnson. was get you some company news starting with google. it might open a london branch of its venture capital unit to invest in british technology startups. google ventures has backs more than 200 startups since 2009. among them, the car service out uber. adviser saysroxy walmart needs a more independent board. institutional shareholder services says the board needs to improve the way walmart pays executives. is concerned about an investigation over whether walmart violated laws over bribery. sapp is what no longer just as noosed -- zappos will longer post job openings.

jobseekers will have to join a social network. that will give them a better sense of whether candidates fit in with the culture. zambassadors. >> i remember when used cars became >> preowned. >> they have a specific culture. >> do we have bloomberg ambassadors? ambassadors. >> ambassadors at "bloomberg surveillance," looking at it another news story. its bid to buy astrazeneca four $117 billion in what would've been the biggest deal in the drug industry. drew armstrong joins us with a look at why. pfizer did not go hostile. why was it not willing to go hostile? >> one of the things they said

about: hostile is that it would have poisoned the process and they would not have been able to do the dew jurrjens. a deal with this size, you have fixed experimental -- a and external drugs deal this size, you have all these experimental drugs. there was a lot of tension. >> there are talks circulating that maybe pfizer left it vague, leaving the door open for another bid in three months' time. >> last weekend this thing from its roots to a close yesterday. pfizer was in talks at 53.5 pounds a share. hours after, they put

out a share 1.5 pounds higher. they essentially blew the thing up with that. now what happened is you are seeing a group of astra zeneca saying hold on, wait a second -- maybe you guys should go back to the table. >> there is a mandatory three-month cooling off period. >> we have u.k. takeover panel rules. this is dead for the time being. three months from now, if astrazeneca asks pfizer took him back, pfizer can come back to the table and they can restart the talks. astrazeneca does not ask, they have to wait six months. this will go on until late summer, potentially into the late fall if we keep going through. >> do you think this was about concern over astrazeneca's pipeline only goes out six years . the concern about the loss of u.k. jobs. or was it a pride thing, asters

and because the number two drugmaker in the u.k. and lawmakers did not want to see that go to an american company. >> it is a little bit of everything. want to be saying we independent. their ceo wants a chance to prove he can hold down promises he has made. pfizer is sometimes seen by u.k. big, bad,s as a conquering american company that was going to ruin everything. political issue in britain, sweden, and the u.s.. this was a lot more, located than many mergers. >> what will you be looking for in the next three months? >> we want to see what is happening with astrazeneca's shareholders. if you see them piling on in making public statements. talks and 9% are ok with where they were.

if this adds up, it will be good. with thermstrong latest on the pfizer-astrazeneca deal, it is dead for now. durable goods, case shiller, consumer confidence, richmond fed are all coming out this morning. futures higher. morning from a "bloomberg surveillance" on bloomberg television and bloomberg radio. look for us on bloomberg.com. bloomberg radio plus and bloomberg tv plus. not monday morning. with me is scarlet fu and adam johnson. raj date, former deputy director of consumer financial protection. up overdebt you rang the weekend. lots to talk about on wall street. >> the time to take stock of what has been going on. >> perfectly said. up, bonuses are

down. uncertainty is at an all-time high at the biggest firms on wall street. more talent is looking for new homes. a lot of feinstein -- a lot of feinstein says hedge funds are getting banks a run for their money. saylked to traders and they they are asking what is the upside to doing this or proposing that? the downside is so huge now that they are better off sitting on their hands. >> there is no upside to taking risk of the way there once was. you can only be penalized for it. the compensation of years past does not exist. if you mess up, it is not even an issue of getting fired. people feel like the environment is far more personally punitive than it was before. you see individuals getting maimed and suits. -- getting named in suits. the latest is the bnp suit

where individuals are going to be named. >> it is not fun anymore, especially if the pay is not there. how do you connect this with departures of senior executives like mike cavanaugh? >> mike cavanaugh leaving jpmorgan to go to carlisle is a telling sign of where people want to be. this was jamie dimon's guy. he was the heir apparent and next in line for that thrown at one of the most successful banks out there. you butally said thank no thank you. it is not particularly fun getting thrown in front of senate hearings and getting vilified in the press, trudging through legal issues. that is not what i want to spend my time on. >> you have a terrific perspective. what is different this time? in summary 2014 we have got to

make business plans. even february of 2015, what is different now versus previously announced? -- previous slowdons. -- previous slowdowns. is thatnk the feeling it is structural. people come see us like going to a doctor for your career. people tell us what is really on their mind. they are feeling fatigue and frustration that things are not going to get better. this is not an opinion, numbers support this. look at the ferrari engine, big trading. >> fixed income -- >> this goes to the heart of the matter, ilana, you mentioned for not buying people the second or third home.

