Lets get to a data check. We look at stocks and bonds, what a churn before the economic data. Futures negative two. The euro begins to weaken. Major cross asset series. The six, well under. Eight to 10 spread. Like the german yield that adam spoke of, this shows some of the flatter yield curve. Her dose co gold elevated above 1300. What a complex. Is steppingop story up gaza. Hitting the only power plant. There could be a long military campaign ahead. Any troops must be based on disarming hamas. They have fired more than 2500 rockets at israel. The imagery, it is something i watched live. Think of 1050 people and gaza, dead from these incoming israeli missiles. This is more. War. Ban kimoon accusing them of pummeling with ver has been taking a lot of heat from countries around the world for all of the civilian deaths. You go into the tunnels and realize that hamas is trying to wage war for many years. Will extend the discussion and moments. I will speak with a finance minister with interesting politics versus the Prime Minister. United behind Benjamin Netanyahu. What is our second story. More sanctions against russia. They may come out today. Sanctions would target key sectors of the russian economy. This could be bad news for the british banking sector. Be difficult news for the german engineering industry. This has changed rapidly. All of a sudden, there seems to be agreement before between. Ermany and the United States it does highlight the french navy deal that might avoid sanctions. I wonder where that will be. A bola, close to 700 people have died in west africa. The fatality rate has been close to 60 and is as high as 90 . It has expanded beyond africa only once this year. Nigeria has closed its borders and put airports and seaports on alert. Animals tomits from humans. It is not airborne. To be terrified it is going to take off. I like how you say terrified. Af to you says today this is not malaria. It is not tuberculosis. Remote partshese of western africa to the major cities. That seems to be the focus. Our guest host for the hour, partner and head of mergers and acquisitions of jones day. Lisasa abramowicz bramos. What do you tell your associates at jones day . Dont count on vacation in august. Thisat is the character of moment versus others that you have seen . Is capital reinforcement. Theyre selling things for a multibilliondollar transaction. It is reallocating capital. Fundamental focus on capital discipline. How can we better our how can wether than take advantage. Is reallocate capital, get out where you are not so good. Would you predict the warm buffets will play . There is going to be plenty. What drives the market is the stuff we saw yesterday. We have a fed meeting. Does anyone expect a change . Do not make too much news over the summer. Not a lot of trading. People are expecting some of the isnomic data coming out optimistic. It will push the fed to increase Forward Guidance and will raise we have jim with us in the next hour. Rateas the high interest changed . What is their nuance . They have been wrong. Of disagreement over what the pressures are that have made them wrong. The nuances are what are the pressure and how much can yields rise. Ol le feel like 30 year yields may. You sit on the pink couch and we had a halfhour all off the, record. The state of the market. Dni is looking for coupons. Deanna is looking for coupons. Is the fed fueling a stock bubble . Surveillance. Lets get company news. A mixed Quarterly Results for the biggest investment bank. Net profit fell 29 . The bank blames rising tasks those taxes and market instability. And u. S. To british authorities. They admit to wrongdoing by u. S. Authorities. A snag in talks between the Justice Department and the bank of america. Says theet journal dealings of Merrill Lynch and countrywide financial are the problems. They are both being at paying a cash fine. Todays company news. Canceling an auction due to market conditions. Coming up, my interview with israelis financial minister. Abysses bloomberg surveillance. Manager nance minister, yair lapid, joins us from tel aviv after the extensive attacks overnight. Wonderful to have you. You will have a security Cabinet Meeting in a few hours. What will be discussed by you, the Prime Minister and the rest of your leadership . No one within Israel Government is accusing secretary of carry of betraying israel. He is a devoted friend of israel and doing his best to help out. It side from that, we have to discuss the fact that israel has agreed to three ceasefires. Against israel because this is what they do. Do what, think and their organizations do. We have to deal with that and see what we are going to do about it. That they castay dispersions. We said it was the opinion pages of various media. I did not accuse you of anything. I just used the opportunity to reassure the friendship we have with secretary kerry. These moments in and the increasing attacks last night, one distinction is the United States, using egypt or qatar, or turkey as emissaries to hamas. What do we need to do to bring peace to gaza . Egyptian offer on the table that we have accepted eight or nine days ago, saying lets go to a ceasefire, keep the ceasefire and lets Start Talking about the things that through both parties the egyptians with the help of the United States, which is always blessed. Militarys nation of the gaza area. No country on we want the demilitarization of the gaza area. Rehabilitation of gaza and this can be discussed because we have no beef with the citizens of gaza, only with hamas. Can you give us an update on the percent of the tunnels taken out . This is a huge mystery to people worldwide. What portion has been removed . Cannot go into the exact numbers because this is operational. We have found more than a couple of dozen tunnels going andrground into israel other settlements. Tong specifically kindergartens, dining rooms, they were trying to kidnap or kill israeli women or children. Lets turn to your finance minister. Mr. Neng yahoo speaks Benjamin Netanyahu speaks of a campaign. Can he afford that . We have a strong economy. We