We are glad youre here. Capital goods and durable goods are at 830. This is an important read on our economy. Moving to earnings, we have stanley, black decker, abbvi. Today. Fire ships that is a phone. You almost have to describe what that is. I dont know why they called it the fire. Maybe it is hot . What do you think . It is revolutionizing the world. It is innovative. Is it as good as my iphone . We will have to see. Bidensident obama and joe are meeting with leaders from Central American countries today, trying to figure out how to deal with this crisis on the border. Lets do a data check. What a week it has been. We turned 3 on futures. Can we break through support for a week or euro . Hydrocarbons have done nothing but churn all week. You can see with the vix, better than good market. That is important. 50. 47 2. 50. Top just a whisper. This will be a theme all day. For inflation,d over 30 years. Were extending out inflationadjusted beyond where we were in 1999 and 2007 as well. The russian market, which you talked about yesterday, is more like this. Just flat. What is also intriguing to me about this chart rally down to hear. Retirees adjust for inflation. Lets look at the front page now. Here is Olivia Sterns. Israel and hamas are concerned a u. S. Backed proposal for a ceasefire accelerates. Aza over 800 palestinians and 34 israelis have now died since the conflict began. They rejected a truce that was brokered last week. The hangup was the issue of lifting the blockade. Hamas did not feel that they had a solid guarantee that it would be lifted. John kerry is doing everything he can. A lot of questions about whether hamas will listen. That is the distinction. Hamas is actually in the conversation. Adam, when we started the week, they were not. No. The military side said they were not even consulted on that first truce proposal. Sunday is a day this will be fascinating. From friday ended saturday, what will secretary kerry do . The protests have spilled over into the west bank. I do not know where to comment on the u. N. Hospital that was struck last night. There are so many reports on that rocket fire. Terrible. We have ukraine. Violence is wrapping rampi ng up again. Shooting down a three drones in the last 24 hours. They assert that russia is firing artillery across the border. This is the first time american officials have publicly alleged russias direct participation. The Prime Minister resigned yesterday. More and more, this is resembling the ground floor. We will have alex from the Eurasia Group join us in 45 minutes. We will try to figure out why putin would do this while the world is watching. I have two observations. E. U. Sanctions Prime Minister cameron said that sanctions must target puting cronies. The Prime Minister is talking about rifles. A lack of rifles. You wonder where is kiev. Well, that is one of the themes of the morning. Much more on this in a moment. Rupert murdoch, 21st century stocks, agreeing to sell the pay for tv business in germany. This will increase the 85 per share bid for time warner. Many say that Rupert Murdoch is like a shark. Moodys has just come out with a downgrade of bskyb. Theyre questioning how much you can spend on time warner. How much is it worth . Is it 85 billion currently . 85. Pershare price of Mario Cavalli thought we could get up to 100. Aboutember how we talked dell going private at 21 million and that was a big deal . That is front page news. Futures are negative. Dow futures 19. Laws have not been voted. Folders cannot be paid. What options do we have now . That was the jury comments of the israeli Prime Minister who resigned yesterday. Ryan chilcote joins us from the london news bureau. What are their options in kiev for what remains of the government . We have two things. One, the Ruling Coalition collapsed. That may have been orchestrated. The collapse of the Ruling Coalition clears the way for an early parliamentary election. That is what all of the politicians wanted. The more worrisome thing is the ukrainian Prime Minister. He made a very emotional speech and says he is resigning and stepping down. He does not need to do that. Typically, he would stay in power until the new Parliament Comes in. You are so good at this. Kiev,r. Biden flies to this is the guy he wants to speak to. Thee have a dialogue with guy who is a followon on from the previous corruption . We do. Everyone was used to dealing with the guy who did the 17 billion deal. This is the guy who has been driving those reforms that the ims has been demanding. He was unable to do that. That is why he is resigning. This could be indicative of a risk that would be worrisome. He would be on the same page and they are fighting a war now. The answer is, yes, theres a little bit of a dialogue now. But everyone is a little more comfortable with being a technocrat. What sort of mandate does mr. Henko have on the western side of the country now . He has a pretty strong mandate. Everybody has backed that revolution and backed the former president s overthrow. They wanted to do parliamentary elections, which they have not gotten. That was promised. Is trying to do is consolidate his power by giving the people those elections they were seeking. Why . Because there are a lot of people who supported the ousted president. Many of these people see these people as evil, having given permission to the police. That is what is going on. Thank you so much. We appreciate your perspective. Mr. Chilcote will join us in the 7 00 hour as well. Our guest host, we have julianna Emmanuel Julien with us. I love your perspective on europe. Why havent the markets gone down more . They should react to the stuff, but they have not. They have not. Where in the crossroads people are looking through and looking toward the next couple of years. What you see when you look that far ahead is that the markets are generally in good shape. Because the market is doing better in the united days. Earnings are picking up. Is very evocative of past bull market that had several years to run. Adam mentioned as a german economic