EBay’s Q4 Forecast: Bloomberg West (10/16)

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Oct. 16 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Voxer CEO Tom Katis, Former General Motors Chief Marketing Officer Joel Ewanick, Bloomberg Contributing Editor Nicholas Thompson and Bloomberg’s Peter Cook and Megan Hughes. (Source: Bloomberg)

? live from pier 3 from san francisco, welcome to late edition of "bloomberg west." we cover the global media and technology companies that are reshaping our world.

I'm emily chang.

Our focus is on innovation, technology, and the future of business.

Let's get straight to the rundown.

Should ebay we worry about a slowdown in online retail sales -- be worried about a slowdown in online retail sales?

New reports that apple is cutting orders for its lower end iphone 5c. could supply be catching up with demand?

It seems like hollywood is always been a fan of twitter.

We introduce you to the director who is one of twitter's first beta testers and earliest investors.

More on all of those stories in a moment.

I went to update you on the deal struck in washington today to raise the nation's debt ceiling.

The senate will be voting any time now on the bipartisan compromise.

The house expected to follow suit sometime today.

Peter cook is live on capitol hill.

When are these votes coming down?

We expect the vote in the senate to happen within the next hour or so.

I am told at a range of 6:00 to 7:00 p.m. eastern time.

Lawmakers want to wrap this up, and this crisis and let federal workers come back to work and take the risk of default off the table.

It has been a painful few weeks in washington.

It ends with this compromise brokered by two veterans of the u.s. senate, harry reid and mitch mcconnell.

A lot of fits and starts.

At the end of the day, here is what we have.

The debt ceiling limit lifted through february 7. again they will have to decide what to do about funding after january 15. there will be a house-seven budget meeting.

-- senate budget meeting.

The two leader spoke on the floor and talked about the compromise they reached.

For today.

The relief we hope for is to reopen the government, avoid default, and protect the historic cuts we achieved under the budget control act.

This is far less than any of us had hoped for, but far better than what some had thought.

Senator mcconnell and i have sat and had very serious discussions the last few days.

We're going to do everything we can to change the atmosphere in the senate and accomplish things that need to be done for our country.

Over in the house of representatives, this is a defeat for john boehner's fellow house republicans, who push for much more, including significant changes to the president's health care law.

John boehner talked about it on a cincinnati radio station.

We did everything we could to get them to the table and negotiate.

John boehner received a standing ovation.

There are still some conservative republicans not happy about the situation, and other republicans worried about the damage done to their brand after the shutdown and the fight over the debt ceiling.

We are standing by for those votes.

Peter cook, thank you.

Now to ebay, which reported double-digit gains in sales and profit.

Sales rose 14%, to $3.9 billion.

Writing down those numbers further, ebay saw gains in its paypal business and the value of its merchandise.

Ebay is expanding its ebay now delivery service to london.

The forecast for the holiday season is worrying wall street, sending shares down in after- hours trading.

Jon erlichman has been sifting through the numbers.

Tell us more about paypal.

This is one of the things you have to had line with this, because if there is an argument out there based on some of the headlines that this holiday shopping season, ebay has its work cut out first as a player like amazon, maybe that puts more dependence for ebay on the paypal business.

You're talking about a part of the business which is not small.

It has generated more than one half billion dollars in revenue during the period compared to $2 billion for the traditional ebay business.

As a percentage of all the sales ebay generates, paypal has consistently been becoming a larger piece.

You go back to 2009. it was less than a third of the overall revenue.

It is now 40%. the payments business quickly changing.

Lots of mobile activity.

Huge opportunity for this company.

That's a balancing effect with the other part of the business.

Ebay has done deals to bolster the paypal business.

Recently we talked about braintree on the show.

It's hard to argue that we were not on top of our game with developers for a couple of years.

Now we are focusing very intently on coming back.

The braintree deal is part of us accelerating our comeback in the developer seen.

-- scene.

He's admitting their that for a few years, they did follow bit behind and they are playing catch-up, and now they are focused on it.

What do you make of that?

This is a company that has said, we will do acquisitions if we feel like we missed the trend.

In the case of braintree, the business has been providing payments technology for players like uber, air b&b. it is quickly changing all the time.

Even ebay and paypal have to be thinking about, what are the other companies looking to buy had -- ahead.

Still ahead, hundreds of millions of dollars to invest in a media venture.

To ibm, the pc slump is striking the company hard.

He reported six straight quarters of falling sales today.

Operating profit was up 9%. that income jumped.

Ibm has been trying to shift to software, as demand for computers and servers drops.

Our editor at large joins us now with more in today postural down.

-- today's drill down.

The company has taken great aims to say, don't look.

Look at our big strategic moves.

If you look at the stock chart, stocks -- five years' time.

-- doubled in five years' time.

It is alarming this company has not seen revenue growth in eight quarters.

In the last six quarters, you have gone from flat to down 3%, down 5%. that is not inconsequential for this company.

You mention operating profits as well.

Operating profits are still growing.

The rate of growth is very much in declined.

That is an alarming thing when you see a company that has spent well over $15 billion in acquisitions.

You're not only seeing operating profit growth, you are seeing revenue growth.

Let's talk about the biggest part of ibm's business.

Their technology service business is half of revenue.

That business has been suffering from a great retrenchment, shrinkage.

The retrenchment of so many quarters in a row, and the fact that their software business -- there is been a suggestion they should move more into software -- the software business barely growing 1% year-over-year.

It is supposed to be the strong suit for this business.

What else jumped out at you?

This whole game of did they beat or miss the estimate -- their tax rate was 16% in the quarter.

They took the third quarter, their assumed tax payout for the quarter.

They lowered it from 22% to 16% rate that was a tremendous benefit.

