Adam silver will talk about his findings on the alleged comments from the la clippers owner. Mercksonder if earnings will be different with the pharmaceutical frenzy. And four slabs being bought by activists and yesterday it turns around and says it will do its own deal in addition to that. Forest labs being bought by activist. And twitter different from what we saw from facebook . What may be. At the end of the day it is about monetization. A data check. Not that much going on in the markets. Up six. The euro, a little bit of strength. Vix, our next screen, the under 14. I was surprised by that. Vix. Is a better than good i put amazon, breaking 300, as it did during bloomberg surveillance yesterday. Putin gets ae as break in the news flow. Lets go to the chart of the day. Case shiller coming out. This is inflationadjusted housing. Here is 15 years, 15 years of quiet. Adam bought his threebedroom a a deck here terrace, excuse me. Here we are, down we go. It is remarkable how we are back to on an inflationadjusted basis. It does not look publishes or anything. Iscious or anything. Andf course, case shiller, betty liu will have that. We scoured the papers. The front page. Here scarlet fu. Our top frontpage story, a new round of sanctions on russia. Still targeted sanctions. It is putins inner circle who has to do with it. June in the u. S. Protesting russias actions in ukraine. The u. S. But seven people and 17 comments on the list. The white house says it does not expect immediate change of russian policy toward ukraine. So the plan is to steadily ratchet up sanctions that would cause more pain for russia over time. Me rephrase that, it sounds like more pain for individuals in russia who are close to mr. Putin. Very targeted. A broad sectors of the economy still spared for now. The banks did not get touched. Which, i believe, was effectively a german request. They did not want that. Second frontpage story, a followon to the almost 100 million 100 billion megadeal. Pfizer making the offer for astrazeneca. A uturn from the strategy of less is more, and another angle is pfizer could save billions of dollars in taxes because the u. K. Created incentives for drug makers to increase research and capital investment. Adam, you have been doing this for years. I can honestly say i believe i have never seen anything like this. The amount of deal activity a different color and character to it. You think just about what we have seen in pharma over the past week, six separate deals and they are all big. The fact ise been simply got too cheap. The runup and then the collapse. I think it is more than that. Money is for a. Money isnt free. We will see it with the apple bond deal. The guys about apples bond last time top of the market talk about deal of a lifetime the bond came at 100 and the 10year like if you are a cfo, why wouldnt you go out and borrow money . Every investment banker ought be going to every cfo lets continue this discussion. Our frontpage story, carl i can carl icahn and bill ackman ending their nasty dispute with a phone call. Bill ackman called to leave a message saying i am calling to return carl carl return because think it is a blessing to forgive and i forgive you. Their wives or girlfriends make them do this . Whats i wonder. But all of this has to do with herbalife. Higherthanexpected earnings, raised its forecast. Ackman at a bar having beverage of his choice and i saw mr. Ichan cross central park south. Behink carl was going to healthy. Going for his morning constitution. But just people. At the end of the day, where all people. Those are our frontpage story. Tom . And tom is somewhere in the middle of the second and third page. Im reading about the nba, i dont get it. Value of takeovers and not for 2014 reached the one trillion mark, reaching that level the fastest pace since time began, seven years. Our next guest host has a biblical understanding, chairman and managing partner of sunshine sonenshine and partners. Give me your book no one shows up to bloomberg surveillance look at that. Show the label. Bloomberg. Marshall, thank you. He wanted me to come on. I had one of my associates give me some stuff and i read. Let me cut to the chase. Have you ever seen anything like it as silly as it is . Four months into the year and hit a chilean dollars, so a run rate of 3 trillion in global m a. We had a trillion dollars. M a was the last market to recover in the financial crisis. But at a high in 2007 it was four dollars trillion 4 trillion. What is different now . Whats money is cheap. I think this is the First Time Since the financial crisis when the cheapness of money is actually part of the reason for growth in m a. Up until now the cheapness of money simply reflected a lack of conviction and belief in the just about anything. So, m a being conviction driven, we have to believe in the company in the future did not recover like equity did. As you talk to dealmakers, do you get a sense that they are saying we need to finance while the money is still cheap i get it done while we can . Yes, but i wanted to get a second point. It is very important. And you mentioned, adam, the apple bond. The last thing apple needs is more cash. But theyre buying back their stock. Second situation. But its important about this particular runup in m a is the Drug Companies. These are strategically driven. They are not financial transactions. These are Drug Companies merging theut costs, compete with generic drugmakers and figure out ways to get more product to market more cheaply. Within this conversation, what you and i have heard the last days or weeks is there is so much money the private equity boys will jump in here with normal mergers. No shortage of opportunities. You talk about conviction on the part of ceos is it conviction on the fear . T in the pharmaceutical sector, some is conviction