Geithner Goes to Wall Street: Surveillance (11/18)

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Nov. 18 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Marshall Sonenshine, Andrew Sieg, and Scott Galloway. (Source: Bloomberg)

This is "bloomberg surveillance." microsoft is choosing a new ceo.

The workmates today.

Mr.

smith goes to washington.

Mr.

geithner goes to wall street.

The former secretary will do deals.

A disaster in the philippines.

Nations donate funds.

A kiosk donated more than china.

Good morning everyone.

I am tom keene.

We are live from new york city.

It is monday, november 18. scarlet fu is joining me.

Good to be here.

Why don't you brief us?

China stocks rose after they agreed to ease the one child policy.

Also, new home prices in the four major cities rose since 2011. london home prices fell in november after a 10% jump last month.

The government wants to boost demand.

In economic data, here in the u.s., the housing index is quiet.

Very quiet on the earning front as well.

After the bell, urban outfitters -- stores were empty this weekend.

I was waiting for the big sales.

Did you notice that this weekend?

I was at home reading the papers.

Leaves.

Trying to keep up with you.

We should mention that the board at microsoft is meeting today on the subject of finding a new ceo.

Let's look at the data check.

Futures are up again.

The 10 year yield was higher today.

The euro is at 134. a stronger euro.

Nymex is going new year -- nowhere.

This is a huge deal.

We are approaching 11. that is complacency.

They are instead a great job on touching on that this week.

There is a weaker yen.

The 30 year bond yield is that 3.79. that is the data check.

The front page -- let's go to the board.

You are so excited.

Here is the line for 20 years.

Get out of stocks.

The fed is coming intoo.

There is a snapshot.

There is a frothy effervescence.

Do we have a front page?

There is no shortage of deals.

Boeing scored $100 billion in orders.

United emirates ordered $75 billion in big planes.

We're are talking low-cost units.

They ordered 111 737s. another airline ordered 25 777 x's. is the general idea that they are both winning?

Is this a new win for boeing?

They are both winning.

Airbus is crucial for them to come out with a deal before the end of the year.

They did not have any orders this year.

They did score some big orders as well.

One of the coolest things about the 7777 is that the wings.

The wings.

Therefore to conserve space.

What is really cool is that you can look up after the third drink and see stars on the roof.

You give a speech in to buy -- in dubai and get back on the plane.

I look at them and they are accurate.

You could see the whole arc of the diver, big dipper.

Let's see with the stars have to say about what the fed is doing next.

They are considering a delay.

According to financial times, the delay will give more time for provisions.

Banks are currently required to comply by 2014. under this rule, they have to be an proprietary trading.

They cannot put their own capital at risk.

There is no shortage of dizzy bodies there.

There is some work around trading, right?

This does allow for hedging.

Not against an entire portfolio, which could be deemed as proprietary trading.

This is just one tiny thing.

Call in the lawyers.

The third story, a possible hat trick.

Round numbers for all three major indexes.

The s&p 500 is approaching 800. mastec is going to reach the highest since december 2000. is this the sign of a bubble?

It is debatable.

They tend to attract investors.

They have been missing out on -- what do they do?

We will talk about this through the hour.

Right now, timothy geithner will join pincus.

They are known for recent transactions with bausch & lomb.

Secretary geithner has served as the fed president.

Peter cook cook serves as chief washington correspondent.

He has hiked the trail from washington to wall street.

Any surprise here?

There is always some sense about the questions of what painter would do ultimately.

The one thing that we have heard is that he would never go to a wall street bank, especially one that he used to regulate.

It is not a huge surprise that he is headed to an investment firm.

He is headed to wall street.

There were questions about whether he would ever had to wall street.

He was trying to create distance.

This is a firm that is a private equity firm.

As treasury secretary, he and the administration went after the tax code.

Particularly the carried interest -- they were never successful at changing that.

Now, he will be a beneficiary.

He has an interesting academic act ground.

Very different.

What would you describe as the leadership formula?

Is he a follower and a leader?

What is the formula?

The one thing you can take away for sure is that he has been faced with a lot of crazies.

There is an idea of responding in force to a crisis.

Both at the treasury department, they've dealt with the situation in mexico and he took lessons from that -- and that the fed, and the structure -- and as treasury secretary.

He takes decisive access -- action and throws everything out a problem.

This will be a very different job with different resources.

This is someone who believes in decisive action.

Whether or not there is pain down the road.

We all believe in decisive action.

Any idea what he will be doing?

The sense that we have is that he will not be a figurehead.

A lot of people leave washington and had to wall street to do schmoozing with customers.

