Day Two of Government Shutdown: 10/2 Full Show

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Oct. 02 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Anne Mathias, William Cohan, Alison Rosenthal, Ken Auletta, Judd Gregg, Peter Beilenson, Tim Ryan, Anne-Marie Slaughter, and Bill Johnson. (Source: Bloomberg)

The president cancels his trip to malaysia, house republicans suggests the president engaged democrats.

Democrats are just a shutdown is all political theater.

Day two begins.

There are too many regulators, wall street ceos head to the white house today.

Sara eisen speaks to jamie dimon . facebook and twitter have one app that is one giant headache.

The morning, this is "bloomberg surveillance." i am tom keene.

Tuesday -- excuse me, wednesday, october 2. the week racing on.

Joining me is sara eisen and scarlet fu.

The week just races by as we are shutdown.

Government shutdown, day two.

The morning brief to get you caught up on overnight news, italian prime minister enrico letta address the senate this morning, called for a vote of confidence and it looks like he should survive it.

You see that reflected in the markets.

It looks like he will when that confidence vote.

Emerging economies in asia got their gdp forecast cut.

In the u.s. today, -- i also want to mention the ecb rate decision comes out.

No change is expense did -- is expected.

It is one of their two meetings a year away from frankfurt.

No change expected.

Mario draghi will speak to reporters this morning.

Weekly read on mortgage applications comes out the 7:00 a.m. our.

8:15, a proper report on the payroll.

That is usually leading up to the government report on friday, which we will not see as long as the government stays shutdown.

As is always god.

-- that is all we've got.

The federal reserve chairman will also be speaking, ben bernanke in st.

Louis.

This is a webcast only, the speaking perhaps about tougher capital rules with regard to u.s. banks.

Before the bell we get earnings from monsanto.

Let's do a data check.

Little impact yesterday.

Part of our theme on "bloomberg surveillance." this morning we go the other way, -12, big move on futures.

Euro, 1.35 31, showing that weak dollar policy.

Nymex crude can't get to 101. there is these fix.

Really, not all that bad given the theater of washington.

The yen is very important, honey 7.46. that is a stronger yen.

Also some news out of japan, prime minister abe goes ahead with the audio that attacks.

The stimulus he announced with it not as big as some -- goes ahead with the tax.

The steelers announced not as big as some had thought.

Technical move.

Time for the front page.

We scour the web for the most important stories.

The government shutdown tops the list.

You can look at the different papers, from pages, "the wall street journal" the first full day of government shutdown ended with yet another stalemate.

No signs of breaking so everyone is digging in for something longer.

This is all leading up to the deadline over the debt ceiling as well.

Democrats rejected an attempt by house republicans to restore funding.

Republicans criticized senate democrats for being unwilling to negotiate a standoff.

Sniping is the word of the day.

President obama jumped in as well, accusing house republicans are trying to dismantle the affordable care act also known as obamacare.

He is not going anywhere, either.

He was supposed to go to malaysia and you will be staying at home.

This has real ramifications.

The international view.

People are going to be disappointed if the president doesn't show up.

But can you imagine the beating he would take from the republicans if he took a trip?

And the first of the affordable care act -- i tried all day to get on.

You're the only one.

Heavy traffic, website problems, technical glitches led to delays in some cases, even crashes as well.

2.5 million people in new york visited the first hour, california had 16,000 hits a second at one point.

The president cited some big stats as well when he gave his speech yesterday talking about how more than five times as many people visited some of these sites as they do the medicare site.

Do we have any idea -- was this well-meaning people going on or at least -- curiosity.

People looking to find out what is going on.

There are some reports in certain kinds of blogs is just people were trying to crash the system, but i think a lot of people were confused and want to find out more information.

It has become such a politicized issue squarely in the middle of this fiscal debate.

The last front page story has to do with the ceos of big bangs headed to washington to meet with the president on the vip list, lloyd blankfein, jamie dimon, michael corbett and also untrue jane -- andrew jane.

I was reading a column in bloomberg view and she says the ceos have been unusually timid in the lead up to the government shutdown, leading the lobbying group do the works for them but they can be really effective if they point to the potential loss in business and consumer confidence and especially make an impact if they say, we're not going to contribute to your election campaign anymore.

And i squeeze in one more item?

Hockey started last night.

Already?

It is a little early, but toronto-montreal -- and the red sox lost.

I didn't know that.

It is the beginning of hockey season.

I almost of the day off to celebrate.

Excuse me, the reds lost.

Let's talk more about washington.

Democrats are rejecting republican proposals to fund parts of the government.

A few republican suggesting they cut a deal.

President obama spoke on the impact of the shutdown yesterday in washington.

The longer the shutdown continues, the worst the effects will be.

More families will be hurt, more businesses will be harmed.

So once again, i urge house republicans to reopen the government, restart the services americans depend on and allow the public servants who have been sent home to return to work.

Joining us for the hour is giving him investments director of washington research and william cohen is here, it lubricants are bidding editor.

-- bloomberg contributing editor.

Here we are, the government has been shut down for more than 24 hours, barreling into another deadline on the deadline -- the debt limit.

It is almost like the final lines of the great gatsby that we are forever being bored backwards into the past.

It feels like we're going back to pre-world war ii when we funded the government piecemeal and each agency had to advocate for its budget.

We're not getting anywhere in the longer it takes, the closer we will get to try to align those two things with the budget and the debt ceiling.

We could go for two two -- have a already become intertwined into one giant fiscal mess?

It is like iv in your backyard, they're becoming intertwined.

And the more likely the two issues have to get resolved at the same time.

Is that dangerous or positive?