people down on wall street, are they retrenching? hitters are reevaluating whether they want to be there. the ability to hit out of the park is not the same. slew of goldman partners choose to exit stage left. even people who have been at the top, even vikram pandit. he did not resurface at another bank. he said at a -- he set up a buy side entity. >> roche. take, is this a victory lap for washington? >> this reflects the fact that volatility is down and capital levels are up. only so many ways the arithmetic works. fixed trading is less profitable and there is less money to pay people.

the shareholder does not feel that that. us.lana weinstein with our twitter question of the day, what language should your children learn to speak? tweet us. ♪

>> good morning, "bloomberg

surveillance." futures up 7, dow features up 55. it tuesday morning. >> looking ahead to the rest of the day. the deutsche bank global financial services investor conference is taking place later new york city. stephanie ruhle has a preview for us. an all-star lineup of guests you will be speaking to. >> i do. posted by my alma mater. the first person i will be .peaking to is ceo of socgen he said they are making big bets in russia and africa. you are seeing barclays pulled back out of riskier businesses. it will be interesting to hear what socgen is doing. to behink they are going able to increase their return on

equity by 2016. some very risky places. >> you will also be speaking anshu jain.-- with >> $8 billion capital raise from qatar. they have made some big hires. they are using that money to hire big guns. what are they going to do at a time when volume is down and we are seeing a slowdown in the ipo market. they have the cash, are they going to turn it around? i will find out from anshu later . >> ask mr. jain how he intends to get return on equity of 13% to 15% when he did a diluted offering of stock that adds 25% to the flow. >> it is a great question. they have big goals and they

need to make big returns. it is one of the reasons they are building and super people. i will speak to their head of equity capital markets and investment banking. i want to find out what is the game plan. , "marketnie ruhle makers" anchor will be at the deutsche bank conference later. we want to bring in ilana weinstein. headhunter extraordinaire. deutsche bank reallocating resources. does that mean trading heavy businesses get the short stick? >> it is a dying business. ink at goldman, q1, revenue 2009 it was six .6 billion. q1 is post be the most robust quarter. five years later in 2013, it is 2.8. this is the poster child of

fixed income powerhouse. 8%.s down at 6. i disagree that it is due to market volatility. you cannot look at five successive years and say it is just the waning and waxing of trading. it is structural. >> structural, not cyclical. date aill give raj chance to rebut that in two minutes. ♪

>> good morning, "bloomberg surveillance." futures up 7. europe,, on ukraine, on china and vietnam. we bring you ian bremmer of eurasia group. joining us on television and radio and the 7:00 hour. is "bloomberg surveillance," scarlet fu with tom keene and adam johnson. raj date, former deputy director of the consumer financial protection bureau. stein is here as well. sony is bringing game consoles to china. marketing its playstation consoles and video games. five months ago, china listed a

14 year ban on game consoles. a new survey says twitter is hitting a speed bump. the number of twitter users in the u.s. will grow by less than 10% next year. good news for twitter is that asia is still a hot spot. the number of twitter users there is expected to rise 34% in 2014. apple wants a federal judge to ban u.s. sales of some samsung smartphones after a jury in california agreed that samsung infringed three of apple's newest marfan's, the galaxy as for an s5 were not at issue. we welcome you to structural and cyclical changes of global wall street. markets are priced to apparent perfection. there will be a lack of volatility. nowhere does quiet scream as .oud as in the hedge fund space formerith idw, raj date,

deputy director of the consumer financial protection bureau. chronic under performance by all hedge funds. is the game up for hedge funds? >> not at all. >> how can that be? >> i don't know if you saw the article this weekend, one of the few pieces that has addressed what is literally called "what to expect from a hedge fund." hedge funds are not meant to be compared to the s&p. people do and that is where the expectations come from. they are meant to lower volatility in all sorts of markets. if you look over time, adjusted for volatility, hedge funds to outperform stocks. >> in the first paragraph of a hedge funds -- they are doing about it back end filling. what is it like for everybody else? real difference