It was not enough to convince wall street to move the stock up after hours.

That one time change was not something analysts were looking for.

Cory johnson, our editor-at- large.

Thank you.

Less than a month after going on sale, apple is cutting orders to the iphone 5c. ? this is "bloomberg west." i'm emily chang.

Apple is cutting orders for the cheaper iphone 5c. production may be cut by a third , while orders from the supplier may be cut by 20%. the phone went on sale last month in the u.s. with a suggested price of $99 with a service contract.

I spoke with wedge partners principal and senior analyst brian blair about what this means for apple.

We wrote about this to our customers last week.

We believe apple has been cutting their production.

Whether it is by 30% or 40% is not clear.

What we feel confident in saying is they have cut production meaningfully for the 5c, but they believe we have raised -- they have raised production for the 5s. the 5c, investors have been concerned about sellthrough of this product.

It is not seen the stockouts of the 5s. we talked about this last week.

The 5s, more of them are being produced.

How serious is this for apple?

We do think there is still overall production cut.

We think units are going to come in lower than we expected.

I thought the units for the december quarter could be in the $58 million range.

Now it is likely to be in the $53 million range.

In terms of the stock, investors really express this concern immediately after the price of the 5c was announced.

Once people announced it was going to be $550 -- i think investors price this in a while ago.

Not a huge impact on the stock in my view.

Do you think it was worth it introducing a cheaper phone at all, or should have stuck with their original strategy just to make the old model the cheaper model?

This was a good move.

They introduced colors.

Where they flubbed is in the pricing.

This should not have been a $550 phone.

This should have been $399, selling more palatable.

If you walk into at&t or verizon, it is free on contract.

This is a much lower quality device.

In china, i have heard the joke made that the "c" stands for cheap.

If you're going to make it cheaper, it should be more affordable.

Could they cut the price still?

I think they will.

They might just wait until next year.

We might not see a real price cut until we get to september of 2014, when they introduced the iphone six.

Then we will see this come down and pricing sharply.

October 22 coming up, apple having a big event.

We are expecting ipads to be unveiled.

What are we likely to see?

The ipad mini, we will see that introduced with a retina screen.

That was one of the big things it was lacking last year.

On the larger 10 inch ipad, we're going to see a much smaller bezel.

The area around the screen itself will be considerably smaller, making the device a lot more portable.

We will see a faster processor.

That was wedge partners principal and senior analyst, brian blair.

The patent war between apple and samsung has taken an interesting turn.

Samsung and its lawyers may be in hot water, and what is being called patent gate scandal.

How did this happen?

This is an unbelievable story.

When we talk about patents, people start to drool.

This story is amazing.

We know the case of apple versus samsung and samsung still some patented stuff from apple, the look and feel of the phone and the way the phone is used to read.

The verdict was reduced, but it was in the hundreds of billions of dollars.

The judge said, yes, samsung, you have a right to know about apple's patent agreements with the likes of nokia and others.

But samsung, you cannot look at this.

The federal judge said, you have to have your outside attorneys look at these documents from apple and not share them with samsung.

Samsung's outside counsel was supposed to look at these documents off-site and never share them with samsung, just look for infringing materials.

It later turns out that samsung read these documents they were not supposed to see.

The judge very explicitly said, you're not supposed to have them.

These confidential documents ended up in the hands of samsung.

What was in the documents?

Licensing agreements with nokia, royal philips.

These are deals that apple had, patent deals that were licensing deals that were confidential that samsung was not supposed to see when the judge -- see.

When the judge found out they had seen them, the judge is livid and may impose some sanctions.

What has the judge said so far?

Your some of the quotes she has said in open court -- here are some of the quotes she has said in open court.

Confidential information remains confidential.

If parties breached this basic rule, the court's assurances to come meaningless -- become meaningless.

What can the court do?

We don't know what they're going to go after.

The court is saying that the court's entire integrity is based on these agreements that happen before the judge, and these were not kept up.

Samsung wanted to investigated themselves.

The judge laughed and said, rarely is the fox allowed to investigate without supervision the disappearance of chickens at the henhouse.

This will be a big story going forward.

It's not about confusing patents.

Not about billion-dollar verdicts, either.

It's about lying to a judge.

Judges don't care for that.

Before it went mainstream, twitter when hollywood.

Meet one of its earliest investors and baited testers.

? welcome back.

I'm emily chang.

This is "bloomberg west." early backers are getting attention.

Jon erlichman has more in today's new hollywood.

Who are we talking about here?

These days we are talking about the ties between twitter and television.

There were some tv executives who did not know those two were going to come together the way they have.

Here's the back story.

Tv director greg may not work in silicon valley, but he says being an l.a. show runner is like the life of a tech entrepreneur.

If you look at the process and the way a starter begins, they really nearer each other -- mirror each other.

He has directed tv shows such as "lost" and "grey's anatomy." when his old friend started something called twitter, he became a beta tester.

In hindsight, i wish i had registered my name.

I could have been @greg.

He was one of twitter's first nine investors.

In the early days, he said he was providing advice on how to deal with the growing popularity of the platform, not to welcome the growing hollywood like celebrity status of letter's founders.

As for the recent headlines about the legal battle -- for me, all he ever saw was teamwork and innovation in a creative place.

He has gone on to invest in companies such as square and pinterest.

With his latest show, "banshee." he says he's finally getting a chance to work twitter into tv.

We are outlining all the stuff that is now commonplace in the workflow of tv shows.

It's great to see it happening.

That's what you hope for.

How much do you think those twitter shares are worth?

He did not tell us that.

He did say that been stoned said, -- they said, put a little more money on that.

Thank you.