statistics. When you speak to your colleagues, do you separate buoyancy and optimism on the or. From gloom in europe does europe have a recovery as well . Europe is a bit of a different animal. Russia is at europes back door. The pressures there are certainly unique. When we look at it, it is the m auation where, fro professional perspective, we think the markets should be discounting more risk than they are. Julian emanuel, we have lots to talk about. The gloom last week was outrageous. Sell everything, good cash. There was a big rally last friday. Theres a lot of pain around the world. It is amazing. I am already in cash. Lets go to company news. Hisargulies says accusations against his blackpool trading is unwarranted. Barclays says this does not show that clients were harmed. Quarterly profits for gmr down from last year. They are paying 1 billion for recalls. The popularity of chevy suburban said other large models are offsetting this somewhat. In ae is buying twitch deal worth 1 billion. Twitch makes games for players. Amazon has a problem. Tom keene is not spending as much as he should. They had a disastrous Earnings Report yesterday. We discussed after the break. Good morning. Good morning from new york city. A beautiful friday morning here. Coming up, you had a wonderful article this week russ from blackrock. Their chief investment strategist. That is that 9 00 on in the loop. This is bloomberg surveillance. Olivia sterns is up at this awful our. Scarlet fu is off today. It is 11 00 in london. We are talking to amazon. They are reporting their biggest quarterly loss since 2012 after the bell yesterday. Jeff bezos is spending more and more cash, building more distribution warehouses. He is developing more smartphones. What is he not doing . The key question is, how long will investors tolerate losses . Is this a Tipping Point . 19 billion in sales for the quarter. Yet still coming out with a loss. I remember this with comcast. When would they deliver cash flow to shareholders . Mr. Roberts finally did that and the stocks shot higher. This is a stock that has gone higher. You create an interesting parallel. Comcast had to lay down new fiber cable. That is what he is doing with all the situations. Heres a quote from the quarry mcquarry. It is clear that this ecosystem war is going to be expensive and affect margins. Apple and google are in the lead. And for so long, that has been the strategy. Try to buy loyalty. Try to buy that market share. Look at stock rid it hugely values. It is the second highestrated 500. In the s p also interesting to compare it to alibaba, the ipo we are waiting for. It is spinning off profit. Speak directly about amazon, but i want to talk about the hopes and prayers maybe Cloud Computing right now. When you talk to your tech specialist, how much has to be poured into Cloud Computing . Seconds really in the inning. It is something that is going to reshape the world. Like amazon reshaped the world in the late 1990s and early part of the 2000. What i would say is, when you look at the share price isctions, what we are seeing disappointment when earnings do not meet expectations. Not to comment directly on amazon, but we have seen this before. The Strategic Plan in the markets says enough. They go ok, that is fine. Give us some cash flow. That is right. You are at the point where the fed chair basically called social media and by attack out biotech out. Was that an appropriate . She could have given a more nuanced message. It was not the exuberance. Amazing, actually. How interventionist to the fed has become. Be sure to check out the latest issue of bloomberg businessweek. 33 years old is how old the burger king ceo is. Daniel schwartz is one of the youngest ceos and we talked all about it. Get your copy today. We will be back after a quick rick. Good friday morning. We welcome all of you worldwide. Adam johnson and Olivia Sterns are with us today. Scarlet fu had to have a threeday weekend. Adam johnson insisted on top headlines. French troops are heading to northern mali two guard the wreckage of an air algerie airliner that crashed. Boko haram is active in the area. The cause of the crash is not yet known. Israeli warplanes attacked three homes in gaza. That happened earlier today. A leader of the Islamist Group was killed. Israeli troops are trying to shut down a network of tunnels that the militants use. And a host of factors are slowing sales of new homes in the u. S. Sales fell 8 last month. Think higher rates are hurting the recovery. One of the mysteries for august is the housing economy. I do not have a straight answer. The gains have been very strong. It seems to have slowed. What is it, 33 . That is shocking. One third of the homes being got our cash. You asked why i moved back from london. I cannot afford a home in london. I think this may raise a few eyebrows here. Jim chenos was speaking to charlie rose. He said he had a surprising comment about putin. He is a nationalist. Said he would he be first among equals. It is fair to say that he is first. More firmg to be much and aggressive and much more muscular. What do you make of that . So much saber rattling going on in the u. S. There is a mitt romney fear of russia researching. Maybe it is china. You have brought this up a couple times this week. Julian emanuel is with us from ubs. I think of the classic work done by Jonathan Anderson on china. What is the ubs take now . China has flagged for severl years now. With the numbers turning around the market the last two years is up. All of a sudden, investors are interested in the china story again. Everything looks like it is expensive in the u. S. Or getting there. What is the catalyst . That the government is going to engineer, as it seemingly does, a soft landing. How do you judge those that are skeptical of china like mr. Chanos. Is it a large audience . It is a steady audience. You look at Corporate Governance and the political system and theyre always going to be clas ses. He has given a shot to the New York Historical society. Be sure not to miss the full interview on charlie rose on bloomberg tv. We went to oppose the twitter question of the day. Can the u. S. Negotiate with putin . Tweet us. Good morning everyone. Olivia sterns is with me today. Adam johnson as well. Lets do a quick data check. It is friday and a fourday no, futures 4. Theres a lot going on. Yields are higher. Weaker euro, stronger u. S. Dollar. 