This is bloomberg surveillance"." jpmorgan considers another fine.
Republicans try to find a path to 2014 and on to 2000 16. we speak with the former secretary of commerce.
He is not senator ted cruz.
Forget the smartphone wars, we go below the surface on tablets.
This is bloomberg " surveillance." it is thursday, september 26. joining me as always, sara eisen and scarlet fu.
Very cool speaking with the leader of spain.
He does not do many interviews but sat down with me because he is a real story to tell.
Spain is finally emerging from recession.
26% unemployment rate.
One in four spaniards out of work.
We talked about potential ways he could fight the high unemployment rate and corruption charges he faces, or at least circles around him at home.
We will get to that.
The traffic has let up a little bit in new york city.
Reddish economic growth accelerated.
It turns out consumer spending was a bright spot in the u.k. gdp report.
It is thursday, which means initial jobless claims.
They have been funky in terms of the data.
A weekly read on consumer comfort from bloomberg is out.
10:00, pending home sales.
Also, nike reports earnings after the bell.
The united nations and clinton global initiative's continued today.
Also, 11:00, the president set to deliver remarks on his health care the distillation.
Let's do a data check.
A boring week.
Five weeks down for the s&p. futures bounced back.
This is interesting.
We have gone from a 2.70 to 2 .62. that is a big deal in the past week or so.
Nymex softens up over the past week.
102 .75. onto the next screen, so little going on.
The vix resilience given the pullback we have seen.
Help me, dxy index nearing a pullback.
The dollar strengthened pretty much in the past few months going into the tapering, scaling back.
People have perverse the trader over the past few weeks.
There is the data check.
We have scoured the front pages for the most important stories out there.
We have to start with jpmorgan.
On the cover.
Not so boring for jamie dimon.
The dollar amount to settle the mortgage-backed sale -- security sale has shot up to $11 billion according to the ft, wall street journal.
That would include a 7 billion dollar cash penalty and $4 billion in relief to provide consumers affect it.
The talks are not final.
What is four billion in relief?
A check in the mail?
If you are affect it, you might get a small portion of that.
Citigroup agreeing to pay freddie mac 390 $5 million to resolve repurchase claims.
11 billion is not agreed on.
At some point this starts to add up and affect operations.
Moving onto jc pennies.
The shares begin today's trading at a 15-year low.
Goldman sachs credit analysts saying liquidity will be strange because they are heading into the crucial holiday shopping season.
There is original distinction.
When i saw the release yesterday, that is what stuck out.
-a lot of equity analysts are studying- when amazon got in a lot of trouble 15-20 years ago, it was the debt analyst that buried the stock.
Speaking of running out of cash, the u.s. government running out of cash and running out faster than previously thought.
Jack lew said the government would have 30 billion in cash no later than october 17. the money would be used up between october 22 and 31st if the debt ceiling is not raised.
It is draining very quickly here.
$65 billion in military pavements due on november 1. now you're saying military pavements coming out saying this is what is going to happen.
Hard to imagine if you have friends up against the debt ceiling.
We do not see any action on this.
We are honored to bring you carlos gutierrez, former secretary of commerce under george bush administration.
Former kellogg company ceo.
Chairman with albright strowbridge group.
Thrilled to talk about technology.
I know sam grobart quoted him in a recent bloomberg businessweek article.
Wonderful to have you here.
Once again, a shutdown.
Is this different than the shutdowns you experience on the public watch?
It is similar in the sense there is brinkmanship.
I do not believe there will be shut down.
I think even the most extreme understand it will be a backlog activity.
We will get a continued resolution, which means we are running a $3 trillion government payroll in 3 million increments.
We are not managing this economy.
I know him.
He is a brilliant man.
He accomplished a lot for ted cruz.
For those people who like him, i think at the end of the day it is what are the results?
The results are going to be the same as if you did not do that.
It was a symbolic gesture.
I think he is more known today than he was before.
Lets rip up the script.
It was a symbolic question.
Did he bury the republican party?
I do not think he buried the party.
I think he showed there is a very strong side of the party that once this done.
It is going to go through.
We are going to have a budget.
I think it is imperfect and will eventually be able to fix the amendment but it cannot be repealed.
It cannot be yes or no.
It has to be here is what we think is wrong with it, here is what we do.
Lex it is a binary washington.
-- it is a binary washington.
Ceos out there say they do not have confidence.
They did not have certainty, clarity and are sitting on their hands, not making any moves.
It is the rest of the world watching and wondering and worried about what is going on in the u.s. we do not look very professional.
That is certainly one way to put it.
We will continue the discussion on technology and politics.
Wall street rival exchanges could work together.
The nyse and nasdaq talking about teaming up to serve as each other's backup for pricing stock.
This is according to people briefed on the matter.
The sec recently told exchanges they need to come up with better back up systems.
Twitter cuts a deal with the nfl . they will post highlights from the game.
Verizon has signed on to be a sponsor.
Videos will range from replays to offering expert advice on fantasy football.
Drivers in california can now rent a tesla.
The electric car will rent for $500 per day.
The first 75 miles for free.
That is today's company news.
Did you see the final america's cup yesterday?
It was quite something to watch.
Larry ellison certainly got his money's worth.
They pulled up the greatest comeback in america's cup history and one of the most rheumatic in sports, literally.
Winning the cup by beating team new zealand on san francisco bay.
At one point a lead eight victories to one.
They needed just one more victory.
Oracle team usa won eight straight to keep the trophy.
Eating new zealand 9-8. there are estimates larry ellison spent $100 million.
-- beating new zealand 9-8. it is fabulous.
