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Dec. 19 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Marshall Sonenshine, Michael Wolf, Kyle Stock, Anna Bager, Mario Gabelli, Peter Orszag, and David Schlanger. (Source: Bloomberg)

This is "bloomberg surveillance." per bernanke and yell and surprise markets -- they taper.

Equities search, the dollar, too.

There is too much information.

We are up to our eyeballs and a digital, and now facebook wants to give you a video ads.

And santa is wearing his air jordan retro 11 gammas.

Limit one per chimney.

Good morning, everyone.

This is "bloomberg surveillance." it is thursday, december 19. i am tom keene joining me, scarlet fu, a. steele, alix steel is here.

Good morning.

Good morning, tom.

We will start with china.

Short-term liquidity operations.

Staying in the region, new zealand's economic growth accelerated to the fastest pace in almost four years.

Deftly good news there.

Economic data here in a u.s. -- it is thursday, so we get initial jobless claims 8:30 a.m., 9:45 a.m. bloomberg consumer confidence, and in about a.m., existing home sales.

Earnings after the bell we get nike and carnival and 50 days until sochi, olympics.

Do they have snow?

They're going to have snow.

It is a little dicey snow?

Maybe they will get snowblowers in there.

And seriously, mr.

Putin speaking in russia.

We have that on london television this morning.

Look for that at bloomberg.com.

We scour the newspapers, but before that, let's go to the data check because this is a big story.

Real movement off of what we saw yesterday afternoon at 2:00 p.m., futures negative 2 after a huge surge yesterday.

Here is the story -- yield did not move.

Everything else moves, but it was really priced out of the bond market nicely, euro-dollar weaker, yen dollar stronger.

Let's go to our next screen.

Vix moving to a complacent 13.80. there is the dow well above 16,000, gold craters and the yen weaker come out that important $104 level.

Socgen and others looking at the 104 level for a weaker yen.

Alix steel, there is gold plunging.

, saying below 1200, you will have a lot of shortcoming in the market, betting against any price swelling.

Does this price effect a gold mining, gold investment, getting gold out of the ground?

It will as long as it stays below its actual support level.

6, 12 month is when you will see minors taking stock.

It is not like the taper came out of the blue -- do accept guess -- gifts of gold for christmas?

I do.

Hearings would be green eyes.

She takes gold for the holiday season.

We started the front page -- here is scarlet fu.

It is all about the fed.

The fed begins tapering and the world is not -- a miracle, ben bernanke leading to a slowly scale back with the $85 billion monthly bond buying program to $75 billion less.

The economic forecast were more dovish.

Well cut the time and employment falls below 6.5%, that is if inflation stays below that 2% goal that the fed has outlined.

The press conferences get better, and i thought one of the best question yesterday was from bloomberg news chris torres, and he said are you out of a toolkit, are you out of tools, is that what this really is about?

Chairman bernanke he a very thoughtful answer.

The view forward -- well, he is a lame-duck chairman.

You have to wonder how this set up janet yellen for 2014. how much did he help her by starting the process while he was on his way out?

This morning, mario moberly -- mario barbara lee and peter -- mario garbelli and peter orszag joining us later.

Fighter jets contract to sweden from boeing.

We know that brazil's president had complained that the nsa had some -- bite on her government.

We lost in the french lots, two to be fair, saab has been desperate for international business they have been working hard on that.

They also offer higher levels of technology transfer meaning that they might have had a better business.

If you are the world's number one and number two, i mean, the contract is yours to lose and boeing is going to get it.

A convention in the sac insider trading -- larry somber -- larry steinberg guilty of insider trading.

Italy took them a day to come up with a verdict.

A lot of drama around here.

Some people call it acting.

Really?

This is really incredible, new york federal prosecutors bringing 87 insider trading cases over six years, and now 77 convictions.

That is incredible.

Can he appeal?

Would not know yet.

We have not got the night yet.

The role news is this puts pressure on matthew martone, whose trial begins in january, since it's steinberg trial did not go over well.

And stephen cohen has not been charged with anything, but his firm has paid up.

Those are front-page stories.

This thursday morning as we raced to the end of the week.

I will be on vacation, our guest is this our, chairman and managing partner of sonnenschein partners.

Michael wolff is founder of active, former yahoo!

Board member.

Marissa mayer is a ceo at yahoo!

As well.

We had a fed taper yesterday, and gentlemen, let's go to this.

I would say a less uncertainty.

Marshall, is this a boost for 2014? i think that is right, tom.

I think maybe there's somebody -- something for everybody.

We expected a little bit of taper, we got a little bit of taper.

We expected a little bit of clarity because bernanke is a clear speaker, he does not speak in fed speak.

He is clearer than i would have expected on this zero policy for a while longer, but he was clear and he had a something for everybody.

Michael, this has to be good news away from economics.

This has to be great news so bad but you can move on.

Was interesting most of our is the -- most of all is the consumer -- there is easing in the markets did not collapse.

Provides a great deal of confidence to consumers, especially also reported as we go to the final days of the christmas season.

Within the fed policy, what is the humility on the west coast going into next year?

The tech world has had a challenging year to say the least, a major economic boost.

The biggest hit in the gut heaven would've happened with the nsa, but from a tech perspective, they are looking at the something good, there should be continued interest in the sector.

We did not see the 10 year yield move at all, but as the fed continues to taper and we see that slowly move, what does that wind up doing for the m&a business climate?

Does that end up spurring more deals to take advantage?

Sort of.

I do not negatively moving of the yields that facilitates m&a. it is the gaining of confidence.

Below money environment we have lived with now for a half decade since the financial crisis has propped up equities.

That is not prop up m&a. m&a is a longer-term marketplace.

If yields are moving up, because people believe that money has value again and that we are going into a mode of growth again, that is facilitating of m&a. whereby you, michael wolff, things are going to start to return to normal.

