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Speaker 1: This is Bloomberg surveillance. China is reflating through credit growth,

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Speaker 1: and the set has become a bit more dubbish and

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Speaker 1: has served to weaken the dollar a bit. Clearly, it

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Speaker 1: wasn't the fet intervention that was bringing down interest rates.

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Speaker 1: It was the good quote unquotal favors. I don't think

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Speaker 1: the fetchages raise rates for the sake of raising them.

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Speaker 1: They certainly want to make sure that the steps that

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Speaker 1: they take are well justified. Bloomberg Surveillance your link to

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Speaker 1: the world of economics, finance and investment on Bloomberg Radio.

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Speaker 1: Good Morning. I might com McKee along with Tom Keene.

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Speaker 1: It is seven am on Wall Street, one pm in Brussels,

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Speaker 1: where the European Commission is whacking Google upside the head

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Speaker 1: trust US. We'll talk about that in a few moments.

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Speaker 1: We'll talk politics to today, not to depress you too much,

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Speaker 1: as important as those stories may be. Neither really in

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Speaker 1: the markets this morning. Instead, it is China. It is

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Speaker 1: oil back to the future there. China's markets falling the

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Speaker 1: most since February, Shanghai down two point three, all down,

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Speaker 1: the striking Kuwait apparently over West Texas forty cents of

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Speaker 1: barrel down one point nine percent, were rounded to two percent,

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Speaker 1: red crude one and a half percent lower. Put the

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Speaker 1: two together, you get a lower open. In Europe, this

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Speaker 1: stock six d right now is down by about a

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Speaker 1: point a tenth of eight percent. The Dacks is higher

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Speaker 1: fifteen points right now a tenth of a percent. But

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Speaker 1: we're watching the foot see trade lower seventeen points, three

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Speaker 1: tenths of eight percent. Futures mixed here in the United States,

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Speaker 1: turning positive, the SMP turning positive just a moment ago,

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Speaker 1: up by a point, The Dow is flat, Nasdaq futures

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Speaker 1: up by five points right now a tenth of eight percent.

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Speaker 1: In the bottom market, bonds higher this morning one point

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Speaker 1: seven eight for your tenure yield one point to five year,

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Speaker 1: five year, the two year going for seventy six basis

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Speaker 1: points that our index just a touch stronger at four

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Speaker 1: point oh seven four. Headline from United Airlines this story

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Speaker 1: reported earlier naming Robert Milton, the former Air candidate CEO,

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Speaker 1: as chairman of the company Google. The European Union expanding

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Speaker 1: its battle with Google, alleging the technology company rigging the

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Speaker 1: global market for mobile apps by making sure it's Android

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Speaker 1: operating system gives preferential treatment to its own products. New

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Speaker 1: York University Strdente School of Business Professor Scott Galloway is wheus. Google,

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Speaker 1: of course, says Andrew's Android is a free and open

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Speaker 1: source operating system. Um so is this a fairly obvious case?

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Speaker 1: It either is or it isn't, or is this going

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Speaker 1: to turn on technicalities that maybe only Tom's eight year

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Speaker 1: old is going to be able to understand or Google's

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Speaker 1: attorney is. I mean, this is a definition of what

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Speaker 1: an ecosystem is supposed to do. Is the ideas you

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Speaker 1: drive traffic to your other properties and you create an ecosystem.

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Speaker 1: So it's sort of like tell us something we don't know.

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Speaker 1: I don't think anyone would be shocked that Android would

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Speaker 1: be favoring other Google products. I think that's their job.