I think the video is great.
Is america engaged by this?
I think technology plays such a big role in the team coming back.
From where you sit in technology, who is larry ellison and why is he doing this?
He is the pioneer who brought us oracle.
And has made a lot of money, unlike microsoft.
He is a legend in the industry.
He is a friend of all of the major players.
Famously a great friend of steve jobs as well.
Has san francisco been engaged by the america's cup?
I would think so.
Certainly san francisco is a sailing destination.
New england west coast, people who wear bow ties.
Gutierrez takes a shot.
I like that.
I get so seasick.
And one of his first television interviews, the spanish prime minister spoke about the end of the spanish recession and spoke candidly about jobs, corruption in the country and the future of europe.
That is all coming up.
Lex we are better than we were before.
The dark clouds have been dispelled, and i did not think we will see substantial changes in european policy.
-- i do not think we will see substantial changes in european policy.
? good morning, everyone.
Coming up, tony james, chief operating officer at blackstone group.
This is on "market makers." i have never heard of dole interview with mr.
He says exactly what is on his mind.
This is bloomberg "sur veillance." i am sara.
Walmart is reducing orders to suppliers.
Certainly moved the markets when it spoke yesterday.
The worst performer in the dow industrials.
Walmart having inventory management issues.
Cutting orders with suppliers this quarter and next.
Basically through january.
It is not across-the-board the board, category by category.
Lex i wonder why?
Is this a company-specific issue?
Weaker economy is certainly part of it.
Also, walmart does not have enough workers to staff the stores and shelves properly.
People go into the stores and notice they cannot find things they want.
That is one issue.
Inventory growth at walmart has exceeded sales growth for eight of the past 10 quarters.
It is about 3.5 times sales growth.
For target or taller general -- dollar general, about twice the rate.
Here is walmart's website.
Here is the apple world.
By our old, ipad, and the other one is a recliner in the kansas city chiefs.
Walmart can sell premium, but the question is more for apple, do they fit within the brand?
They are a premium, polished brand.
It is a delicate issue.
This started with the ipod.
It has been a couple of years.
When they first did it with the ipod, a lot of questions were asked.
Given the size of walmart, it is hard to not be there.
It is surprising walmart let inventories get away because they have the most sophisticated supply chain system.
Who are the suppliers?
You have your typical staples , procter & gamble, kraft foods, but also a couple of discretionary come.
-- companies, apple, samsung.
A $5 million loss.
It reported a $5 million loss of weakness at a big north american customer.
Next we have to get to the question of the day.
Did you ever have too many cornflakes?
Did you ever get a memo?
You always have inventory ups and downs, but you have to have the information to let you manage that and monitor that.
Ahmard has the best in the world.
Walmart is the biggest retailer in the world.
When they give any type of or in income of the worst.
You wonder if it is a symptom of something bigger.
Already we know sales will rise to go in four percent, the smallest gain since 2009. walmart are ready did -- already did cut the profit forecast.
Walmart has done better than good and the share price return in the past three, 4, 5 years.
What is interesting is we have had reports previously about the shelves not being stock.
This is a big issue.
They cut back on sales staff because they need to compete with amazon.
This company has 2.5 million employees.
That is more than our staff at bloomberg " surveillance." twitter question of the day, why is walmart having problem's? labor, inventory?
Tweet us at bs urveillance.
? this is bloomberg " surveillance." i am sara eisen.
Instead of a morning must read, i will do a morning must-listen.
I had a chance to sit down with europeans.
Including the european president is that there is still a long way to go before we can say the crisis is behind us.
I think the crisis is not yet over.
We are technically out of recession him a but still at very high levels of unemployment.
The doomsday scenario did not get confirmation, as i always told you.
He makes a joke he always tells me it will not happen in the doomsday scenario.
They are cautious, and certainly cautious of what they say to say crisis over.
Please, carlos gutierrez.
The thing is you ask european economist, what do you think it's going to happen?
What they say is the mope -- most likely scenario is we muddle along for the next 5-10 years.
Can spain muddle along?
Pain has a lot to be proud of.
The prime minister speaking out now.
-- spain has a lot to be proud of.
The brain drain.
A lot of spanish begin countries looking at that.
Mexico benefited greatly with immigration.
They will do it again.
Like the imf recommended more labor reforms on top of what the prime minister has artie done.
For the first time he said he would be open to doing more.
We are now evaluating this labor for him and want to have an independent, outside evaluator.
If it were necessary for spain to do touchups on this reform, you can be very sure that we will.
Interesting he is open to the idea of more labor reform that he put in face.
That he is on track to meet the but just -- budget deficit challenge.
Like he was speaking to a spanish audience.
My experience is he is always speaking back to madrid.
Speaking to a spanish audience but speaking in the united states.
Thank you looking for a global platform.
One of his proudest aspects is export growth.
They have seen the most export growth in europe.
What does this mean for mexico as one example?
For mexico, a tremendous opportunity for a strategic type of immigration.
The spaniards who went there after the civil war have all done very well.
They have contributed and started businesses him a lot of the large businesses.
This is an opportunity for spanish-speaking countries to supplement the workforce with good, spanish graduates.
I am curious why he is beginning out now.
This is a guy who does not speak to media often.
He is speaking now because of the turn and the bond yields.
They were a percent.
Not too long ago speaking out saying he will do whatever it takes.
They were up four percent.
I asked him about the euro and whether it would help to have a weaker euro.
He said of course it would help.
Much more from my prime minister mariano riveraajoy.
Also coming up, taking a bite out of amazon.
Getting into the tablet game with renewed tablets.
Will they give apple a run for its money?