It looks like from investors point of view and the research part of you at least, the shutdown, ok, we didn't deal with.

The debt ceiling would be an absolute catastrophe.

That is true.

Is it going to make the situation easier if we combine the two debates, the budget and the debt ceiling at the same time?

Does that give more power to opponents or to people who want to come to the table and solve it?

Bill cohen is with us, and his next book is called "photo op." eight guys, 10 guys, their entourages go to washington, why ? obviously, it must have been on the schedule, right?

There you go.

The optics of it really are not very good at this particular moment to have the so-called fatcat bankers heading to the white house in the middle of this government shutdown?

I don't know.

If they can convince the president to step up to get congress to work something out.

I don't think this group needed to convince the president to do that.

What i do think is an important message he's trying to reinforce is that the debt ceiling debate is a serious issue, even more serious than the government shutdown.

If we can't pay our bills as they become due, then we as a nation suffer.

Then the economy really will drop off the cliff.

Which of these bankers is on best terms with the president?

Probably somebody like michael corbat who is dead nothing to upset anybody because he is relatively new.

-- who has done nothing to upset anybody because he is relatively new.

Would have a wonderful show with you today.

Judd gregg will join us later.

His is going to be great.

In the most important state in the nation, ohio.

It is "bloomberg surveillance." can you imagine, day 24 of the shutdown?

Let's not get ahead of ourselves.

Company news.

New york is going after wells fargo.

The state's attorney general will bring enforcement action against the bank for allegedly failing to uphold a national mortgage agreement according to a person with knowledge of the matter.

Lear this year ag said wells fargo failed to respond to our were is seeking a loan modification in a timely manner.

Japan's user september sales drop.

Toyota, honda, nissan seeing sales drop.

Archer than forecast for toyota and nissan.

Honda sales slid almost 10%, but that was better than predicted.

Part of the decline iterated to fewer we can selling days -- weekend selling days.

Moving to go public, gaming company, makes candy crush, has made a confidential filing for an ipo according to a person familiar with the matter.

One analyst picks the business can be valued as much as $7 billion.

London-based king.

That is today's company news.

It has destroyed my life.

I see you at your desk working on it constantly.

It is just sick.

I am addicted.

In a moment, we're going to talk about shockwave from the top news that will feel the most pain from ford to saks fifth avenue, coming up on "bloomberg surveillance." ? good morning, "bloomberg surveillance." the chairman and president of empire state realogy trust, anthony malkin with that emu.

-- with betty liu on "in the loop." the government shutdown will no doubt hurt furloughed workers.

There are also some industries and private companies that are actually at risk here, too.

What really ties this together is the since this u.s. economy depends so much on the consumer.

Jeff rosenberg from blackrock advisors wrote in his monthly note today that the economy depends on consumption full stop consumption depends on the consumer and the consumer relies on confidence.

To date, confidence has mimicked them about as a result of rising wealth.

I'll have an on companies.

Cars, for instance.

Fox luxury?

Things might be felt in the entry of the stock market stars to react.

We saw a little bit of a wobble in the lead up to the actual shutdown.

Yesterday the stock market rose, but there are economists that say if it starts to the stock market, it will start to get that sense of wealth.

Do they put a timeline on when this clicks in?

This is all one big question mark.

What we do know are some numbers in terms of impact.

Ihs a strength at least $300 million a day and loss.

Macro economics initially set at the shutdown last for two weeks, it could cut gdp by .3 percentage points.

People are wondering how long this goes on for.

Let's translate that.

Microeconomics for this quarter just ending is at 1.8%. if you bring that forward, which i'm just guessing, you go 1.8 -.3? anne mathias is with us.

This is your wheelhouse, conducting -- connecting this.

The impact on the u.s. consumer, do they really get scared off by this type of thing?

We think the longer it goes on the more impact it could have.

The daily dollar amounts are not that significant, given the size of the market, but our global chief investment officer has talked about the cross currents in the economy.

This is just a really new and large addition to that cross current.

It makes us a little worried about q4. one of the bright spots in the economy and the consumer market has been autos.

We got vehicle sales yesterday, coming in a little bit soft.

A lot of people say the weakness we saw last month is not necessarily an inflection point, especially with auto sales on track for the best year since 2000 seven, but if the shutdown drags on, it will be one of those things that causes consumers to pull back.

Ihs automotive declined to raise its forecast for light vehicle sales because of its economic uncertainty.

It was on course for raising or upgrading its assessment but not doing that anymore.

Let's go to "the new york post." the winners in the industry, beer.

Federal workers booze it up.

I guess the bars in washington were a bit crowded yesterday.

I guess that makes up for the delis in the bodegas and the other places that didn't get their usual business.

You live in washington.

I'm surprised.

This can't go on their expense account.

That is surprising.

There could be another aspect which is here in new york you had shutdown babies.

In the 19 90s we joke about you had blackout babies.

We have had shutdown babies from the shutdown in the 1990s when the federal workers were off.

Really?

We need to explore this further.

Yes.

What do you name those babies?

Can't say on tv.

Boehner, cruz.

It has to affect the d.c. economy.

It does.

We haven't talked about the impact of federal government contracting.

The government contracts about $550 billion the year.

It is still uncertain.

We don't know exactly how it will affect military contracting, for example, although a number of military personnel were deemed essential.

Will they still be able to let contracts?

Will the pace of contracting slow?

The bottom line is private employment also.

Eventually, it will start to trickle down.

It all depends on how long it lasts and right now there are no signs of either side is willing to concede.

Coming up, wall street is coming to the white house.

The ceos of the biggest banks will be meeting with the president today.

Will they be able to end the logjam in congress?

Bill cohen says, no way.