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Speaker 1: Why then are the Europeans doing this? You know? I look,

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Speaker 1: I think everyone every once in a while we get

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Speaker 1: angry at some of the external or the unintended consequences

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Speaker 1: of these unbelievably successful companies that on a business level

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Speaker 1: deserve every point of market share that they've earned, and

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Speaker 1: then we wake up and goes, this is this? You know,

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Speaker 1: it's good for Google? Shareholders. It's good if you in

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Speaker 1: real estate and Portola Valley or the Ferrari dealership in

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Speaker 1: San Francisco. But occasionally we say is this good for society,

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Speaker 1: and a lot of people decide no, it's not. We're destroying,

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Speaker 1: staring a lot of jobs. They get angry, they got

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Speaker 1: all hopped up. They go after one of these companies,

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Speaker 1: and typically it doesn't work because these companies have earned

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Speaker 1: their share. So it's hard, you know, it's hard to

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Speaker 1: say they've run a foul of antitrust. They've earned it,

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Speaker 1: earned this this share. But I think we're headed here

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Speaker 1: some sort of showdown because it's just having such negative

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Speaker 1: impact on the economy, or not even on the economy.

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Speaker 1: Daniel Rushcoff had a great book that basically said we've

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Speaker 1: opted for growth over prosperity. Scott Galloway with Us with NYU,

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Speaker 1: had a great time at n y U last night

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Speaker 1: speaking thank you to Carl Weinberg for ligning intelligence students

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Speaker 1: up UM with some brilliant questions, some of them I

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Speaker 1: thought were really sophisticated. Bloomberg Surveillance. This morning brought you

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Speaker 1: by Investco. Markets may be volatile, but investcos value managers

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Speaker 1: are finding a high conviction opportunities to find out where

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Speaker 1: at investco, dot com, slash interactive. Scott Galloway on innovation

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Speaker 1: up to me, the LIV the litigation or potential regulation

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Speaker 1: whatever of EU is about starving for innovation. Review for

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Speaker 1: us again, how innovation gets transported to regions desire it

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Speaker 1: but don't have the structures the culture to embrace it

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Speaker 1: like a given Silicon Valley or Austin or maybe the

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Speaker 1: nascent Los Angeles as well. Yeah, for all the candidates

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Speaker 1: talking about how poorly America is doing. The NAVDA company

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Speaker 1: that's added more than ten billion dollars in market cap

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Speaker 1: outside of a bike ride of Berkeley, Stanford or or

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Speaker 1: you know, or n y U or Columbia. I mean

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Speaker 1: from what was it from nine nine, within a seven

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Speaker 1: mile radius of SFO, there was more market capitalization created

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Speaker 1: than all of Europe since World War Two. Name an

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Speaker 1: incredibly innovative disrupt or coming out of Europe right now.

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Speaker 1: It's just that there's something about the culture here, the

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Speaker 1: willingness to fail our education system. But yeah, I imagine

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Speaker 1: Europe has been asking themselves the same question for the

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Speaker 1: last thirty years as they see all these newly minted

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Speaker 1: billionaires on the paper everywhere, and none of them have

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Speaker 1: a British or a French accent. It's been said that

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Speaker 1: the US innovates China copies in the e U sues

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Speaker 1: well China, Yeah, China, China. They call it process innovation.

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Speaker 1: We call it IP theft any But the bottom line

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Speaker 1: is any economy that accelerates the kind of seven or

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Speaker 1: ten percent GDP growth is typically stealing i P from

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Speaker 1: somewhere else, whether it's US stealing textile manufacturing from Britain,

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Speaker 1: Um and Tom. You had that great guy on from

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Speaker 1: Warbert Pinkas his name is escaping me. But he's sort

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Speaker 1: of an economics store and he's wonderful. But effectively China

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Speaker 1: is you know, they look at what's happening to P

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Speaker 1: and G some amazing firms and luxury brands in China.

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Speaker 1: They watch, they wait, and then they come in and

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Speaker 1: they take back all the share. China's gone from being

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Speaker 1: a dream for a lot of consumer companies to a

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Speaker 1: real problem all of them. Is that mean that we're

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Speaker 1: going to see more UH support for someone like Donald Trump,

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Speaker 1: who would essentially cut off our relationship with China on

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Speaker 1: a trade basis. Yeah, I think the roots are trying.