That is next.
? it's "bloomberg surveillance." last week apple, this week washington.
This is on "bloomberg businessweek." pick it up at the newsstand tomorrow.
Sara eisen is here with tom and scarlet fu.
This is a quick way to check.
It has been deadly for a week but we have movement.
The s&p 500 is nicely under 1700. the euro is at $1.35. we have had some funky data today.
Some of the states are misreporting so maybe that will get back to normal.
There was a lot of flurry yesterday afternoon.
J.c. penney was a big loser, off by 15%, trading at a 15-year low.
Concerns about liquidity, wondering how much cash they will burn through to get through this holiday shopping season.
Citigroup goes to a $12 target from 11 darkest -- $11. carnival is down by 5.3%. it has had a lot of problems.
It forecast fourth-quarter results below estimates.
One more loser -- the yankees are a limited.
I had to get that in.
-- the yankees are eliminated.
The last appearance for mariano rivera tonight.
We will move onto the tablet race.
Amazon and microsoft unveiled new tablets this week.
Well it didn't the $1.35 apple ipad dominance?
-- will it dent the apple ipad dominance?
In the tablet wars, microsoft and amazon -- does anybody think they can put a dent in the apple dominance?
They have bad visibility but when you look at the numbers, apple has not had the market share leadership for the last few quarters.
There has been a huge surge in android devices.
Android is fragmented.
Amazon runs on android.
What can blackberry do?
Don't they have to have a massive move with rebranding?
In the tablet space they tried and completely failed and exited that market and they wrote off a lot of inventory.
On the device side, that will happen again on the phone side but their service business.
I think that will be the emphasis for the new investors.
You are more qualified to talk about disruptive.
What is the disruption in the tablet business?
The category of tablets is disruptive to pc's. this will be the first year we will see tablets outselling pc;'s and they are being used increasingly for the same jobs.
Put your toy up to the camera.
This is a mini-ipad which is a year old.
When you put the new iphone5s in that toy, what happens to apple?
If this thing becomes more like a computer, you will see more productivity apps.
At the apple launch of the latest iphone, they announced the iworks suite which is comparable to microsoft office, that will be free on all new devices from apple.
That's an amazing story for people who want simple word processing and spreadsheets and presentations.
It is mobility.
The idea sitting in one place with the computer is moving into the past.
Are the customers widely adopting tablets?
Absolutely, it started with ceos and high level executives at meetings to look at their notes but increasingly, the productivity side of these products is becoming evident.
That's when microsoft that -- that's why microsoft is keen on this project -- product.
They decide to become a maker of tablets themselves.
They bought nokia to help them in that class.
Microsoft is nowhere near one of the big players.
If you look at it chart of the top five tablet makers, it's not in that category.
Apple still leads the way but the apple market share has declined to 32% this year from 64% last year.
Does samsung lead in terms of innovation?
The problem with android tablets is it is not as consolidated around samsung as in the phones so we have a lot of no name brands flooding asian markets.
We see those tablets used as browsing devices.
They are not used as app platforms.
The big companies are trying to be platform players.
We talked about the hardware side but the real question is ecosystems.
It's why microsoft buying -- got into buying nokia.
Perhaps amazon is not trying to take market share from apple and ipad but get able to buy books and video.
The purpose of the tablet for amazon is to drive foot traffic.
Think of it as a retailer.
That's why they sell it close to cost.
Exactly, microsoft, apple, and amazon have different business models.
Microsoft wants to sell its core software franchises through new hardware and amazon has a service business.
The apps are unique to the company?
Amazon is using android but they are adapting the platform a little bit so not all apps that run on samsung can run on amazon.
They need to make a few tweaks.
Planned obsolescence is part of the apple strategy.
If people use tablets mainly to browse and the hardware is less important, what is the outlook for people having to replace their ipad?
The android tablets are much more likely to be used for rousing and not apps.
Apple is encouraging people to use apps and that's why they add more horsepower to the developers so it entices developers to make more powerful apps and there is innovation there.
The apple strategy is different.
Think of the console business.
It lasts for seven years and that would be amazon's preferred strategy.
They would love to have the device sold a low margin in the hands of the consumers as long as possible because that is better for them in terms of getting the lowest cost traffic.
It comes down to the apple profit margin.
Great conversation on the new tablet.
We will see if anyone buys the new microsoft and amazon tablets.
Coming up, how angela merkel's election may change the course of the european economy.
We will talk about germany's vision for europe.
? this is "bloomberg surveillance." the united nations security council has agreed on the key elements to a resolution for syria to surrender its chemical weapons.
The council is hoping to work out the details and vote on adopting the resolution as early as this week.
The earthquake in pakistan actually created a new island.
This landmass immersed off the coast of the country after the earthquake.
It is made up of mud and rock.
Isn't that weird?
They are reporting that flammable gases are losing out of it.
Strong earthquakes have produced this.
California has hiked its minimum wage to $10 per hour, the highest in the nation.
Governor jerry brown says the raise is needed for workers to keep up with rising costs.
It will about $4000 more per year in full-time workers paychecks.
I wonder if it will spur other states.
Martin wolf who has been on our show many times went after germany, citing his own work and ambrose evans pritchard.
Brown says the raise is sarah ivins -- sara eisen's book about this.
-- spoke about this.
Is the victory of angela merkel a good thing for europe?
Germany is the leading and most powerful nation.
I think it is important, this idea of stability and angela merkel has shown a great amendment to the europeans.
Among the european leaders at the national level, she is one of those that devotes more time and energy to the european affairs.
I think this is an important signal to our partners in terms of stability, consistency, we need staying power in europe.
