Dell's Decision Day: Surveillance (09/12)

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Sept. 12 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests include David Burwick, president and CEO at Peet's Coffee & Tea, Adriane Brown, president and COO at Intellectual Ventures, Donald Baer, CEO at Burson-Marsteller Worldwide, and Judd Gregg, CEO at Securities Industry & Financial Market Association. (Source: Bloomberg)

Finally, the shareholders of dell vote.

Verizon strikes before the window closes, investors pay out for verizon debt and the russian president speaks to america, vladimir putin wants diplomacy.

Good morning, everyone, this is "bloomberg surveillance." i am tom keene , live from new york.

Joining me is sara eisen, scarlet fu.

Let's get started.

We're going to talk a lot about verizon and the megadeal in the bond market, but overnight news out of europe, italian industrial production fell in the month of july in a that third-biggest nation in europe may be stuck at its longest recession since the world war ii.

The euro is weakening and italy is leading the charge lower.

In the u.s., weekly report on initial jobless claims this morning.

9:40 five, weekly report on consumer sentiment.

The comfort index is out.

2:00 p.m., the monthly budget statement.

In terms of corporate events today before the bell, kroger will be reporting earnings.

Lulu lemon -- did you keep them?

Is it going to be a good quarter?

Are lulu lemon or kroger?

I think the missed the mishap in the pants.

That is big.

Those are $90 yoga pants.

They are very good and effective i can tell you.

New york city is back.

The streets were packed yesterday.

There was a lot going on.

It is fashion week and the anniversary of 9/11. we are back from the summer with a vengeance.

We are paying attention to the geopolitical events.

Vladimir putin's op-ed, john kerry is on a plane to russia to be with his counterpart to try to work out the diplomatic solution on syria.

Equities is front and center to some correlation of the market.

Futures, negative three.

What a consensus for a higher yield.

Nymex has gone nowhere for three days.

Totally good for president obama.

Our next screen, commodities feel.

The vix is a big story.

This is a quiet, unspent story of the last four or five days, the move in equities higher.

You see it with the vix.

Gold tanks, way under or 200, really pushing on support.

Brent crude down from the 116 tension of syria am a 112. i am the only one who doesn't own horizon bonds.

Are you a subscriber?

No, i have at&t is what i happen to use.

Maybe you can get in on the bond deal.

There is a rush of investors.

We scoured for the right page stories.

Verizon stands out because of the numbers.

The largest corporate bond debt sale in history and it is a $50 billion one that top the previous record set in apple -- by apple.

Surpassing the market's easily.

They really shows how institutional investors crave save corporate debt was solid returns.

Safe in a big blue-chip company with a big, big debt.

In meetings i had yesterday, people were floored at the acceptance.

I stood on the desk.

My wonderful charity event yesterday.

Cantor fitzgerald and their charity at their headquarters.

I was with bill dial on the bond desk as he traded for rights and he said it was instant.

It went to a premium just like that.

It was out of this world.

The bonds were amply priced with a very high yield.

This is a rare direct appeal to the american public.

Russian president vladimir putin writing an op-ed in "the new york times" overnight.

Putin urging the obama white house to embrace this proposal for syria to surrender its chemical weapons to the united nations.

This comes as john kerry heads over to geneva to meet with his russian counterpart, sergei laffer off.

-- lavrov.

We will see.

This is going to be our morning must-read.

I thought it was fascinating . and putting its credibility and founding as an international agency here at risk.

He put a lot of importance in the u.n. in this op-ed.

The last story we want to talk about, it has been going on for months, the dell saga.

It may be drawing to a close finally.

Michael dell could finally get his way.

It is in a seven-month long battle for control of the company.

There is another shareholder meeting due to take place today in texas.

Earlier this week, investors indicated their support.

I guess we want to know where the company is and make money, but what i really know is cristina alesci is to left -- developing a texas accent.

The hard work remains to be done for michael dell to do something with this company.

Let's talk to two very smart people about these events and, certainly, vladimir putin as we get to the front page.

William george.

Our guest host this morning, judd gregg.

To say he is chief executive officer of the securities industry and financial markets association barely describes his experience and new hampshire and former u.s. senator.

Gentlemen, good morning.

Were you surprised to see a letter by vladimir putin?


This is almost alice in wonderland type scenario between our relationship and how we're dealing with syria and dealing with russia.

We are stumbling into the situation and that situation.

The president draws a red line he can't enforce and suddenly, the secretary of state as a press conference and has a throwaway away line and the russians take it.

Now you have the russians in a position where they're essentially calling the shots.

The fact the it ministration is going to have to go to the u.n. where the russians have a veto.

The fashion -- the fact historically viewed russians, if they give you five dollars, they want what hundred dollars back.

They're going to expect something for what they're doing.

I like how you say alice in wonderland.

And john kerry has just arrived in geneva to continue these talks.

I love that, alice in wonderland.

The other alice in wonderland is dell computer.

Dell inc.

Warned to be taken private.

It has been seven months long.

You wonder what the task is for michael dell.

Even if it goes private and, this is number three but time behind in pcs, what is the future?

Have you ever seen this?

What is the future?

Have you ever observed something like this?

As i told you last spring, i thought the offer that mike had was fairly priced.

I think there was a lot of skepticism and short-term investors tried to get in and get a couple more bucks per share.

I never thought carl icahn was serious about running the company.

Books r.o.i. con got what he wanted and yet the no, i don't think he got much at all.

-- carl icahn got what he wanted then?

No, i don't think he got much at all.

It is a great american company.

We should also be comes back.

It is a tough market and he is trying to buy some time so he doesn't have that day-to-day pressure of the market.