There will be some of that for the 75th treasury secretary.

He has actually been doing some work.

He is giving direct advice.

The tim geithner i know -- that is what he would want.

He went what to get his hands dirty.

Thank you for that report.

A start to a great week here.

Our guest host this morning is marshall.

He is the chairman of sondheim partners.

A great time to talk to him.

Marshall, let's talk about secretary geithner.

What is the distinction?

We have all of these relationships -- what stands out about this firm?

I have tremendous regard for them.

They actually sell companies to the private industry.

Private equity of columbia -- the thing about them is a few distinguishing features.

They are still private.

They are still a private equity firm.

It will not be in the public view the same way.

It is also substantial.

They have $35 million in assets.

They like to be private.

This is why it is so interesting.

It is a divergence from what they have done historically.

They are driving right into the spotlight.

They have hired a good bank of executive ceos.

The other thing i was going to say is that they were not a part of the crazed buyout.

They were corporate investors.

They encourage to the investors to buy outs.

You have the poles of this at merrill.

Where's the individual investor?

The individual investor is in the market.

They have been the smart money in this market.

There have been equities for the last several quarters.

If you look at this point in time, they have allocations of 57% equity.

How much cash?

About 12%. you can stay.

You made my day with an individual investor.

Ahead of the gloom.

Let's get to the optimism.

Here is scarlet fu.

A billionaire company is buying a 21% stake in the world's largest potash user.

This is based on the latest stock price.

Walmart has safety inspections and bangladesh.

More than 15% failed audits and had to make improvements.

In one instance, workers had to knock down and illegally billed for.

And google is taking a page from apple.

They're opening showrooms in six u.s. cities.

They're called winter wonderlabs.

New york, washington, and chicago are among the cities that will be home to these.

Online is going to brick and mortar.

That is very microsoft, and don't you think?

Speaking of microsoft, they are finalizing their roster for potential ceos.

They're also launching a new xbox.

We will discuss that next here on "bloomberg surveillance." ? here is what you need to know on monday morning.

James tisch of loews corporation -- a total redo.

Everything to the carpets.

He will be on "market makers" today.

I am here with scarlet fu.

We are up to our eyeballs in an and a. --m&a. microsoft is narrowing down the list of ceos to replace the ballmer.

Scarlett has her finger on the pulse.

The board of directors meeting will proceed other meetings.

They will cut the roster to three or five people.

They will interview the next several weeks.

Ballmer said he would retire within the year.

There is a lot of hopes and dreams tied up in this.

That was before we thought he would retire.

What is the angle right now?

The biases toward someone extra no.

They need someone who can turn around a big multinational company with hundreds of billions of dollars in revenue.

Alan mullally is a good one.

He is a close adviser to ballmer.

He has proven turnaround experience.

He does not have a technology background.

Stephen elop is also in the running.

Maybe you're talking about bringing in someone with tech experience.

Turner, who is at microsoft -- kevin turner is also speculated to be on this list.

Tony bates is the head of business development.

He is known as a chief ed makers off.

They are internal candidates.

What is wrong with a double- barreled executive office?

You do a deal and it is not about one guy.

They are a big, mature company.

It is likely area said.

-- like larry ellison said.

You have to start thinking more broadly.

You have to look outside of the organization.

I think that they do have complex issues.

They need different styles of leadership.

It is not just about good cop, bad cop.

Alan mullally would be the happy choice.

It is about brainpower.

People drive innovation across the scale.

That is a broad problem.

It is a generic problem poured large companies.

To either of you have of you on the role of bill gates?

That is potentially the next big issue for microsoft.

How will they handle bill gates and should he be -- have the chairman title?

I do not know where his head is.

He has said publicly that he intends to stay involved.

Particularly if someone outside of the organization is speculated.

He would have to be more involved.

He is on the committee.

Of course he is on the committee.

He is a big stockholder.

Mr.

ballmer has done pretty well this year.

They have done well because he said he would step down.

People question whether they are a growth stock or a value stock.

There is a lot of money that is back in shared buybacks.

You have a company that is sitting on 75 billion dollars in cash.

Apple is almost twice that.

You also have a company that has stubbed its toe badly.

The cash is driving this market.

Do you remain bullish?

Cash at microsoft or anyplace else -- is that still a story?

It is still at record levels.

We see that turning back to the markets.

It will be a big driver.

Pensions as well.

This rally has been led by individual investors.

The individual investor in the market -- everyone else is allocating and diversifying.

We make eight percent while the market is up 23%. brilliant.

If you are in the markets, you're pretty happy with how microsoft has done.