Jeff bezos has put his money in "a moshing can post." -- "the washington post." ? we focus on technology and the future of business.

I'm emily chang.

A huge debut on the new york stock exchange today.

Stock soared, making it the third biggest tech ipo of the world.

One of the biggest winners, emergent capital partners.

Facebook is changing its privacy policy for teenagers.

Starting today, users aged 13 to 17 can share the content publicly.

They were previously restricted to sharing their content with friends and friends of friends.

A survey found that more teens had identified twitter as their most important social network over facebook.

Sheryl sandberg is in washington, meeting with an ftc commissioner and other officials.

The ftc commissioner calls it a meet and greet.

Privacy groups wrote to the fcc, asking them to block facebook's most recent rule change allowing the companies to use names.

We are watching the action in washington.

The senate expected to vote very soon on the bipartisan compromise to raise the debt ceiling and and the government shutdown.

The house expected to follow suit late tonight wearied megan hughes joins us from capitol hill -- tonight.

Megan hughes joins us from capitol hill.

We are waiting on that vote.

I just got the final draft of this senate deal.

That vote is expected to start any minute now.

After that, if it passes, it goes over to the house for a vote.

That is expected to begin no earlier than 7:00 p.m.. and then he goes to the president.

We heard from jay carney but the president is behind this deal.

-- that the president is behind this deal.

The may run through a few of the big items -- let me run three view of the big items in this package.

It does raise the debt limit, suspends the debt limit until february 7, funds they government through january 15. those across the board cuts would be in place until january 15. it sets up a house-senate budget conference responsible for issuing a blueprint or report of taxes, the budget going forward for the next 10 years.

That would be out by december 13. a lot of room for disagreements in the days ahead.

Speak boehner telling his members today -- the republicans did not get everything they wanted.

He is telling them to get on board.

Emily?

The republicans have conceded and said, we lost.

Did they achieve any small goals here?

There is one piece of this worth mentioning.

It's called income verification.

That is a tweak to obamacare.

It would toughen that up.

To get a tax credit under obamacare, you would make up to 400% of the poverty level.

It makes it more strict to prove that.

The inspector general will take a look at that process to make sure that is happening.

In terms of actually getting the law, the accomplished very little.

Megan hughes in washington, thank you.

We are waiting for this vote to happen in the senate.

I want to get to glenn greenwald.

He is leaving his job at "the guardian" newspaper.

The decision to leave was not an easy one, but i was presented with a once in a career dream opportunity.

It turns out the greenwald's opportunity is being bankrolled.

Your member that amazon ceo recently bought the "washington post." why are these tech titans putting their money behind news?

Neck thompson joins me from new york.

-- nick thompson joins me from new york.

What do we know about this?

A lot more details came out yesterday.

We know that he's going to build some journalistic institution.

It's not just going to cover investigative reporting.

Its main focus is doing in-depth investigative reporting, doing stuff the challenges powerful institutions, putting legal resources behind it, and doing the kinds of things that glenn greenwald has been doing.

This should be a pretty big deal.

$250 million, that is what bezos paid for "the washington post." look at pro public oh, which is done a lot of great investigative work.

If he uses it wisely, hires the right people and does the right kind of stories, it can be a very important organization.

It's not clear he will put it all that money, it's not clear who will run it very.

There are a thousand questions that need to be answered.

There is potential.

The "new york times" has a budget of $200 million.

Just to put that in perspective.

What do you make of the past opportunity to buy "the washington post"? why would you start summing from scratch instead of buying "the washington post"? it comes with lots of journalistic legacy issues.

He decided to start a new.

It's a combo kit a storied institution -- obligated, storied institution.

-- complicated, storied institution.

Why these rich people go into journalism and have from the very beginning, they think it will be something fun and exciting.

They do it partly for social reasons, political reasons, personal reasons, partly for the challenge.

Do you think the media hierarchy could look a lot different five years from now, or will establish brands that have retained their prestige overtime like the new york times?

Things are changing all the time.

I hope and expect that some of those brands -- a in "the new yorker" are doing well.

There is interesting is to pair with that today.

Publishers raised $40 million in a series a. there are media-based startups that are doing exceptionally well.

There is real money to be made in this industry.

Things are going to change, things will be shaking up.

How much hope do you have for this new venture?

There are a couple things about it that i love.

I love that they have really put an emphasis on investigative reporting, long, complicated narrative stuff.

That is the thing that people have been saying, it is going away.

My strong view is that the internet helps this kind of reporting.

There are lots of reasons to believe the future of investigative and law reporting is strong.

He certainly helps that.

I'm optimistic about that.

We don't know if hollande about his plans.

I'm going to -- a whole lot about his plans.

I'm going to view it with skepticism.

There are lots of structural challenges he's going to face between now and whether he succeeds or fails.

We will be watching.

Editor of thenewyorker.com, nicholas thompson, thank you for weighing in.

What makes twitter a hotspot for advertisers?

We asked the man who decided to pull a general motors ad from facebook.

? welcome back.

I'm emily chang.

Investors will be wondering how the company attracts marketers.

Is it better an advertising man facebook?

-- at advertising than facebook?

General motors shocked marketers when it announced plans to pull paid ads from facebook just before facebook's ipo.

That put the spot on general motors's operating chief, who is no longer with gm.

He told us that he has changed his tune on the effectiveness of facebook advertising.

The social space is constantly evolving.

For this industry, the automotive industry, it is hard to keep pace with it.

At the time we made this decision, it was the right thing to do.

We took the moneys out of advertising.

We put it in the content, which was the suggestion even being made by facebook.

At the time, they're mobile applications were not up and running yet.

We were looking at launching a couple of cars and we needed something more urgent than that.