So he has time to go out and get it right.

Is that an effective strategy?

What can you do outside the public market to turn it around?

He can diversify his business, for sure.

I think it is got to be done.

All of these companies are struggling right now.

Ibm , wise enough to spin it off many years ago to lenovo who is a tough competitor and i think that will be a tough competitor.

He is taking his margins down to get very aggressive on price.

That is pulling down hp right now.

We have a packed our and judd gregg on vladimir putin will be of interest.

Rocks we start with jpmorgan -- we start with jpmorgan.

It is facing a fine for its debt collection practices.

The penalty will cover an investigation into how jpmorgan told a dignity that related products.

These and mastercard could wrap up an eight-year-old antitrust battle soon.

A judge will hear arguments today on whether to approve a settlement between the credit card companies and retailers.

The proposed multibillion-dollar settlement will cover the swipe fees visa mastercard charged to merchants.

12,000 resumes a week.

Mercer mayer says that is how many are pouring into yahoo.

The ceo saying that is about five times as many as the company have been receiving.

Marissa mayer said about 10% have been boomerangs, those who had worked at yahoo previously.

That is today's company news.

The world's largest bond sale after was completed yesterday.

Verizon selling $49 billion worth of debt.

Investors pounced on it.

It is our twitter weston of the day -- we will discuss that next ? the sun rising in new york city.

Emotional day yesterday.

You could see these lights for miles and miles.


We have got to talk about the biggest corporate bond deal ever, demand was certainly in on verizon's debt sale.

Verizon rewarded investors with a profit of about 2.1 billion dollars for green to buy the record bonsall.

49 billion dollars of paper.

This easily surpasses apple $17 billion bond issue in april.

Tom, you're been talking about this, apple's bonds using money for those bondholders who bought in early on.

If you bought in at 100, 90 days later, worth $.89 on the dollar.

But a huge appetite for this verizon bond sale.

It speaks to how much investors crave stable, inc.

Has been grade-rated paper.

These bonds came cheap.

They came with an ample yield pickup for the investors.

All the incentive to go to this.

To me, the weighted duration of these many bonds is 16 years.

Judd gregg is with us, the senator from new hampshire.

Scarlet, to fold this into the financial repression of the moment, senator greg, could this have been done without the bernanke's low interest rates?

The central banks lower the interest rate, hammering retirees and benefiting a big company like verizon, they can get the deal done.

Did ben bernanke make the still happen?

Certainly played a major role.

There is a massive amount of the quiddity in the station looking for something safe and get a better return.

When a company like verizon comes along and creates this opportunity, that is where the money goes.

It is not only in the u.s., but the world.

The world is looking for safe havens, especially views the united states as the safe haven.

Clearly, the lower interest rates have created an appetite for finding a better return.

More than 1000 investors submitted bids for these verizon bond orders from its pension funds, insurance companies, asian and middle east investors.

What we have seen has been this massive rush for corporate debt because in part of the low interest -- and the yield will go higher.

The assumption the heels will go higher.

Is this the peak?

I spoke with jeff or assembler -- to rosenberg yesterday.

He noted, interest rates adjusted for inflation, real rates, are beginning to move up.

Ill george, you been here before as a corporate officer.

There is a consensus opinion as an executive, all your radars have to go up against a consensus opinion of higher interest rates.

I believe in having adequate liquidity.

We would not have the financial crisis five years ago of the banks had adequate liquidity.

I think with this deal, is is a good thing you're able to float this offering even at a high yield.

As a corporate executive, the window is closing.

I understand.

And all the qe purchases?

It is time to make a move.

I think treasuries are trying to get in on it and i think they should.

You don't want to be caught short with too much leverage and liquidity.

But those who bought into apple bonds have been losing money.

Could this be seen as a bet that interest rates are not going to spike from here on out?

Yes, it could.

Investors are looking for a safe haven.

The stock markets have been a great place for it, but they seem to be tapering.

And you wonder what your equity return with verizon will be.

The backstory, brand-new, like the ink is drying on my fingers, hank paulson will talk about this on "bloomberg surveillance." his look back five years.

Judd gregg if i am a viewer, a retiree, barely making low interest rates, this is once more the fat cats.

What is it, $250 million in fees?

All the bankers will get paid.

If you bought into this, 57 basis points higher than existing debt with that much liquidity.

Is this about the fatcats making money where retirees make nothing at the bank?

Simplistically, that is the way the public looks at this.

I think it is inaccurate, if it is.

This is about the markets working.

A company made cash in order to do a major deal came to the markets i got cash at a premium.

Paid a premium for it.

Folks have a chance to participate in that through their investments.

This is just the beginning, in my opinion.

I think the markets are getting back toward normal state after five years a significant fear.

It was amazing to stand on the cantor desk yesterday and watched the buzz of five guys dealing with the phone flow.

This is a litmus test, successful if you want to look at it, of the anxiety before this anticipated fed tapering.

Bill george, do you expect to see more deals and spinoffs and mergers as a result of this window closing?

I do.

As an investor, i will take 5%. but it is a fine line between working and distortion.

I don't see this as distortion.

I think there is plenty of liquidity out there.

Who knows where interest rates are going?

Everyone is predicting they will go up.

But the chief financial officer says, let's get this done.

I would say the same thing if i were a cfo right now.

Move in and take it vantage.

You don't want to be shut out.

Remember the credit crunch five years ago.

This conversation would not happen in europe.

American capitalism.

They did not even do a european roadshow.

The european junket in london and paris.

They didn't have to because they got it done in one go.

Mario draghi has been pretty active for himself as well, not just ben bernanke.

Vladimir putin speaks directly to america in a powerful message.