? good morning, "bloomberg surveillance." our twitter day of the question -- sarah, why aren't they?

I don't know, perhaps they're not worried about the debt ceiling.

The last time around, he was and big of an impact.

This has happened a couple of times since 1976, something like 17 times.

Will they panic as we get closer to the debt ceiling is the question.

Top headlines for you.

The fact president obama has canceled his trip to asia because of the government shutdown and what is going on in congress.

The president has to cancel some stops as he is heading over to asia.

We have our white house correspondent on the phone.

Tell us what you know about the president's decision, where he will go in where he won't go.

The president was scheduled to leave on saturday for a four- country stop, set to go to indonesia for the apex summit, to brunei for the summit, and then also adding trips to malaysia into the philippines to promote trade and investment.

This is part of the president's big foreign-policy move to pivot to asia after yours of war in iraq and afghanistan.

The white house confirmed this morning the president will not be making those stops in the philippines or malaysia according to a national security spokesman.

She says "the cancellation of the strip is another consequence of the house republicans forcing a shutdown of the government.

This completely avoidable shutdown is setting down our ability to show advance u.s. leaderships in the largest emerging region in the world." i expect you will be hearing this message from other administration officials and the president, perhaps today.

The other stops are still going on as planned.

The president would likely be meeting on the sidelines during these trips with russian president vladimir putin and china's new premier.

These are two very important stops.

Right now, they are still planned to go, but administration officials say they are evaluating every day.

What about the president and his discussions with domestic leaders?

We know he will be making comments, but does he have anything on the calendar to meet with the senators or congressmen?

No.

still no back channel negotiations right now.

The last reheard is the president speaking with house speaker john boehner on monday night come a senate majority leader mitch mcconnell and other than that, no updates on any other discussions and it looks like the shutdown is here to stay for now.

The white house yesterday made a point of the president you see there pictures of him in the rose garden talking about the affordable care act with enrollment beginning yesterday.

Part of the point of that statement was to make the case that they want to see these shutdown and the ceiling debt with -- dealt with together.

This could possibly take us until the debt ceiling matter is resolved.

Thank you for joining us on short notice this morning on the president's cancellation to some of his stops in asia.

Coming up, the wall street regulator you may not have heard of, how new york state's top cop who stood his national profile and who he is going after next.

? this is "bloomberg surveillance" here as always with tom keene and scarlet fu.

Markets on the move.

If you just pointed to a lower start.

Let's do a data check and then talk about the president's trip.

Futures, -11. 10-year yield churning.

Nymex crude, 101.72. gainers and losers, quickly, scarlet.

Newmont mining down more than three percent.

We have seen a plunge in gold prices since the federal reserve declined to taper the bond buying program.

Newmont mining continues to slide down as well.

A lot of questions about whether their investment in those mines are starting to hurt the bottom line.

Sears also gaining almost seven percent on the day.

This is a stock that has been rebounding more than 50% since late august.

A lot of people saying cooler weather is helping to boost retail sales.

Although, a prolonged government shutdown could jeopardize it.

We heard from julianna goldman on the cancellation of the president's the trip.

Bill cohan is with us, and anne mathias is with us as well, from guggenheim research.

I am confused.

No manila -- and no malaysia.

But he is still going ahead to bali and brunei -- how many americans know where brunei is on the map?

It is an oil country.

A very rich country.

I don't understand why, if he is canceling part of the trip, why not all of it?

What kind of message is it sending to the malaysians and the filipinos?

I don't understand exactly what is on their mind.

It would look bad if he is being greeted by all sorts of leaders -- where is if he is going to apec and asean, he is getting a done deal.

I hope it is fluid at this point because it does not make sense at the moment.

Prune identity independence from the united kingdom in 1884. -- brunei got independence from the united kingdom.

The president will be meeting with a couple of big bank ceos, and include in lloyd blankfein and jamie dimon and on the agenda, front and center, the shutdown of the debt ceiling.

You have to wonder if regulation will play a role.

No doubt it is looming large.

I had a chance to sit down with the new york state's chief financial regulators, two years on the two years since the agency was created by the governor.

He has made waves and has scared the street with his giant $340 million standard chartered fine last year.

Leapfrogging the federal reserve and the sec.

I asked him about the regulatory output that soup.

Here is what he said about it.

There is this alphabet soup of regulators out there, and i think it is something we think about a lot because we don't want to just be one of the multitude and to just add another layer regulation on to businesses that actually want to really thrive.

These businesses -- insurance, banking, and other financial businesses here in new york -- are obviously just vital.

William cohan, author of a trio of books on big things.

He wants to distinguish himself.

Do you think he did?

I think he has distinguished himself.

I happen to think that apps -- alphabet soup of regulators is actually a good thing because people like ben lawasky, we traditionally have not been regulators, can see things from a different perspective and catch things other regulators might miss.

I think it is very, very positive.

You talk about those issues.

Let me give you some the civics.

Definitely looking into the idea of illegal money transferring, his big win with standard chartered.

He is looking at the consultant business.

He had a big case against deloitte and how they are devising.

And the promontory financials.

And high-tech.

I asked about the idea of regulations and what makes a good regulator, and he said it is a lot about what you don't decide to press charges on.

You never hear about the things we don't do, but there are many each day where you decide it is not needed there and not needed over there.

I think that is true regulation.

And those are the really important decisions.

I was once a federal prosecutor and also the prosecutor's most important decisions are the ones you never hear about, decisions not to bring it -- a particular case.

The same for regulators.

I thought it was a thoughtful answer.

The idea of what makes a good regulator.

Obviously he did not show me any of the cases he decided not to bring up.

He is a new york state regulator.