The xbox goes on sale this friday.

Our twitter question -- what should be the agenda for the next executive at microsoft?

Tweet us.

Also, president obama has a tough second term battling budgets.

How does this impact his presidency?

We will have that next.

? good morning.

I am tom keene.

It is interesting this five day week.

Next week, is thanksgiving.

We're here with top headlines.

Maybe you will get an invite.

Tornadoes and severe thunderstorms swept through the midwest and killed at least five people.

Central illinois was the hardest hit.

A tornado destroyed an entire town of washington.

It snarled air traffic in chicago.

More than 230 flights were canceled late yesterday and last night.

At the box office, "the work" took the top spot again.

It rang up $38 million in sales.

It has taken more than $100 million since being released.

"the best man holiday" came in second.

The owner of an art collection refused to give up the pieces.

He told a german magazine that he will not voluntarily hand over his art.

The pieces were believed to have been seized by the not sees.

His father bought the art from museums.

At story continues to endure.

It has been around for two weeks or so.

Scarlet fu has more.

It is an epitaph for the obama presidency.

Edward lewis is a columnist who writes that the obama presidency is not over, but it is failing.

He has fallen that almost every hurdle.

The year began with attempt to oppose tough checks on gun buyers.

It is getting painful for the white house.

Nancy pelosi was on "meet the press." you get the feeling that 2014 will have vengeance upon us.

It makes sense that bill clinton is setting things up for hillery.

We will have to see.

We will continue to monitor this.

A swedish furniture store makes a bigger donation to the philippines.

Good morning.

I am tom keene.

A quick data check.

A quiet day in europe.

Futures are up.

We continue to advance on the s&p 500. the euro is stronger.

Nymex crude has been quiet.

Quiet ascent over the last number of days.

Americans are generous in the wake of disasters.

There will be donations of over $1 billion to haiyan relief efforts.

American corporations are opening their wallets too.

They have been pretty visible with their giving.

They are among those pledging $1 million to relief efforts.

The itunes store and apple has activated it donate button for ease of giving.

At&t, verizon, and sprint are offering free calls and texts to the philippines.

Ikea and coca-cola are leading donations.

Each pledged over $2.5 million apiece.

They initially offered something in the neighbor of $200,000. they increased it to something like $1.6 million.

A disaster -- there will be another one.

Our guest is and the -- andy, who focuses on merrill lynch's philanthropic efforts.

I know you are on a number of committees with bank of america.

What is the new new in the way that big corporations reach out to these terrible disasters?

Corporations are doing -- they have for a long time.

The way they are participating is they are not just investing dollars.

They're following their hearts.

One of the strongest trends is growth in socially responsible investment.

Nearly $4 trillion in investments around the world are driven by environmental mandates.

We are seeing some real innovation on things like social impact bonds that allow individual investors to receive returns based on profits.

To a disaster like the philippines, individuals are doing more with social media.

Do we need to do more or are we doing our fair share?

I think we're doing our fair share and more.

U.s. corporations are more on their front foot around disaster relief.

It is the hallmark of our culture.

Increasingly, investors like companies that are active in their communities philanthropic way.

That helps you to land on the dow jones sustainability index.

It is a very powerful reinforcement.

There may be something generational to this.

Warren buffett says that he objects to corporate giving.

You give away other people's money.

Shareholders money.

He would prefer to see individuals give money and company stay out of it.

When we look at our clients, the younger we go, the more they believe that investments should reflect values.

The millenials say that they see their investment as a manifestation of their values.

They have confidence that they can change the world by doing this.

They think they can drive positive impact.

Are they embracing the idea that you can do charity and make a profit at the same time?

We have seen a lot of daschle -- special corporations formed around that idea.

In sub-saharan african, their housing development projects.

It is a double bottom line.

They are doing some great things in those markets.

Martha is with us.

Andy mentions a generational shift.

You see on wall street, whether it is a robin hood foundation or whatever, there is a new new.

What is the new new in philanthropy?

I think that wall street has embraced philanthropy.

Goldman, for example, has been in the news on that subject.

It is interesting.

The disaster in asia is an opportunity for corporate brand identity.

This is not what warren buffett was talking about.

That may not be helpful to the company.

Here, you have consumer facing companies looking at corporate branding opportunities.

China missed the boat on them.

I do not understand why they missed that.

This means something.

Goldman sachs is not exactly a consumer facing company.

It is hard not to be cynical when you think about the fact that they are giving and has increased when they need to build their reputation.

Does this not raise questions?

They are a bank.

All banks take deposits from communities.

They expect you to give back.