Our morning must-read is next on "bloomberg surveillance." ? this is "bloomberg surveillance." top headlines, secretary of state john kerry is meeting with russian foreign minister sergey lavrov today in geneva.

The u.s. wants russia to put afford a credible plan to inventory, koran team, and destroy syria plus chemical weapons according to u.s. officials.

Those men will be joined by chemical weapons experts from the u.s. and russia.

North korea they have restarted a plutonium reactor at its main nuclear complex.

Satellite images show white steam rising from the turbines.

The reactor is a key component in the development of a nuclear weapon that can produce enough plutonium to make one atomic bomb a year.

The new york yankees had a record in the tax department.

The franchise will pay $29.1 million in a luxury tax to major league baseball.

It is for payrolls more than 178 million dollars.

The yankees, 230 six lane dollars, the only dodgers were the only other team penalized paying $99 million.

No one cares.

You are a font of wisdom.

The yankees are one game back as tampa tanks.

This is exciting.

Watch what happens friday.

Books are you going to go to a soon to see your heartthrob rivera?

The one when he retires.

I think it is sunday.

But so the next monday you are not in.

Jeter is done for the year.

He swears he will be back next season.

I like what they say in "the post," "there is reason for doubt." let's do something global.

How about warning must-read.

It is a putin must-read.

He makes a direct appeal, reaches out to the american people.

He speaks his case for why military strike should not be the default option and writes in "the new york times" this morning -- he says it is dangerous to see people as exceptional, whatever the motivation.

Some would say american exceptionalism -- joining us, judd gregg and bill george.

Senator gregg, the steam was coming out of your years.

Is this a foreign-policy?

Would hinder kissinger or even john kerry recognize this policy?

I don't think so.

You have got a purpose and the policy which is definable.

This has been a lurching exercise.

Unfortunately, when you're dealing with the middle east, if you don't have very defined goals, you can end up positioning yourself in a very difficult way.

What has happened, we are poorly positioned.

We are relying on russia.

The president is a guy from chicago with terrific domestic experience.

We know he can give a speech in berlin.

Who is advising the president right now?

I have to assume john kerry, but i don't personally know.

I think the president is very torn.

He sees the human tragedy of using gas in syria and his natural personality wants to do something about it.

Doing something about it, he has to do that it strategically helps the u.s. we will be back.

Coming up, dell versus icahn.

? to not miss this interview on bloomberg television, 4:00 p.m. on "street smart" henry paulson.

Cover of the brand- new business week.

Hank paulson.

This is "bloomberg surveillance." we need a data check.

A foreign data check except for one item.

Futures negative two, 10 year yield is nowhere.

Brent was 107 -- excuse me, west texas intermediate, nymex was 108. old down $21. gold has gone south in the last few days.

Let's get some gainers and losers.

Up on the 60% in trading yesterday, canada's largest paper producer.

Closing in alabama mail, reducing output of so-called white paper.

That push them up as a result.

Highlight apple which weighed on the nasdaq yesterday, coming out with those two new iphones.

Disappointing to investors who had anticipated a more aggressive price on the lower- cost phone.

United rentals down more than four percent.

Rate improvements lower than anticipated.

Investors punishing that stock.

Another member to watch would be dell.

Shareholders will be voting in round rock, texas.

Carl icahn has given up his battle but activist investors are staying busy.

Apple, pepsi, procter & gamble are all facing these inpatient investors pushing for a shakeup.

Whole new generation of activists.

How do management teams and boards was successful companies deal with this new phenomenon?

A case study on who calls the keys in corporate america.

We need a case study on the strategy and reacting to shareholder activism.

William george is here.

He ran a company.

You have dealt with ornery shareholders.

I sure have.

How do you go after someone at the annual meeting that is yelling and screaming?

Just be very calm and respond.

Look, we have a responsibility to our shareholders, but don't let them overreact.

The big change here, they're not taking on america's worst companies but best companies.

When a guy like norman peltz comes in, he going to restructure pepsico -- six great quarters, that company position for the future, carrying out her strategy and winning on every front and he wants to break it up.

This doesn't make any sense to me.

Somehow he thinks he knows more how to run pepsico.

The board has a very sophisticated ceos on it.

What does he say when he comes in?

He only adds i you.

He can only get the market to respond for a few weeks.

I don't see any long-term value.

If this were a different company than pepsico, i might see differently.

But we saw eddie lambert and sears.

These companies have a steady long-term decline.

I don't think there will ever come back all stop that is my honest opinion.

They distract them from the mainstream.

What is the purpose of the business?

To create a great global company for the long term.

This is a knock against activist investors, just in it for the short-term gain of the stock, but these guys are pushing longer-term strategies.

That would argue against what you're saying.

They may be pushing it, but i don't think they -- look, they came at metatron it -- metronic.

These were clear, thought out strategy, take the cash flow from the mainstream businesses and fund the growth businesses.

That is how he could fund over 18% growth for over 20 years counting.

What is the distinction between short-termism and strategic thinking echo what timeline should they be working?

Great question.

Some would say 10 years.

It takes 10 years.

I think you have to show markers every quarter, every year.

You have to perform.

Judd gregg with us, former senator from new hampshire.

You represent a huge part of banking and security's business.

You are not with a cigar at the willard hotel.

You're representing these people.

They have their own distractions.

Are they distracted by all that legal action?

No question about it, yes.

In dodd frank you had a new regulation coming out every 2.8 days.

You had 15 million words of new regulation.

If it were war and peace, you would have 28 copies and they're only 39% through dodd frank.

A lot of changes were needed and i think the capital markets industry has addressed much of that.

Capital is way up in our banking system.