Anne mathias, when you think about federal regulators and how helpless they have seen -- seemed during the crisis.

Does it appears they regulators have a little more room to do what they need to do?

I think certainly some of the major marketable like here in new york, i think state regulators are important.

I think at the national level -- we are concerned about it as an investment manager, this idea of lack of liquidity particularly in the corporate credit market.

With the fed buying up almost 90% of u.s. dollar issuance of debt and now the government shutdown, you could have a tight liquidity situation.

What is the level of the debate in washington to be more like the united kingdom?

Is there any kind of an effort to have one or two regulatory bodies?

Know, and fact i think it has been going on in the last two years the other direction, new regulatory bodies and increasing power in the state level.

What we have seen is bigger personalities and seemingly cover personalities.

Now elizabeth warren has a seat and now mary jo white is getting banks to admit to wrongdoing.

And people like -- these are baby steps.

Everybody's talking about getting banks to admit wrongdoing?

That passes as a great leap forward?

Teenagers -- if that is what they are hanging their hat on, that is embarrassing.

But i do think this panoply of regulators is a good thing.

It reduces the amount of regulatory capture that didn't data that can take place and allows people like lawsky who is very smart to see things from a different perspective.

The three or four books you have gone on wall street -- is this the normal chronology out of a crisis or is there something more urgent now?

Is it just that time is moving on, we are seven years on?

What was really unusual in this crisis was the lack of prosecution of any of the wrongdoing on wall street.

It is now five years out and as we all know, there has been very little significant criminal or civil prosecution.

Fabrice tourre.

That is the most ridiculous case.

They crow about it and say it is a good thing but this poor guy has been hung out the driver for just doing his job on wall street.

I know you guys will like this.

I asked him about eliot spitzer and rudy giuliani who helped going after banks, bring boarding their political ambitions.

He said, i am not interested in politics.

Coming up, who do you trust less than the national security agency?

You will be stunned by the result of this new survey.

It is in "bloomberg surveillance "bloomberg surveillance our single best chart, coming up on -- coming up on "bloomberg surveillance." ? this is "bloomberg surveillance." i'm sara eisen, with tom keene and scarlet fu.

The death toll in the shopping mall in kenya has risen to 67 after police found two more bodies in the rubble.

The raid on the upscale shopping center was carried out by islamic militants from somalia.

In italy prime minister enrico letta scrambling to keep the government in power.

He is appealing to parliament to back his administration after silvio burst only pulled in support of the weekend.

He called on lawmakers to support them with a confidence vote.

The vote expected to take place later today.

It's pirg pirates won their first playoff game in 21 years -- the pittsburgh pirates won their first playoff game in 21 years, beating the cincinnati reds.

The pirates advanced in the national league a vision series where they will take on the st.

Louis cardinals.

In the american league, tampa bay rays and cleveland indians play in a wild-card matchup tonight.

Cruel and unusual punishment.

That you had to read that.

I did not read it, i just recounted.

We are all looking ahead to hockey.

I guess that was big news for the reds.

Joining us is allie rosenthal, ceo of message me, the latest mobile messaging aap pp.

I want to bring her in on this chart, how the government beats out facebook and google when it comes to trust issues.

There is a poll that surveyed americans about their level of trust in these entities.

The question asked, how much do you trust, for instance, the nsa to protect the privacy of personal information.

37% said a lot or some.

The irs, surprisingly, came in second at 33%, that they trusted them a lot or little.

On the downside, facebook, 75% who answered and said they distrust facebook to protect your privacy.

68% distrust google.

Google and facebook facing some challenges.

Allie rosenthal, you deal with messaging apps and you know about mobile development.

Message me claims to capitalize on the distrust.

What are you doing to change people's views?

I think it is interesting to see the result especially since users give local and facebook that type of information every day when they do a search and fill out their profile.

The information we are volunteering is information these companies are clear that they used to produce better services.

I think with respect to message me and messaging generally, we aim to enable you to communicate in the ways that they want a very quick weight on apeer to peer bases or also in groups.

There are not as many options of the service as you would find across google services or facebook, so it is more of a communication tool.

Is there a lot of interaction with the nsa or iss -- irs at the needed information?

We have not heard from the nsa or iran's -- that are government agencies.

If they were to ask us for information i am sure we would have to look at -- is the nsa spying being shut down this week?

I bet they are -- they have decided they aren't essential personnel and they are in the office today listen to us this morning.

You can imagine the late- night shows are having a ball.

Here is jay leno.

I am glad the government is shut down.

Think about that, for the first time in years, it is safe to talk about fun and send e-mails without anybody listening in.

[applause] well, it is a hot topic of conversation, no doubt.

This brings us to first look photos.

Going old school.

Tom, you will love this.

Back to 1995, the last time the government shutdown.

President bill clinton us -- faced off with a republican congress led by newt gingrich for 28 days.

Here is the speaker trying to explain his criticism of medicare spending.

I remember that night in 1994 when the republicans took over, the only one who covered it was cbs.

It was like not a big deal night.

No one expected to republicans -- the republicans to win.

The only one who had it was cbs.

The intersection of health care budget issues, the same thing.

We've got another one of the national debt clock in manhattan on 6th avenue taking away.

It was paused during the shutdown, it stopped around $5 trillion with a family share of 64,747, now when you close to 17 trillion.

Didn't -- did they have to turn it off for a while?

It went dark a couple of years.

The president and vice president gore sitting down with newt gingrich and robert dole to negotiate.

Simpler times.

Could you imagine it now?

A great shot.

No smartphones in that picture.

The upshot politically was great for president clinton.

His approval ratings soared.

Speaker gingrich referred to the shutdown as the single most affordable mistake as speaker.