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Speaker 1: It's just such a phenomenon. You always actually how did

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Speaker 1: this happen? I think it goes back all the way

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Speaker 1: back to World War Two, where we effectively flatten these

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Speaker 1: very productive economies called Germany and Japanese, incredibly productive cultures.

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Speaker 1: Our our capital infrastructure was untouched. We had a thirty

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Speaker 1: or four year advantage. We took this cohort called white

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Speaker 1: dudes and paid them a lot of money without ever

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Speaker 1: telling them why. And now the global economy has decided

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Speaker 1: that they want to catch up. Everyone talks about income inequality.

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Speaker 1: If you look at global equality, it's been a century

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Speaker 1: of equalization. The Chinese in India want their piece of

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Speaker 1: the pie. If you're a Trump oter, it means the

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Speaker 1: global economy has left you behind. This is the middle

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Speaker 1: class white guy who can't keep up with the global economy.

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Speaker 1: A fascinating discussion. That guy, by the way, is William

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Speaker 1: Jane Way, legendary at Warburg. Pink is uh closely associated

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Speaker 1: with Cambridge and he has been a huge value. It's

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Speaker 1: a great time when we have Mr Jane, William Mr

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Speaker 1: Galloway on at the same time, Professor Galloway, when I

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Speaker 1: look at that American that is not innovating. They're not

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Speaker 1: writing code, or they're not around the industry of the

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Speaker 1: code writers. Is there a policy to make them more

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Speaker 1: tech savvy. I don't observe it. You know, everyone immediately

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Speaker 1: defaults the education. I just wonder Tom, if we're destroying

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Speaker 1: jobs now at a pace that we just can recreate,

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Speaker 1: because the argument is, okay, a grarrant society. People are

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Speaker 1: farmers turn in the century four at the end. But

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Speaker 1: other industries picked up the slack. But it seems like

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Speaker 1: we're destroying jobs so fast now it's hard to keep

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Speaker 1: up with recreate, you know, recreate and recreating them. And

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Speaker 1: you're the guests on the last hour said, okay, but

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Speaker 1: it's great for it's great for employment. That's true, but

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Speaker 1: but wages are just flat because people are being are

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Speaker 1: down to being uber drivers or air and runners for

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Speaker 1: task grabit. I think where we had it as a

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Speaker 1: negative income tax, I think it's gonna be easier just

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Speaker 1: to pay people who don't have the skills and to

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Speaker 1: provide social service. Like I saw chart on on Twitter

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Speaker 1: today from a legitimate source. It's absolutely stunning that male

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Speaker 1: full time employed headcount is just now getting above where

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Speaker 1: it was in oh seven. All the rest of it's

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Speaker 1: been self employed in some real legitimate pickups, and women

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Speaker 1: employed as well. It's sort of a Pogo academy. And

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Speaker 1: that we've met the enemy and it is us. We

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Speaker 1: talk about the problems of globalization, but you don't stop

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Speaker 1: shopping at stores that advertise ultra low prices because of globalization.

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Speaker 1: Uh you know, where do we how? How do you

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Speaker 1: how do you you know? Massage and into this? Uh?

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Speaker 1: You know, is there a way you know this is?

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Speaker 1: This is the correct question? That that and your right.

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Speaker 1: So people talk a big game about made in America,

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Speaker 1: but they want a little black dress. H and M.

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Speaker 1: It's just consumers vote with their pocketbooks and they decided

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Speaker 1: to have the gifts under the Christmas tree or from China.

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Speaker 1: It's just we we love low prices and then we

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Speaker 1: complain about, you know, a destruction American jobs and free

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Speaker 1: trade is arguably the way to go. It's just certain

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Speaker 1: people are being left behind. And I don't know if

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Speaker 1: education is going to catch him off. Scott, don't talk

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Speaker 1: about Yahoo in the next block. Let me squeeze this

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Speaker 1: in quickly thirty seconds. I'm taken aback by the abandoned

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Speaker 1: bricks and mortars on many side streets of this great city.