Is she a visionary for europe?
She is someone who is very committed to europe.
Sarahshe has expressly linked germany to the european union which is sincere.
Not only angela merkel and the government but the main opposition party.
We continue to see that angela merkel was always speaking for the euro, the need of germany to support the euro.
She got extraordinary results, much better than before, and the new party that was created against the euro were not able to reach the minimum threshold to elect one single member for the parliament.
Once again, it's a signal that our partners are interested in europe and the euro and overall, there are people critical, but overall there is a strong consensus about this policy.
Another question i asked him is whether the german export model was a good model for europe.
He said you cannot have that model in every single country.
That is a debate right now.
The top forecast of the done since angela merkel won the election.
Secretary carlos gutierrez is with us.
What are your thoughts on this?
Who would not like to have the germanthat is a debate right now.
Model ? it is a strong currency.
It is a strong labor market.
It is -- it has strong labor laws but they're one of the greatest exporters in the world.
Could it be replicated in the united states?
We have different products.
We don't lead in automobiles print we don't lead in the same type of products they do.
Many of our products tend to be technology.
Yes, we could do that as well if we decided to be the most productive nation in the world and do things that would help our economy whether it is an energy policy or something else.
Many countries would not love to have the german economy?
We will talk about an issue that is very important to you coming up, not ted cruz, immigration reform.
What ever happened to what was going to be a once in a generation reform on immigration?
Is there a chance it could come back to congress.
? this is "bloomberg surveillance." we've got company news.
Twitter is moving closer to an ipo after adding jpmorgan and morgan stanley to its roster of banks working on the offering.
The pair joined the main underwriter, goldman sachs.
The ipo could happen in november.
Netflix wants to add its web based movies to u.s. cable systems.
It has extended an open offer to cable companies to offer their service for two years.
Cable companies have to decide if they view netflix as a competitor or offering complementary programming.
Nokia could team up with alcatel lucent mobile phone network.
A partnership would help nokia better challenge ericcson.
You cover nokia and you live in helsinki?
I have been in helsinki almost 10 years.
I went there to work for nokia and i left in 2009. is that combination of good idea?
That's the network equipment sector and that has been under stress lately but so has the phone business but the network equipment has been commoditizing rapidly especially with the entry of the chinese.
We have had consolidation going on.
The nokia network business has been in merger and we now see that with the french.
It is almost a european-wide consolidation.
Alcatel lucent has been a train wreck for 20 years.
Is nokia the new train wreck?
Nokia arguably has been a train wreck for a while.
They may be broken up with the device business going to microsoft and now the network business is up in the air.
We will talk about an issue that is clustered technology and that is immigration reform.
It was once considered a legislative priority of the obama administration and many republicans appeared to be standing by.
Now, it is a political stalemate.
What happened to the immigration reform in the house?
Congress is involved in a battle over the budget.
Carlos gutierrez is a kind of republican like ted cruz but it makes him screw -- squirm.
Maybe they need to immigrate to a new party.
I would say we are the republicans of the future.
You have been out front on this for over two decades.
Have we messed it up again?
I am concerned we have.
We are going into 2014 and the budget will take over all the discussions in politics.
Next year, it's too easy to punt it to 2015. the problem keeps getting worse.
Our economy is not being served.
You mentioned walmart does not have enough people.
I bet that traces to immigration.
We need more people in this country.
Our workforce is not growing not just in high skilled workers but throughout.
How big of a problem is it for corporate america, for companies to find lesser skilled workers?
Let me give you an and joe twitchell washington loves -- i met a guy the other day that says he owns three restaurants.
If i had more workers, i would own age in a fight owned eight, i would hire more u.s. citizens.
What would you say to ted cruz?
I think the people who support him are dead wrong about the economy and what damage this will be to our economy if we don't get our act together.
Is this about latin americans and not asians?
This is about the economy.
Asians are a big part of what is happening in immigration, 3.5% of the population is asian.
Russians, africans, latin americans -- the push back to this is why can't the restaurant owner and the walmarts hire more americans?
Because they cannot find them.
90% of our people did not have a high school diploma years ago and now it is only 10. democrats love this and they sit silent while the republican party implode's. this started with lincoln and you picked it up with your generation and now the young kids will mess it up.
What is your order to marco rubio and ted cruz and the others to reinvigorate the republican party?
Focus on the beauty of free enterprise and less government and fewer taxes and stop focusing on social issues.
Social battles which were fought 50 years ago, let's fight the battles of the future.
What would barry goldwater say right now?
He was pretty conservative.
I think he would say get off of that stuff and let's fight the fights that counts and that distinguished us.
We are being governed from the far left.
You are from the far left with the president, what is an example of a republican that would meet your mandate to reinvigorate the party?
I like with the governor of new jersey -- i like his pragmatic stance.
I have always liked jeb bush.
He eats a lot of cornflakes.
He is doing that now.
He is getting cut and chiseled.
An extreme right-wing republican can get elected in the primary but they cannot get elected in the national.
That's the parties problem.
The only -- they only nominate extremists.
How much division is there between the elected officials in the party base?
The party base is probably 20%. that has a disproportionate impact on the politics.
Until we start getting people in there that are center-right, we will have this problem.
Will employees of kellogg stopped out of the new health care plan.
That's a big company.
What is your take on the affordable care act?
I think for large companies, as the president said yesterday, if you have health insurance, let us know.
The problem is the smaller companies, companies with fewer than 50, companies with more than 50 that will move to part- time.
There are so many unintended consequences that we don't know.
You have been great on being months out in front on this affordable care act.