81 on the blended basket of Major Trading partners stronger dollar for the week. What a week it has been. The gloom crew has been wrong. They are generating ever better profits and cash flows off of modest revenue growth. Emanuel is a derivatives strategist at ubs. I love your note on a profit shock. What do you mean . Basically, the quarter that is shaping up is quite good. It is as good as it has been sent 2011. We are happy about that. Stocks do seem to be discounting them. It is the rest of the year that is a bit more challenging. The expectations are very high. Growth is over 10 factored in. We may not get there, but we will stay strong. We will talk in a bit with mr. Murdoch. Synergies. Word is is that just cost cutting . Are corporations simply tougher on cost . That has been the story since 2009. Corporations have to find a way to survive. Revenue is starting to pick up. The economy is starting to pick up slowly. That was my question. To your point, to what extent can this continue to be germ by cost cutting . Driven by costcutting . It seems to be a great quarter, but not on the top line. It is good, it is improving. We do not want to get carried away. If we think about where we were in the first quarter, gdp printing down 2. 9 and we look at where we are now, it is a steadily improving scenario. We assume that was all weather related, correct . We should be clear. There were issues with spending on health care. The government has inflation. That was a large part of it, no question. Heres my concern. This is from the technical analysts. Only 20 of stocks right now are at 20 day highs. The rally that we are seeing is getting narrower. Your target is 1950. You do when you are through your target . You stay optimistic. We have said all along that if things went right, you could go to 2050. Our concern in the short term is that the market feels it is discounted, lots of good news. You have geopolitics out there, you have that set up there. You talk to 50 people all day. When will you talk to Olivia Sterns . One,oes not have a for a because she is too busy. If shes going to go into a 401 k , how does she go into a market now . You have to think longterm. Look at her. Fine. Think longterm. Basically, one year out, two years out. All of the conditions are in place. It is just the short term where we seem to be not paying enough heed to things that could go wrong. What are the sectors i want to be in . We continue to favor technology. I know technology a strong. Old tech, new tech . We like tech with cash. When you look at tech and health care, those are sectors with lots of cash. And cash, we are in the midst of an m a boom. Please stay with us. We have the bank of switzerland. Ubs, i love to say that. Someone else Rupert Murdoch is on a tear. After 21st century fox. He unloaded italy and germany last night with the transaction of 9 billion. Guy johnson us to explain from london. How big a deal is this really . I was taken by the number 9 billion. Is that a deal or a rounding error . I think it is not a rounding error. It is going to give him a lot of opportunity to change the direction of that time warner bid he is trying to make. He does not want to raise it and risk his credit rating. He has a Nice Investment grade there. What he does is make the transaction work for him in relation to that. It kind of works as well. It is putting me stock lower the stock lower. Mr. Murdoch is trying to protect his investment. Moodys came out and says it anticipates a cut by two notches to bskyb as a result of that transaction. Mr. Murdoch is ok with his investment grade. Sky is getting a downgrade. So, yeah, not a rounding error. Jump in. I am thinking back to 2011. Murdoch and his son were trying to take over bskyb. They lost it because of the phone hacking scandal. Is this murdoch exiting europe . No. E has a 30 stake in sbkyb does he come back when the dust settles . I dont think he is thinking about that. He is not exiting europe. He still has a big chunk of change invested in bskyb. Held me and help americans understand where mr. Murdoch focuses. Is his focus on london and europe . Or is he an american guy focused on u. S. . Which is it . I think he is an australian on chipper nor. He is a newspaperman born and b red. He does not care where the asset is. He is thrilled that the wall street journal is giving papers a run for the money. Do you agree that he is geographic agnostic . I agree. He is an australian newspaper guy, isnt he . He sees the deals and the opportunities where they arise. Clearly, this transaction is aimed at improving that. He is prepared to shuffle and take a little bit to make it happen. Inwith people off the record his organization, he applies to his managers to make money. That is what drives him is money. And understandably so. That is fair. Guy, i know you will have a view on this. Olivia, you spent eight weeks in london . How did you get this assignment . You need to be able to watch the footing. Dumb question how is sky tv different . Sky tv is paid satellitetv. It has a lot of options. Bbc is basic cable. Is it like cnn . No, more like espn and a package of cable. Very good. I learned a lot here. Guy is almost to his we can. Thank you very much for it you know what you do allege time in london . You go to a pub. That is why he looks a little disheveled. , president obama is calling for swift action to stop tax inversions. We will show you why in our startling single best chart. Good morning. I am tom keene. With me, adam johnson and Olivia Sterns. It is the perfect day here in new york. A fabulous summer. The best summer in five years, six years . I walked out of my building and it was like a september morning. Gorgeous,