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Speaker 1: Where's Amazon in five years? Oh? I am Amazon must

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Speaker 1: distrust to force the largest economy. UM, I believe that

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Speaker 1: Amazon is going to make a transformative acquisition of bricks

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Speaker 1: and mortar. Consumers don't live in isolation of anyone medium.

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Speaker 1: The most influential factor in a purchase is still the store.

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Speaker 1: There's three new factors in the top ten, social media search,

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Speaker 1: UM and online discovery, but the number one is still

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Speaker 1: the store. The stores, Tom, there's a myth that stores

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Speaker 1: are dying. It's not stores that are dying. It's the

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Speaker 1: middle class stores and wealthy neighborhoods are thriving. Stores, businesses

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Speaker 1: and everyone else in middle class and lower class. Scott

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Speaker 1: Galloway with us, one of our most popular, truly one

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Speaker 1: of our most popular guests, and of course with his

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Speaker 1: inflammatory important impression to comments on beyond the story, we

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Speaker 1: will Yeah, that's the Galloway. You don't know coming up Galloway.

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Speaker 1: I'm mayor seven ten. I'd all streat this hour of

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Speaker 1: surveillance brought to you by Volvo Cars White Planes. Visit

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Speaker 1: Volvo Cars White Planes dot Com. Here's my cabar with

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Speaker 1: world in national headlines. My Tom, thank you very much.

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Speaker 1: Republican Donald Trump had to Democrat Hillary Clinton had big

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Speaker 1: wins in the New York primary. It's now on to

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Speaker 1: their next campaign. Stops Clinton and scheduled to spend today

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Speaker 1: campaigning in Pennsylvania, while Trump has a rally planned in

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Speaker 1: Maryland as well as Indiana. President Obama has landed in

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Speaker 1: Riya to meet with Saudi King Salmon. The President will

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Speaker 1: later attend the Gulf Cooperation Council's summit with Persian Gulf allies.

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Speaker 1: The president visits comes as the Saudis remain deeply opposed

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Speaker 1: to the President's outreach to a run. Michigan's attorney general

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Speaker 1: will announce criminal charges today against two state regulators and

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Speaker 1: a Flint City employees related to Flint's lead tainted water crisis.

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Speaker 1: Global News twenty four hours a day, powered by our

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Speaker 1: twenty four hundred journalists. I'm Michael Barr, Mike, Tom, Michael,

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Speaker 1: thanks so much post two days uh down the Road

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Speaker 1: forty dollars eighteen cents in West Texas, Brent down seventy three.

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Speaker 1: Scott Galloway of n y U Stern. This is Bloomberg Surveillance.

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Speaker 1: Global Business News twenty four hours a day at Bloomberg

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Speaker 1: dot com. The Radio plus Mobile act had on your

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Speaker 1: radio is a Bloomberg Business Flash. And I'm Karen Moscow

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Speaker 1: Coca Cola posting first quarter of profit that beat analysts estimates,

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Speaker 1: revenue met and shares her down one point three per cent.

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Speaker 1: Oil is lower after Kauaid workers said they would end

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Speaker 1: a strike that disrupted output in Oppeg's fourth largest producer

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Speaker 1: for three days. Right now name x screwed Oil down

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Speaker 1: two or ninety cents to eighteen cents of barrel U

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Speaker 1: s Dock index future is they're a little change now.

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Speaker 1: The decks in Germany is up a tenth of upper

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Speaker 1: set ten. Your treasury up four or seconds. The yield

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Speaker 1: one point seven seven percent yield on a two year

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Speaker 1: point seven five percent coll MAXs Gold is down to

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Speaker 1: tenths per cent, down three dollars twenty cents at announced.