Goldman, to their credit, has used their innovation to drive something around community involvement efforts.

I think it is great.

What could be better?

Hedge fund leaders are competing to have the next philanthropic idea.

I go where you are.

You are in the crosshairs of this.

There is a new generation of consumers -- they demand this from corporations.

This is not about black tie events.

They demand corporations to be sincere.

You cannot buy that.

They are not just looking at -- they also look broadly.

Part of the process is something that they believe sustained -- drives sustainability.

They are outperforming other companies.

There is a return here.

We will continue this discussion.

There will be no -- there will be more.

Look at illinois this weekend.

The tragedy in the western part of the state.

Have you ever given money to your children?

It does not stop as you get older.

We will take a look at this coming up.

? good morning.

I am tom keene.

Scarlet fu is here on a monday.

Top headlines.

The military's top commanders want to curb growth and pay benefits to personnel.

The move comes as costs rise to over half of the overall defense budget.

Any changes would have to be approved by the secretary of defense.

Relief efforts in the philippines are strained by the number of women giving birth.

Almost 25,000 women are expected to give birth each month in a disaster area.

That translates to one birth every two minutes.

A scarcity of clean water will make the challenge even harder.

Women have recovered all jobs that they lost during the recession.

A record 67.5 million women are working today.

That is up to lately from the previous peak set in 2008. the number of men meanwhile is still below the peak.

69 million men have jobs today.

That is almost 2 million less than the peak set in 2007. this is tied to the growth in jobs in education, jobs, and hospitality.

And the fact that we are cheap labor.

Do not say anything.

You will just get in trouble.

Now it is time for -- our single best chart is on the family bank.

This takes a look at whether it is mom and dad, grandma and grandpa, or your aunt who is giving.

This is people who have given money to their family members.

68% have given money to their adult children.

They do not know what the money is being used for.

When a six percent of people over the age of 50 if money to their grandchildren.

13% to their siblings as well.

The money just keeps going.

And the -- andy sieg is with us.

Is this something new?

This is new stuff.

It is driven by coming out of the worst economic downturn and years.

It is boomerang kids coming back.

Families have to step in and help their kids.

We see that 68% of americans are providing financial support to little children.

They are providing that support across their family.

We think this is very new.

It is incredible generosity.

As we head into the holidays, you have to commend the generosity.

There is some risk as well.

Be careful jumping in.

Only one third of people are comfortable that they're ready for their own retirement.

Is this with this is about?

Are we writing tuition checks?

They should be free and clear of tuition.

These are living expenses.

You tweeted about this.

Do we risk becoming like europe?

People are too dependent on parents.

It is a systemic problem.

Not just a parent being overly generous.

How much support is going to children is cyclical.

Parents are sharing resources across families.

They are not talking about it.

70% of families say they have not discussed basic financial -- i agree.

I had a conversation with my youngest about where they're going and what they're doing.

There was an article on the lost educated children of europe.

You have the idea that mom and dad are writing checks.

Their writing checks, not just for tuition.

It is like a rent.

One in five parents have at least one adult child living with them at home.

Let's get to that.

That was interesting.

This is your photo.

Let's take a look.

The acrobatic squad of the united arab emirates air force showed off their skills at an in your show over the weekend.

$192 billion of jets were announced on the first day.

It is a new record for the air show, which is growing and international stature.

In brazil, the world cup cannot wait.

It is less than one year away.

The main stadium is finally taking shape.

It is seen here.

It is located in the city of natal and will be one of the major arenas.

They are spending one point $1 billion for refurbishment alone.

If i said that, i would be put in timeout.

We just showed this picture.

It is gorgeous.

Dubai air show.

We will have more on that live coming up in the second half hour.

Coming up, a good return for m&a , but is it too optimistic?

Where you are staying at.

You are watching bloomberg tv.

We are streaming live on your phone, tablet, and bloomberg.com.

? this is "bloomberg surveillance." time now for company news.

Sony's new playstation is topping the old one in first-day sales.

They sold one million consoles in the first 24 hours on the market.

There were some glitches for the ps four.

The device suddenly turns itself off.

They will fix that soon.

Microsoft will have new mobile devices next year.

There are reports that they could indicate a smart watch.

Microsoft has approached opponents in preparation for these products.

Yahoo!

Is being sued over privacy issues.

They have intercepted e-mails and use personal information to profit from ads.

The plaintiff is seeking damages for each person whose privacy was invaded.

That is company news from "bloomberg west." everyone else is.

I do not even want a smart watch.

Who wants a smart watch?

I want a merger monday.

The volume of m&a was the highest -- since 2008, with a total of $214 billion.