We are big believers in facebook.

It's unfortunate that the announcement came when it did.

It was not intended.

We were not trying to hurt facebook.

I was not trying to hurt facebook.

It was the right thing to do at the time.

If we are making a decision today, we would make a different decision.

Facebook is a good choice for certain applications.

There are other things happening.

Twitter is clearly another alternative, and a completely different set of circumstances.

If you were the gm cmo today and asked the same questions about those ads in the context of twitter, what would you say?

They're different.

The more you understand the fundamental differences between facebook or other social platforms versus twitter, twitter is in the moment.

For a marketer, if you use it correctly, it's a wonderful tool for getting the people in a moment, to catch them when they are doing something where they want to engage other people.

I was explaining to somebody yesterday, the way i look at twitter is, we are celebrating the 30th anniversary of kirk gibson hitting a home run for the dodgers.

I remember watching that, and wanted to share that moment with somebody.

I went over to the window, nobody's outside.

It was kind of a big thing.

Yesterday or the day before, i was watching the red sox game.

The game is about to go down, and it's looking terrible.

He hits a grand slam home run.

I'm sharing with all my friends around the world videos from guys sitting in the second row behind home plate, the guy sitting behind the bullpen.

We have all this interaction and engagement with thousands of people.

It was a wonderful moment.

They're fundamentally different tools.

For a marketer to take advantage of that engagement at that moment in time is huge.

50 million people claim to be on at any given moment on twitter.

If you can grab that moment, it is huge.

We are using tools today.

Twitter is doing things different and others have.

They are certifying tools.

A company out there allows you to make almost like a homepage within twitter.

That allows a marketer to get involved in that moment in time without interrupting it and ruining the moment.

There are ways to do it.

The upside for twitter is huge.

At the end of the day, if a chief marketing officer right now had to make a decision between an add-on twitter in an add-on facebook, what would you say?

A clearly depends on what they're trying to do.

If you're trying to launch a car and you are doing something this weekend and you have a big tv campaign, i would use twitter as a way to magnify that exposure you have on television.

It's a way to magnify.

It's not the only thing you would do.

It magnifies everything else you're doing around it.

I would look for these other tools that twitter has.

It allows you to get into the fire hose and get all the tweets.

There's ways to do this.

That is a great tool.

Facebook could work.

There are ways around that to extend the reach of that and build for long-term.

If you're trying to do something in the moment around a super bowl, world series, economy awards -- twitter is something for sure.

That was the former general motors cmo.

Sprint shut down nextel's push to talk.

? i'm emily chang.

This is "bloomberg west." mark scored a big wincuban in court today.

-- cuban scored a big win in court today.

A communication app gives a regular cell phone push to talk capability.

Nextel used to dominate the push to talk business.

My partner, cory johnson, is out at pier three with more.

The business opportunity could be greater.

The story behind it, the founder joins me now.

The story of how you started this business -- nextel has this incredible business story of its own.

That's a whole other thing.

What inspired you to do this?

Frustration with military communications.

I spent time in special forces.

The military radios were the best in the world, but trying to communicate effectively was always a challenge.

For years after coming back, i kept trying to figure out, how could you build something better.

I heard a story like you were in a combat situation, and you needed to talk to the personnel carrier in front of you and it was not as easy as he wanted -- you wanted it to be.

You are dealing with multiple things at the same time.

If you have a messaging system like e-mail or instant messaging or sms, you can talk to a whole bunch of different people and prioritize and multitask.

If you have a system that is live only and it has to interrupt people, and if more than one person is talking to you, you cannot understand multiple people speaking at the same time.

What i realized was that the only way you can solve the problem is if you build a system that was messaging.

You have had success on the consumer side.

How is it different?

The app itself acts very similarly.

Businesses need more than just the end-user app.

They need their own domain.

They need the ability to revoke access privileges to employees and terminate them.

We provide all of that.

It's like being able to administer your employees.

The story of nextel -- we had a great conversation on the beach about this.

Nextel was purchased by sprint for over $36 billion.

$30 billion was written off three years later.

What happened?

How can your business succeed if there's did not?

The core problem with nextel is it is a to g -- 2g technology.

They did not have enough spectrum.

They made the choice to move onto modern protocols.

They along with everybody else, every wireless carrier has made the same mistake.

They have all bet against the internet.

It doesn't work around the world.

We have always had the point of view that to be successful in the space, you need to [inaudible] if you are any kind of carrier, you're going to build into your own spectrum.

Is that inherently limiting?

Absolutely.

One of our customers is an airline, and they have wanted to roll it out across the world.

You cannot because there is no carrier the works all around the world.

Even just between two airports in the u.s., the only had a good signal with at&t at one airport and the other, with verizon.

They could not use a solution that either one of them offered, so they came to us.

Is that the biggest difference, not enterprise support, but getting an error line to pick up the phone and say, we have got this great enterprise thing?

Enterprises need different things from end-users.

It is sort of like with e-mail.

There is tons of free e-mail out there.

Gmail is great.

When you work for any legitimate company in the world, they're not going to say, use gmail or hotmail.

They want you to use your company e-mail.

Thanks for that story.

Emily?

It is time for the bwest byte.

We focus on one number that tells a lot.

Jon is in l.a. $.31. ibm reported adjusted earnings of $3.99. $.31 of the so-called beat was thanks to a share buyback.

The low tax rate, which the analysts had not accounted for, was responsible for $.27 in the quarter.

Without those two changes, the company would not have $2.99 per share.

It would have been $3.68 per share.

This gave the analysts their big beat.

As you mentioned, the stock doing well over the last five years.

Revenue, not so much.

John, is this a phase for ibm?

It is a company that is making this big shift from hardware to software.