A happy living wills.

They are moving derivatives open on the swaps market.

You have a big movement to try and address some of the issues which got us into problems.

But it is a practical matter, is the industry distracted?

Their spending a huge amount of money, not lending money or putting capital out the door to help entrepreneurs go -- grow.

The headline that goes with what he just said, thanks supper as derivative trade shifts to the shadows.

This goes right into what henry paulson is telling bloomberg throughout the entire week of these seismic shifts from activism, whether it is shareholder activism or government activism.

Why are these activist going after bigger, healthier targets like apple and procter & gamble?

Short-term gain.

They can move the market whether it is p&g, and they have.

Some have lost half $1 billion.

Did not make any money on target.

It was just a distracted move.

They have made good money short- term.

What i don't think -- america needs to build great companies and great banks.

This whole thing about too big to fail, i like the fact that jpmorgan is the world's leading bank.

I am not on their board.

I want us to have great companies.

You talk about healthy companies.

What is a ceo to do the ipo steve ballmer is head of microsoft.

Does he pull a runaround around the activist investors announcing the nokia for value act has its member on the board?

Steve ballmer has stayed too long, spent 13.5 years, time to move on and find a successor.

Think of it as he and the board have decided to do that.

He has done a very good job monetizing the gains of his mainstream office and windows, but he is missed every innovation that is, long.

It is time to get behind and be innovative.

Great companies are innovative.

Hewlett-packard has the behind.

We need innovative companies that can dominate world marke ts.

The road games -- if you could have bailed out after six years, steve jobs had not shown one dollar of gain on apple stock.

If you have the patience to stay with it, you would have made a killing.

What about social responsibility and those types of issues?

I am all for change of governance.

With the exception of section 404, i think they did good and got through in 31 days.

I think dodd frank is a huge distraction and there is a reason why it hasn't come to pass and i think it will be obsolete before it is fully implemented.

I think the key is the supervision of these big banks.

Why do i think in a year we will be sitting here talking about shareholder activism at verizon.


What the effect of this bond deal will be on equity shareholders.

Bill george with us from hps and judd gregg with us from new hampshire.

In the next hour, we will speak with the ceo of pete's coffee and tea on the business of coffee and why they're injuring the pods, one cup brewing.

? this is "bloomberg surveillance." i am sara eisen here with tom keene and scarlet fu.

Tourism is boosting the great economy.

The finance ministry says it expects the economy to contract about 3.7% this year which is down from the previous estimate of four .5%. at the cup and tourism credited for the improved outlook.

-- it is credited for the improved outlook.

Locking the construction of new coal plants unless they are built with new technology.

To capture greenhouse gas emissions, according to "the wall street journal." a proposal could come as early as next week.

The u.k. postal service is going public.

It will sells shares as a way of topping the capital markets to give you with rival delivery services.

300 60-year-old company employs 150,000 workers and will receive a 10% stake at no cost of corn into the ipo plan.

Do a bond you like verizon?

Come on.

Perhaps the u.s. postal service should think of something like that.

Let's have a persistent single best chart.

Sequestration and job growth.

Goldman sachs put together this scatter plot chart to show the effects of reduced public funding on industry and job growth.

That shows the relationship between government exposure and hiring.

Little government exposures on the left, the dots on the left, more government exposure on the right.

The y axis shows the three-month change in employment.

Companies are less dependent on the government for revenue, more positive employment growth over the past three months.

Defense industry, the outlier, they get 70% of revenue from federal spending.

This has been the hardest hit by job losses.

That is the sequester effect.

A couple of tech sector there's seem more immune to federal spending cuts.

They have each seeing jobs grow at least 1%. is this a course at harvard business school?

You would think so.

This is from goldman sachs.

It is a timely discussion given how we have been waiting for the effects of sequestration to filter into the job market.

Judd gregg is with us.

Sequestration a success?

It didn't accomplish what it was supposed to accomplish.

Entitlements are driving our debt.

This would be so draconian, especially on the $900 billion of discretionary cuts to another 1.2 twin dollars echoes the left and no right would have to come together -- one point two twin dollars that both the left in the right would have to come together.

It is not grabbed.

Next year he grabs seriously.

Especially on defense.

That is a headline.

I did not know that.

It sounds like we tried to get too clever with sequestration.

We need to get both sides of the table to sit down and hammer out something.

At would be logical, but that is not the way washington works.

The only way it works is a major forcing mechanism.

The debt ceiling -- speaking of which.

It is not a good way to manage the government.

The sequester is the number one forcing mechanism that is now in play.

If the republicans in the house don't fumbled the ball over the debt ceiling, we can move into sequester and leverage to get something done in the long-term debt.

We have to talk more about your second year of sequestration.

Judd gregg of new hampshire.

Some of the photos making news.

We will start in paris.

Have you seen this?

Solar powered boat.

The world's largest.

This is the final tour after three-month voyage across the atlantic.

It is a futuristic catamaran.

Set out to study climate change.

Guess how much it costs?

$20 million worth of solar panels is on the deck alone.

$20 million?


Next up, another biggie, the world's largest 118-caret white oval diamond.

It is the size of a chicken egg.

It is up for auction this october.

Expected to break all sorts of records.

The presale asking price, $28 million to $35 million.

Where is this from?

I don't know where it is from exactly.

Tiffany's? you can get it at auction in october.

A few series of photos.

Mark zuckerberg speaking in separate cisco yesterday.

Mercer mayer was also there.

She also made a speech.

They were in town for three-day event to discuss strategies, talk about new ideas.

Here is what marissa mayer had to say about yahoo.

We now get 12,000 resumes a week.