-- avoidable mistake as speaker.

But this was a different time.

Ali's influence is important here because this time we have google, facebook, message me, we have all of these mobile applications.

We have proliferation of cable channels.

We have so much more communication technology.

I think it makes it more explosive.

One reason why this time is different.

Coming up in the program, we will talk about your world.

First it was myspace and facebook.

The next big social media trend, messaging, big money here.

That is coming up on "bloomberg surveillance" on bloomberg television, streaming on your tablet, phone, and bloomberg.com . ? this is "bloomberg surveillance." i'm scarlet fu, as always joined by tom keene and sara eisen.

Company news for you.

Htc works to avoid a ban on the flagship smartphone.

The taiwanese company is working to alter its component for its one smartphone.

The move comes a after rival nokia won a ruling that htc infringed on some patents.

They hope the design change will avoid a u.s. man.

They spoke -- facebook trying to boost its app usage, rolling out a mobile advertising tool to encourage people to use apps already installed on their smartphones.

It will link serve the best users to apps via promotion on the main news feed.

Walt disney offers hundreds of full-time jobs tend to health care reform.

Full-time spots to 427 part- timers at disney world in florida.

For staff -- 1500 hrs last year, which will qualify those are benefits under the affordable care act.

We will look at companies that the messaging.

They are exploding right now and they are actually taking market share from facebook and some other older, more established social media.

Facebook feeling it the most.

What apps say they carried twice the daily traffic of facebook, for instance.

Outside the u.s., i keep hearing from friends to download whatsapp, because that is become former popular.

South africa, the service has 15 million users, 50% more than facebook.

Fascinating.

I'm not up to speed.

Ali rosenthal was in charge of global mobile operations for facebook and currently chief operating officer of message me, and messaging application that allows you to send all forms of media from one user to another.

It's morning i will be sending clips -- and this morning i will be sending clips to sara and alan greenspan.

Sell me on it right now.

Why does a geezer like me need it?

We believe in message me that the future of social is mobile.

40% of teens in the u.s., for example, have phones.

We were just discussing that kids' first experience these days with the internet is on a mobile device.

That means screens are smaller and there are fewer things you can do with a mouse, with a bigger screen.

Kids are using various messaging services to communicate with each other.

The reason you should use a? smartphones today are super powerful.

They are super capable of entertaining us, being fun.

They are fast.

They are capable.

And texting has been texting for a long time -- if i use you i could to save my 10 or $15 a month for texting?

Yes, it is free with -- and faster.

You can grab and image and doodle on top of it.

One of my favorite -- you are the ones where i get stickers all over -- you can send what you are feeling without even having to fight.

Do you have a bowtie sticker?

I think we do.

I am wondering if the messaging app industry see the u.s. as emerging or developed?

We are so far behind overseas markets with messaging.

You hear about whatsapp overseas longer for the u.s.. for a longer time users here had laptops and desktops.

We were earlier to adopt the internet.

Other countries and other reasons in the world had to use mobile devices.

That is what we did on facebook, which is to deal with that market.

As a smart phone and smartphone penetration grows outside the u.s. it is a huge opportunity for many companies, but also the smart phone technology and the ways people use mobile devices in the u.s. is changing very quickly and we do think it is a huge opportunity.

No question these messaging apps are hot right now but how do you ensure they are long-term viable business proposition?

We are seeing the work abroad as well as the u.s.. things like subscription services.

Whatsapp did charge users an annual subscription fee.

As a content delivery system they will be super interesting.

Imagine watching clips with -- of "breaking bad" with your friends?

Do you see the content we message each other?

We just know you are sending mail.

We have to rip up the script and talk about the idea of the moment.

Goldman sachs, m&a, onto facebook and of this project.

Are you going to buy shares in twitter?

You know, i am a huge twitter user.

I am a huge fan.

We will see where it goes out.

You and i have a curiosity about with the red herring says.

To a pro like you, a real mystery of what twitter is really doing financially, isn't it?

I guess.

Twitter was actually a wonderful application for phones earlier on, even before smartphones became really big.

They tapped into usage prevalent -- early on when they launched.

I think it is a great company.

I think we will do very, very well.

Do you have confidence you can monetize or message me can monetize?

How can we monetize without leave to the next that?

How we do is it will be the sale of digital goods.

The ability to develop a vast development platform upon which games and other premium services can be launched.

As you exchange messages between people, you are actually creating memories.

You are at an event, you are at a wedding, you are sharing images and you are connecting around content.

And some applications today, the contents disappears.

Our content stays.

This week go back -- people are what people is all about.

Why blackberry bbm was so successful and popular.

Exactly.

This was such a nice diversion from the shutdown.

Can you come back tomorrow?

Day three of the shutdown with ali rosenthal.

A real pleasure.

How about a four x report?

We have seen the dollar weakening on the back of the showdown -- shut down and stop strengthening.

Today it is a little bit stronger.

The japanese yen is stronger than more than half a percent.

A signal that there is a little unease in the market.

The ozzy dollar under pressure as well, looking for a lower start for u.s. backs heading into the open.

Coming up in the next hour, we are talking technology with the author of "google" and we are all over the shutdown.

We will speak to a democrat and a republican from the great state of ohio.

? this is "bloomberg surveillance." the president shortens his trip to asia -- he will skip his visits to malaysia and the philippines.

Back on the washington standoff continues.

We speak to both sides of the aisle this hour.

A democrat, a republican, and the swing state of sara eisen's ohio.

Disney and dish avert a blackout.

Content is king but distribution may be clean.

This is "bloomberg surveillance ." i'm tom keene live from world headquarters in new york.