I feel like cory is getting us to a shutdown story.

There are d.c. taxes tied to this thing.

Thanks, cory, for bringing that together.

Thank you all for watching.

We will see you back here tomorrow.

? on today's stockmarket rally.

Let's begin on capitol hill, where megan hughes has the latest developments.

Good evening.

Requested evening.

We are waiting on the senate to vote on this deal any moment now.

Senator ted cruz after the this vote -- it would go over the house and then the president's desk to sign.

We heard from the white house spokesman jay carney earlier today.

The president is behind this deal.

There are a lot of questions earlier today whether senator ted cruz and mike lee -- two of the big fighters against obamacare, whether or not they would continue the battle and hold up the vote.

They could have pushed the vote into the weekend.

It does not appear that will be the case.

Here is senator lee, a little earlier.

He is frustrated at the deal.

Take a listen.

Class it appears this particular fight will end much the same way obamacare began.

In a last-minute deal, negotiated in back rooms, and forced on congress and on the american people.

Again, we heard from senator cruise earlier today saying he did not see the point in holding up the vote.

It is expected the vote will be happening here in the next few minutes or so.

Let's take a look at what the deal does.

It would reopen the government and lift the debt ceiling.

It would restore borrowing authority through his death through february 7. it would fund the government through january 15. that would be under the earlier level under the sequester.

Across-the-board cuts would still be in play.

It also sets up a joint house- senate budget conference that would be in charge of issuing a report, able -- budget who -- budget blueprint.

In no way it would defund or -- obamacare.

A big goal of house speaker john boehner, saying to members they fought the good fight and he is urging members to support the deal.

Republicans did not get anything when it came to the affordable care law.

There is one mention of it in this plan and i just reached through the bulge -- the bulk of it.

It has to do with income verification.

It is more of a tweak than a major change.

People say they make xml in order to get the tax credit.

It would just be for the government responsibility.

It charges the inspector general to look more closely.

It would not do anything to gut the law.

That is the provision that is in this deal.

Megan hughes joining us live from capitol hill.

Thank you.

For more on the budget eel -- deal, how is this agreement playing at the white house now?

The white house is backing the deal.

It is temporary.

They would much have preferred to see a debt ceiling increase that lasts a lot longer than february 7. they will not get that but they are getting most of what they asked for.

This is a pretty big victory for the president.

He said he would not negotiate with the debt ceiling.

The bottom line is he is not giving up all that much if anything to get the increase in the debt ceiling.

In some respects, democrats believe they have set a new template here.

Future presidents will not have to fight over the debt ceiling each and every time.

I can assure you on capitol hill the republicans have a different view and they believe the debt ceiling remains a huge spending point.

We could do this all over again in the future.

We are talking about in just a few months.

That is right.

The spending and the debt ceiling.

Maybe gets extended a little longer because of the extraordinary measures.

There is still language allowing the treasury to move accounts around.

The one sliver of opportunity here is the budget conference.

House and senate negotiators will go into a budget conference.

There are not very high expectations.

I spoke with a couple of people, including a senator from virginia.

Johnny isakson, democrats and republicans who would potentially be a part of the process.

They see it as an opportunity, tying up washington and programs . the issue of revenue for democrats and, most important he, sequestration.

A lot of people see that as the one area of bipartisan agreement.

Both sides would like to undo sequestration.

Maybe that is the basis for a broader deal.

The chances for that appear slim at best but at least there is a chance.

The biggest winners and losers?

You have got to put the president as a winner in simply the fact he got the debt ceiling extension.

Harry reid is certainly an -- a winner.

A lot of restore -- a lot of support from his fellow democrats.

A very tough line in the sand.

Losers have to be house republicans.

I would not necessarily put john boehner in that group just yet.

His position in the conference may have been strengthened by all of this.

There is a lunar -- loser and a winner, ted cruz.

A loser with the american people in terms of this public opinion, but a winner with his republican base.

The numbers are in.

The most conservative aspect of the republican party, those who pick presidential primary winners in many states, they are thrilled with what he did.

He has been helped and hurt by the whole process.

Peter cook, thank you.

He will also be interviewing a man who has been one of the integral parts of the negotiations, john mccain the interview can be seen on friday on "capital gains". it will re-air saturday and sunday, only on bloomberg television.

Joining me from minneapolis, the cheap -- chief political analyst.

He has been covering washington over 30 years.

Welcome back.

A pleasure to have you on tonight.

Great to see you.

The south carolina republican senator lindsey graham told reporters today it has been a very bad two weeks for the republican brand.

How do you think the business community in particular will react to the republican strategy during the government shutdown and the debt ceiling negotiations?

That is one of the really interesting sidebars to the entire story.

The business community traditionally could throw money around and do lobbying and get republicans to agree with what they want.

Keep the government open, do not have a debt ceiling crisis.

It did not work this time.

The new breed of republicans are almost immune to lobbying for banks and wall street.

It is a different dynamic all of a sudden.

What about the democratic brand, leaders on that side of the aisle such as chuck schumer, one of the leaders on the democratic side, speaking live on the senate floor now.

What about senator schumer and his colleagues?

I thought for a while they were overplaying their hand.

They knew they had a victory in sight.

They have to be careful not to inflame things even further.

The very hard-line by schumer and harry reid prevailed.

It worked.

Three weeks of government shutdown will cost the economy $3.1 billion in gdp from lost government services.

It also lowered its fourth- quarter gdp growth estimate to 1.6%. that reflects cumulative damage.

How much does this set back what had been viewed as slow and steady growth?

It does setback growth -- growth.

There is a good story and a bad story.

It keeps the fed on the sidelines for several more months, maybe we'll -- at the late january meeting they can start tapering their purchases of aspects.