The reason that is a fun number for us, basically, the company is about 12,000 employees right now.

Basically, for every job we have, we get a resume each week.

Talking about her culture ship.

-- shift.

We get three resumes to be for our jobs, too.

Nobody wants mind.

They did, they want to hang out with sara eisen and me.

Quickly, bill, i look at the playbook that tech plays by.

I cannot see a ceo from a major company doing what they did at that summit.

There is a gee golly we are pretending at this versus raw corporate america.

Is that true?

They play by different book, but it is an awfully good book.

Marissa mayer is doing a good job bringing about a company that was left for dead.

You have to give her time.

These things don't happen overnight.

That's not pull a j.c. penney and try to do it in six months.

Give her credit.

Look at the age of these people.

I think it is time for baby boomers like us to step aside and let some of the young talent step up and take over.

They are doing a great job.

Tom -- look at i.t.. what you want these great companies?

They rise and fall.

If you don't stay current, you'll end up wising -- losing out of the game.

Do i need to retire?

Was that your message to tom?

No, no, tom is a commentator like i am at harvard.

He is not running yahoo.

That's true.

Coming up, hank paulson's role in the financial crisis and his big regret.

That is coming up on "bloomberg surveillance." ? bloomberg businessweek hits the stands tomorrow.

You can download it on the ipad tonight.

On the cover, five years from the brink, hank paulson on the crisis that change the world.

In honor of that, a new film is being released called " hank: five years from the brink." you can watch it on netflix starting monday.

Pretty cool.

It gives a behind the scenes look at one of the most critical moment in u.s. history.

When i'm looking back at some of the things that i could have done better, the first one i come to is i was never able to convince the american people that what we did with tarp was not for these banks, it was for them.

It was to save main street, to save our economy from having a catastrophe.

So the whole reason i am doing this is not because i want to look at, but because i have increasingly come to the view that it is important that there be a historical record for those that come after me.

So we don't replay this movie all over again.

It premieres in new york today and available on netflix september steam.

-- september 16. we have bill george here, he studies corporate management practice and former u.s. senator judd gregg who has been a senator during the crisis and now a defender of the banking industry representing their blobby.

-- lobby.

Do you agree that hank paulson never got the message that it was a bailout for main street and not just the banks?

I think it is absolutely true.

I remember when we were asked to come up to the capital about 9:30 at night about negotiating tarp and secretary paulson and chairman bernanke came into the room and without any homonyms, chairman number 90 said, his secretary paulson doesn't get what he needs in the area of resources and looks ability, the entire banking system will fail and it will take with it every or most banks in america and we will go into one of the most severe potentially recessions or depressions in history.

There are estimates we were getting that up to 25% unemployment.

Talking about main street shutting down.

We had anecdotal evidence of major corporations that were incredibly strong, which are common names, not being able to move their money from one thing to another so they could open their branches.

We were on the verge of a massive crisis and the crisis would have affected the banking industry dramatically, but it would have affected americans even more dramatically because they would've had no way -- as the secretary alludes to the fact, the public perception is it was a bailout of the big eggs in the financial system.

It was demonized.

I happen to think chairman bernanke and secretary paulson saved the world, basically, financially, and made as capable of having a recovery that was actually doable versus being in a depression for a long time.

It became a four letter word and the politics of the day and totally misrepresented.

I heard secretary paulson speak last week and he didn't talk about it.

To me this is not about lehman, it is about aig.

So much more of this blowup was to do a -- what to do with aig.

A bailout to aig, to the european banks, which were hugely related to aig.

Where does aig fit into this?

It could have been a total disaster.

Much more than limits gekko yes.

Thank you.

Is shut down all the credit markets.

It is like every car transportation system in the world shuts down and there is no energy.

The system was shutting down, but there was a huge amount of money pouring in try to take on the banks coming in from a lot of funds.

I don't know where the money is coming from.

I can tell you no one knew it was going to happen at the end of the day, it was a scary, scary time and paulson and bernanke are going to go down in history as heroes for stepping up to this crisis.

Within this lehman, aig nexen is, i would say aig is not getting nearly the focus it should, are we in a better place now?

We are in a better place in the sense our banking system is much more highly capitalized, that many of the markets that were at issue here, the derivative markets are getting more transparency.

We have a system of basically putting in place living wills and we have the capacity to do stress tests.

I think we are much more sensitive to the underlying problems that were significant at the time.

Going down the road, there could still be another problem.

It has not been solved.

You have a huge contingent liability.

The simple fact, our banking and capital industry has moved forward effectively.

Senator gregg, thank you for joining us.

Bill george, thank you as well.

Let's round out the hour, the yen is stronger for a second day in a row.

U.s. equity market.

The euro is weaker against the u.s. dollar.

New zealand is stronger in anticipation of potentially higher interest rates there.

Coming up in the next hour, we will continue to discuss henry paulson or an interview later on at four clock p.m. ? coffee makers innovate or is it a case of catching up?


Do we need a third candidate?

"bloomberg surveillance this is" with tom kean.

Joining me is sarah eisen, scarlet though, christina alessi in texas.

Good morning.

Let's get you caught up.

Industrial production in italy surprisingly fell in the month of july signaling that potentially europe's third- largest nation may be stuck in a long recession with no sign of turning around yet.

In the united states, we get some economic data at eight dirty a.m. with jobless claims, 9:45 a.m., consumer sentiment from bloomberg, 2 p.m. eastern time, the monthly budget statement is out.

A few corporate events to watch before the opening bell -- we will get earnings from kroger and lulu lemon.

Secretary of state john terry has arrived in geneva.

He is there to meet with his russian counterpart to try to work on a diplomatic solution for syria.