We are not there yet, but we have taken up first important step.

In the valley, what is happening is these streets are paved with gold matter what.

They continue to see more and more consumer interest, but i think the fact that the financial system looks like things as he said -- the world did not end, give them a lot more context.

Marshall, you have a lot of experience.

What year does this remind you of?

1994? is there a moment, as we end to 2013 that this feels like?

1994 was not bad, we were coming out of the 1992 recession in the gulf oil crisis.

There was a sense of relief eared we are five years past the real crisis.

In some ways, bernanke has been right all the long in a stating the simple truth that this is not like anything.

This is all new, and let's face it -- the will did not and a bang, but we still had jerryrigged economy with way too much debt, and while we see no sign of inflation, paul krugman has been right on that, i think that there is always going to be some vulnerability that when there is a release of animal spirits, there will be a lot of cash.

There is a protection -- reduction for 2014 during we will continue this conversation with marshall sonnenschein -- marshall sonenshine and michael wolf.

And that is our twitter question of the day --what's your biggest worry for 2014? i am worried about goal, but i am also worried about the employment picture.

I am worried about what is going to happen on "kindle." -- "scandal." me too.

Astrazeneca targeting diabetes.

Astrazeneca will pay as much as $4.3 billion to take so control.

Myers will focus on building cancer treatment instead.

Onus is that citigroup will be little changed this year.

-- bonuses at citigroup will be little changed this year.

This move comes at citigroup ceo tries to reduce costs to curb shareholder pressure.

And a sacred service investigating possible theft to credit card and debit eta at target.

It is believed the reseller was had by hackers over the black friday weekend.

The breach may have affected as many as 40,000 card devices according to the secret service.

That is today's company news.

That is a lot.

I stopped at target for the first time in my life on black friday, spent $20 and i was on my phone this morning trying to find out if i got hacked.

It is a scary.

When is the last time you buy something at target?

I am watching "scandal" this weekend?

Do not read that wikipedia page because it will give you spoilers.

Crac at leas -- at least -- no more, spoiler alert.

Here is what is coming up on "surveillance" -- $14.5 billion, nike's fiscal full well -- footwear sales.

This is "bloomberg surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.

One of the most interesting guys in academics -- dean henry will be on "market makers" this morning, peter henry from jamaica, first-rate education, he is the force behind the nyu stern school.

On "market makers" this morning live at the clock a.m., that will be with the stephanie ruhle -- at 10:00 a.m. that will be with stephanie ruhle and me, tom keene.

I am here now with alix steel and scarlet fu.

Nike launching six new limited edition holiday-themed sneakers in the last 10 days of december.

That is a lot of sneakers.

That is in addition to the three signature sneakers by nba stars lebron james, kevin durant, and kobe bryant.

"bloomberg businessweek" kyle joins us.

It sounds like too much.

Is it?

Speakerhea -- sneakerheads will buy them.

The secondary market on this is huge.

It is a lot.

They might be hitting some diminishing returns.

Are they responding to demand or creating demand when they create these limited editions?

It is a little bit of both pure that of a brilliant and risky part of the strategy.

There is not a lot of competition -- there is a lot of competition of ideas, reebok -- adidas, reebok.

Is a growing?

It is growing, but it is predicated on the fact that they're commencing consumers of supply is short, but that is not that short if they're rolling out one or two every week.

For years and years, the death and nike, a continues to be a moon shot they made 18% in the last 10 years heard what is different now as they go into 2014? what do they cost?

About $140. so they are acceptable -- they are accessible for a large body.

That is the nike formula.

That is the formula, but it is not that scarce when they have got 11, just on basketball, 11 shoes in the next 30 days.

I have 11 pairs, i could go with the next 12 th pair.

We are about technology and shoes.

As much as nike does these custom shoes, i think they will sell out.

The kobe bryant model, for example, it has a snakeskin, alligator skin look.

I think everybody is going to want one of these.

If you collect sneakers, you are going to want one of these shoes.

Is in part of the technology you have the new, whatever, air things in the bottom of your feet?

Isn't that part of it?

I do not think it is as much technology -- i think it is people collect them.

There is a cool factor of people seeing them on your feet.

When i was growing up, everybody wanted a pair of air jordan's or the reebok pump.

There was one "it" sneaker.

There is not any one "it" sneaker.

We are talking about all these different pairs and it does not matter if one sells 100,000 pairs, right?

It is almost like the opposite of that.

Keep consumers to lust after what is of skier in the very rare, odd looking shoe, which is different from the 1980's in 1990's. obviously 50% of revenue comes from sneakers, what is next?

Basketball shoes, running his big, they are doing great in europe.

China is the big place where they are missing right now.

What did you learn about this, financial?

They're making tons of money, they are constantly being the gloom expectations that i've known for, what, 20 years or more.

What does the management say the interesting sneakers will do to continue to drive that equity performance?

It is furnishing the brand, and the thing about it is they are doing it because they can, and the value in the company is in the supply chain.

They can run off 10,000 pairs of shoes.

Why don't the other sneaker people do that?

I do not know where reebok is are now.

I have four or five adidas.

Yeah, because you run all the time.

She can give it right back.

[laughter] where are the other sneaker companies?

They are doing the same thing, just not as well and not as much.

Nike -- they know exactly where to distribute, they know when to get them, they know when to push them into the market, they know how to hype i. t. can you see me running through central park?

So fast, so fast.

You have to get some lebrons on your next run.

That is what it comes down to -- nike has the stars.

That is what has driven their business, and that is one of the things, besides manufacturing in every thing else, that has made them continue to win.

This is something we will continue to watch for.

Kyle stock of "bloomberg businessweek," thank you for joining us.

Coming up on "bloomberg surveillance," why microsoft is focused on the wrong thing when it comes to microsoft's next ceo.

Good morning, everyone.

Breaking news here at "bloomberg surveillance," this has to do with facebook and mr.