Markets like it.

The bad story is we get another crisis in december, another in january, another one at the end of february at the debt ceiling.

This type of uncertainty does really corrosive damage to the economy.

Businesses, consumers, cannot plan.

There is no certainty.

The gridlock in washington revealed the depth of this schism.

Will the gop be now seen as two separate and distinct parties?

They could be.

They are lucky this is an odd number year.

We are in october of 2013. with the exception of a couple of races, there are not any the graces for 13 months.

I think they have to get a little more moderate.

If they stay this far out of the mainstream, their brand will continue to suffer.

We have about one minute left.

This agreement has already been missed for new ones.

The concessions the republicans sought did not materialize.

What was the point if the outcome just kick the can down the road?

A great question.

We talked about this five or six weeks ago and i said i thought john boehner would eventually capitulate.

It took him all this time to do that.

The country went through a lot.

Let me make a quick point.

I think the process in the next six or eight or 10 weeks to come up with a budget deal is not doomed.

There is a chance they could come up with something because everyone hates the sequester.

If you kill a sequester, i do not rule out a deal.

Is america's rule on the global community up for question or do people understand democracy can be messy and frustrating?

We have done a little damage.

The chinese and others are gloating about this in the last day or two.

I think the u.s. continues to be the ultimate safe haven for investors, despite this debacle.

Chief political strategist joining us tonight from minneapolis.

Thank you for your time tonight.

I appreciate it.

You that.

Coming up, stocks rally as the house and senate race to get a deal done by midnight.

We will look at today's near record close along with earnings next.

? on this wednesday, wall street liking what it is hearing from washington.

Let's get you the stories behind the numbers.

Su keenan is in the newsroom with details.

Good evening.

Strategist say investors believe we are not going over the cliff.

The scenario, worst case scenario, off the table.

We are starting to get an idea of what the fiscal turmoil cost.

The shutdown took a $24 billion bite out of the economy and cut third-quarter growth by one percent and could slash spending.

Advance auto parts, all-cash takeover of general parts, making the biggest carpark retailer in north america.

Earnings longed.

This is a tool company that cut its profit forecast for the year, saying it is time to slow growth in emerging markets and a hit from the government shutdown.

Carpark retailer in north america.

Other stocks in the spotlight, bank of america.

We saw profit rebound on expenses.

Earnings from mattel and pepsico and fedex surged almost three percent to a record adding to the rally we saw yesterday on the share buyback announcement.

A company out with earnings after the bell today.

Check it out.

The online auctioneer and computer company disappointing investors while american express is reporting a nine percent jump in profit.

Ebay issued a forecast for the fourth quarter that missed analyst estimates.

Ibm saw its shares plunged as it reported its sixth straight quarter of falling sales.

It is facing sluggish demand for computer hardware.

They are looking at cloud computing to make up for it.

Thank you.

Coming up the -- despite the partial government shutdown, the federal reserve released a report.

That does not mean the shutdown did not go unnoticed.

We will have analysis next.

? the partial u.s. government shutdown put a stop to most economic releases but did not get in the way of most -- this week's report.

The economy expanded at a modest to moderate pace despite the shutdown.

Yang yang is in washington with details.

Good.

Good evening.

The beige book tom once again, shows the u.s. economy expanded at a modest to moderate pace from data collected from early september to october 7, a week into the government shutdown.

It does not mean the got -- the shutdown went unnoticed.

The survey down contacts across districts that districts remained cautiously optimistic.

Many also noted an increase in certainty due largely to the fed -- the government shutdown and debt ceiling debate.

The uncertainties are why many economists expect policymakers to maintain the pace on the 85 billion in monthly bond purchases.

He does with now that from now, at their annual meeting.

Consumer spending is continuing to increase and retailers are still generally optimistic about the holiday shopping season.

Travel and tour resumed expanded, as well.

For business, spending grew modestly in most districts.

Invest and proceeded at a moderate pace and overall manufacturing activity expanded modestly as well.

The take away is slow but steady growth, despite the uncertainties surrounding the budget battle in washington.

It looks more and more likely the fed will keep its foot on the gas pedal.

We did not get a september jobs report.

What did facebook say about unemployment had about -- unemployment?

That is right.

According to today's datebook, employment growth for -- growth remains modest.

Several districts reported businesses were cautious to expand payrolls given the uncertainty in washington and questions surrounding the rollout of the health care law.

Back to you.

As far as the rest of the report, we saw, it was kind of a split.

Four districts saying things did not seem to be going that way -- that well.

Some of the information comes trickling out.

Some of the past information that had been delayed because of the shutdown, is there any indication of how that might impact fed thinking going forward?

Corrects it is true there is definitely a delay in a lot of the data.

We did see a majority two thirds of the 12 districts reporting modest growth.

Things seem to be going well over there.

It is basically all we can gather from the report at this point.

We will have to see with the deal coming to an end tonight, hopefully, we will have some of the other data coming out soon to make up for the lost time.

With only two weeks left before the next meeting, it does not look likely.

Yang yang joining us from washington.

Thank you.

John is an economist at the american enterprise institute and also a former consultant to the treasury department and congressional budget office and he joins me from our washington bureau.

Welcome.

Good to have you back on the broadcast.

Good to be here.

It is a lively day.

Class it is.

Yang yang was mentioning the latest they spoke survey showed growth remained modest to moderate as consumer spending maintained gains and business investment group.

Any surprise given what is going on in washington as of late?

They do not call it the beige book for nothing.

There are seldom any surprises there.

It was completed october 7, before things really heated up.

It is perhaps a little still worn as it comes out.