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Speaker 1: The euro at other thirteen seventy again one oh nine

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Speaker 1: point two four. That's a Bloomberg business flash. Tom and

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Speaker 1: Mike Karen, thanks so much. Good morning everyone, Bloomberg Surveillance.

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Speaker 1: Scott Galloway with US with New York University. We now

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Speaker 1: look at you, Scott. One of the smartest comments I've

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Speaker 1: ever heard in business was from one Martin Geller. Marty

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Speaker 1: Geller legendary Bloomberg. He's on the Bloomberg gelp board. He

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Speaker 1: keeps he keeps track of the credits and the debts

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Speaker 1: for the company and all that. Marty Geller said, once,

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Speaker 1: if something's they are and it goes way two days later,

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Speaker 1: will you miss it? If Yahoo went away, would anybody

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Speaker 1: miss it? Oh? Yeah, I do think so. I think

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Speaker 1: there's a lot of people who depend on who really

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Speaker 1: enjoy yeah who sports? Yeahoo finance? Even it sounds very pedestrian,

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Speaker 1: but it gets a huge amount of usage. Is YEAHO mail?

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Speaker 1: So yeah, yeah who? Does play a significant role in

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Speaker 1: quote unquote the attention graph, and that is there are

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Speaker 1: a lot of people spending a lot of time on Yeah.

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Speaker 1: So yeah, people would miss it. Does it Does it

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Speaker 1: integrate well into uh A Verizon or somebody like that. Yeah.

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Speaker 1: I think again the the kind of the algorithm of

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Speaker 1: the peanut butter and chocolate combination. Here is a hundred

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Speaker 1: and five million handsets and then a ton of content

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Speaker 1: that people want to see, not daily but often, and

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Speaker 1: the amount of data they can have an amount of

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Speaker 1: users they pick up creates a mobile ad platform that

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Speaker 1: could be very exciting for Verizon. Now, is it the

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Speaker 1: mobile ad platform and the algorithms that create the ad

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Speaker 1: sales that Verizon would really want? It's it has been

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Speaker 1: pointed out we had from Bloomberg gad Fly Sharro Oviity

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Speaker 1: here the other day who noted that companies that produce

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Speaker 1: content tend to be very popular for a while and

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Speaker 1: then be eclipsed by somebody else. So is what Verizon

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Speaker 1: wants not so much the contents is a way to

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Speaker 1: compete with Google and selling mobile ads. Yeah, so I

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Speaker 1: think you're buying a user base here and as opposed

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Speaker 1: to maybe you know, as as opposed to content. But

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Speaker 1: mobile advertising is so powerful when you think about one

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Speaker 1: word proximity, and that is if you know someone is

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Speaker 1: outside or near a Sephora and you know they've just

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Speaker 1: typed in Sephora, or they've typed in Blush or some

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Speaker 1: block and they're looking for it, or they are they've

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Speaker 1: typed it in recently into their web browser, and you

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Speaker 1: can push them a notification saying if you come into Sepphora,

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Speaker 1: which is eighty meters from you, and here's a map,

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Speaker 1: so you literally can just fall into the store. They

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Speaker 1: can probably sell that ad for a lot and they

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Speaker 1: have this closed loop now with this data, the fund handsets,

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Speaker 1: and then the content and the user base of the

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Speaker 1: Yahoo to offer a pretty compelling ad proposition of clients. Mike,

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Speaker 1: I did that the other day with tested you know

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Speaker 1: outside you're in Luxegen, the avenue I did Bronzer. I

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Speaker 1: have to suppor happened and brought the Bronzer to go

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Speaker 1: back to where we started though, because that raised anti

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Speaker 1: trust questions. Oh my sense is anybody who thinks that

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Speaker 1: they might have a shot at compute. I think anyone

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Speaker 1: who says who shows up to regular and says we

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Speaker 1: want to compete with Google gets a pretty warm reception.

