Are you a michael kors fan . Im not up to speed on it. It seems like a lot of americans are like, michael kors, whats the big deal . Those watches are hot. [laughter] does lady gaga were michael kors . Does she . After the bell, earnings on aig, marathon oil, and avis budget. The 100th anniversary of britain entering world war i. Let me do a data check. Stocks, bonds, currencies, commodities. Up 6. Es up futures nymex crude turns churns as well. The vix was up 17. 03. Will see where that begins with trading. 104. 82. Ude is some stability to the market. What an interesting weekend. Here is scarlet fu with the front page. Movement topped our front page. Lets start with the middle east. Israel declares a seven hour long ceasefire in gaza. We are back in the middle. In other words, it is holding. A humanitarian window that covers all areas of gaza, except for where israels military is operating. State, it is a unilateral ceasefire. That is the case. Israel is declaring it. Hamas is not part of this discussion. Diplomats met in cairo yesterday. Israel do not send anyone there. It said that hamas had undermined previous efforts. Thatyptian president said the truce which he and john kerry put together with the you when from last week un still stands from last week. I tweeted out some great information maps on gaza. Taking it away from being a hunk of land to a nuanced territory. It doesnt even feel like a hunk of land, but a really small piece of land. A strip of land. 1. 8 Million People. Isil has taken control of two oilfields. This is overnight. This is not on the front pages this morning. This bears serious scrutiny through the day today. The distinction to me is that isil, this is the group asociated with caliphate, they move south and east, they get into kurdish territory. This is going after the Kurdish Forces. The Kurdish Forces have been the strongest resisters. The most organized. If they are showing weakness. It is a headline item something to be aware of. There is much more on this from bloomberg news. Speaking of another headline item, portugal bailed out what was once its biggest lender. Aboutst of the rescue is 6. 6 billion. It will be broken up into two. The good bank and the bad bank. The government will own the deposit taking operations. Sounds like a run city. Our own city. It is still dominated by a bad bank. The idea that this is going to cause nobody anything. Explain. That is what the articles say. The taxpayers will not be affected. Really . Somebody is holding the bag. Lets get to wear last front page story. General electric ceo jeffrey a immelt iseff hi warning the government about closing the exim bank. Congressntor leaving means it is more difficult to get the charter reissued. The u. S. Is the only major economy that trades less with africa than before 20072008. This is all happening as the u. S. Tries to improve trade with africa. China, japan, europe is doing what they can. Nationsou name ten looking at a blank map of africa . I could get kenya and nigeria. South africa would be easy. Egypt, libya. Maybe you get ivory coast. Maybe i dont. [laughter] i think it shows our ignorance. We have all day coverage of the u. S. Africa Leaders Summit. Than 40tomorrow as more African Leaders gather in washington to meet with titans of american business. This is an event sponsored by bloomberg philanthropy and the u. S. Department of commerce. Our twitter question of the day, what is the biggest opportunity for the u. S. In africa . Surveillance. Israel announced a unilateral stop to rocket attacks. They will respond to any attempt to exploit the window. David, good morning. What is different within this truce . Proclaims this unilateral truce did they do it from world pressure . Israel has not said that. I think it is a question you raise fairly if you look at recent headlines that can mount and what is happening last night. The shelling of the uns school and at least 10 people dead, that is the third time that such an incident happened. There is a bit more pressure on israel. The United States ambassadors. About a horrifying incident. So, yes. What happens when this truce ends . Your guess is as good as mine. As you have understood and pointed out, since the last alleged that hamas broke the truce as it try to capture one soldier and kill another. Israel is saying, look, we tried to give you a truce. We have agreed on truces with you guys before. But it did not lead to anything. We cannot trust thomas. We will do things unilaterally we cannot trust hamas. We will do things unilaterally from here on out. A cityhting continues in on the border with egypt. Israel continues to detonate tunnels. Prime minister Benjamin Netanyahu commented that there would be a pivot in strategy moving assets in or out of gaza. Ais that reflect some sort of does that reflect some sort of a pullout . Does that necessarily sit well with the israeli people . Nen yahoo has been under pressure to make some sort of decision. Has beenin netanyahu under pressure to make some sort of decision. He was under pressure from the thousands of those Ground Forces that were sitting near the border and were basically open targets and move them out and redeployed some others. Airstrikes continue. Whether this has back up from the people is hard to say right now. I will say that there is overwhelming support here in israel for this operation. Since the beginning, people want to see israel deal a blow to hamas. How they do it, those are things that are a bit more extreme. Thank you so much. From our news purulent tel aviv this morning. Our best host for the hour from bank of America Merrill lynch, the chief Investment Officer of portfolio strategies. We also have the chairman and utous andf devote associates. Geopolitics,nd the and the middle east or the ukraine or iraq, finally having an impact on asset prices . I would say yes. Without a correction would have in the fall. It seems to becoming a little bit sooner. We have been looking for a correction and we would have thought it would have happened in the fall. Is going toe it becoming a little bit