It's a huge experiment.
Thank you so much, horace.
We look forward to the new mini.
secretary, thank you so much.
How about a four x report?
The euro is weaker so you see a stronger dollar against the euro and the japanese yen.
Prime minister abe is in new york talking about the economy.
He wrote about how they need to bring women back to the workforce.
Coming up, our guest house for the hour is nouriel roubini.
? we enter the seventh year of the financial crisis and speak with the man who called the slow down a recession, an update with nouriel roubini who joins us for the entire hour.
Unemployment in spain is at 26% and sara eisen will speak with the prime minister of spain.
Finally, tina fey without amy, " saturday night live" opens its 39th season.
This is "bloomberg surveillance." i remember the night " saturday night live" opens.
I sat in a college dorm and we sat transfixed.
Who was on it?
It was the original group with chevy chase.
It was so cool.
George carlin, we would wear out his records, record is a thing that spins around.
What was so cool about it is we knew it was special while it was happening.
That rarely happens.
We will speak with someone who wrote the book on it and how valuable it is to nbc.
It has been a ratings winner and we will talk about the business of "saturday night live" later in the hour.
Economic growth in the uk accelerated and consumer spending was a bright spark -- spot in the gdp report.
We get our weekly read on jobless claims and at 945, the bloomberg comfort report and 10 a.m., pending home sales.
Nike earnings come out after the bell.
The united nations general assembly continues in new york and the clinton global initiative people are dissenting on new york city.
President obama will deliver remarks on the affordable care act and he has been facing some political backlash.
There is your morning briefing.
It is up to $11 billion, how much jpmorgan could end up paying after the federal investigation of its selling of mortgage backed securities.
The talks are not final and the result could be even higher than that.
Citigroup is cutting a deal with freddie mac paying $375 million per the settlement covers 3.7 million mortgages that went bad during the mortgage crisis.
Can you do afine-free story?
The nyse and nasdaq are talking about teaming up.
The sec told the exchanges they need to come up with a better backup system following a series of technological glitches.
We will talk to guest host nouriel roubini.
About the global economy.
He is a professor at new york university which barely describes his acclaim.
He'd nailed the recession early and has provided caution in the autumn of 2003. he joins us.
Wonderful to see you again.
I was with you the day osama bin laden was taken out.
We were in los angeles.
Nothing has changed but everything has changed.
The e lead me to greet in new york, what a shock.
Everything is fine and you push against complacency.
What do the elite in new york this weekend get wrong?
They talk about global recovery but the information is mixed.
Acceleration of growth in the u.s. -- the eurozone, the uk -- the hard data on growth in volume and demand are softer and the softer pmi will go in the direction of the hard data.
David blanche flower tweeted about the wage reductions in greece.
Those people are getting flattened.
Comment on the distance between the elite and everybody else out there in europe and asia that is suffering.
I wrote recently comparing wall street with main street and suggested economic road and the most advanced economies remains very anemic.
In the eurozone, there is still recession in five out of seven countries.
Greece and spain is a near depression.
Even positive growth in the eurozone next year, maybe one percent.
It will be pathetic.
It will not reduce the levels of unemployment.
Asset prices can go higher but for a while, they can go higher because the forces of re-flation will help but weaker economic growth will have more influence.
I had a chance yesterday to speak with the spanish prime minister who says recession there is ending.
He acknowledges the 26% unemployment rate, 56% among youth but here is what he said on the idea of walking a fine line between death and austerity and the fragile economic growth.
We are not going to do that because we are going to meet our budget targets.
To think this very friday, we will make public that last year's deficit was not seven percent.
It was better.
It was 6.8%. we are not going to have any more budget cuts over the course of this year because we have also seen a very important thing which is that the risk premium has gone down.
As a result, things are better in europe.
In spain, we have done our homework and there will be savings for the publicpurse.
We are talking about billions of euros.
That will enable us to deal with the most important and complemented aspect of the desk -- of the recession which is social security.
Spain will meet its target as it did last year.
I asked him about whether he would need more austerity to meet the fiscal deficits.
The idea is that the markets have settled down so dramatically.
How fragile do you think they are, the bond market in particular, around the idea of debt targets and fragile economic growth?
Whatever it takes in the omt, market access is lower than one year ago.
If you look at italy and spain, it italy they are at 100 dirty percent of gdp and spain is going higher over 100%. you need four percent of gdp just to stabilize so it will go higher and and the short run it will be good but the medium term, the economics are unsustainable.
Where will the next shoe to drop?
Over the next year, and the euro zone has been missed right by the market.
--mis-priced by the market.
Growth in china will only be 7.4%. next year, icy growth growth in china below seven percent.
How will that manifest itself?
If growth slows down in china in the second half of next year, markets are not pricing in that growth or slow down in economy -- in emerging markets.
I don't think it will be true hard landing but it will be harder than soft.
You and your critics, particularly of academics, have one thing in common -- you go back to theory and academics and economic history.
Are all the central banks on original round and original territory?
Are we making this up as we go?
We went from conventional monetary policy to unconventional.
Quantitative easing, zero policy rates, credit easing, people are now talking about negative nominal interest rates.
The times are also special and even after five years of monetary stimulus, but u.s. is not -- is growing below trend.
I predicted the fed would not taper in september.
Has this become a plutocracy with what we have seen over eight years?
Could we become more polarized within our societies?
If you divide m labor, real wages are either not growing or falling.
The share of profits and gdp is rising.
The inequality is rising and that is part of globalization.
We will come back with nouriel roubini who is with us for the entire hour.
Here is a data check.
All these trends have caught up with us over seven days.