and some is fear. They are under the own pressure and the need to merge to make it happen. Private equity is not going to companies they have a lot of dry powder. Can you say janet yellen or theyoxy ben bernanke that are causing this, the fed with distorted policies are allowing bill ackman to team up to go after allergen . Because they continue a policy of cheap money . , on i personally im surprised as a lot of people of wall street moneyat the era of cheap has gone on as long as it has. But i dont think they can of the luxury of worrying too much about that. They really have to worry about keeping the rebound going because it is tepid. Marshall sonenshine, we will continue this. Lets get to company news tuesday. We start what the fight over this French Company getting serious. German Companies Siemens preparing its own bid. General electric offer to buy theom any bid that values company at 13 billion. First quarter profit falling at bp. Earnings were in line with estimates. They have been improve the Balance Sheet after the oil spill of 2010. Disney is boosting investment in its new shanghai Amusement Park by about 17 . 5. 4 billion by the time it opens next year. The ceo spoke to Bloomberg Television about investing in china. Among decisions we made collectively as a Management Team is to invest in china, and to not just plant seeds but to plan big seeds trees that will hopefully feel Enormous Growth for the company longterm beyond my tenure. It means a lot to me because when i think about carrying out my responsibilities, my legacy, Shanghai Disneyland looms large. Is a Shanghai Disney world, Hong Kong Disney world and tokyo disney world. We just had a trip to disneyland in anaheim. I am sorry. Theres no alternative. It is the original one. I used to go there with my grandparents as a kid. You should be loyal to disney world. When my grandparents are tired and left iowa they want to southern california. There is a brass plaque on the blue teacup that reads adam johnson. All right, comment, pfizers propose near 100 billion bid for astrazeneca may have been invited by you ks tax policy. We will discuss that. This is bloomberg surveillance a Bloomberg Television and streaming on your tablet, phone, and bloomberg. Com. Good morning, everyone. Bloomberg surveillance. 2 in los angeles. Stephanie ruhle and Erik Schatzker at the Milken Institute conference. With theirem conversations, including the former Prime Minister of italy mario monti in a conversation near the 4 30 p. M. Hour this afternoon. Erik take on los angeles and Beverly Hills as well. This is bloomberg surveillance. Good morning. Im tom keene. With me is scarlet fu and adam johnson with us as well. Adam, you get us started on taxes or a lack thereof. Score one for shareholders zero for u. S. Taxpayers. Pfizer intends to reincorporate in the u. K. If it is successful acquiring astrazeneca. It would save pfizer millions and leave ordinary americans like you and me shouldering even more of the tax burden. Marshall sonenshine, i am fired up about this bit really upsets me, u. S. Corporations leaving u. S. Soil. What sort of backstop the regulators have if any . Forax planning multinationals is extremely complex. Remember, the dell deal there was a kerfuffle over where was it cash. As Pfizer Companies included, sitting on fortysomething billion dollars in cash a lot is abroad. The answers are complex. The fact is a pfizer pays 27 Corporate Tax rate, which is not so bad. And i think in the final analysis i dont think a deal reflects tax play but i think all these multinationals, whether in transaction mode or not, are intact play mode, looking to reduce and cut as they can. They are allowed to do that. Do you presume washington will step in that sometime . Not on this. Lets assume the senator from new york mr. Schumer will support wall street on this, which is understandable, what about the other senators . Chuck grassley . He could say whatever he wants, there could be political backlash on this. But it is very difficult for congress to correct the complexities of the national and global tax system. Our audience is saying why . Why cant they fix it . Why isnt there a way you can mark to incent a stay here. It is not all where they are incorporated where you make money. They will pay some tax in the united states. The look at the tax code your tax planning and documents reflect an inordinately complex thing and you are just an individual. I think it is not so easily fixed. Although politicians might like to ask for the moment, because it is in the news, as if it me isbp at what struck how outspoken pfizers executives are on the tax savings. Would that kind of old news prompt politicians to move . Same answer. I think it will prompt a little bit of political banter. I dont think these things are easily fixed or changed. There is a lot of complexity. With her democrats and republicans saying they have Common Ground to amend we have democrats republicans saying they have, ground to amend the tax system. Tiesou believe the fancy and chanel dresses of Corporate America will stay in america and pay the taxes if we go from 20 something percent down to 8, 9, 10 Corporate Tax . No, i dont. They will keep on moving to ireland or whatever . I dont think they are paying 10 , either. I think it is an overstatement. Apple is mid teens that is too low. That is true. And a lot of that cash is locked up abroad for them also. The same problem dell has. Effectively it is not a onetime fix, tax repatriation and you can bring the money back in an odd double taxed . Whats that is a solution. There are all kinds of tax schemes in theory that can happen but in reality they dont. Childrennt think dollars of takeout will be a catalyst for washington to get off their butt and have these to the unitedate states under i am all with you. I think it should be. Do