Zuckerberg -- it is at tech time, and they are to offer 27 million shares.

The headlines just coming out.

This is what overhangs successful growth company offerings, those of further shares.

Scarlet fu has the details are greg facebook will offer 27 million shares, and mark zuckerberg, the founder and ceo, will be offering 43 million shares by certain selling holders.

The majority of the net proceeds of zuckerberg will get on the shares will satisfy taxes incurred in connection with this sale.

That is only one part of it.

Facebook sales down in the -- shares down in the premarket.

This is distinct it appeared at about the guys in this ever before.

Facebook, zuckerberg, to "gift" 18 million class b shares in december.

The class b gift to be converted to class a. our gift of the morning -- you get lucky sometimes with us, with a lot of work in silicon valley and yahoo!, michael wolf joins us.

You have seen this before, you do an ipo, there is the share overhang and they have to go out a movie shares.

It worries investors but there is a motto in silicon valley which as you raise money when you can, not when you need it.

They are taking advantage of this moment were people think the stock is doing well, the company is doing great, and it has gone back up.

So it is striking that balance between what is going to be that overhang versus good moment to raise money.

How do you discern a company doing this right whether it is fancy talk of gifts, class a, class b, and a company that is being devious about it or less transparent about it?

The big indicator is -- how long does the ipo -- are people giving out their shares or selling their shares?

At the moment, facebook had -- a initial wave of people who left, but for the most part we have not seen a lot of that.

The initial shareholders, marshall sonenshine, help us as well, knew this was going to occur when a bot of those shares.

They knew this would happen.

Yes, there are lock up options and post-lock up option periods, you should expect insiders to sale.

The gifting will not hurt anybody initially, but later on if the sets of a foundation, he gets a full tax credit.

Slowdown, this is a sonenshine alert.

Give me all the literature you brought today.

Michael wolf showed up with his iphone, marshall has enough -- he actually knows what he is talking about.

You are presuming mr.

Zuckerberg is setting up a gift transferred to set up a zuckerberg foundation.

Scarlet said he was selling some shares and there was a news item that he was going to give some shares.

I assume, i do not know, but i assume he will set up a foundation, texas -- take his taxes -- and -- the letter a to b -- is the a to b. i think he is going to buy the san francisco giants.

Yeah, right.

Telethon leading innovator and will it do it again this year?

Cut morning, everyone.

"bloomberg surveillance," breaking news again -- facebook out with a secondary offering third scarlet fu we'll have details on that.

Let me do a quick data check.

What a celebration yesterday.

S&p futures back above a few hundred, dow closing 16,167. stronger bernanke and yellen this morning, they take a victory lap.

Terrific news on facebook.

This is a real validation of their shared price performance.

Facebook is selling cash.

Mark zuckerberg is offering 43 million shares as part of this.

Mark andreessen is selling 1.6 million shares as well.

Part zuckerberg is making a gift of 18 million class b shares and converting 18 million of them to class a shares, which are the general shares.

J.p. morgan securities is handling this.

Michael wolf is with us with his great experiment on m&a, corporate structure in silicon valley.

Michael, this class a, class b, explain that to mere mortals.

From the beginning, mark zuckerberg has controlled his company.

It is one of the reasons he did not sell out to people.

And right now, he had special shares, just as the founders of google and other people, so he certainly if he is going to give those shares away, he certainly wants to convert them from b to a so he maintains that control.

Facebook says the majority of shares to zuckerberg are to satisfy taxes of sales.

What part of this is motivated by shares having rallied big from the ipo, and what part of this is normal tax rotationn?

Every analyst has a buy on it at a much higher price.

They do but their average rice target is up to $60. right now it is that $55. is this an indication of people within facebook do not see the stock of going that much higher ? it may be just a moment.

I think they have a lot of confidence in the business and facebook continues to be a growing phenomenon.

We will discuss this later in the hour.

Newsfeed front and center across the zeitgeist.

The zeitgeist for 2013, while it was disruptive, disruptive as well, it is so 2013. next year's word of financials like this -- financial zeitgeist maybe constructivism.

Marshall sonenshine, a for more busy 2013 come, and m&a -- what is a constructivist?

First welcome i made up the word, and they said they had a strategy to buy lots of shares from families in institutions that one out but only if the management or board would say that they would go along with some of their ideas, i.e., be open to their suggestions?

I said you better not call yourself an activist fine, but if you want to change the company on those terms, you should call yourself a constructivist.

Is carl icahn a constructivist?

He loves being the terrible of the marketplace, i would say he is not cured bill eichmann is not, although i think you would like to be thought of as constructive.

-- he is not.

Bill akerman is not, although he would like to be thought of as constructive.

The m&a that we might see -- out with the old, and with the new, dubs going private, the near stock exchange being bought by company that -- barely existed, right.

We had a bounce in the m&a market in q4, some of which is normal and some is a leading indicator that we are starting to get a little bit better confidence.

This has not been a good year -- it has been applied to last year roughly.

Where do you need to get to to be happy?

I'm fine where we are.

But the industry do a double, a triple?

I do not think so, tom.

If you would go back to the height of the m&a bubble, about $4 trillion, but it $1 trillion of that was leveraged buyout.

Dell had a lesson for the entire marketplace, and they think a lot of directors took notice of this.

You know what?

Some activists actually have something constructive to say, it is just that they say it in show tunes that are annoying, and some directors actually do not want the headache that dell brought to them.

The dell.

Done by only 65-35, it is like the office voted 6-4, we're giving you a get well card, thank you very much.

At some point, i think dell stands for the proposition that directors acting in the interest of public shareholders may have some alignment of interest with activists who are annoying, and i think there is a movement now afoot to try to get corporate strategy and corporate share prices rights, including three m&a, but when it is right.

What about next year?

When i look at the big leading indices for m&a this year, telecommunications far and away the most active industry.