There is a bond offering for the record books.

A rise and is selling $50 billion worth of that beating the previous record of $17 billion from apple.

It offered yields higher than market rates on the 10-year, 225 aces points more than similar treasuries to raise interest and those bonds and it worked as demand for the issue surpassed market expectations.

J.p. morgan moves closer to a settlement over how it collects credit card debt spread the firm is facing a fine of $80 million for debt collection practices.

The penalty will also cover an investigation into how j.p. morgan sold identity theft related products.

Visa/mastercard could wrap up and eight year antitrust battle and the judge will hear arguments today on whether to approve a settlement a tween the card companies and retailers print the proposed multibillion- dollar settlement will cover the swipe fees that they charge merchants.

The top corporate dory, after seven months of drama, and dell shareholders were built today -- will vote today on making -- on taking the company private.

Christinaalesci has been through it all.

This is not your first time at the shareholders meeting.

Potentially some closure today.

How does this play out today?

Today marks the end of one of the luckiest corporate battles i have seen in my years covering m&a. it is a little bit of a victory for michael dell and silverlake although they are somewhat battle scarred.

We know that michael dell tonight is planning a celebratory dinner at his ranch perhaps earlier than we see in most deals.

If you don't have the closing dinners until the actual close of the deal, which is not for another three weeks.

If you talk about drama in this deal, there was no lack of it.

This shareholder meeting is a routine thing but there are for tv trucks outside.

What is generally a routine thing on any deal has been, a media circus.

Was all of that worth it for the shareholders?

Quacks they they are going home with more so let's not forget that none of this would have happened had it not been for carl icahn was all of that worth it for the shareholders?

Quacks they and other angry shareholders arguing and pushing the idea that michael dell and silverlake were trying to steal the company away from stick -- from shareholders are in . without carl icahn we would not have the outcome we have today.

Quacks what happens to -- what happens to the legal ramifications?

This will be interesting and will have a ripple effect on all deals going forward.

This is the largest lbo since 2007. they set it up in a pristine way and the process got dragged through the mod.

- mud.

Lots of corporate executives will take lessons from this.

Will you be there for the big party?

I'm trying to get in but i was told that no press is allowed.

Back to the barbecue for you.

After seven months, potentially some closer -- closure for michael dell.

Quacks we ring in donald baird.

He is exceptionally experienced in public policy with the clinton administration and the headaches of corporate america but most particularly with dell.

Dell is a client of yours.

It is a client of our firm.

Can you get christina alesci into the party?

Don't count on it.

What can be done to repair the brand?

You think back to the glory days of these kinds of deals.

" barbarians at the gate, , come someone should write a book.

Michael dell, his name is on the firm.

He has the passion, the instinct, he has the intelligence to bring this thing back and he is committed to doing that.

How do you bring a brand like this back?

You turn it into a performing company.

You direct it in the way he has talked about and show that it has the capacity to really compete in this market.

Does michael dell need to have an executive search to run this?

He has a good executive team around him and what he does is to be able to corral that executive team and run it.

He will be heavily involved in this company.

He sent every signal that he is coming back and he will be pushing this thing forward.

The news continues -- with dell going private soon, a private company is getting ready to go public.

Helton worldwide has filed paperwork for an ipo, 1.4 -- 1.25 billion dollars.

It will use the proceeds to repay debts.

It was taken private in a leveraged buyout and has no current plans to pay a dividend.

Hilton worldwide is filing paperwork to go public.

This folds into our " bloomberg businessweek" cover and hank paulson.

Is the crisis over?

No, what we know is still true.

The business sector is moving it the business sector is ready to really move out for it whether it is private, public, whatever, there is great activity out there but we are still seeing, when it comes to jobs in this recovery and when it comes to people who are being brought back into the economy, we are not moving fast enough.

There is this drag.

Government action and government inaction and the appearance of government inaction is still holding things back.

Some say we need less government action.

Quacks we need more certainty.

We need understanding of what the direction is.

We have another potential budget crisis at the end of this month.

Secretary clinton was a pro- business secretary of state.

She actively projected this is a broad.

Is resident obama a pro-business president?

I don't think anyone would say that.

The syrian crisis has gotten in the way of what a were beginning to try to do.

Mid august, he launched a hold of economic focus.

Where is that now?

We will talk about that in a few minutes.

I can do a quick data check.

There's not much going on except gold.

Futures are flat and the 10-year flat and the euro is flat.

Nymex crude had a little bit of a rise.

Jobless claims are at 8:30 a.m. and consumer comfort in decks -- index is important.

There are three major can assume her indexes and the bloomberg one is the one the pros use.

Gold is down $22, $1342, not near the $12 20 -- $1220 bottom.

We'll talk about how giant that is.

And what it signals to everyone.

It was 50 william dollars but almost 100 onion dollars worth of orders came in.

There was a heated debate last night, this consensus call for higher interest rates which is assumed by everyone.

That will be a big theme for us.

Also coming up, we will hear how one company is disrupting the patent it is a big business and this company is backed by ill gates.

? good morning, everyone.

This matters now -- our guest host is donald behr, was the senior advisor to president clinton as is concerned with staying on message.

The secretary of state is in geneva, switzerland, transfixed by syria.

Nothing else gets done.

I think other things will get done but it is hard.

It is very hard for there to be much more message flowing out.

Look at the media this morning and for the last 10-12 days.

It will be hard for them to get much message out.

The white house wanted to be talking about the economy now.

They were trying to pivot and talk about the middle class and begin to talk to the country about recovery and a modest way and show that the president was focused on what people really care about.

There is very little opportunity for them to do that.