Needless to say, at the october meeting, they will have to consider the effects of the shutdown and the debt ceiling and the aftermath thereof and the ongoing discussions until december.

Class concern was widespread across industries and regions.

How much has the stalemate impacted or even undermined confidence as -- has the damage been contained?

I do not think it has.

The shutdown has two negative effects.

One is the numbers for october and november.

They will be very weak.

Secondly, policy, uncertainty, we are really adding fiscal policy uncertainty to substantial uncertainty about monetary policy in the wake of the taper.

We have got uncertainty about where the fed is going and a lot of uncertainty about where fiscal policy is going.

After all, we will revisit the shutdown in january and the debt ceiling in february.

There will be leeway.

For all the trouble we went through, we did not get very much and uncertainty is not cut back here at for businesses and forward guidance and outlook, how has the -- this affected planning, particularly at a time where there are still questions about when the fed will wind down its monthly asset purchases?

I talked to a lot of people who say, they will certainly write off the rest of this year in terms of any active investment plans.

We will take it up again next year, maybe in march after we see how all of the events we are looking at shake out.

I think we will see weak investment.

If the fed decides to maintain bond purchases when it meets in two weeks, will that be enough to offset the impact of a partial government shutdown?

No.

i think that was widely expected anyway based on what numbers we had, which were not very impressive.

The fed, it pains to say they really cannot offset the effect of uncertainty and fiscal policy bungling.

Finally, we still got a sequester, which will cut spending.

The fed, the best they can do is stay steady as she goes.

Joining us tonight from washington, it is always a pleasure to have you on and get your thoughts.

Thank you for your time tonight.

Good to be here.

When we continue in a moment, we will look at how asian markets are be acting to the budget.

The top stories in asia are next.

? welcome back.

I am mark crumpton in new york.

Thank you for joining us.

Let's check where the markets hit the session in this bottom of the hour on this wednesday, october 16, 2013. markets are apparently liking what they're hearing.

A senate deal on the death and the shutdown sending stocks soaring today.

The s&p 500, up one and one third percent at 1721. dow jones industrial average rising 205 points at -- a 1.5% rise.

The nasdaq composite index up one and one quarter percent at 38, 39. let's check some of the top stories.

The u.s. shutdown to end soon.

A vote in the house is expected later tonight.

John boehner says republicans will not try to block the compromise.

The white house spokesman says president obama supports the deal, which will suspend the debt limit until february 7. new jersey voters are choosing a member of the u.s. than it and it -- all electronic -- election , pitting jerry hooker against steve -- polls are scheduled to close in 30 minutes at eight: pm eastern time.

A typhoon caused deadly mudslides that buried people on japanese islands, grounding hundreds of flights and disrupting tokyo's morning rush.

Nearly 50 people still missing.

Dozens of homes were destroyed.

For more on the typhoon, i am joined now from hong kong with the very latest.

Good eight.

Hello.

This is a once in a decade typhoon that has pretty much slashed across the eastern part of tokyo.

It has weakened to a low pressure area off japan's eastern coast.

Wins have slowed.

Hundreds of flights, as you say, were canceled.

Trains were canceled.

They are now open.

It is as nice as usual.

People are trying to come back to work.

The typhoon passed by the nuclear plant.

It is owned by tokyo electric and there are no reports of contaminated water due to the typhoon.

The nuclear plant staffed it with additional workers to make sure nothing went wrong.

Tokyo got 33 inches of rain in total.

This is because of all of the tropical moisture in the air.

It is typical this time of year.

Markets were -- were open yesterday.

For traders who could make it into work, they will open again.

It is not all set for clearing right now.

Tokyo might have to brace for another storm.

It might turn into a typhoon.

Let's look at the markets.

How are asian stocks and currencies reacting to the senate deal?

There is a deal done on the table and the debt limit right now has some clarity.

Asia is waiting for the vote, like the rest of the world.

We will be doing it again in february.

Two markets will be opening here.

Australia and new zealand are trading higher.

I can tell you while futures are trading down, they are pricing to an open of 200 points higher.

Hong kong will also open in two hours.

Index futures are rising.

Sentiment is looking positive in asia.

Mia, thank you.

We have breaking news on capitol hill.

The united states senate is beginning the first of two votes on the reid and mcconnell plan and the first will be to end debate and the second vote will be on final passage.

The bipartisan deal worked out between the two leaders of the senate, the majority leader, harry lee -- harry reid, and mitch mcconnell.

That seeks to extend the debt limit and and the partial government shutdown, now in its second week.

This is expected to pass the united states senate.

The house of representatives is expected to take up a measure tonight.

John boehner telling a radio station in his home district the house will not stand in the way of the senate vote here and we will continue to follow this story and bring you more updates . coming up, iran is making concessions on the nuclear program.

That's tory is next.

A customer ordered shoes from us online but they did not fit.

Sales go down, i am not happy.

Use ups.

They make returns easy.

60 -- 60 votes are needed to end a debate.

The second vote would be on the final passage of the reid- mcconnell plan.

And the house of representatives is scheduled to take up this measure.

John boehner telling supporters today in his hometown of cincinnati that the house will not stand in the way of the senate actions.

We should mention bloomberg television should stay through the senate votes tonight.

The president of united states is expected to make brief remarks in the white house briefing room following the second vote, the second tenet vote, on final passage.

We will be with you through that event.

A step forward in negotiations.

Diplomats from the united states, china, france, germany, russia, the u.k., and iran.

They have been meeting this week.

They have agreed to meet again in november, a sign that comprises offers by iran are taken seriously.

Bloomberg's foreign policy reporter joins us.

These are the first nuclear talks since iran posses first president came to power.

After 11 years of talks over its nuclear program, what is different?