Does that continue into next year, is it being driven by activism?

Telecom is its own special case, and it is not a lack today to combine, it is very mature, powerful companies that are combining.

T-mobile and sprint together, it they've got over 50 million subs, which starts to compete with verizon and at&t, the majors on top your the real game in telecom is in europe or they have not had as much consolidation.

You've had fragmentation on the political and regulatory site as well as on the markets i, and that is starting to age because the eu has gotten the memo.

At&t is looking to vodafone, for instance.

You boy, has that thing done well.

Vodafone is almost the same size and market value.

I think the big regulatory shift is in the eu.

They are getting a little bit of pushback from the european commission parliament, but this woman from the netherlands who is overseeing this sector has really gotten the memo and a starting to say we need to be pro-consolidation.

Your talk about regulation big deal, and michael, i am going to suggest minimal regulation other than the nsa headache, and mark zuckerberg should be celebrating.

They wait too big for forgiveness than ask for permission -- but there are so many startups, to be fair, versus telecoms, where there are what, like, five in the u.s.? if you look at what is happening me sectors, yes, there will be a lot more mergers between a big.

Right now, we have charter circling around time warner cable, and sprint, let's not forget that sprint is pretty much owned by softbank, which was a very shortly ago upstart itself.

I'm going to be cordial and ask what the future of yahoo!

Will be.

The criticism is ms.

Mayer has been acquisitions, she put out yahoo!

Leverage, she changed the logo, what is her to do list for next year?

In a lot of ways, the appreciation in alibaba has given her cover to do a lot of things she needs to do for the company.

This was really a broken company.

When i went on the board, it had not been run by somebody who knew the internet for 10 years.

It was ridiculous.

So we brought in some he like marisa who knows technology, very few turnarounds in silicon valley -- what is her to do list for this year?

She has to continue to grow traffic.

She has got to grasp and sell advertising, and i think the advertisers -- advertisers via momentum.

As soon as they see that the prices of -- that the traffic is growing, they will go after it.

She ought to buy a pair of the nike shoes week talked about earlier.

It is a brand transformation with ms.

Couric and others -- i think tumblr is going to turn out to be a great acquisition.

The stock is up 100%, but the revenues have not moved a bunch.

It is all alibaba.

I think the pressure is on her to start showing real growth.

To that point, is 2014 going to be the year of allie baba?

-- alibaba?

It better be because how else can you explain a 100% rise in the stock?

Does marshall know that if you say ibita on bloomberg you get a major minor?

All of your viewers know what eva talk -- ibatita is.

My husband does not.

I know what it is.

Excuse me.

My husband is not know what it is.

Olivia pope knows ibtit -- a. michael wolf and marshall sonenshine are our guest host.

We want to alert you to the guest -- to the cover of "bloomberg surveillance -- of "bloomberg businessweek." also coming of an annex our bloomberg television and radio, gamco chairman mario gabelli.

Think of it as a stocking stuffer.

Good morning, everyone.

"bloomberg surveillance." scarlet fu and alix steel with me.

Finance minister dealing with failing banks.

They will create a resolution fund.

The finance minister has also agreed on a plan on how to share the cost of the program.

The agreement among the finance ministers is seen as a big step towards completing european banking unit.

Senator max baucus is president obama's pick as the next ambassador to china.

That is according to people with knowledge of the matter.

The montana democrat is chairman of the senate finance committee.

He has already said he will not run for reelection next year.

And u.s. home values soared $1.9 trillion this year, the biggest gain since 2005, and with the increase, u.s. home values have never covered 44% of the losses suffered during the housing crisis.

All of this according to zillow.

Those are your top headlines.

Thank god.

I bought an apartment last year -- thank you.

Appreciation is what i need.

The city is spoiled.

Is existing home sales today?

It is.

At 10:00 a.m. now it's time for the single best chart.

The thing will best chart is on the app economy from statistics.com.

It really shows how the total numbers of available apps across all apps stores has climbed.

It is that about 2 million, and the platforms leading the way, pardon away -- far and away is the apple either with the system, which is the blue line, and the end racism.

Everything else, windows phone, which is microsoft, of course, and blackberry is kind of stuck at the bottom there.

It shows that divided nature, the bifurcation in the app.

Platform and operating platform.

There it is.

We also wanted to check out the top 10 free apps.

I know you're a big fan of number one, tom, candy crash.

Youtube is number two, tebow run, vin -- temple run, vine, and google maps.

I'm glad you brought this up.

Michael wolf with us.

It is like separate worlds.

It is like twitter -- i have my app world, and 70 doing candy chris has their apple world, -- and somebody doing candy crash has their app world.

Apple has 13% of the smartphone market but they have 76% of the app sales, 76% of the $25 billion a year app sales.

Google on the other hand has practically 80% of the smartphone market with around 20% of the sales.

I think we will see that.

Summers do other favorite apps, but there are some big hits.

-- consumers do have their favorite apps.

Candy crash, 500 million downloads.

Vivid they have the same thing on farm led -- it didn't they have the same thing with farmland on facebook, and when they come out the next day?

Price youtube, pandora, those are here to stay.

We have the top paid apps, which are here to say.

Marshall sonenshine of sonenshine partners, d.c. this app -- who do you see this applet growing more m&a? apps are good for consumerism.

They do aggregate buyers of goods and services and they are very effective tools, which is exactly why facebook is doing so well because it is a way to reach people.

Using technology to drive commerce.

How about reaching businesses?

The same thing.

It started as a consumer phenomenon.

Here is my candy crash, here is the app for you folks, a paid advertisement here on "bloomberg surveillance" -- pocket slide rule, there it is.

It has the cursor that moves, and you can even turn it over and learn how to do logarithms on your slide rule.

That is a mapn app?

Show this to marissa mayer the next time you see her.

Yahoo!

Finance has 90 million users, and i hope that bloomberg 's next wave of technology will go a little bit farther than a slide rule.