you think do i think will happen easily and quickly . I dont. Taxow high consideration of arbitrage to other factors like strategic fit . I think this deal is much more about strategic fit. A billion dollars of tax savings per annum and this is 100 billion deal. I dont think that is that material itself. To benefit tens of billions of dollars. Weve got a deficit. We incur more and more that. Hasthat means everyone else to pay for. This conversation is important that it goes back to fair. People in america saying fancy suits and ties in manhattan are not paying the taxes they should be paying. Nomad or what we think no matter what they think, that is what they think. I pay 50 personal income tax rate because it because that is marginal and if i charge one percent selling a company if i were private equity, it will be capital gains. Is that fair . Whats the beginning of a rigorous debate. The beginning of a rigorous debate. Marshall sonenshine is our guest host for the next hour. Our twitter question of the day that we will be addressing later on how should the nba respond . The Los Angeles Clippers owner. The l. A. Clippers after the owner made some allegedly discriminatory remarks. Exceptionally discriminatory, if they are true. Tweet us bsurveillance. We want to hear from you. Good morning, everyone. Im tom keene. With me, scarlet fu and adam johnson. Today onler later housing. We will see what the weather does to that. It is a couple months behind. Lets get right to top headlines. Second day of violent weather in the southeast. Tornadoes killed at least 11 people in alabama and mississippi. Dozens injured. Scores of houses and other buildings damaged or destroyed. The storm that killed 28 people in the past two days. In credible. Secretary of state john kerry meanwhile says he wishes he had changed his language on israel. Not his message, however. He has been criticized for saying in private that israel risks becoming an apartheid state. He says he wished he had chosen different language to describe the belief that the only week two state solution. Danish restaurant noma is wanted in the worlds best. It is located in copenhagen. Known for foraged ingredients and its a new nordic cuisine. , is this a picture of the restaurant you got force. Beautiful. Noma, it looks like a place where you get nothing on your plate. Little itty itsy portions. That is the art. We are having fun. The chairs did not look comfortable. Like a two ounce torsion of us out for. Those are the top headlines. To dofistfight over what first. Morning mustread, adam johnson continues. We have been we have been talking about Northwestern University where the Football Players wanted to unionize. Morton schapiro says the following Marshall Sonenshine, what is your best advice to College Graduates . You really want to do. If you think you can plan a people who picked wall street had a little rough ride in the past decades. I have College Graduates, three sons, thats what i tell them. Very cool. Follow your passions. Up with fallout from l. A. Clippers owner scandal may threaten the team in the league. And that brings us to the twitter question of the day how should the nba respond at 2 00 p. M. When david silver hold his News Conference . Some breaking news. Energy future holdings, the wass Power Company that taken private in 2007 has filed for bankruptcy protection. Energy future holdings. Filing in delaware, after months of wrangling by creditors, owners, and management. A soap opera involving kkr, Goldman Sachs in on it as well. We are honored to have Marshall Sonenshine with us. We you involved in these transactions years ago . Was a 2007 transaction and part of the state of very large deal done at the height of the leveraged buyout market just before the financial crisis. 45 billion for operating companies not enron. Too much debt and too little price. What happened after 2007, Energy Prices came down and these guys were left holding the bag. In a bankruptcy like this, doesnt redound upon the original dealmakers kkr, Goldman Sachs, and tpg, or are others affected . It is a creditors territory, which is what chapter 11 is. I think that the bonds are going to have to echo ties and banks will have to take some stretching out or amendments to their term. The company will go on but without the equity. If there is a lesson we learn from the crisis is there is always a solution gm. Company is not broke, the financial structure. But you set the bond equity highs equitize. Make suggest kkr additional money moving bonds to equity . Do they take a loss . A all the echoing will take loss on equity. If any of the private equity firms choose to put more capital to work or somehow be an agent for change in the restructuring, they may make your money because they deserve to but they will lose the original investment. Energy future Holdings Filing for bankruptcy. Heres another story we have been following. Nba playoff action has really become an afterthought these days as of the league investigates racist comment attributed to la clippers owner Donald Sterling. Sponsors and Corporate Partners are rushing to sever ties with the clippers. What is next . A Bloomberg News correspondent and a partner who serves as cochair of recording obtained by tmz, epicenter of the. Sterling is heard telling a girlfriend supposedly sterling. Quick supposedly. Supposedly. Ok, we have not heard from him himself admitted to or denying his voice, yet few people are willing to give them the benefit of the doubt. Why is that . He has a history of saying and doing overtly racist things. In 2009 he was forced to pay the largest housing discrimination settlement and the history of the united states, and he was also involved in an age Discrimination Suit against a former nba legend in which a bunch of overtly racist statements came to light. It is just not surpr