sooner. We are looking on a technical basis over the next few weeks. When you look at fundamental backdrop, it is improving. When you look at earnings estimate revision, that ratio has been rising for three months and arrow. In a row. I think people are getting nervous of all the geopolitical events. Before their going on holiday, they are taking a little bit of profit. A lot of people are calling for a major correction, looking for a 20 downmarket. We dont see that. We think this is a temporary pause within the market. What is different is that the highyield market, the credit market, is reacting. We have not seen both of them go down since around the second half of 2012, when we had the periphery concerns on the debt. There has been such a good run for somebody markets. Howard, Consumer Spending accounts for a lot of gdp. How is the u. S. Consumer doing . I would say, lousy. Six years ago we had one out of 12 in poverty in america. We now have one out of six in poverty. We have doubled the amount of poverty. It is the fastestgrowing group of people in america. Twice as many people drop out of the labor force as are getting jobs. 65 of new jobs are parttime. 44 of americans have zero savings. People areamerican not in good shape. That is why when you look at walmart, they are down five straight quarters, that is why when you look at target. That is what toys r us is losing. When you look at the numbers, it is not surprising. Chocolate store on fifth avenue was absolutely packed. I have no doubt. Our expert on chocolate here. On this monday morning, lets get to company news. With earnings. Firsthalf profit at hsbc falling for the first time in five years. Investment banking weekend. A 12 drop in profit. The economist ranked as wall streets best is casting in cashing in on his research. Isi was founded by ed hyman. Burgers are coming back. Beef and chicken items were dropped when the packaging item was caught relabeling meet. Meat. That is the latest company news. I took hot dogs out of the that were expired. Werest cooked them, they that will kill the bacteria. Put a little back no bead on their. There. Veeta on why is Warren Buffett sitting on 50 billion in cash . We will discuss next on bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. An important conversation with the violence in chicago. Unbelievable what is happening with the gang warfare in chicago. He is the mayor of chicago, rahm emanuel, in the loop with betty liu today. Im tom keene scarlet fu and adam johnson with me. Omaha. Warren buffett. He has never had this much money to spend. Cash topped 50 billion. About why to talk Warren Buffett has so much dry powder 50 billion sounds like a lot. Put it into context for us. It is really just about 10 of berkshires assets. Warren buffett has been buying railroads, electric utilities. That has expanded the size of the Balance Sheet. It has expanded the earnings power of berkshire. Every quarter, Berkshire Hathaway is generating a lot of money. Buffett waits for the fat pitch. He wants a really good investment. When he is going to buy a company or invest in a stock, he wants to make sure he is getting in at a good price. What we have seen recently is that cash number really just climbing at his company. 50 billion is an alltime high on an absolute basis. After the last financial crisis, he saw a lot of fat pitches. He invested in goldman sachs, bank of america. What is he saying in terms of the prospect for another correction . What does he say about stock market valuations . We got these numbers late on friday. Berkshire reported earnings. For berkshire, that is just a press release. We get a lot of data, but we dont have commentary from buffett. We are left to speculate about what he is thinking about right now. What is his skill set of saying no to a deal . No does Warren Buffett say to a potential transaction . I think he does it with the grace and humor he gets at the ukulele and start singing a song . Clearly, he has no problem saying no. Some of the people are trying to get him interested in investments. So many people are trying to get him interested in investments. The you see any fat pitches out there do you see any fat pitches out there . We are we are very bullish on the m a stock. Is the confidence there in retail, Mary Ann BartelsHoward Davidowitz . People cannot compete. Ofhave a tremendous number bankruptcies, closeddoor is, and everything else. Retail is not strong. Consumerism is strong. He hates retail. It is 2 of the business. He hates it. He says it is trouble. Quoteunquote. Think you very much. Adam . Coming up next hour, we are going to be talking about africa. , the onlying markets american on the debt , the debt of ivory coast and belize, he will be joining us to talk about opportunities in africa. The white house kicks off the africa conference today. This is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. Im tom keene. Scarlet fu and adam johnson. Its time for morning mustread. Scarlet fu has one for us. It is from the new yorker. It is about the language of money. The language we use for economics, everything we do here on bloomberg surveillance. Form ofehension is a consent. If we allow ourselves not to understand this language, we are signing off on the way the world works today, in which everything about your life is determined by the accident of who your parents are. This ever widening gap between the rich and everyone else. You are condoning the status quo. This is really, really important. To 1974 andoes back the mystery of Retirement Planning in the United States. People inexplain to plain english . There are some good commercials right now trying to tell you that. It is all about communication. At merrill lynch, we recently did a survey about retirement and really what we found out is that 47 of the preretirees that we interviewed said that they are not going to retire. This is what we really need to focus on. What is retirement . Is that the right word . Synergy . Tization or what is interesting is that in the survey, when we asked why are you not going to retire, it