between the top 20 hedge funds and everybody else. areocus on the top 20, they the industry. in terms of sheer numbers they are not but those top 20 control the assets in the industry. that is what you have to look at. the smaller players who are not performing will go away. if they are and they can't scale, they will get gobbled up. >> it used to be that hedge funds could raise $10 million without blinking an eye. do they want to maintain flexibility because it is difficult to get 30% returns on a large fund? >> absolutely. they want to raise not even $3 billion, they want to raise $1 billion in stock and generate the performance. grow more slowly. they realize it is a long race. three years or four years

of consistently good track records will help them grow to scale more aggressively overtime. of 2014 -- amer question for me is if the game is up for global wall street, where do people dispersed to? hedge funds, secondary or tertiary funds? >> where do you go? "there" twothe years out. >> rostock take, former deputy director of the consumer finance bureau. where do we stand on the possibility of nonaccredited investors being able to invest in hedge funds? least not make at $200,000 a year or have $1 million in assets. to the extent by which crowd funding was going to be able to democratize asset management for people. i don't think there is a russian trying to expand -- i don't

think there is a russian trying to expand the gates for investors. the other hand, we have seen a lot of new intermediation in asset classes that used to be dominated by that thanks. regular rate installment loans by peer to peer lenders is a fast-growing sector that did not exist 10 years ago. >> it is like shadow banking. >> if shadow has a non-pejorative definition. rate intermediation done by other than banks. andhere do these traders brokers go? do they end up going to hedge funds? is there space? >> two places where people from the sell side can find roles, if nior, hedge funds will pick them up and hope they can grow into an investor.

if they cannot, there is the next class to choose from. at the more senior end, very infrequently there are jobs like the one caps on got that carlisle. realizes he is really running a mini bank in terms of the infrastructure. operations and financial functions. there are a lot of people to manage. someone who did manage a large organization can have a seat there. the guys in between are sort of sol. to wealths management. james gorman bet on this at morgan stanley. ubs tries to figure out what to do. wealthill management be in 24 months? >> it is a business banks are

emphasizing as they have looks for other revenue streams as fixed income has been on the demise. i do not think wealth management or equities are going to be able up for the loss in revenue. fixed income was a $20 billion a year plus business. cannot makenagement up for everything else. wonderful. >> a whole new world out there for wall street. let's get to our agenda. stories that are making news. >> france and the elections, this was just -- >> the earthquake. >> something we do not follow that much. bill gross and mohamed el-erian, this was a point of real discussion of whether france -- i like the conversation we had earlier. this is about mario draghi. it puts weight on the sec meeting. >> we're talking about the

parliamentary elections. a lot of countries want more nationalist. what i am focused on is the case of houses.ce index something we can appreciate. if you look at the past 25 years, look at where we are. we are nowhere near the peak. the peak was inflated, but we are nowhere near we were. click scrolling over on a year-over-year basis. >> a little bit later, the rangers face-off against the canadiens, game five. one win away from the stanley cup finals. >> is this what you were blue? >> ranger blue. maybe a lot of people cursing in french. >> a huge surprise to see the rangers go this far. >> our twitter question of the day, speaking of cursing and french. what language should your

children learn to speak? with demographics changing so rapidly. "german, chinese, russian." that is three for one. >> smart answer. >> fluid, coherent english would be great. >> like, that would be like grea t. >> lol. >> 47 likes. >> where did like come from. @ajinsight, where did like become like so important? >> dueling which of love -- the language of love. >> raj date, what language? >> they language my parents speak, heavily accented english. >> ilana? >> as long as my son does not

use four letter words, we are ok. >> that means like. "bloomberg surveillance" continues on the radio. "in the loop" is next. ♪

>> good morning. it is tuesday, may 27, and we are live from bloomberg world headquarters. i hope you enjoyed your long weekend. it is time to use back into the

," and ih "in the loop am betty liu. we are starting with baseball -- should ben bernanke be the new commissioner? we will discuss that with leo hindery. lots to talk about with leo. here is a look at the top headlines. china is hiring a later shot in the dispute over ciber as --. the chinese government -- espionage. the chinese government is urging companies to dump their ibm servers. wilshire is in the midst of trying to acquire pinnacle foods. last friday, the s&p closed over 1990 for the first time ever.