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Speaker 1: So I don't I don't, you know, I just don't

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Speaker 1: see how Verizon runs runs into patrol. But I can't

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Speaker 1: predict that, Scott in the time we got left. There's

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Speaker 1: been a lot of articles recently too, in the New

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Speaker 1: York Times, Jim Routenberg and word articles, a con doctor

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Speaker 1: out with a smart article sort of with her digital

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Speaker 1: wither video. There's a lot of naval gazing going on

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Speaker 1: right now about the news business plan of video. Do

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Speaker 1: you believe in video doesn't have a future where companies

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Speaker 1: even like Bloomberg full disclosure and are fearless leader El

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Speaker 1: Mayor's they have to do video because someday it may work,

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Speaker 1: or is it working right now because a lot of

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Speaker 1: people are saying it's not. Video is enormous. There's a

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Speaker 1: tectonic shift taking place where young, wealthy people, who all

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Speaker 1: advertisers worship at the grail of our leaving broadcast TV.

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Speaker 1: So in step social media with a ton of new video,

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Speaker 1: whether it's periscope, merecap, Facebook video YouTube. So video is

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Speaker 1: the new black in the world of media. It's hard

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Speaker 1: to do and if you can do it, well, there's

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Speaker 1: a huge does it will um gosh, that's a great question.

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Speaker 1: You know, Bloomer does it well? You're look at what

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Speaker 1: their new, the new data, the existing online news guys flat,

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Speaker 1: the old economy guys, the hurst, the ends, the Bloomberg's

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Speaker 1: their online usage is up. And I think a lot

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Speaker 1: of that is they're just better at video given the cost.

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Speaker 1: Can they make money at it? Is there any brand

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Speaker 1: loyalty in video? Or are people looking for the video

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Speaker 1: rather than the provider? You know, it's an interesting point,

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Speaker 1: but even I would argue, I mean this again, using

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Speaker 1: Bloomer as an example, your online portal, I think you

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Speaker 1: guys get more video views than any online news portal

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Speaker 1: because you invested early and often in video and it's

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Speaker 1: paid off. That's I mean, I'm being a little bit

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Speaker 1: obsequious here, but video is what does all strategy come

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Speaker 1: down to? Do something? Do something really hard that you

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Speaker 1: can do well. And so if you can do video well,

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Speaker 1: there's a big opportunity it's getting. It's substantially higher ad

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Speaker 1: rates video than traditional banner. Does it have a durability?

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Speaker 1: I think that's the thrust of the eighteen articles that

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Speaker 1: have been written is Okay, that's fine, and the dynamics

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Speaker 1: you mentioned we live. But where is it in five years,

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Speaker 1: which no one knows. I get an idea, Yeah, honest answer, Thomas,

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Speaker 1: I don't know. We don't know. I just know that

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Speaker 1: video is getting getting higher CPMs now and everyone's trying

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Speaker 1: to reach young, millennial, wealthy consumers and so you're seeing

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Speaker 1: more innovation around video. You've seen an incredible resurgence of YouTube.

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Speaker 1: The video is the new black in the world of

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Speaker 1: online marketing and media. Scott going always valuable. Thank you

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Speaker 1: so much. Will No don't speak to you as we

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Speaker 1: see Yahoo News move forward. Uh, Mike the screen. I mean,

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Speaker 1: what's the economic story today? Do we have data housing

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Speaker 1: existing home sales? But it's not that that's driving the markets.

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Speaker 1: It's interesting that we have had this turnaround because we

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Speaker 1: were looking at the oil correlation earlier. Today oil down,

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Speaker 1: stocks down, but that's that's changed. Well, there it is.

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Speaker 1: Let's do a data check. We look at equities, bonds, currencies, commodities.

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Speaker 1: A euro one seventies strong, euro, weaker yen, fractually euro yen.

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Speaker 1: That litmus paper the pros use euro yen one twenty

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Speaker 1: four twenty Michael McKee and Tom Keane Boomberg Surveillance. Good morning.

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Speaker 1: Bloomberg Surveillance is brought to by New York Community Bank

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