Futures are up to, yields are lower, that speaks to the caution, euro-dollar $1.34. coming up, this will be live from new york, four decades of "saturday night live." it launched the careers of some of hollywood's biggest stars and we will go into the business of "snl." that is coming up on bloomberg television and streaming on your phone, your tablet, and bloomberg.com.
. ? good morning, everyone.
Our guest is nouriel roubini.
We begin the seventh year of a financial crisis and the elite speak of recovery with a fed that is data dependent.
Nouriel roubini knows dove from hawk.
That bernanke dropped a time bomb.
He said the fed is data dependent.
That's not a surprise, is it?
The economy did not approve and the fed decided not to taper.
There are uncertainties about washington and the talk about tapering of -- is affected by the sensitive cycles of the economy like housing.
There are discouraged workers and the labor force.
Your critics say you have been wrong and a single point but you got the vector right about growth.
How do we create global gdp?
How do we create growth?
It will be hard for the next few years because the process of de-leveraging still continues.
You still have high debt ratios in europe.
In the united states, we have not done much fiscal adjustment.
I think there will be slow economic growth.
It will be better next year.
2.4% next year in the u.s. is better than this year but it will still be below trend.
Many americans don't know you have written serious tapers and so does janet yellen.
What would be your recommendation if you were sitting at the fed?
She has her own strong views.
She might be chosen for the fed chair but she still has to go through the committee and they will go slow as to when they start tapering and when they start exiting zero policy rates and even slower when they will normalize rates.
It might take them three years.
Where is the inflation?
But-- there is no inflation.
There is no in flesh and.
There is no wage bargaining power.
The super cycle is over.
Credit growth is anemic so i think inflation in the u.s., europe, and japan and the uk will be slow in coming.
Nouriel roubini will continue with us in this hour.
Theatrics in the senate is next on "bloomberg surveillance," live this morning from new york city.
? "bloomberg surveillance," live this morning from new york city.
? this is "bloomberg surveillance." our guest host is nouriel roubini.
The united nations security council has agreed on the key elements to a resolution for syria to surrender its chemical weapons.
The council is hoping to vote on the resolution as early as this week.
The earthquake in pakistan created a new island.
This landmass emerged off the countries coast shortly after the earthquake, 300 feet long, and 70 feet high.
It is made up of mud and rock and flammable gases are losing out.
Wrong earthquakes have produced islands but some have vanished a short while later.
The americas cup stays in the united states.
Larry ellison's oracle team usa had a stunning comeback to beat new zealand.
The u.s. has trailed in the series 8-1 before reeling off eight straight wins to capture the championship and defend the cup.
It was called one of the greatest comebacks ever.
Those are your top headlines.
It is almost not a sailboat.
It is a machine.
It is unbelievable.
This comeback story will be made into a hollywood movie and i want to know who will play larry ellison.
He certainly has spent a lot of money.
Look how tall it is.
It's really cool.
We welcome you on bloomberg radio and television.
Live from new york, it is "bloomberg surveillance." the 39th season of the iconic "saturday night live." lorne michaels does what he does best, using new talent.
We have the author of " live from new york." there is only one tina fey.
It is about the new people.
It is also about minting money.
We talked about " the today show," the tonight show" and other moneymakers.
How much of a moneymaker is "saturday night live?" it is a dependent variable on a schedule that has while changes.
39 years it's there.
It is one of the great marathons in television history.
It is almost impossible -- nbc has " meet the press" and some shows have been on as long but in the entertainment is business, this is one-of-a-kind.
Lorne michaels broke new ground putting snippets of this gets online.
Was he a visionary or just lucky?
At this point, he is quite a visionary.
He adopted new technologies and incorporating them into the show but in terms of reinventing the show -- this season, they will have six new cast members, for new writers -- those things don't happen by accident.
Have they ever had six new cast members?
Maybe once but this is a big hill to climb.
If you look at the people he brought from nowhere and became huge stars, talk about his development of talents.
This is what happens.
I remember being on the show the last time phil hartman was there.
They wondered how they would replace them and then will ferrell came along.
Picking the right talent is very difficult.
I go to the language of a year ago where they called it terrible.
Cecily strong is doing weekend up data.
Why hasn't been replicated?
Why can other networks not do this?
People have tried and there have been many attempts through the years.
This is an incredible formula.
Lorne michaels has a real sense of talents.
It is very difficult to do.
When he picks these people and puts them into this mosaic that he runs every season, it is harder than it looks.
How valuable is this show for nbc?
The late night part is not as valuable as the morning television.
It is still something that is very important.
Aside from football last year, "saturday night live" was the top-rated show.
It is a touchdown because nouriel roubini was actually featured in "saturday night live " back in 2009 and they talked about his global recession call.
Did the show set out to be this cultural touchstone?
Absolutely, in the first season when chevy chase was laying gerald ford, de facto branding of the ford presidency.
There is nothing like "saturday night live" during an election.
I would like to see chevy chase imitating nouriel roubini.
Fred armissen did it, what did you think of it?
I thought it was really fun.
I got 10% more e-mail after that.
You were talking about talent and people leaving.
Seth meyers will leave in february.
Will that be a big loss?
In front and behind the camera -- he was the head writer but he is staying on for a couple of months and is a great mentor.
He is a generous person with the young people on the staff.
What did they do on thursday?
They block, wednesday night they read through, thursday night they block.
Very good, thank you so much.
Look for his book on "saturday night live." 21% is how much paper consumption will fall in north america by 2015. it is the reality for international paper so how is it changing its strategy as it closes its plants?
