Comcast and mcdonalds. After the bell we have amgen, at t and yum brands. Screen. Oard futures flat. Tenyear yields flat. Eurodollar flat. Loyal 104 per barrel. Monitor. The existing home sales. Here is the housing boom of the middle part of the last decade. Sales have rolled over again off of the trend line back 20 years ago. Existing home sales just cannot get it going. That is an ugly chart. Now what . Unemployment stalled out. More on that through the next number of days. Here is scarlet fu. Top frontpage story about changing up the guard at ford. The chief operating officer, mark fields, will be named ceo eventually. The announcement may come as soon as may 1. Alan mulally probably stepping down by the end of the year. He is 68 years old. A former executive who turned around ford and kept the company from pursuing a federal bailout. Billiond up on the 23 loan before the financial crisis. A stroke of brilliance. They never had to pay government take government money. The point is, ford figured out how to use assets and figure position itself correctly. Between bill ford and alan mulally, it has been something. Mark field has been at the company for 23 years. Mulallys eking to Stephen Engle in china. Look for that as well. The second frontpage story, bill ackman going after another company. Evening up with valiant pharmaceuticals. Pershing square and valiant think it is undervalued. Right there. What is interesting about this story, it valiant had been trying to interest them in a merger. Excuse me. Robust. E repeatedly this is a huge deal. An activist is getting the acquirer before the critically valiant. So they begin the dance of 1415 ownership. That is right. Shares are up in the premarket. Allergan. Way, a fine looking bowtie. We decided to be inspired i mr. Ackman in the twitter question of the day. If you were bill ackman, what would you target next . He has been very busy whether it is netflix or herbalife. We steer away from the corporate world and go to politics. Joe biden in kiev to show solidarity with the ukraine. His message is we want to be your friend, your partner. John kerry warning there will be consequences. Script. T to rip up the what did you learn on your european trip . That google maps is superior to apple map. Quietseems to be calm and after the european debt crisis from a couple of years ago. You do not sense the panic. At least in italy. Your children were well behaved . They were well behaved. Very cool you drag your children around euro. A dead market. How will the economy performed . Summer, fall and winter of 2000 14. Robert roberson has seen quiet times before. Guest host. She strategist at sandler oneill. Also joining us is jon erlichman. What the title. That is so cool. Chief senior west coast correspondent in charge of the sunset tower bar for me when i am out there. Looking at the markets. They are dead. Why are the markets so quiet . Trying to is still grasp where we are in what is going on. We have a very lengthy and sluggish recovery. People point to things like housing and say it is recovering , and they look again, and it is not. The numbers that have come out are consistently mediocre. I thought janet yellen speech , she really hedged the future. Do the smart people know what is coming in july in september, december . Do not think anyone does. There is so much artificiality in the markets right now. It is very hard to see the truth. If you look into it and see the broad demographics of the country, it starts getting much clever a cousin we are having a long term slowdown trend in labor force, and that is really holding us up. That is the bulk of the economy. Lets get the chart up right now if we can of wages. Alverson does the best charts on the street. You have wages rolling over and then you adjust for health care costs. The great leveling of wages and salaries, up we go. Believe construct perhaps a century. Then we go flat or even rollover. If you look at what we spend and how much is funded by what we earn him a their earnings is going down and down the lift it to the spending. The total back to where we were in the depression. If you take out the health cleric burden healthcare burden, it is much worse. If you look at what we can grow generically, it cannot support. This is what steve roach says. He takes the idea that the consumer flat on their back. Jon erlichman, looking at media companies. Representing a threat of the economics of the Television Industry but not the only disruptive force. Why is it different with aerial . Because they have their act together and came to market with something that work very well. Gives you the same netflix experience but it is for broadcast television. I would argue it is the most important case over the past decade in media. The onesided is successful and raises the questions about aliens and billions of dollars the brought pastors are paid. I go back to what you guys were just talking about, the economy. Do people want to pay what they are paying for cable . The cable bill is probably going up because the fees the broadcasters get will continue to go up. To that excellent charts about the fact that real incomes are stagnating. Who else is providing value right now in hollywood in your beat in entertainment . Everyone is choosing new platforms. Broadcasting works, unless you still largely the stand alone tied to a broadcast network, but if you think about the engine of growth, they are not the broadcast networks. For disney, abc is not an engine of road. They are looking to platforms like netflix. Will a Supreme Court judge theytoday if will take away broadcast tv . I think they will ask if they will broadcast to a bunch of people . Do i understand areectly a few stations under threat if they win the case . They would argue no because the fees to the broadcasters will remain. That is one of the issues whether they go away. I do not understand what this means for me. A guy like me. Even if i have cable tv. If they arethat successful, that you are allowed to continue to have a rabbit years world. That you are able to have the 