The search was led by verizon's $130 billion purchase of vodafone.

Jamie lee is optimistic about deals in the u.s. he spoke with betty liu earlier this month.

It has gotten bigger here in the united states.

I do think that there will be more large transactions going forward.

Because of the fundamentals.

That is all well and fine.

What about the smaller deals?

Mr.

lee may have rose-colored glasses.

Marshall, gloom and doom.

He suggests tepid economic growth will lead to continued malaise.

I ran into jimmy last week.

I asked him if he said that.

I said that it is great he is busy, but look at the numbers.

Where are we now?

$2.25 trillion.

We are in a low growth environment.

This sounds very wonky to you guys.

It sounds like a shameless plug.

They published the piece.

If you look at the numbers.

And then they -- m&a is way off.

We are in nosebleed territory.

My question is, do you need to be at that $4 trillion marker?

No, you do not.

That was dumb.

They should not have done a lot of those deals.

Most have to overpay and they know it.

They leverage finance with low yields.

You can make 45% this year and they stock market.

When do executives -- we're are in a low growth environment.

When do they capitulate?

They will obviously not good growth on their own.

It is not capitulation.

It is acceptance that we are in a low growth environment.

We see more and more of it.

Maybe corporations are spending the money more smartly.

That is right.

Telecom is huge.

What is holding back the rest of the business?

We're are all talking about tech.

In industrial america, out in chicago, goldman sachs was doing boring m&a with foreign companies -- where did that go?

I do not think it is gone.

Even in 2009, after the crisis, we counted the top deals.

There are plenty of big deals, even in a bad market.

95% of m&a is small.

It is 95% of the business.

I did not know that.

It is a big market.

And the -- andy sieg is with us as well.

It helps to have m&a activity.

I am more optimistic about the environment will look like next year.

They're coming back.

We have a gdp forecast.

Even gloom and doom?

Are you on speaking terms?

He is in outlier.

There is a currency to do deals.

There is cash and there is value in the stock to go out and buy companies.

I think we could see an uptick next year.

Right.

Marshall, the numbers are impressive for 2013. more than 23,000 deals.

I know the telecom companies make up a large chunk of that.

What do the numbers not tell us about the environment?

If you look at every single element.

Until this changes, i agree with andy.

We have political headwind as well.

We have dysfunction and the european union right now.

That is not stopping equities.

They are propped up by cheap capital.

We finally saw more money in 2013. it was flowing into equity funds for the first time in several years.

M&a is a long-term commitment to own a business.

You need conviction about what that business can do.

Here's a question.

What is worse?

Doing a bad deal or missing a good one question mark doing a bad deal.

Why?

It is worse for us.

It is not necessarily worse for the people doing deals.

What our internal rates?

Well m&a just keep coming in?

We are all in a low growth environment.

Equities normally grow admit to high single-digit rates.

This is a key question.

Double-digit?

Are you living in a single-digit framework?

I think high single-digit is where we need to think equities will be.

We think that technical factors will take over 1800 to the end of the year.

This has been a strong third quarter for earnings.

We see earnings growing somewhere between five and 10%. that will help to drive the market.

Thank you so much for your comments.

Marshall, thank you so much for your rose-colored glasses.

How about a rosy forex report?

They euro is up one dollar.

Stronger euro, weaker yen.

We care about exports.

And scott galloway will join us to talk about alibaba and microsoft.

? the 2014 microsoft is choosing a ceo to replace steve ballmer.

The board meets today.

Mr.

smith goes to washington.

Mr.

geithner goes to wall street.

The former secretary will do deals.

Bitcoin is a fraud.

It will replace greenback.

Congress will consider the digital currency.

Good morning everyone.

This is "bloomberg surveillance." it is monday, november 18. scarlet fu is joining me.

Our guest is scott galloway from and why you.

Good morning.

It is time for the morning brief.

China stocks grew overnight after boosting investments.

There was the biggest package of economic reforms since the 1990s. prices in the four major cities rose for the first time since 2011. london home prices fell in november after a 10% jump last month.

The government failed to offset the previous decline.

Economic data is pretty quiet here.

The housing market index and earnings are also very quiet.

Before the bell -- after the bell, urban outfitters is at four.

We are paying attention to microsoft.

Scarlet fu has some insight on the next potential ceo.

We will discuss that later with scott galloway.

Alan mulally is a front runner.

We like the idea of a turnaround expert.

Let's get to some company news first, though.

There is no shortage of deals at the dubai air show.

And merits was a big buyer, spending $75 billion on jets.

Boeing pulled in the largest order ever for its jumbo jet.