Wednesday, october 2. joining me, as always, sara eisen and scarlet fu.

Our guest host, ken auletta, author of the highly acclaimed must read "googled." writing for "new york magazine" from time to time as well.

Good morning.

Italian prime minister and enrico letta called for a vote of confidence.

We are not seeing any kind of panic in italian bonds or stocks just yet but something to watch as well.

It :00 a.m. our time he will be holding a confidence vote in parliament in italy -- act 8:00 our time.

7:45 a.m. eastern we will get the ecb rate decision.

Mario draghi, the president of the ecb, will be addressing reporters together -- today.

The meeting will take place in paris.

One of the two meetings a year they venture outside of frankfurt.

Always interesting to hear what residents rocky will be saying.

This hour, we will do mortgage applications, and that 8:15, the adp employment report, a good snapshot of private sector jobs.

And, of course, if the jobs report does not come out friday, this is the best look we get for employment aforesaid number.

This is important.

I have seen a report this morning saying it is equivalent.

I do not agree.

It has not correlated exactly in previous sessions, but the trend -- and revisions were based on adp so it is always important to look at, at least anecdotally for the private sector to see who is hiring and who is not.

Chairman bernanke does speak today in st.

Louis.

And earnings, before the bell, we get monsanto.

Starlet has company news right now.

Wall street heading over to washington.

The ceos of the big banks will meet with president obama as part of the white house's efforts to mend relations with the financial services industry.

The head of goldman sachs, j.p. morgan, citigroup, and bank of america have been invited.

New york is going after wells fargo.

The attorney general will bring an enforcement action against the bank for allegedly failing to uphold terms of a national mortgage agreement, according to a person with knowledge of the matter.

Earlier this year the attorney general said wells fargo failed to respond to borrowers who wanted to see gloom one of occasions in a timely manner.

The three c's their sales decline.

Toyota, honda, nissan report declined after a surge in august.

Honda sales slid almost 10%. but it was better than predicted.

Part of the drop attributed to poor weekend selling days.

With the shutdown looming over the united states, the president decided he will no longer be stopping in the lazy and this is -- and the philippines during his tour of southeast asia.

-- no longer be stopping in malaysia and the philippines.

Julianna goldman, why did the administration announced they decided this?

The president last night called the leaders of malaysia and the philippines to tell them he would be postponing his trip, and really this came down to logistical hurdles.

These two trips were supposed to be on the back end of a four- country to her.

He is still planning to go to the aipac and the east asian summit in bali and brunei, scheduled to leave saturday and sunday.

That is where the big business of key national security and foreign policy issues were going to come into play.

These were the -- rescheduled conferences, could not be rescheduled.

That is why they are delaying the back half.

Some big meetings could be held on the sidelines.

Russian president vladimir putin , obviously a key meeting to be talking about the latest with the efforts to turn over syria's chemical weapons to the international community, and also the possibility of the president meeting face-to-face for the first time with china's new premier.

Obviously the optics will be important, especially with this battle royale between democrats and republicans.

How confident are they feeling given the shutdown is being largely blamed on house republicans?

And what is their next move?

I don't think anyone has the luxury to feel too confident, because i think the new message you will probably start to hear from the president and other officials is they want to see this fight, the fight over the continuing resolution of the budget, married now with the debt ceiling, which really raises the prospect that this is dragged out to mid-october to when we actually hit the limit, and they want to try to get some bigger deal.

Julianna goldman, stay with us.

Right now, the entity i wanted to do all week.

Judd gregg, was republican senator from new hampshire from 1993-2011. he is now chief executive officer of securities industry and financial markets association.

Judd gregg on the politics of the moment.

Simply, your thoughts on the 40 or 50 republicans reinventing the republican party.

Well, i think they are on the wrong track.

The simple fact is, you are not going to repeal obamacare, nor are you going to raise taxes.

Those other two non-debatable in this exercise.

But there is an awful lot of ground in-between that you can cover.

What we should be focused on is some sort of debt deal to get the deficit, gets the debt under control, resolves the issue of this sequester, which is a real counterproductive way to reduce spending, and replaces it with improvements and reform in entitlements.

That is the agreement i think they will end up with.

In any political debate, there is the will of the moment, the idea somebody has the will to do something.

What is the will of the new republican party?

Is it to govern or run for reelection?

I don't think the republican party is homogeneous, tom.

A sickly you have a small group within the republican party who grabbed the microphone -- basically, you have a small group within the republican party to grab the microphone who are doing it for various reasons, self-promotion and they are raising a lot of money, and set out something that is not accomplish double digit good one-liners -- not accomplishable but it's a good one-liners.

There is a majority -- i think bigger boehner is the leader of the majority but he has to get the others in line.

-- i think speaker boehner is lolita of the majority.

I was there in 1995 and 1996 when it happened, and it was a bad experience for republicans.

You have seen the political sacrifice.

Should john boehner sacrifices speakership for the nation?

I think at some point -- it is starting to become clear, he has to shift gears from focusing on obamacare to focusing on reducing the deficit and the debt and doing a deal around that to resolve this issue.

I think julianna is right, it will occur as part of rolling and continuing into the debt ceiling.

Markets are assuming the shutdown today reduces the likelihood of a default tomorrow.

Is that the way congress thanks?

I don't think so.

I don't think congress is coherent on this issue right now, to be honest.

I don't think anybody has all through the endgame here.

But i do think a pathway is starting to develop toward an endgame, which is a major deal on the deficit, which replaces the sequester, and would get off the topic of obamacare and raising taxes.

Julianna goldman -- julianna is with us.

He is meeting with the likes of blank financial need time and.

Perhaps he can push for help politically with the best -- with the debt ceiling or maybe they can warn him about it.