Class it is a question a lot of negotiators have asked themselves going in.

What we have in coming out is bateman's unprecedented.

For the first time, a joint statement issued in the name of iran and the six powers negotiating with it.

Both sides saying serious rye grass had and made and it was worthy to have a very quick follow up in the next round of talks, november 7 and h -- and a -- and eighth.

Conn's negotiating team -- remember he himself was one time one of iran posses negotiators.

The people he has empowered are trying to get a deal.

The u.s. has said they have seen more progress and business in these two days than in all the talks they have before.

What do we know about the concessions iran is willing to make and any reciprocal steps the west may offer in return?

That is the million dollar question.

So far, no leaks.

All sides are saying they have made an agreement and plan to see it to it to keep secret the program and proposal iran has made of what sorts of measures it would take as confidence building steps over the next six months to prove to the international community it is not to gain nuclear weapons.

The west has likewise said it will not reveal anything about lifting or easing of sanctions little by little.

You talked about no leaks.

What is the significance of the party posses agreement to keep confidential details of around posses proposed concessions?

One western diplomat said to me the reason they were keeping it sacred is because everyone was taking it seriously this time and they do not want to face public opinion pressure at home.

That is a reference to both hardliners and sanctions hawks in washington on both sides, the folks who would make getting a deal more difficult.

They are trying to keep it close to the vest.

Not talk about it in the public sphere.

U.s. officials at the top told us they will be giving congress a classified briefing about what was discussed and the obama administration made their they would try to lean on congress to not go forward on new sanctions while they tried to get a good faith deal with iran.

The talks had been a couple of weeks ago during the assembly meetings in new york about the olive branch that appeared to be being held out by the new president of iran.

What about a new approach being shown by the international community?

How's that different from past dealings with iran?

Interesting you bring that up.

While the west has always said iran needs a new approach, iran has said the same thing about our side.

I thought today it was really interesting how the foreign minister, who you will remember, we talked about this at the time, had a 30 minute sitdown meeting with john kerry.

During the un's general assembly.

He came out and said we have to give credit to the other side that they are coming at it with a different approach.

Both sides felt, and maybe this is because of the signaling and trauma, maybe both sides felt there was a real seriousness and both sides want to get a deal.

Joining us on the phone from geneva.

Thank you so much.

Still ahead, in an era of delayed tv viewing, network executives need to be more patient than ever.

Three weeks into the fall season.

Despite changing tv times, networks are sticking to old school tactics.

? welcome back.

Nbc is leading in the ratings.

Nbc is the top-rated network when it comes to adults 18-49. he is the only network to increase its 18-49 rating from one year ago.

All other age group ratings fell slightly.

Brad, the senior vice president of research at a media company joins us in the studio.

What is going on on tv?

What is your initial conclusion about how this season is panning out so far?

Things are up.

Things are what they were year ago.

There has been a slight uptick in the total viewers.

The age of the veer on broadcast television is increasingly getting older.

It is now about 54. slightly older.

There are hit this year.

That was for three of the 48 -- networks.

Is this about programming or viewing habits?

I think viewing habits.

The walking dead has a median age of 32.3 on sunday night, with a few million viewers.

Some of shows like american horror story and sons of anarchy, the median ages are in the 30's. networks cannot seem to get a show that gets that type of viewers for that size, to that young an audience.

It has been a problem going on for a while.

We are in different times.

Everybody does not have to rush home at the appointed hour at 8:00 to watch something.

They can tivo it and do what ever they want and watch on their phone.

A lot of it is not measured.

Mobile is not measured.

Abc has a watch cap -- app.

I think it would be younger.

You would get a younger audience because the earliest adopters tend to be 18-year-olds to 30- year-olds.

I do not think that big a number just yet.

People timeshifting is a much greater number.

48% of homes have a dvr.

60% of homes have a dvr.

They are the ones, they are very aggressive of putting content on those platforms.

Which shows have been the top-rated first shows, standouts, with adults 18-49. class it is incredible how the voice can launch these types of shows on monday nights 10:00 nbc.

Shield is doing very well.

That comes from marvel.

Part of the disney acquisition.

Sleepy hollow did very well on fox.

These shows are heavily time shifted their those three shows have been for the full season.

The networks are really behind even though it is very early.

Bill carter of the new york times wrote the oldest scheduling technique in the world, putting a new show hide an established it, is still the most effective tool at a networks disposal.

Where are we seeing that strategy pay off?

Monday nights with the voice.

One of the top-rated shows on television.

That has launched a bunch of shows on nbc.

The black lips -- the blacklist is another example.

On cbs, you have the big bang theory and the millers.

That has done very well.

It is extraordinary.

There are 180 channels people have to watch.

There is something to be said about having a strong lead in.

Who has been struggling?

Vaux's down.

Cbs has been disappointing.

They canceled a show very early on.

We revamped the monday night and hostages, which they put on at 10:00, the summer in the same time.

How has this changed the scheduling dynamic for the network?

Another competitor.

Monday night becomes hyper competitive with espn.

Over 13 million viewers.

The nfl network has about eight teen viewers.

The cuts in.

A younger audience.

The median age is there before, it was -- a lot younger.

The nfl network may put on a second game or stream it on thursday night.

Network executives, are they less patient in allowing new shows to try to find and develop an audience?

They have always been impatient.

But more so because of that many channels?

I think the threshold is dropping of what is a hit show now.

I think a show, lucky seven, on abc, it dropped 3 million viewers the second week here they will not go that low.

There are a lot of different variables, like the audience composition, how young they are.

Are people timeshifting?

Is there a social media component?

Abc noticed there is a huge engagement to this.

It is a lot more difficult than just looking at the overnight positions.

Training in studio, always go

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

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