121 relationship with the broadcaster because you have an antenna. I think where things get obligated and where broadcasters are skeptical is what happens if they are successful and the Business Model starts to broaden out . Right now they have played it part. Imple for the most john will be with us. We will pick this up in a minute. I am fascinated by this. Everyone we know in media is riveted by this. The intersection of technology and media. I have a great story for jon erlichman. Did you know San Francisco has a new fleet of trains for the Rapid Transit system and the interior was selected by someone who knows nothing about the nfl and loyalties because the seats are neon green and blue, the color of the seahawks. Probably one of the most hated rivals of the 49ers. Fan started a petition and asked that the seats be scrapped. He noticed the general motor general manager used to work in seattle. He is probably a niners fan. We can blame him as well. Does anyone use the subway in l. A. . They are trying to implement more bike usage. To our audience worldwide, when you say i live in l. A. , what does that mean in 2014 the . Use google maps. It works in italy and l. A. We have much more coming up streaming success. Netflix firstquarter sales profit and subscriber growth beating analyst estimates. We will discuss the companys next success. This is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. In our 7 00 our competent that chiefl and aereo executive offericer, chet kanojia. This is bloomberg surveillance. All of theg to worldwide. I am tom keene. House of cards on netflix is about to get a lot more expensive. I am watching something less bloody, and name of the rooms. Charging new customers one dollars to two dollars per month more because of online numbers. Sales numbers beat estimates. Jon erlichman is here with us to discuss this. Netflix has learned pretty hard lessons about price increases. This time it has done things a little bit differently, dipping the toe in the water slowly. You know what is different this time around the gecko house of cards. They have original shows. They understand that netflix is home to their own stuff, stuff you would find on a cable channel that you like or their hbo game of thrones. So they can say we are going to raise prices to ensure the continued to make the kinds of shows you have come to like. They were not in that decision the last time they toyed with pricing. By frankly, everyone always thought they would have to do this anyway. They have billions and billions worth of obligations. We need to charge more in order to give you the content you want. Who was at netflix figuring out what the content is . Who is the master behind content . The guy who gets the most attention is ted saran toasts ted serantos. They took a page out of the hollywood book. They were nice, they were a friend of the big layers in hollywood and said we are looking for interesting stuff, interesting shows. We write big checks and people slowly but surely said ok. Some approaches in the past with hollywood have not been as easy. They definitely broke the longer are the ones doing it. Amazon does it very well. Netflix not tapering off necessarily but no longer such a unique player. Amazon does not share specific numbers or details or how many people are using its service but it is growing quickly. Prime, the Free Shipping program , they just raised the price in part because of the content. What is the response of . Etflix. Com how does cbs or nbc response . I think netflix has forced the traditional players to pony up more commitments to slightly move away with the Traditional Program of pilot season, which never made sense to anybody. You have the new shows and test them to see what works and what does not work. Netflix came in because they were the underdogs. Then not only had to commit a lot of money for the shows but had to commit to long stretches of shows to say were in it to get the content creators in it and you have since seen at other otherms since seen programs. You use to see the guys who ran studios where the power players. Everyone realized it was distribution. Where is netflix in the food chain rocco you raise an excellent point. Netflix said it is against the merger between comcast and Time Warner Cable. This after they are ready cut a highto ensure they can get broadband speeds, which has improved service for people watching during prime time and use to get frustrated with buffering. Broadband is king. Comcast is king. Cable companies are king. That makes netflix uncomfortable as they have to pay to get good access to the pipes. About havingying to pay others. At t and verizon and others. The precedents that it sets. Come back again. Jon erlichman in town for the morning. Coming up, going live to michigan to speak with sander levin about the challenges facing the longterm unemployed in his state across the nation. Streaming on your tablet, phone and at bloomberg. Com. Good morning, everyone. I believe we migrate towards 70 get raised this afternoon. A good and beautiful thing. Yankees doing better than good. The drugs kicked in. Good morning, everyone. Good morning to all of you in boston after a terrific boston marathon. With me is yankees fan, scarlet fu. Adam johnson with us as well. Vice President Joe Biden arriving in the ukraine in an ease to do tension has shown signs of crumbling. Easternver buildings in ukraine. Militants say they are not bound by agreements. The Vice President will meet with the acting president in kiev later today. Some student loan borrowers are being hit with automatic default when the cosigner dies or declares bankruptcy. This comes, a study by the Consumer Financial protection bureau. The agency recommends giving the borrower time to find another cosigner. Manchester united has fired the coach after 10 months onthejob. The team has racked up 11 losses so far for the season. The most defeats in 22 years. He took over for coaching legend allison alex ferguson. Jim oneill is at the top of the list. Nothing to do. Bloomberg news contributor. Call one are