I don't know, i like that.

The majority of people do not to use a slide rule.

This is true.

Marshall sonenshine, we want to thank you for joining us today, sonenshine and partners talking about m&a for 2013. zuckerberg on a slide would go 27 million times 53 -- it is a lot.

Whoa, and the government gets all that!

Taxes.

Speaking of mark zuckerberg, as we said, planning to sell shares.

How this will affect the company and what the company is doing with regards to the pesky video ads showing up on everybody's newsfeeds.

We will talk about that on "bloomberg surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.

This is "bloomberg surveillance." i am scarlet fu with tom keene and alix steel.

Let's get to company news from the files of "bloomberg west." oracles third-quarter forecast in line thanks to the shift in the cloud.

Analysts were forecasting a 4% increase.

Oracle spent $50 billion acquiring 100 companies in an effort to keep up with this move to cloud computing.

Apple kicking off its made in the usa push.

The company now taking orders for its new mac pro, the machine being built in a texas with components made domestically.

It starts at just under $3000. and hulu says revenue will hit eight $1 billion, 44% increase.

They also say paid subscribers reached 5 million earlier this year.

That is to raise company news from the files of "bloomberg west." breaking news this morning on facebook.

Shareholder selling as much as 70 million shares.

Mark zuckerberg himself selling 41 million.

They're using the money for working capital and other corporate events.

Facebook shares down almost 58% in the market.

Rocks are made to pay some taxes, too.

-- mark zuckerberg needs to pay some taxes.

We're talking but the dreading video ad on facebook, right now youtube has the biggest slice of video ad spending.

They spoke wants to get in on that territory is now a somebody who says video will be on the forefront of multiscreen advertising.

The head of interactive advertising bureau's advertising center.

Thank you for joining us today.

What took facebook so long because youtube has been running 15 second video ads for the last five years, yahoo!

Has been doing it for 10 years, acted like facebook is just catching up now.

I think facebook is just embracing mobile.

In the past year, facebook has come to a place where mobile has become a core part of its strategy, and giving be growth of video, -- and given the growth of video.

They have gained enough traction that it will not be a turnoff anymore.

That is yet to be seen i think.

I think that one thing is proven -- interrupted advertising works.

If it is relevant and if it is targeted, it works even better.

Eventually i think that people will get used to it and they will like it.

Facebook is up for a little bit of a struggle in the beginning.

Facebook has said it has reached the capacity of the number of ads they can serve the audience.

Is it more about pricing, getting the most for one ad or the amount of ads that is important?

I think it is more about getting the most for one ad.

And i watch my kids watch hulu, and he hulu ads seem fit into the product.

Others seem to be in the way.

What makes for a good video ad where i am looking at it, but i'm not angry that it is their?

-- there?

I think it is just that, in stream, native -- how long?

What is the research on how long i can stand a video ad?

That is one thing that iab is working on.

Seven seconds?

15 seconds.

And some are 30-second ones.

Quite feel a thing i pay attention to is the little banner that says you can get out of here in three seconds.

Just as scarlet mentioned, how many of us look at that little banner go 3, 2, 1, bam?

We actually do not have that research, but it is something we will look at next year.

I think most of us do.

It is different between each group.

I think you and i may look at it but i am not sure that kids do.

They are used to it at -- it is part of the content.

I think there is a big issue about user experience.

The fact is they're not putting ads in the middle of a video program, they're talking about putting a video added to the middle of your screen, and when a consumer is looking at that on their iphone, it is really intrusive.

Also, they are saying they're just going to launch to tech.

What is fascinating is facebook has already given up on social ads.

They are now coming back at display and video like everybody else.

It will be interesting to see how users react.

I can understand why advertisers would be excited about it.

How do you measure success?

The follow-through is one part -- yeah, how do you do that?

How do we measure success, how do we measure effectiveness?

No one knows yet.

Nobody really knows it.

Thank you.

That is one of our basic themes on the show as we are going into what he 14 blind.

That will be the -- into 2014 blind.

Facebook and other big companies really investing in this, we will -- it is not just about engagement, it is about audience.

Where is the audience going?

It is also about the effectiveness of the ads and how long they should be.

What should people avoid doing on their mobile devices?

What is a preferred doing on their desktops?

I do not think of anything.

Wordprocessing is one.

Anything work related, things that relate to heavier, yeah, word processing, excel, things like that.

Business insider with an article that there is too much information out there, we are drowning our news feed, we are drowning in all of this information.

Are we drowning?

I don't think so.

Kids are finding what they want to see.

We are not drowning -- if anything, we are consuming more and more.

We are taking in more and more.

The expression of this year is fear of missing out.

So you want to keep consuming information because people do not want to miss out.

All right, to isolate, michael wolf of activate and also anna bager.

This is a post taper forex extra for, really moving in the markets.

Indonesia is what i am watching around the world.

You see weaker yen and weaker euro as well.

It is "bloomberg surveillance." bernanke and yellen surprise markets, they taper.

Equities surge, the dollar, too.

Has they adjusted to a smaller principle?

We have peter orszag and murder the belly.

Washington getting its act together.

Your back hurts, you have nightmares about bowties.

There is a website for your inner hypochondriac.

This is "bloomberg surveillance ." we are live from world headquarters in new york.

Thursday, december 19th.

I'm tom keene.

Joining me, scarlet fu and alix steel.

Guest host, peter orszag, former director of omb and vice- chairman at citigroup.

Mario the belly is with us from gamco investors -- mario gabelli is with us.

Our morning brief.

I think you have nightmares about your bowties.

I do.

And no, i do.

Let's get caught up on what happen overnight.

China, the central bank injecting funds into the financial system using short- term liquidity operations.

New zealand's economic growth accelerating to the fastest pace in almost four years in the third-quarter.