? this is "bloomberg surveillance." we've got company news -- shares of jcpenney are sliding in the premarket after wall street weighs in on the struggling retailer which closed yesterday at a 15-year low.
It may not have enough cash for next year and the year after.
Credit analyst save the liquidity will be strained this quarter as they head into a crucial holiday sales season.
Twitter has a deal with the nfl.
It will push highlights of the lease games and share in ad revenue.
Verizon has signed on to be a sponsor and the videos will range from replays to offering expert advice on fantasy football.
Drivers in california can now rent a tesla.
It is adding the model s in san francisco as a rental.
It will run for $500 per day.
Kurtz said it will consider expanding the rentals to other locations -- hertz said it will consider expanding the rentals to other locations.
They will not be able to keep them in.
You have to ride in it and see if you like it.
You are usually in a hummer.
I don't drive.
I sit in the passenger seat.
Another full day of washington theatrics.
Senator ted cruz led the non- filibuster lasting for more than 20 hours and still no compromise to stop the shutdown of the federal government.
We are back with nouriel roubini and james andrew miller, author of " running in place." he worked for howard baker in the 1980s. has anything changed since then?
It's nothing compared to now.
I feel lucky about the fact that when i was working on the senate floor, you see dental patrick moynahan -- you see dental hat trick moynahan and scooped jackson, great legislators getting things done.
This makes me carsick watching this stuff.
Senators from different parties were talking with each other but you don't get that sense these days pretty genuinely don't like each other.
The cammarata ray on the senate floor when i was working there is fundamentally different and the action took place between the 40 yard lines.
Ronald reagan carried many states but got a lot of things done from support from conservative democrats and things got done.
How much is this holding back the economy?
I think you could have a repeat of what happened in july and august of 2011 with the correction.
We may see a government shutdown.
We will run out of money by mid and it will get ugly.
It will directly damage the economy.
The fiscal effect on investor and business confidence will be negative.
Business investment creates jobs in the united states.
Where is the business investment?
The latest data about capital spending has been mediocre.
There is uncertainty about the economy.
The recovery is an anemic.
. if they have to make investments, they do it in rapidly emerging markets.
They are now slowing down.
We are still deleveraging.
Until there is robust demand, we will not see much growth.
Do you buy the republican idea that this is about uncertainty in washington?
I don't think so.
There is always policy uncertainty.
I don't think that is a key factor.
The reality is that we have a slow recovery.
We are still deleveraging and the rest of the world is not growing and emerging markets are weakening and there is excess capacity.
Is there anything that can happen in congress or something else in the economy that could change your view and make you more optimistic?
Congress will remain dysfunctional.
The fights between democrats and republicans on the budget will go on for a few years and that will create more uncertainty.
The fiscal drag is too large still.
Given the situation in congress, i don't think we will get anywhere.
Do you agree this is a new normal?
I call it the new abnormal.
The new normal assumes stable economic growth.
It will be uncertain and volatile.
I call it the new abnormal.
If you allow growth to be, trend growth will fall to the level and damaged the economy longer.
Thank you so much.
Futures are set up for little change and we are waiting for jobless claims to come out at 8:30 a.m. good morning, "bloomberg served well as -- bloomberg surveillance." nouriel roubini is with us.
You can't ignore the rise of digitalization and its impact across industries including paper products which see a decline in demand.
International paper is a company that is reacting with the shift in strategy and some bold choices.
They had to make bold decisions decades ago and the reality was them shrinking from 113,000 employees 13 years ago, to 70,000 jobs today.
John ferrqacci has provided leadership for decades.
It has been a profound challenge.
The shares are the same as they were in 1987. to be fair, you had a great six quarters or so.
It's been good to see international paper come out of the global recession stronger and better but we are not done.
We've still got more runway and we would like to see a better global economy to help was a long.
What is your strategy to your board?
Nobody talks to john faraci.
Every day is working in an old, stodgy industry.
What is the best practice right now?
The industry has been around a while but i would not call it stodgy.
North america and western europe, we got a balance of supply and demand.
In the emerging markets, brazil, latin america, russia, india, china, it is looking for profitable growth.
You have shifted your strategy from paper to industrialize packaging.
How big of a business is it?
Our strategy is about global paper and packaging.
The demand for paper is growing globally but the per capita consumption in the u.s. is four times higher than it is in china and 10 times higher than india.
Paper is coming down in developed market so we are adjusting our supply to meet demand.
You acquired a recycling business but you don't break out the results separately.
How profitable is that?
It is not hugely profitable but is that it is core to our packaging business.
We are one of the largest collectors of recycled fiber.
We are the largest user in the country.
Can you scale that up further?
If demand grows, i the u.s. economy is all about demand.
70% of the economy is spending related and we will scale up the business if there is demand.
You have not written a business book that everyone else has.
If you had a book, what would be the title and what would you say about best practices?
There will not be a faraci business book.
I am not a writer or an economist.
Give us the headline of that.
One of the keys to business success in any part of the world or industry is leadership.
That is critically important if you are leading or managing a company.
How do you manage down 43,000 employees?
Managing and any company is not an individual effort.
You've got to have the leadership team and a good line of employees and it comes down to communication and making sure employees know what is expected and how they can help.
The people that make and sell things are the success of the company.
You are global, where do you see the most growth right now?
Still in the emerging markets.
They are slowing but they are still growing at a faster rate in the developing markets which are slowly improving.
You still see demand in china, demand in latin america and india.
What about talent?
We hear about how companies cannot find the right american workers.
Recruiting, retaining, and developing talent is one of the most important things a leadership team has to do and we have no trouble recruiting talents.