I they likely to move the needle on the conversation?

I spoke of valerie jarrett, the senior adviser of the print that -- to the president, who has been achieved liaison, and she says the financial executives are really in the best position to go out from this meeting and educate the public of the real-life consequences of default or the near default like what we saw back in the summer of 2011. i think what will be interesting is to see whether or not these wall street ceos are able to change the dynamic in the republican party.

They might not be able to do that, but what they can do is use the power of their campaign donations.

House speaker john boehner, kevin mcarthur, majority whip eric cantor, they are up in new york all the time raising money from these guys.

So when it comes to the debt ceiling, wall street executives are on the side of the president that it is nonnegotiable and you should not be playing chicken and using it for bargaining chips.

So you could see them start to exert influence when it comes to campaign dollars, and puts pressure on republican leadership to try to move some of the tea party republicans who are basically directing the show right now.

Julianna goldman, white house correspondent, thank you for briefing us this morning on the presidents agenda, including the cancellation of some of his stops.

And thank you to former senator judd gregg.

We go negative this day.

Bouncing yesterday.

The euro, 1.3521. stasis for us.

The important ecb meeting coming up within the hour.

Ken auletta, author of "googled," we will talk to him about the changing media landscape.

And 2.5 million, those who visited new york's health exchange in the first half-hour yesterday.

? i'm tom keene.

This matters now to my guest post.

Ken auletta, he has observed name stream media for decades and watch the mainstream profits become losses at least in the newspaper business.

Investigative journalism, like reporting on edward snowden, can it survive?

One test -- the guardian, the british newspaper with a massive global perspective.

But it -- the british newspaper, with a massive global perspective.

He has a fascinating article about the guardian.

What have you learned about the upstart, the guardian?

They are desperate.

They are desperate to figure out and they offer a free online newspaper.

Can you make money with free?

It basically depends on advertising.

The experience others have had has not been very encouraging.

Their hope is -- a digital growth of sales is dramatic but also dramatic as their loss in print revenue.

He says we go the german way, one print magazine, one print newspaper a week and then go digital.

Will it work for americans?

Advanced communications, which owns "the new yorker" is doing it in several cities for newspapers they own.

It is not clear whether it is going to work.

The basic problem is that -- you save a lot of money if you drop print, print less frequently.

No paper costs, no distribution costs, etc.. the problem becomes, can you make up enough in advertising from digital or from subscriptions in digital to compensate?

What is your research?

Right now, no.

"the new york times" has 700 thousand digital subscribers.

Over $100 million of revenue.

But profitable arts -- profit margin still remain small.

Where will be in five years?

Would you assume newspaper strip away and other media does better?

No question newspapers will continue to decline.

30% fewer reporters working today than 10 years ago in newsrooms.

But will it be compensated or by twitter and buzz feed and huffington post and will they provide the kind of sustained coverage of state capitals and city capitals as newspapers traditionally have done?

That is the question.

We don't know the answer.

Absolutely true.

I find i go from site to site.

I jump around.

There is no loyalty anymore to a certain site.

Much more with ken auletta coming up.

Also coming up, two opposing views from sara eisen's ohio.

The sixth and 13th congressional district of ohio as the nation's government is shut down.

? good morning, everyone.

"bloomberg surveillance." it's free during the shutdown and free when there is no shutdown.

Our twitter question.

Why aren't investors panicking over the government shutdown?

Only @bsurveillance.

We have gotten smart stuff.

Because it's free.

Smart people.

This is "bloomberg surveillance." i'm sara eisen, here as always with tom keene and scarlet fu and with us this morning, ken auletta, author of "googled." in italy, prime minister enrico letta scrambling to keep his government in power, appealing to the italian parliament to back his five-month-old administration after silvio berlusconi pulls report over the weekend.

-- pulls a support over the weekend.

A confidence vote is set to take place later today.

U.s. office market showed little improvement.

Average rent after landlord discount rose just 0.3%, the third straight quarter that increases in rent actually slowed.

The slower growth in the labor market caps off is the man you did.

In sports, the pittsburgh pirates won the first playoff game in 21 years.

Eating the cincinnati reds 6-2 in the national league wild-card game.

They advance to the division series where they take on st.

Louis cardinals.

An american league, tampa bay rays and -- plays in a wildcard match.

You deservewar -- you deserve war duty pay.

Cincinnati reds fan.

I guess the pirates lay pretty well.

I thought the reds with the best.

I guess not.

We have to talk about the new health care law in effect been a rocky start for the health exchange is that opens in the public yesterday.

Many websites where individuals were able to sign up for coverage actually saw delays and even crashes.

A worry for the administration and did the government shutdown.

You have to wonder how much of it with high demand, which could turn out positive.

Absolutely unaffected by the health exchange is an in the trenches is a doctor, chief executive officer of evergreen health core of maryland.

He is in real time facing the -- the affordable care act.

Good morning.

Thank you for having me on again.

What drives you nuts in the media about the coverage of health exchanges.

What do we need to know right now that we are not seeing in the stores?

A couple of things.

No question there were going to be glitches in the first couple of days.

It does seem that it is due to excessive traffic, which is actually surprising because people thought there would not be quite as many people in the first day or so.

The second thing, we have to look at it as predominately the most significant day in health care reform in the united states in about 50 years since medicare and medicaid.

But using that analogy, it took a long time for medicare to get to where it is today.

It took 48 years of changes and tweaks and etc., so we cannot judge obamacare on day one.

We have to at least look at the six-month period where people can enroll up to march 31. there will clearly be bombs.

But it seems there are many more people interested than others may have thought.