The playstation four tops the old one and first-day sales.

They sold one million consoles in the first a on the market.

There were some glitches with the playstation for an buyers reported that the device turned itself off.

Google takes a page from apple.

They are opening showrooms and 60 u.s. cities to step up retail efforts.

They are called winter wonderlabs.

They will feature devices.

New york, washington, and chicago will be home to these labs.

That is company news.

Futures are down.

We wonder if you will see some print.

Opening this morning -- timothy geithner will join wall street.

He is joining pincus.

Secretary geithner served as said president and then asked the secretary of treasury.

Peter cook serves as our chief correspondent in washington.

This up right here we talked about earlier.

What will secretary geithner do?

Does he show up and have lunch?

He will do more than have lunch.

According to people close to tim geithner, he will actually be involved in deals.

He will be a real player at the table.

That is according to heads of the equity firm.

They want to tap his insight of the u.s. economy and what is going on here.

He has ties to the corporate sector and knowledge of what is happening overseas.

He is heading to wall street to do some work.

Not just to go and schmooze.

The extended family is going back to 1936. at least the mid-1930s. they have a london-based international reputation.

Does boehner project for them and the united states or is it more for the international mandate?

He does both for them.

He has been in the trenches for the federal government in terms of the economy and financial system.

This is someone who also has looked carefully at markets around the world.

He has hedged market reaction.

They're looking to tap that.

This is a way to get into wall street without the taint of working for a bank.

He was not going to go there despite opportunities in that sector.

This puts him in a shop that has not been tainted by scandal or bailout in the past.

It will allow him to make money.

That is not insignificant.

He took a pay cut when he left the new york fed.

He will make money here.

He will make money with his book, which is due out when he starts working.

Stick around with us.

It is clear that he is looking for a payday here.

You have been following all the key firms.

They are not like a carlyle, which has been active in recruiting former washington guys.

That was one of the things that surprised me about this headline.

They have for you much flown under the radar.

Proud about that.

They have the nose down and they are deal guys.

They're not interested in expanding the business.

It is surprising on that front.

The big question would be you, why do they feel that they need timothy geithner?

They have been so successful.

They're one of the oldest private equity firms around.

Very quickly, we looked at the sunday talk shows.

Nancy pelosi is out front.

What has the president learned about his support?

He knows he has support among democratic leaders in the congress.

He also knows that there are some real?

Sa question marks.

What does this mean politically in 2014? can this be salvaged.

Nancy pelosi will be by his side.

Will the rest of the troops be there with him?

He is new york university professor of marketing and is described with accomplishments.

I am thrilled that you are here.

I am looking at microsoft's ranting.

It is almost anti-branding.

What would you say to the new ceo about writing into microsoft?

Right now, the only way to make a brand younger or more relevant -- that is what microsoft needs to do.

They are facing the same problem the cadillac is facing.

They need a dressing up.

There is no secret sauce here.

The only two used serums are product innovation and digital programming.

What does that mean?

A great website is a good example.

Obamacare is an example.

The website is not working.

Your twitter following is a signal of your product quality and how innovative you are.

When it comes down to the candidates, people are looking externally.

Mulally is currently the ceo of ford.

Elop has also been floated as well.

Internally, there are a couple of candidates.

Tony bates.

And kevin turner is the coo.

They have suggested combining the two.

Someone from outside and someone from inside.

Is that a formula for success?

Goldman sachs is famous for that.

Having two people.

I have to think that if mulally wants this job, it is his.

He has separate -- such a reputation.

That would be dramatic.

Number two would have to be a mobile guy.

You either want to say we are turning around and we are serious or we have a guy who has a future.

You brought up the digital presence and how important that is.

Brands are increasingly starting to get physical.

We have seen them in the stores.

Microsoft is trying to get in front of customers.

What rate would you give them on the physical front?

Everyone compares them to apple.

Apple has the most productive retail in america.

The number one sales per square foot.

They have double the salesperson where foot of tiffany.

It looks like apple and the seven dwarfs.

Every time someone opens a store, it looks like a bad knockoff of apple.

The ascent of mobile is stunning.

It is just truly stunning.

Where will mobile be in two years?

It looks as if the pc will become an interesting kitschy item.

You might use it at work.

Our lives are moving to a stream.

Whether or not that will be a, we do not know.

Companies are becoming mobile companies.

Facebook is accessed with a mobile device.

Services are hitting 50%. look at what is happening to people who are focused on pcs.

The oxygen is being sucked out of the room.

Got galloway, a lot to talk about.