watching, 800 wayne rooney and fix this. That is all there is to it. Time for morning must reads. I am going to go with morning must reads. Former Supreme Court justice, sandra day oconnor. Millions of students taking the sats will now encounter tests like the declaration of independence. Old test prep methods will not be sufficient. They will need more sophisticated tools. Digital technology will be essentials. A marrying of digital. This is about what you write in your legendary notes. Critical thinking skills. How did you pick them up at Carnegie Mellon . I was taught to doubt everything to learn the truth of it. Sounds crazy. It makes your brain work harder. I would like to know if maybe we should all take it again as adults to see how we would do. Stop. You would get 800. Would we do . How good is the Critical Thinking is the question . You have to fight. For those of you taking the sat [inaudible] trigonometry. I like it. Talking banks with robert. Good tuesday morning, everyone. Right to a data check. Quiet screen. Quiet market. Futures flat. Your row still elevated above 1. 38. Rent crude off the bloomberg,. 40 one. Elevated hydrocarbons. Scarlet fu is back with the movers. Traffic moving. 12 higher. Christopher rowland raising his price target. The other big mover i wanted to highlight was lululemon down about five percent. The biggest drop since january. Saying lululemon does not have a Clear Strategy for opening sales. That is what the takeaway was. Is it so yesterday . They are more expensive. They have all jumped in as well. Safe to say. There is a theme here. Can we do that with the banks . Is there a bank we can turn into french . What do we got . In all seriousness, you talked about the banks as being priced too high and growing too slowly. Institutional investor has rated you one of the top analysts for years. There has to be niches. I am very bullish on a subsector of banks that are focused on the business economy, because that is the part that is growing. Step back and look right now, we are at the slow dawn of oldfashioned thinking. Bankse a constant flow of coming in and raising new capital. Investor demand is there. They have to have a growth story, and they do. The simplest way to think of it is the banks have 10 trillion seven trillion in loans outstanding and nonbanks have 33 trillion and the nonbanks continue to shrink. The banks will be able to read and inherit what they once lost. And more people are seeing this. This is a bolstered her a overall. When you say it is a very said pacific specific subsector of loan. Individuals . It is commercial. Business investment. Business spending. It is growing. The demand for it, entrepreneurs, creates people who see the broad picture. Plenty of global demand. Both consumer slowly trying to pick up. You see this as a leading indicator. How are banks doing it differently than in the past . That is the irony. They are doing it the old way. Putting credit on the books. Doing basic lending. They are beginning to understand what they used to do 1020, 30 years ago. The commercial side is study. It has been that way for three years. I want to explain to people why we have guests. Ugly are for ugly four charts. Copy write protected. This is the secret sauce of why we have gas on the show. I have to go home with a magnifier and freebies because they are so informative. That is the pro level we try to bring you every day. Continue. Talking about return on equity. That used to be the way they would measure profit. Is this a preferred way of looking at it . Return on assets is more fundamental. Needs to be adjusted for any Business Model based on the current environment of Interest Rates. Nine percent. G just as good as earning 14 when the riskfree rate is higher. Is the return on equity valuable . Rate, back riskfree to pretty much where they were before, even before the Banking Sector had it in terms of margin recovery. This is not a broken model but a very strong model. It will unfold over the next couple of years. Who gets the advantage . It is really both. I would have to tell you the bulk of the momentum is in the commercial side on the low end and medium end. When you say low end, you are talking size . In many respects to my trucks more. I trust the polling these are people with next on the line. Let me ask about Net Interest Margin. An average Net Interest Margin of 2. 6 . That was the lowest in a decade. Have we seen a bottoming out . It looks like it. You can have little surprises. The first is more loan growth. The Second Surprise is the margins are not declining that much anymore. It looks like were are at the bottom and eventually it is going to do step topline. Education you can get, he specifies the degree to which a return to normal is massively good. Very important. Higher Interest Rates are good for the economy. Peter huber at Deutsche Bank has remarkably optimistic view on the american economy. If we get at Deutsche Bank economy, what does that due to the banking business . They get back to the normalcy of the margin. Of theve momentum valuations go. What does the gloom crew most get wrong . They never see the bottom or the top clearly. They missed both. I want to bring up something ft. He talking about Goldman Sachs losing exceptionalism. Surviving the crisis and immediately thriving with a crowning glory. Over the past few quarters, Goldman Sachs starting to look exceptional. Paying as iflonger it is exceptional. I am not supposed to talk about individual companies. It is still exceptional. Morearger they get a complex they get, the more people doubt them some a particularly the politicians. There is a culture there. People miss that. They continue to adjust and move towards the epicenter of the country instead of trying to do it the old way. Tyler writing a beautiful writing ayle cohen beautiful review. Thehave seen for decades evolution of a Financial System. From your view, is this a gilded age . It is a return now to basics that work. Return to what era . Probably the 70s and early 80s. About the momentum focus on quality. The idea o