Our challenge is how to develop it to meet the needs of managing the business tomorrow, not yesterday.
Thank you so much.
Our twitter question of the day -- it is cutting back some of its orders from suppliers.
? good morning worldwide.
Betty liu is at the clinton global initiative this morning and will speak to chelsea clinton.
Look for that in the 8 a.m. hour.
Bill good morning worldwide.
Betty liu lauder will be in the 9:00 a.m. hour.
She is remote today, blocks away from our world headquarters.
She got the mother of all endorsements -- bill clinton said she would make a great president or it betty liu?
He was deflecting attention from hillary.
She was 23. time marches on.
Let's have a moment for a first look, the photos making news today.
We will take it global and started catholic stand where an american and to russian as restaurants -- 9:00 a.m. hour.
And to russian astronauts blasted off aboard a russian rocket.
The highlight of this state will be where to russian astronauts will take an unlit : pick torch to promote -- olympic torch to promote the olympics in russia.
We will go to italy where the search for a victims above the ill-fated costa concordia has resumed.
-- it is no longer on its side.
They have rotated it and they were trying -- this is the largest salvage operation in history.
X are they trying to float it somewhere?
They want to float it out of there.
This is the shot of the day -- one of the most stunning comebacks and ports -- sports history.
Oracle team usa winning the america's cup on the san francisco bay yesterday beating out new zealand by 44 seconds.
How about that?
The second victory for his team and larry ellison who was celebrating.
A boat goes like 16 knots on this thing goes 40? this is not your father's yacht.
It is like a powerboat.
The prime minister of new zealand tweeted about it.
Speaking of billionaires, how about a battle of billionaires?
The nasa rocket launchpad because jeff bezos and elon musk are fighting over it for their space projects.
They are lobbying washington.
They have plenty of money to spend.
Is about science or business?
It is about ego.
A bachelor of science and ego and then you do aeronautics.
-- a bachelor of science indiegogo and then you do aeronautics.
Who has the biggest rocket?
That's what nouriel roubini says.
Did i just say that?
? i don't care about nouriel roubini.
He did not bring down knots.
Nigel travis will and i will barely be able to sleep tonight.
The dunkin' donuts ceo will be here exclusively.
How many donuts will you have?
I will have three donuts, a hat trick.
Coming up on have you tried the cronuts?
You stayed in line.
Some of the girls may want it.
I think dunkin' donuts are better than cronuts and a day and you don't have to wait in line.
That's a headline.
We've got company news -- twitter is moving closer to an ipo and the company has added jpmorgan and morgan stanley to its roster of banks working on the offering.
They joined the main underwriter goldman sachs.
The ipo could come as early as november.
Netflix wants to add its web they smooth ease and tv shows to u.s. cable systems for the company has extended an open offer to cable companies to have netflix for two years.
The executives said the companies have to decide if they view netflix as a competitor or offering complementary programming.
Nokia could team up with alcatel lucent.
The finnish company is considering combining with their mobile networks.
A partnership would help nokia better challenge ericcson.
These are names people think should go to the recycling bin.
These are the all-time dinosaurs.
Does that make them better?
I'm not qualified to answer that but it is unreal.
It is time for the agenda where we will look at the major stories shaping the day.
On my agenda -- nagasaki, poland?
We will look at spain.
I had a chance to sit down with the spanish prime minister.
He never does an interview and is here to tout his economic recovery.
They are finally moving out of it to year-long recession.
Was he on script or off script?
He was very candid and took a lot of questions on corruption for the first time.
He is facing some around his party and financing and a lot of questions on the number one challenge -- jobs.
26% unemployment, the second highest in europe next agrees, 56% youth unemployment.
I asked him if he would co nsider taking more labor reforms and he said yes.
We have carried out a labor reform that has had an impact.
I give this example -- foreign investment in spain is very positive, increasing a lot.
Look at the automotive sector.
Major multinationals are investing billions of euros in spain in recent months and the reason is the labor reform.
We are now evaluating this labor reform and we want to have an independent outside evaluation from the oecd.
If it were necessary for spain to do some touch ups on this reform, you can be very sure that we will.
We have found that without less economic growth, we are now generating more employment and that is a direct result of the labor reform and the government will either maintain it or go deeper.
It is leading to export growth which is something you are proud of.
Would it help if there were a weaker euro?
You are talking about the exchange rate.
Of course that would help.
In any case, that is not something that is lucidly depends on us.
Spanish exports, which is 1/3 of our exports -- of our gdp has gone up a lot and that is the biggest success story in our society.
We had an 11% deficit in the foreign sector and now we've got a surplus of 2.5%. in 2013, spain is now the country in the european economic and monetary union that has the highest export growth and that gives us a lot of hope and means we are improving our competitiveness.
If the exchange rate were a little bit lower, that would be good for spanish exports.
I have been saying that for a long time.
Not everyday day you get prime minister's talking about exchange rates.
We also talked about the banking bailout which is critical.
That is another success story because they took funding for the spanish banks which were under pressure and they are set to exit that program in january as long as it is signed off on.
They never late -- they never formallyin 2013, spain is now the asked for a bailout.
It is the fourth biggest economy in europe.
What does this mean for americans?
What does it mean that europe has an unemployment rate we associate with 1937? it means a lot of the eurozone is on the border.
It is 7.4% and u.s. but if you correct for the changes, unemployment would be 10% if you include discouraged workers and partially employed workers.
It is not as bad as the eurozone but we have a serious employment problem in the united states.
You look at economic growth than in your graduate studies, you did fancy math.
How do we create growth in america?
Do we need a new internet or the leverage of real