Markets are at 16,000. we're focused on microsoft because they are holding their board of directors meeting.

That takes us to our twitter question.

What should top their agenda?

Tweet us.

Also, we notice china's largest e-commerce company.

What is alibaba?

? good morning.

I am tom keene.

Let's go to our guest host, scott galloway.

New york university.

We are in a bubble.

Will they go with zero profit?

What is that about?

Scott, is it a tech bubble?

If you look at traditional ratios -- it looks like things are expensive.

It does not look like we are in a bubble era.

What is interesting is how often bubbles have become their own brand.

The primary news story around is are we in a bubble?

We have had to pretty significant bubbles in the last acted.

When people think they are inflating -- i am interested to get your point of view?

People say we need bubbles to get back to full employment.

We do not have an animal spirit.

We had those with twitter and facebook.

Are those discrete events?

That is an interesting question.

We may not have irrational exuberance.

We may have selective exuberance.

Social media has been validated.

It is a real business model.

It is difficult to say that twitter would be worth 45 times -- linked in is that 18. it is selective exuberance.

We talk about new york replicating the best practices of san francisco and silicon valley.

What is the best practice in new york city?

What did they need to be successful?

Silicon valley has done an amazing job.

You could not find a software company.

What is required to build a startup has coalesced and come together.

Business has done a great job.

There are tier one companies here.

Cornelis coming in -- typically, people used to graduate and bought a ticket to san francisco.

Now, many are taking a left turn to new york.

There is no taking -- getting around it.

We are passing boston.

This is really happening this decade.

They have done a great job.

Also, your thoughts on a tech bubble.

That will be a theme of the moment.

We have much more for you.

We will go to dubai as airbus and boeing go at it.

It is "bloomberg surveillance." ? / good morning.

It is our twitter question of the day.

What should top the next microsoft ceos agenda?

I would say lunch.

What should top the next ceos agenda?

The board meets today.

They will begin considering who will take the reins from mr.

Ballmer.

This is "bloomberg surveillance." christina is here.

Our guest host is got galloway from new york university.

Christina is here with the top headlines.

We start with some terrible weather.

Tornadoes and severe thunderstorms swept through a 300 mile stretch of the midwest and killed at least five people.

The storms snarled air traffic in chicago.

War than 230 flights were canceled late yesterday and last night.

The military top commanders want to curb the growth in pay benefits for personnel.

The move comes as the cost rises to more than half of the overall defense budget.

Changes would need to be approved by the secretary of defense, president obama, and congress.

"for" took the top spot.

It rang up her day million dollars in sales.

It is taken in more than $147 million since it was released.

"the best band holiday lowe's quote took the second spot.

I loved it.

It is a favorite movie of our executive producer.

I cannot say why.

The war -- thor.

Let's take our sites to china.

They are gearing up for an ipo here.

You are looking into what alibaba does.

They are china's biggest e- commerce company.

They are amazon, ebay, paypal all rolled into one.

They own all of these different companies.

Alipay -- ebao -- they have a lot of different companies.

They have their fingers in every part of commerce.

This will shock you.

They have 50% margin.

How do they really that margin?

Advantage tells you a lot.

Look at the valuations that investors are assigning.

They are looking at $120 billion valuations.

That is the third biggest after google and amazon.

They have been around for over a decade.

We all know about it.

What is taking so long?

What is the back story here?

They had a messed up a couple of years ago.

There was questionable fraudulent activities.

It was publicly traded.

The founder of the company folded it back into the parent company.

He took it off of the public market.

They have cleaned up everything.

The ceo has cleaned everything up.

They will put it back out again.

It is a freestanding company?

It is freestanding from the government.

There is real competition in china.

The rivalry is fierce.

They are known for their instant messaging applications.

They are extending to other services.

Search, e-commerce -- they are moving quickly to mobile.

Let's get some perspective from scott galloway from new york university.

Can you transfer our belize construct -- believe construct?

Is it just that simple?

We assume that innovation starts here and is transferred over to -- they just make it cheaper.

If you look at social media and you look at the product roadmap, they are ahead of facebook.

If you look at chad, it might be the first global brand to come out of china.

They are innovating ahead of the united states in social media.

They are a juggernaut.

60% of parcels originate from alibaba.

That gives you a sense from how much commerce is taking place.

People do not trust company websites.

I want to deal with the word trust.

Do they not need to go public because they do not want to go public?

Is it easier to be private?

The honest answer is i do not know.

They could go public and get extraordinary valuations.

It is the hottest market in the world.

You could argue that they have a dominant position.

They recently made an investment in a company like amazon.

There he powerful entity.