Gdp in greasing 1.4%. in the u.s., it is thursday, so initial jobless claims coming out and then bloomberg consumer comfort and then at 10:00 a.m., existing home sales.

A couple of earnings after the bell -- nike and carnival.

Start the countdown, 50 days until the sochi olympics.

Very exciting.

Go team usa.

We need jim grant going down the course.

That is a bowtie for sure.

We start with news that just broken the last hour.

Facebook is raising cash.

The company and shareholders selling 70 million shares in the company itself selling 27 million, and mark zuckerberg, 43 million shares -- also converting class b to class a shares.

Facebook will use the money for working capital and zuckerberg will use money to pay taxes linked to his exercising of stock options.

Facebook shares, trading at record highs, is down on the premarket.

A conviction in the sac trading trial.

Michael steinberg found guilty of securities and trading fraud.

This verdict could increase pressure on his former colleague to cooperate.

Remember, cohen has not been charged.

Secret service investigating possible theft of credit and debit card data and target.

Target was hacked in the.

Dachshund period black friday.

It says the security breaches been resolved.

I hope you did not go shopping on target.

I did, on black friday.

I am really scared.

Use cash next time.

I am absolutely going to use cash -- or bitcoin, maybe.

I am delighted to hear zuckerberg will pay a billion dollars in cash taxes.

On a million shares at 50. "bloomberg surveillance," the strength of our show is our guests.

We bring you peter orszag and marriott -- marriott the belly.

Mr.

orszag, known for his work on the fiscal deficit and the social security program with the brookings institute, service to the president on moving the deficit to a smaller point.

Mario gabelli, come -- acclaimed value investor, the own facebook?

Maybe.

For your kids.

My clients -- we own $45 billion, we have to own a few shares.

This has been one of your great arguments over the years -- media companies, they have class a and b and a play by different rules and voting rights.

How do you bring it over to the land of zuckerberg?

You go back to 100 years ago.

If you owned a press, "the new york times," you want to control and the theory of an independent voice.

A and b was ok.

We went public, but we made a discount after going public.

After-the-fact, we are against.

Viacom hand an a/b stock when it was created but they allowed the voting stock to be converted to b, and stewart sells at five point discount and you can give voting stock.

Do you think zuckerberg is doing the right thing in the way they structure facebook in the secondary transaction?

I don't have a specific point of view.

I have 1000 shares.

But on the secondary transaction today, it is cosmetic.

You've got 2 billion shares of stock and selling 55 million, if he is selling 27 million and the company is selling 27 million, offering the company stock in order to not have attention on his own shares.

Exclusive.

Mario gabelli's tie is less -- ben bernanke's. it is 4:00 in the morning -- do you want me to wear a bowtie?

Peter orszag, former director of the omb and the bloomberg contributor.

I want to bring it back to the federal reserve and what ben bernanke said.

He mentioned people don't appreciate how tight fiscal policy has been and the fed was able to move forward with tapering even with the fiscal restraints in place.

How does washington respond to this?

Do they continue moving ahead with their games or are they in a better position to actually cooperate?

The good news -- i agree with mr.

Bernanke that in 2013 there was a lot of fiscal consolidation.

The federal government probably subtracted 75 basis points from growth.

The number will be much smaller, more like 30 basis points or so.

Just that factor alone you should expect some increase in topline growth in the u.s. the big question is, for that to happen, washington has to stay out of the way.

This budget deal we got, good news from that perspective, even though it is a little deal.

At least it is not shooting ourselves in the foot.

One risk is the backlash seems like it is leading some republican leader saying we need to make an issue of the debt limit again, and that is not good for the economy.

We spoke to the chairman of the president's council on economic advisers, and i said to jason, why can't the president get the gumption to take a victory lap on what you accomplished?

The fact is the deficit vectors are moving in the right direction.

Why is your administration so reticent to say, not job accomplished -- mission accomplished am a but we are moving in the right direction?

Look, i think there is still a lot more to be done both on the economy and the fiscal front.

But you know me, one of the reasons of the deficit is coming down, which still has not received enough attention, is the remarkable slowdown in medicare.

They care costs in the first two months of this fiscal year were lower in nominal terms, nominal terms, dam last year.

That is following a five years a really slow growth.

But, peter, you moved away from the current deficit, which is 400 billion or 500 billion, but 17.5 trillion debt.

Your own projections in nine years is 25 trillion.

This route assertion -- what everyone is thinking about.

You can't hide it.

You can't shovel away 17.5 trillion.

By the way, is the number -- no, but that includes intragovernmental -- [laughter] here is the question.

No one will worry about the level of debt if we were on a stable fiscal trajectory.

The reason we worry about high levels of debt because it typically is associated with an explosion thereof, rising rapidly and get out of control.

I come back to, what is driving the long-term fiscal debt?

The answer is health care costs, by far and away.

The slowdown is so substantial -- not saying this will happen -- but the slowdown is so substantial that the congressional budget office, which i ran and i assure you does not like to update their forecasts frequently, has not been the 10 year deficit numbers by $1.2 trillion because of the deceleration and if it were to continue the entire long-term fiscal gap would basically disappear.

The short answer -- given -- the level of debt is higher than we would like but what i worry about it if we had a stable fiscal -- fiscal trajectory?

No.

is the worry less of the vectors of now but the condition out for years or five years, 10 years -- you are saying it is not going to happen.

I am not saying it won't happen but if we continue to have the slow growth of medicare costs that we have been experiencing -- the cost grow the same rate in the future as the past five years on average, there is no increase in medicare this year in gdp.

Within the framework of the own -- their own numbers at omb, you basically looked at $25 trillion deficit -- assuming three percent interest rate -- 2025, thank you.

It is the debt ceiling -- not the deficit, but the debt.

But interest rates at three percent -- we will come back with you.

A special "surveillance." a lecture with marielle cavalli and peter orszag -- mario gabelli and peter orszag.

That was fascinating.