I went to the ama website and was thunderstruck over the lack of discussion over the affordable care act.

What would be your message to doctors concerned about their lives changing because of evergreen and because of health exchanges.

For doctors, they are going to get many more paying patients.

This is a good thing for doctors.

Also a good thing for insurance companies, for that matter, because there will be many, many more people with coverage.

What doctors should be trying to do is to learn exactly how the exchanges work in their specific state and encouraging people who are not currently covered to go to the exchange.

Talk about where you fit in.

Your insurance company is one of the options on his health exchange.

Do you have any sense of what kind of people were signing up yesterday?

Were they young, healthy?

Who they were?

Because the exchange was not working terribly well, we're not sure exactly how many people were able to enroll yesterday e- mail in.

We will get reports from the exchange every few days basis over the next couple of weeks.

We don't know yet that i can tell you that we were daily with phone calls to our call center where we were actually getting people scheduled to enroll, to help them enroll over the next few days.

But we decided not to schedule appointment to enroll folks until later this week because we thought there would be glitches the next couple of days.

Ken auletta has questions.

Why is it survey research shows roughly 53% or 54% of americans oppose the act.

What is the reason question my is a false information in the press, false information from members of congress question mark why?

I think with the administration headed by perhaps the best communicator in my 50 years of life, having been exposed -- my dad was a congressman and i met tons of political folks -- this is the best communicator around and they did not do a good job of mitigating the benefits of the affordable care act aired so the messages were co-opted by the opponents and the misinformation has been a significant problem.

What we have found and focus groups that we did for our own co-op, the messages that people are buying into our that this is lower-cost -- lower-cost, higher quality care now affordable to many people who were not previously eligible, and this message was not gotten across.

I want to stop you because the criticism is maybe lower- cost because a premium but what about higher deductibles and fewer options in terms of doctors?

We heard a lot about that.

We actually have a much more robust network and many do.

One thing that is important to point out is when people go when these exchanges, they are generally going to meet a navigator, somebody to help you through the process.

As you were mentioning, sara, the total cost is what people need to look at.

If you are on the exchange, you will probably just look at the sticker price and premium but you have to look at the deductibles and other aspects.

Thank you so much.

Greatly appreciated.

Really smart.

That was great.

Good to have anecdotes from somebody actually living this.

Coming up, the shutdown certainly is not what politicians have in mind when they talk about american exceptionalism.

We will talk about the reputation here for the u.s.. ? this is "bloomberg surveillance." i'm scarlet fu, as always joined by tom in sara.

Our guest host is ken auletta, author of the highly acclaimed "googled." a shakeup at louis vuitton.

Designer marc jacobs is leading the european fashion house after 16 years.

He will focus on his own label and get ready for an ipo.

His departure comes as louis vuitton undergoes a series of changes to build its appeal to luxury clients.

Walt disney offering hundreds of full-time jobs thanks to health care reform.

The company offered full-time spots to 427 part-timers at disney world florida.

It was made to stafford to put in more than 1500 hrs the past year, but amount to qualify for benefits under the affordable care act.

The top online gaming company makes a move to go public.

Cain.com, that makes candy crush, made a confidential filing for an ipo --king.com.

One analyst predicted business could be valued as much as $7 billion.

The london-based company recently passed zynga as the top game supplier on facebook.

Second day of the government shutdown.

I know you just got a research report.

You should let all the listeners and viewers know worldwide, we talked to a lot of smart people, grizzled people, over the political and economic process.

Venier from potomac research group, chief political strategist, a nasty signal from the market is required to jumpstart the debate in washington.

And we decidedly have not seen it here.

He also says john boehner needs to capitulate and president obama needs to raise the debt ceiling by executive fiat.

As michael mckee has stated, the view on from that of the the end of the month when the actual checks i did.

Anne mathias was saying that this is increasingly becoming one issue intertwined, the debt ceiling and the government shutdown.

May want to wrap it up altogether and maybe fix it october 31? what is different from 1995? ken auletta, the perfect her senses be to about the perspective from the media and how we get the message from washington.

1995 -- and no twitter, no website.

It was really a year after that we begin to see that.

It is a different political debate because of your world.

Also a debate you had, because you have so many more sources of use, people comment -- can accept different sets of facts so you don't have a common news source and therefore you don't have a common set of facts.

That actually makes it more difficult to solve the problem.

Douglas brinkley's book on walter cronkite.

There is no walter cronkite today.

It is both good and bad.

It is wonderful you have all the sources.

You have people twittering questions to you.

It is terrific that people have two-way conversation.

On the other hand, it weakens the common bond.

Every question i ask is twittered to me by my staff.

Is the american public engaged in the shutdown debate?

We all know what he can do during this continuing resolution is.

The point about the market making a strong statement, if the market made a strong statement people might panic because most people are in at goodies and they will say, what is happening here, and blame washington.

Right now what they are doing, they're saying they are a bunch of -- in washington, don't know what they are doing.

There is a psychology, walt disney, the failure of pinocchio, he figured out if you put a british accent and a queen on it and america would watch, and you have the whole new york city egos of the east coast smart guys in all of that.

Is that fading in america?

If you look as survey research, what do people think of wall street?

Not very much.

What do people think of members of congress and the president question mark not very much.

What did he think of the press?

Not very much.

What about senator ted cruz, do the resume?

Do people say i can back this guy because of what he believes in.

I think he is a very effective spokesman but that is a narrow point of view.

If you look at what independents are saying right now and how unpopular the position of the republican party is with independents, ted cruz will have a very hard time navigating from republican support -- he does not even have it among republicans.

Do they have anyone who they can brandon bridge this gap in the part

This text has been automatically generated. It may not be 100% accurate.

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