have an a plus rating from all companies. This operation, as expensive as it is is an episode within the economical life of israel so there is nothing to worry about. So manye same time, around the world are critical of israel, would they see a diminished gdp because of these attacks upon hamas in gaza . Worried with the decline of world trade, which has nothing to do with this operation. If i have to worry about anything. We are following the numbers and we check on a daily basis, but i am telling you, as dramatic as this is, and as eyecatching as it is, this thattion is not something even touches the fundamentals of the israeli economy. One final question we look for theitmus paper system. We know the Stanley Fischer were the central bank that did a wonderful job of stabilizing your banking system. Do you wish, hope and pray for a to sustainel exports, even with what is going on in gaza . It is always the dilemma. A veryhe result of strong economy. We have a strong currency because we have a strong economy. On the other hand, this hurts exports. Is a game to be played. This is also altering your formal question. After 21 days, the shekel was almost untouched by what is going on. I want a strong shekel because i won a strong economy. I think it should go a bit lower. Give us an update on the tel aviv airport. If they get rockets or missiles ,owards the tel aviv airport how would that change the dialogue . Stopped theas andican fly through israel it was a may stake and they took it back after a few hours. I insulted lax and today i will insult jeff k and say jfk and saying our airport is safer than jfk during the winter. Thank you so much. Yair lapid is the finance minister of israel. About the food at laguardia . I am not a fan of the food. It has gotten better. Lax. Took a shot at he sure did. One ast point flashpoint. Speak with the former head of the nato forces in europe. Twodaybeginning of a dos fed meeting tomorrow. Welcome to bloomberg surveillance. It is time for our morning mustread. It is a morning mustlisten. Here is what was said. Why do you call for security for israel and why do you call for lifting the siege . Why do you give the right to live for the palestinians as the other nations . Brief expert of what was a wideranging interview. Howpeaks to the fact of qatar has become a key in the conflict. Since egypt is no longer playing the role with the absence of a Muslim Brotherhood. Interplays at the center of it, what are we going to do with a Palestinian Authority . Lebanese experience with hezbollah groups. Are three the Palestinian Authority, the legitimate group. Gaza, hamas. In the north, you have hezbollah. What is your idea of discussion that secretary kerry could bring forward. I know you do not deal with matters of the state department, but diplomacy is about dialogue. How do you do this . It is difficult. The idea of trying to find fromelse to mediate the hum assad point of view, we are on the israeli side. Hamas point of view, we are on the israeli side. Does turkey have influence . An egyptian offer was on the table. Is hamas listening . And 10 00 p. M. 0 on bloomberg television, an exclusive. We will be right back. Good morning. Bloomberg surveillance. We welcome all of you worldwide. These are live images from gaza. Of fallacious firing hellacious firing. Moke thisstained spo morning. Day fednning of a two0da meeting. What a busy day across the world with our top headlines. House accuses russia of violating a key arms control treaty. They are testing longrange cruise missiles that would break a 1970 in 1980s deal. Southwest is facing the second largest fine ever. The federal Aviation Administration wants a 12 million penalty. They did not do require repairs on some of its 737s. The charges involve a contractor. Pushoks like the nba will Donald Sterling out of bounds. His wife may sell the clippers. She struck a 2 billion deal with steve ballmer. The league wants sterling out because of his racist remarks. On this, butspeed is this the final deal . To final deal is going it is never final. Did he get good news yesterday afternoon . Sterling has been suing to block this. Stay tuned. Lawyers or employee. Were employee. Is this a good thing . One of the problems with the United States is a cost 500 to file a lawsuit. I think a loser pays system would make a lot of sense. For firms like mine, without be a bad thing . Sure. Who is holding this back . The segment in the bar, the plaintiffs bar. They have huge political input. Can you estimate what percentage of lawsuits would be dropped if you had to pay for it would be a huge percentage. It is holed up rather than the merits. I would not say that about the sterling there it the sterling thing. Reputationale a risk for lawyers taking on a case like the sterling case . Isnt there an inherent check against you know on the lawyer in the firm. Certain firms would never do that case, including mine. The old saying about spell my name right. The interim ceo of the l. A. Clippers will be on bloomberg tv this afternoon. Dick parsons. Far away, there was a merger and acquisition, a combination of those cocompanies. There is a budding frenzy from a standpoint of a creative transaction. With its renewed ceo and board confidence, Robert Profusek is with us. Confidence. This is the first inning of an m and a. Of some mind blowing numbers in terms of the size of these things. Aremost guys like me, it is billion. That is what pays the rent, so to speak. The pipeline is bursting. There is a factor about confidence. Of these other things. The average ceo is about five years, not 25 years like the old days. You have to reallocate your resources. Most of the deals we have seen have been about capital efficiency, not empire building. You need a billion dollar worth of deals to pay the rent. If you annualized what we have seen, were going to be well north above two. Can we sustain that . So many of the deals involve stock. Stock the market is at an alltime high. By and large, when people announce big deals, instead of stock going down, which is historically the case, the. Rs stock takes the why . Is the strategic what is the sweat motivation . Into spacious you are good at, getting out of the spaces you are not good at. We talked a little bit about one of the things is gdp growth is slow. You have to feed themyearold you have to feed them your own multiple. Trying tof people are buy scales, rmb, a pipeline. There is always a buy versus build dilemma. You have to buy rather than build it. Lisa permits abramowicz with us. You are in charge of this for bloomberg. Money is cheap. I am going to sleep early tonight. I wonder how much is the current by optimism orn how much is because they do not want to be taken over or considered less valuable. Not think it is defensive. Went through we this enormous change and we are in an upswing. If your stocks doubled in the last three years, someone is willing to pay premium, it does not look so bad. If you think your career path is five years not 25 years. Youou have to do something, have to create value. Why do you think they will back it up a little bit. Why is it five years, not 10 years now . The whole change in the corporate government paradigm. The space between board and management has been squeezed. Activism, you name these things, makes it in a bowl and it separates. Do you think the fact that the ceos have shorter range mean we are seeing smaller deals . You see less than the warren buffetttype deals. See will thank you very much. My best charthave of the day. It may put the bubble talk to bed. Perspective on biotech. Another bubble we are talking about, our twitter question of the day. Ceiling fueling a stock bubble . Good morning, everyone. Olivia sterns is in for scarlet fu. We are focusing on bubble talk. Many concerns about a bubble and biotech. The best chart shows valuations are nowhere near the bubble era of 1999. Valuations are attractive rather than the growth environment. We have heard every body janet yellen talking about investors. Perhaps a bubble and biotech companies. 33 efficacy for women in a Breast Cancer study. There is a reason people pay for biotech. Janet yellen has taken some heat from the analysts. The economists caught up with the idea that no one was making money. The county now is better than the mystery it was in 1999. It is better than i was. One of the things we got ,fter the internet bubble things are better. No question about it. We know where we are janet yellen said there may be a bubble. What are youcz, hearing . There is concern that high yield bonds are overvalued. The companies are not capable of maintaining capital structures. They have incurred record amounts of debt. Are they able to increase income quickly enough to meet this . Reach anothero refinancing cycle around 2019, 2020. We have pushed the maturity wall back. There is concern about that. Of the sophisticated investors are petitioning against what are flows doing . They are negative. It was the biggest outflow last week. 3 billion from high yield bond funds. You are good at this review. 2009 was the bull market. We got it again in 2012. 2011 2012 is today a bull market in bonds . 1. 3 that is the yield in germany. 2009, 2012, both good years. They have all been pretty good. You look at the average and you are talking nine or 10 , 12 . These are good returns. Anyone trying to bet against highyield bonds, there is been a lot of bubble talk. Us. Im and grant with what do we have for our snapshots . This is a photographic guy. Two images laid on top of one another. Yesterday was the beginning of world war i. They superimposed a tank in a scene of presentday london. Gives you a little perspective. That is foreboding. That was 100 years ago today that world war i began. A shame to think of how many wars there are around the world right now. Competing in the womens 200 meter butterfly. This is the fifth day of the gow table go around the can you do the butterfly . No. You were like championship what is your stroke . Paddle. More of a doggie for could go underwater long distance. Nasa, this one is for you, tom. With then conjunction opportunity mars rover. It landed on mars in 2004. Looks like north dakota. The single biggest fight i had with my father. Just send them up there. There it is. It looks like the desert. That is mars. Some of these are color treated. It is something what we have with these unmanned vehicles. Walle. Oks like when Richard Branson goes to mars, you can buy tickets. Coming up, turning to derivatives to make bets on corporate debt. Why janet yellen may be keeping a close eye on this trend. Good morning, everyone. After a night of attacks in gaza, we see smoke. That is our live image from gaza. This is bloomberg surveillance. I am tom keene. 1. 02 yen here. Get to tuesday, lets company news. Microsoft is under investigation in china. They visited for company offices. Have been ordered not to buy windows 8. The company will not comment. The Home Rental Company against a giant home rental chain. They are operating in nearly 200 countries. It sounds like a nightmare. Chief. Is slashing its he has received 7 million annually for at least the last eight years. Shareholders protested over executive competition. Executive compensation. When you cannds write a credit. Nobrainer. Collect the premium. Writes about how the big hedge funds are making big bets. It is a growing trend. You have Fund Managers managing tens of billions of dollars. The underlying market is not trading that much. How are you going to make it that where there is not much of a volume. People are circling a basket of bonds with companies and think and i willain value compensate you if there are losses. This is a way to replicate a bondlike that without owning the security. There is leverage because you may be called on to pay out if you are wrong. The funds that are making this bet are writing insurance policies and as long as they keep rising, you are fine. If bond prices fall, the insurance policy is a liability. We were talking about this. I remember being at the jing, there was a thing are we back to silly synthetics . There have been fundamental changes. Has been a regulatory overhaul. These have to be cleared cen