You used aquill in the clinton -- you used a quyill in the clinton administration.

How do you get the message out these days?

It's been a long time since i left.

It was one cable channel then.

Think about where we are today.

I was at the white house about a week ago and they called a small group of us in to talk about syria and it is vastly different.

That said, you've got to land on your message and you have to be flexible enough because things change very fast and you have to move all your pieces onto the board.

I think they want to do more of that but, at the same time, they've got many different issues they are trying to balance and they would love to get back to talking about the middle-class class and the economy as fast as they can.

What do our viewers need to know about legislative fatigue?

The lawmakers seem exhausted by the bombardment of messages.

It is hard for them to have legislative fatigue when they are doing no legislation.

They are fatigued by the incoming.

They would be best served by focusing on the jobs they were elected to do.

The thing that matters right now is they deal with the budget situation, they deal with the long-term spending problems and they get on with this.

They need to focus on it.

This is what has happened -- there used to be an interesting convergence of interests left or right which those who were in power wanted to demonstrate to the public a were getting things done.

Now the dynamic is demonstrate you are doing nothing and you are abstracting the other side.

Let's come back and we will talk about women in education.

? this is "bloomberg surveillance." our guest house for the hour is don behr.

Secretary of state john kerry has arrived in geneva to my he is there for two days talks with the russian foreign minister.

The meetings will test the credibility of the russian plan for.

Syria to surrender its chemical weapons both men will be joined by chemical weapons experts from russia and america.

North korea may have restarted a plutonium reactor at its main nuclear complex.

Satellite images show white steam rising from a building.

The reactor is a key component in the development of a nuclear weapon and can produce enough plutonium to make one atomic bomb per year.

The british postal service is going public the royal mail will sell shares to compete with rival delivery services.

It is a 360-year-old company that employs 150,000 employees and will receive a 10% bump.

Qua you compared it to the u.s. post office.

They might get a piece of the public offering to get a piece of the pension.

Go to the bond market.

We will talk about patents.

We hear about the patent wars in silicon valley and microsoft won a trial on the google patent tactics.

It is a big business behind the patent wars.

One specific company grab the attention of ill gates.

Intellectual ventures is a patent licensing firm that makes business out of supporting inventors and innovation.

The company claims to have injected $2.3 billion to the innovation economy.

The president and chief operating officer for intellectual ventures survived palmyra, new york winters for almost 20 years.

. she joins us today.

Everyone who can survive in elmira is worth something.

What is patent control?

At intellectual ventures, we believe that inventions are valuable.

We have since we started in 2000, we have generated over $6 billion in committed capital to invest in inventions.

That is a big deal in it -- the new new business sector.

When you think about patents trolls there are bad actors in the industry will take advantage of the growth and the opportunity.

When i see with intellectual ventures does, buying and investing in invention and finding ways to monetize them that are typical in the industry, i don't necessarily associate us with the bad actors.

Have the lawyers taken over?

Samsung vs apple, they are all embroiled in the patent war.

I think the inventors on the level of technology that is happening today is profound.

That is making competition in tents which is why we think it is important to have a secondary market for invention.

Which companies do you hold patents for?

We hold patents in our own name.

We own over 80,000 assets print our model is to try to give access to companies that want to use those inventions so they have the right they need and can, hopefully, thwart some of the competition in fighting that happens.

Congress is actually taking a closer look at our entire system.

What to the lawmakers need to know to protect america's intellectual property?

One of the most important things that we must do now is focus on the quality of patents.

As these ideas come into the patent office, we mean -- we need to make sure we have the talent to evaluate them and we have the funding necessary to ensure that the absence are healthy.

You came out of mit as a sloan fellow so you are the smartest person on the block.

What are the things the lawyers are getting wrong about this?

What we want to do every day , their minds turn off when they see a patent article.

They see so many.

Do we see more patent lawsuits than smart phone releases?

I think the number of lawsuits we are seeing is pretty consistent with the patents coming through.

It is not disconnected to the same kind of rate we saw before all of this huge takeoff in the technology field.

Is there a legal frenzy in patent science?

There are lots of legal actions being taken but i think it is consistent with the level of technology being introduced.

Our guest host for the hour is don behr.

Intellectual ventures is setting up a lobbying office in washington, dc to deal with federal officials.

What do people misunderstand when it comes to patents and innovation?

You and i need to talk later.

You raised the congressional action -- there is nothing more important to the growth of the u.s. economy right now than intellectual property and that we can continue to fuel this.

It is the potential for the explosion in next growth in this economy.

We have to make sure because it can be a very confusing area.

It's an area where people sometimes try to confuse things a little bit.

We need to make sure there is clarity around the fact that what we are trying to do here is to protect intellectual property rights and those people who are the inventors, the people who are the innovators, so we can continue to reward them.

That is what they deserve.

What is really needed is a campaign to drive clarity around all of this.

There is a new effort going on along these lines.

We will come back to this.

We will continue this discussion.

Verizon is doing something innovative, it is holding the world's largest bond sale ever.

It closed yesterday, 49 billion dollars, what does this signal about the environment?

? this is "bloomberg surveillance." futures are pointing to a lower start just barely ahead of the opening bell.

Scarlett who has company news.

The hilton is going public.

It is owned by blackstone, the private equity firm that took it over in 2007. no word on how many shares will be sold.

Iac chairman barry diller is considering selling that daily beast.

A sale would follow the departure of tina brown who started the news website in 2008. she is leaving to start a new venture.

12,000 resumes per week, marissa mayer says that so many are pouring into yahoo.

That's about five times as many as the company had been receiving.

She said about 10% of all new hires have been boomerangs, people who work at boom -- yahoo previously.