All right, we have much more coming up.

Treasury prices are also higher and yields are coming down the little bit.

Let's take a look at mario gabelli's top stock picks.

You don't want to miss that.

? good morning, everyone.

I'm tom keene.

With me, mario gabelli, peter orszag and scarlet fu and alix steel with us as well.

You have important news.

Garden -- darden restaurants, that owns red lobster and olive garden, is spinning off red lobster and curbing olive garden's growth.

Breaking news just in the last hour -- or 10 minutes, in fact.

Spinning off red lobster.

Shares are moving down in the premarket.

It really speaks to the difficult environment restaurants have enticing new customers.

The economy might be there for some people buffer restaurants it is still difficult to grow the business.

We want to go and take a look at washington because congress heads into the new year with a new budget, a small one.

This spirit of compromise could evaporate as quickly as it came.

The debt ceiling fight is still ahead of us and policymakers are positioning themselves for the 2014 midterm elections and the 2016 presidential election.

Peter orszag, former director of the omb is with us, as well as mario gabelli.

Peter, when you hear of the compromise -- i can't believe we are calling it a grand bargain -- but when you hear of the compromise, do you worry about it is all posturing and will not carry over?

It is better that we have the deal than we don't, we didn't, but i don't think we should celebrate too much.

There are still other risks ahead.

The debt limit being a significant one.

It would be a great thing if we had 12-14 months of node dysfunction, no drama coming out of washington.

We all have hope -- so we can see whether the economy can pick up enough momentum.

I think it is a crucial question.

Gdp.

Yes, which i think we would be on track for if we did not have more drama.

It raises the important question about stagnation in the economy or not.

We keep having these impediments coming out of the d.c., so we can't get to the question of whether the underlying growth rate is a little -- this pushes right into your bullish scenario.

You have been able.

You've got to have gabelli-like patients, the answer, this good news for peter, is good news for gabelli?

What could blow up the rally, clearly a confrontation over the debt ceiling, which is fundamental to the long-term outlook for stocks.

That is one issue, but there are so many others back and go on.

The -- he is more gloomy at 7:00 a.m. than 10:00 a.m. i need coffee to get me excited.

They gave me water.

We have a lot more to come on "bloomberg surveillance," including michael steinberg charged with insider trading.

? good morning, everyone.

A lot of fun here today.

Mario gabelli, peter orszag is with us.

Scarlet fu and alix steel with us as well.

Futures, negative two, dow futures, -10. post-taper, the dow and 16,1068. where were you 12 months ago with the doom and gloom?

Gabelli was buying stocks.

Alix steel has top headlines.

Vladimir putin says a russian made a $15 billion loan to the you can to -- ukraine to help its neighbor.

He says the two countries have special ties, like close relatives.

He said the deal to supply the ukraine a 33% discount in natural gas is temporary but could be extended.

Retail sales in the u.k. bouncing back.

Sales up 0.3% following a drop of 0.9% a month earlier.

Closing sales posted a big gain, up 0.4%. colder weather boosting demand for winter clothes.

U.s. home values soared 1.9 trillion dollars last year, almost eight percent drum and the biggest gain since 2005 -- eight percent jump.

This is according to zillow.

One of the major stories of 2013. shout out to michelle meyer and others, she at bank of america merrill lynch nailing the call on housing.

Santa claus is out.

Mario gabelli is decidedly in.

Giving you something more to look forward to, a christmas morning stocking stuffer.

How about a few of mario's best picks of 2014? weatherford?

And oil services company.

If you look at the chart, it is nearing long-term support.

A great point.

I like to look at figures.

But my no more numbers oriented.

Charts -- i do care about everything.

Weatherford is a benefit of horizontal drilling and fracking, which is a technology that is helping the u.s. with their current account deficit, political independence, and really helping the american consumer and creating jobs.

And oil services company.

They make artificial lists, so when you go horizontal and two lateral view need something to take the gases out.

Jeff immelt from ge bought a company in artificial lift, went public.

The company has about $18 billion in revenues, $13 billion of good quality, 12 billion shares out.

They were going to slow.

All sorts of challenges with taxes, foreign corrupt practices act.

And shareholders will be getting tired of this management moving slowly.

Seeking a management change, perhaps.

A lot can change.

The glacial speed of reducing debt.

Within the framework of valuations, you can, with a number twice the current price of the stock between 12-18 months if they do something in a quick and orderly fashion.

What happens if oil goes to $90? if natural gas was free for everybody, like they are doing in the ukraine with russia buying votes --i don't think it is a possibility because you look up a strict three years from now and you can sell the futures and lock in some of your spreads.

Oil at $90 -- clearly, i am all in favor of it going to 70 -- quickly, peter, i want to bring you in.

This is a multiplier effect a policy where we focus on big oil or whatever, but weatherford is a knock on effect of this expansion.

The big change over the last 12 to 184 months in the various shale plays is a shift toward oil production.

The marginal cost of oil production coming out of north america was $60 or so a couple of years ago.

It is on track to go to $30. a remarkable revolution.

If you then layer on the constitutional change in mexico, our energy analyst, who is very sharp -- definitely a very sharp guy, and he believes we will see a non-trivial reduction in price.

You have another gabelli selection.

Viacom.

Behind "anchorman 2" franchise -- you are very ron burgundy-esq ue this money.

The problem is all of this is reflected in the stock price.

It is trading near record highs.

How much higher can ago?

I think the stock will double the next few years.

I am delighted everyone does not like it so i can buy it cheaper.

The company, like a lot of companies we like -- 722 million shares when they split up cbs, down at 440 and will be at 300. we think a $160 stock.

Isn't media in a bubble right now?

Stay focused on viacom, ok?

When it spun off -- via, you don't have to buy it, i am recommending it.

But within that framework i think what happens is they use cash flow to buy back stock, which is a very good way to return.

Investment 101, how does gabelli ride a winner?