is because they want that mental stimulation, not necessarily because they did not have enough money. Interesting. That is toms recent. I have mental stimulation. Adam johnson will explain the big words for you. Coming up, is this the beginning of the end for bigbox retailers . Howard davidowitz gives us his take next on surveillance Bloomberg Bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. The summer is so lovely in new york. It looks like seattle this morning. It is great. It is clouds. It is gorgeous. It is a gorgeous summer. It has not been 90 degrees and weeks. Cool evenings and you do not even feel like you are here, it is a different. Is gorgeous. We welcome you in on this august 4. This is bloomberg surveillance. Im tom keene. With me, scarlet fu and adam johnson. A quick data check. Futures up 7. Dell futures up 53. Nymex crude is up dow futures up 53. Nymex crude is up. The unrest has not moved oil. Tom, i want to talk retail. , saysx retailers are done goldman sachs. They cannot compete with amazons Free Shipping inconvenience. Didrd davidowitz, amazon post a loss last week. Amazon has its own problems. Who wins this race to the bottom of retail . I think amazon wins in the end. Not going away. It is 11 of u. S. Sales, bigbox retailers. You cannot get too excited. Walmart is not going away. It is not disappearing. It is still a growth vehicle. There was massive incompetence. How can walmart by Family Dollar . They have been screwing around with small stores for 15 years. They have done zilch. This is their chance to do something. They did nothing. Is that the problem . Walmart needs to shift to a smaller footprint . That is part of it. They are tennis shoes. You can do 500 billion. They have loads of issues, like any company that size. One of the issues is more convenient, smaller stores. You say more convenient, smaller stores. Do we want a smaller bigbox . Yes. The Consumers Want them. Because they are closer to where the consumer lives. That is a huge issue. Convenience is tremendous. Those big supercenters are far out. That is the only way you can get to them. The days are over when you use the dodge pickup truck every weekend. That is my thing. What about drugstores like cvs and walgreens . They now include things like groceries and accessories and clothing. That is one of the best segments of retail. Walgreens is doing beautifully. Rite aid, alive and well. If you look at the drug sector, they are doing extremely well. What distinguishes them . Convenience. They are one block away from your house. It is a big deal. They can put all of the other stuff in because it is right near your house. Amazon is even closer. Think the big winner, the person who was really going to win in the end is amazon. There is no question in my mind. In the end, theyre going to win. How do macys, nordstroms, kohls. What lessons did they learn . They have learned a lot. Do 60 10 of the people of the spending. Bye. And pennys, bye they are selling to people with no dough. Macys has upgraded over the years. You are selling to folks with lots of money. The middle is gone. The middle is gone. You have retailers serving wealthy and retailers serving people who need a break. Youve got it. If you look at everybody whos in the middle, they are getting killed. A lot of people in the middle are downgrading. Forever 21 is opening cheaper stores. J. Crew is opening cheaper stores. Everybody is getting cheaper. Howard davidowitz, forever 21. [laughter] , when youn bartels hear all of this and see all of this as a consumer in this country, how does this plan with share prices . What is important here is, who was spending most of the money . Our surveys have shown that it is the females in the household that are really spending. What is really important as we go out to the baby boomers, there was going to be a massive wealth transfer, where most of the wealth will be held in the hands of women and not men. I have a suggestion that this has already occurred. [laughter] i think this will have investment implications. We do find that women do outperform in there per folios. Portfolios. They tend to be more conservative in their investments as they outlive men. Does that mean walmart should have a new female ceo in charge of the u. S. Division . Targets key operating executive happens to be a female. She is the head of merchandising. There is no more important job. That is the job that has always become the next ceo of walmart of target. Is probably the most single soughtafter person in retail at this second. Everybody is calling her up because there are so many openings. What is her name . The name escapes me at the second. She is number one operating executive at target. She was in line to be the ceo. We talk about females, she is a female. She is the key to the company. Rget, that isk ta her. I know tj maxx has been your favorite in the past. Still my favorite. Apparele most powerful retailer in america. You see the way they operate. Everybody else can learn from them. What is the fall trend this season . What is the hot thing . Cheap. Value. Every customer. Everyone wants value. That is the message that is out there right now. I need to interrupt. Say they the word word disaster for us . Im not going to do it. [laughter] not until i get a bonus. Im holding out. Coming up on bloomberg august is a month to use valuable paid time off. Not for everyone. We will show you next. This is bloomberg surveillance. Good monday morning, everyone. It is bloomberg surveillance. Lets get right to our top headlines. More than four dozen federal workers will join the ebola fight in west africa. The centers for Disease Control is sending people to the infected countries. Toledos tapwater. The mayor says toxins showed up in the latest test. Nearly half a Million People in ohio are scrambling to find water. A new worry for Government Troops in eastern ukraine. Russias air force has started drilling in the region. More than 100 fighter jets and helicopters are deployed. Those are the latest oped lines. A lot of warfare this morning. There is no other way to