That is today's company news.

Speaking of female executives, we are leaning into women bumping up against the invisible ceiling.

When it comes to stem occupations, science, technology and such.

More women work in these fields since the 1970s but the bulk of that road came in social sciences, jobs like economists, psychologists, survey researchers and women are still in the minority in math and hard sciences.

Their representation in computer and engineering jobs are falling.

Computer and engineering jobs make up 80% of all stem occupations.

We got the former senior executive at honeywell and corning.

Why the discrepancy in terms of industry when it comes to women in jobs at the higher levels?

I have worked in many nontraditional fields throughout my career.

Without having those mentors and place or a company being really active in focusing, it does not get the kind of growth and opportunity i think girls and women really want to have.

I think it's darts with education.

It starts in junior high school and hard school where earl sometimes are led to believe they cannot he as good in math and science.

Is that complete fiction?

It is complete fiction but it has not gone away.

There is something called stereotyped threats.

For some reason, they have in their heads, they hear and see things that suggest this to be true and the best thing we can do to thwart stereotyped threats is to tell girls about this.

Can something like harvard business school change the discussion?

I love what harvard did because they stepped up and asked systemically what we might be doing that is causing this effect.

They said let's start doing cold calls in the classroom incentive i didn't find the person -- instead of calling on the person that raises their hand.

You open it up for everyone to have a voice my classroom.

I know a young girl who went to duke engineering with the stereotypes and she went through dartmouth engineering and had five major job offers.

How do you mentor this in seventh grade in a tough school in richmond, virginia where the teachers are not aware of how hard this is?

Fortunately, i grew up with parents that said i could do anything.

It helps but where that does not exist, i fixed important that we don't just hope the teachers will come to that conclusion.

We need to put systems in schools that we use the parents and the community and mentors to have an influence.

I enjoy going to schools and talking to girls about what it's like to be in business and have a career.

It is amazing how that sparks possibilities for them.

Do you see any country or company doing it right?

I have worked for two fantastic companies before coming to intellectual ventures.

Being president of a company in a nontraditional role is a perfect example.

I have had a great history of working for fantastic companies that care about diversity and put their efforts where their mouth is.

How do you respond to a conservative stereotype that says girls can't do this, linear algebra or calculus?

I say malarkey.

That's crazy.

Quacks it's the stuff that happens after college graduation.

I would go back to sixth and seventh grade.

I witnessed it with my kids.

Not anymore.

Maybe back in the day.

I side with you, tom, i have a daughter in high school and i can tell you that some of that still exists but we still have to be -- keep pushing against it.

Thank you so much.

Adr ienne brown on patents and education.

The markets are little changed now and there was a big winning streak for the s&p 500. we have weekly jobless claims coming up at 830 that could move the markets.

Good morning, everyone.

All of our interviews are on bloomberg tv + and bloomberg radio +. i am tom kean with sarah ison and scarlet who -- eisen and scarlet fu.

We are passionate about our morning cup of coffee.

The single cup craze is becoming a big business, sweeping the coffee the markets are little changed world.

Peet's coffee and tea a company that prides itself on turning coffee making into a ritual and it launched its own one cup product recently.

It was taken private last or by a german investment group for about $1 billion and has been struggling to compete in the fast-growing singleserve market and is hoping to grab market share back from starbucks and green mountain coffee.

David berwick joins us now.

Why now get into singleserve?

Isn't it a little late?

Share back from starbucks and green mountain coffee.

This category is just beginning.

There is a lot of growth in the category makes up about 25% of the coffee business right now.

It is still in its infancy.

For us, we wanted to make sure we could deliver the best possible coffee that you would expect in one of our stores or out of one of our bags.

We got to that point and now we have been in the market since june and we are happy with our results so far.

We had a heated debate this morning about whether you could capture the same taste and flavor for those coffee aficionados like the pete's fans that prided itself on gourmet, freshly brewed, at new bean coffee in a single cup serving do you worry about compromise?

We do and i think we should and that's why we took five years to get this product exactly right.

We use a special filter that allows the flavors in the oils to get into your coffee so there is more coffee.

We feel a single cup of peet's is as close as you can get to the real thing.

That's why we launched it.

We wanted to wait to make sure that we did not disappoint any of our consumers.

I know you are moving east and expanding to the midwest and to the east coast.

Profit margins at peet's are sometimes higher than starbucks.

When you take over some stores in the midwest, how do you keep the profit margins high?

We actually do pretty well.

This is such a great round which is so well-known and loved on the west coast but one of the greatest stories that has never been told.

As we move east in retail, we want to get a good return on investment but also to build the brand.

We want people to experience peet's coffee and retail store.

You fall in love with pete's coffee when you are in a retail store.

The great unspoken here is the line out the store of an espresso store on madison avenue.

It is packed.

What is the best rectus is you can learn from nestle and their espresso?

We can learn something from how they do retailing.

They have created an incredible store that showcases their product very well.

It is also a pretty good product and the penetration of that machine in the u.s. is very small.

I think they have done a nice job to create an apple-like environment for their store.

I look at that custom thing and the shift -- are the consumers ahead of the marketers and the coffeemakers?

Um, i don't think so.

People like single cup because it is simple and convenient and it's affordable when you consider you are not throwing away coffee.

Is it really cheaper?

I was wrong, yes.

Quacks i ordered my one cup and that adds up.

It depends on what you are buying.

It is $.50 to one dollar if you want to factor in all the coffee you throw away.

It is probably more affordable but more than anything, people think of it as convenient.

There are likely to people in eyeholes -- household than one person wants regular and one person wants decaf and you make one cup each and go.

There are still many people going to stores.



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