That is a challenge because we managed to thousand separately managed accounts.

We have a great team.

You met some of my individuals.

Larry haverty, which covers the global media.

Essentially, when somebody owns six percent of the stock because it has gone from three percent of portfolio, we will curl a little back.

We are running $45 billion, which is small, but primarily all equities.

Quickly, to scarlet's point, you can ride the media stock -- american express, dropped from 50 to nine dollars and it is back to $80. riding the roller coaster with mario gabelli.

Our twitter question -- what are your biggest worries of 2014? tweet us @bsurveillance.

? this is "bloomberg surveillance." i'm scarlet fu with tom keene and alix steel.

Let's get you company news, starting with the news that just broke a few minutes ago.

Major changes at darden.

It may spin off or sell it to red lobster chain and it is cutting capital spending by $100 million a year and said it will halt acquisitions.

Earnings-per-share for the year could be down as much as 20%. it had forecast a decline of three percent-five percent.

Boeing seems to be paying the price for nsa spying.

Losing out on a $4.5 billion jet fighter project from brazil.

Brazil's president publicly complained about allegations the nsa spied on her government.

One this is at citigroup will be little changed this year.

Bonuses for traders and investment bankers will be flat or even down by about two percent in some cases, according to a person briefed on the plan.

It comes as citigroup ceo tries to reduce costs amidst shareholder pressure.

A dramatic afternoon in downtown manhattan.

Former sac trader michael steinberg found guilty of insider trading.

It could mean dark days for stephen cohen and his firm because they recently paid a penalty for insider trading.

We saw the fines for the banking industry, particularly jpmorgan, and we see separately this idea at sac capital.

Mario gabelli with us, with gamco.

You have seen so many of the ups and downs of this for decades.

Insider trading, it is one of the squishy as things out there, is it not?

I am delighted the free market process has what adam smith said, the traffic cop at work.

You have to keep a level playing field.

More importantly, tom, you want to bring back the confidence of the individual investor and the integrity of the markets.

Tell me if i am out of line -- did you make up every morning at your shop at gamco and say sac was playing by different rulebook?

Did you feel like you did not have an upper hand on information flow because they did things differently?

We were very simple.

We follow in industry-specific.

We go to conferences and track companies for a specific.

Of time -- period of time -- in and out?

I don't know what they do.

I assume you have a successful record, he did it a certain way.

I don't reverse analyze it.

Our turnover last year was four percent, which means we buy, love, and hold.

In one hour, four percent -- they generate a lot of commissions and therefore a lot of information low.

Do you see in your philanthropic efforts that main street is becoming to be re- acquainted with your wall street?

Regrettably, we can sense that the animal spirit is returning, particularly with the bond market.

Not looking well.

You want to get out of fixed income.

And intermediaries also feel they want to have a greater return by looking at the exposure of common equities -- to come in at woody's. but not like 1999 when i would go to las vegas with lou rukeyser -- 20,000 people paying $39 to listen to pundits talk.

We are not there yet but we are moving in that direction.

As it is getting increasingly more difficult to make money, is what we are seeing with these convictions, 76 in the last six years in insider trading, does it serve as a deterrent?

When you go to insider trading -- back in the 1980s, the 1960s and the 1980s, people would send brown envelopes out saying if you are not interested in buying this company because, send the envelope back.

Nobody bothered checking.

Whether it was option slipping, ideal flipping, a lot of various ways.

There is always something that goes wrong at the margin but by and large, look at the integrity of the markets over the last 100 years.

They are the best of all alternatives of allocating capital.

Nothing has changed.

Bonds -- you look at equities, but they are linked to bonds.

Bond prices go down and yield go higher next year?

I am three and 6 -- translate that.

Three percent on the 90 day, -- or 180 day, and six on the 10-year.

We assume in the context of analyzing companies, what the economic environment will be an interest rate will look at with inflation at two percent or three percent, what is the 10- year without the fed stepping on the break in terms of rates, and within that framework, how the stats react and why would i want to own a cash producing inflation index earnings power at a reasonable price over an extended period of time like webmd?

Mario gabelli on bond inequities and soon on webmd.

The fed's historic announcement that it will be tapering back this denver -- the mill is package.

-- stimulus package.

Futures off a little bit, backing off after yesterday's rally.

The yield on the 10-year has moved higher, 2.91%. everyone is eyeing the three percent level.

And we have economic data this morning, including jobless claims at 8:30 a.m. in existing home sales after the market opened.

Good morning, everyone.

"bloomberg surveillance" on bloomberg television and radio.

We have m you can -- vladimir putin with a number of pardons and this one was missing.

The idea of the billionaire khod orkovsky getting a presidential pardon.

That is a big deal.

Alix steel and scarlet fu with me.

Our guest host, mario gabelli from gamco investors and peter orszag is from citigroup, as well as former omb director.

"bloomberg view" column this as well.

I have a sore throat, i go to web m.d., and you wonder why your child has a fever, you go to webmd.

If obama wants to sell obamacare, it goes to webmd.

It is making $4.8 million from the government.

Some senators calling for more disclosures.

The ceo of webmd, thank you for being here, david.

Appreciate it.

What did you have to do to make money from the government?

Our contract with the government is to provide our health care professionals and accredited education program just to inform them of the details of the affordable care act and how it is going to affect them and their patients.

Also, a lot of positive and encouraging articles about the affordable health care act.

Is it part of the deal?

The affordable care act is a real opportunity for us.

In addition to empower health care decision-making, we launched a dedicated area in our site where consumers have a company and a set of tools and content to understand impact of the legislation on themselves and their families.

If you are one of the millions of people who for the first time now will have to shop for insurance directly, we provide a set of tools were you can compare plans and understand options.

I checked out the website and it does not appear to be clearly marked as sponsored content.

Shouldn't it be part of it?

All health-care reform center is not sponsored content.

But you are bei

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

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