You have to look at the backup -- factor up of e- commerce sales in china.

In the third quarter, china surpassed the united states in terms of e-commerce sales.

The other thing i want to highlight is the financials.

We do not know a lot about it, but we do know from yahoo!. they make about the same revenue as facebook.

With twice the profit.

That gives you a sense of how profitable they are.

This is what investors are excited.

This is a different model from amazon.

Amazon -- investors are very excited to see them go public.

No matter what kind of investor you are, you have to take a look at the deal because of the sheer scale and growth opportunities.

I like them they're.

I asked a waitress in san francisco and she said she loved it -- alibaba and the 40 thieves.

She set that up incorrectly.

We have a lot more to talk about.

One more sign that they have reached the big time.

Two congressional hearings on bitcoin.

You are watching bloomberg tv.

We are streaming live on your phone, tablet, and bloomberg.com.

? this is "bloomberg surveillance." time now for some company news.

There is a new company that is buying a 21% stake in the world largest potash producer.

The stake is valued at $3.5 billion.

Walmart in the meantime has results from a safety inspection and bangladesh.

More than 15% failed the audit and will have to make improvements.

In one instance, workers had to knock down and allegiance -- and illegally billed for.

They were unable to fix their problems.

And boeing will decide where to build its new 777 jet within a few months.

They voted against a contract that would cut benefits and keep production in seattle.

That is today's company news.

Speaking of knowing, at the dubai air show, they announced orders.

That helps to make this the biggest product launch in jetliner history.

The numbers are getting bigger.

The competition between airbus and boeing -- airbus is also a winner at the dubai air show.

Elliott joins us on day two.

What is different this year?

Certainly the size.

This is an event that takes place every two years.

It has been increasingly the place where we get large airline orders.

It has eclipsed everything from before.

We are talking in total, including options, around $200 billion worth of orders.

From emirates alone, where the air show is taking place, $100 billion worth of orders.

It is a statement on mideast oil.

I know that etihad had a big order as well.

Is it just about the middle east?

Is it an international show?

These airlines see themselves as the fastest growing airlines in the world.

They claim to be the biggest international carrier in the world.

They want to make their emirates the hub for people to travel through.

We're talking about qatar as well.

They ordered $22 billion worth.

This is a power shift in the aviation industry to the middle east.

They see themselves as a global hub.

The president told us yesterday that they will fly for the first time from dubai to los angeles in december.

That is a huge distance.

It is further east than you could imagine.

Elliott, when you look at the airshow, the change for me is the new dominance of boeing.

What does it say about the company and about american exports?

I think that, as you say, there was something for billing and airbus.

It really belongs to boeing yesterday.

The ceo of boeing is coming into town and saying that this was the most historic day in aviation history.

They will launch the 777x here.

The u.s. pilot unions do not seem to be too happy with what is going on.

The airlines of the middle east are helping to out grade u.s. airlines.

Thank you so much.

Scott galloway is here with us from new york university.

Boeing is not twitter or microsoft.

How do you brand a big airline company?

The manufacturer or the airline?

I do not know if you watch the talk shows on sunday, but they are brought to you by boeing.

They're trying to show you that their branding is not about branding the airlines.

Those are intelligence purchases.

They are trying to get favorable legislation and be loved in washington.

What is interesting with airlines is that emirates is coming after domestic players.

London now has emirates.

They are unapologetically changing -- chasing the one percent.

Business class on emirate airlines is a good value.

It is an outstanding experience.

They're coming after americans.

It is truly a duopoly with knowing and airbus.

They're doing a great job.

Let's take a look at the markets right now.

We are waiting for the dow.

The s&p 500 is taking aim.

We are looking at the nasdaq as well.

Good morning everyone.

All of our interviews will be on the ipad.

Scarlet fu and christina are with me today.

Scott galloway of new york university joins us.

Particularly on microsoft, as we look at the board meeting.

They are a big story.

So is bitcoin.

We will see the first of two senate hearings.

The promises and the risks of virtual currency -- tom is digging through his pockets.

It is not there, tom.

It is a clear sign that bitcoin is no longer an internet hobby, but a real payment system that the federal government needs to understand.

There is a debate.

There is controversy about the legitimacy of bitcoin.

Peter cook joins us from washington.

They do not accept bitcoin on k street.

For the moment.

That is that this hearing is all about.

Today and tomorrow -- it is the legitimacy.

These hearings are not about bitcoin or the threat.

That will be discussed.

This is also about bitcoin arriving in washington on the national stage and having policymakers take a look at it seriously.

It is not just a hobby anymore.

This is for folks who support bitcoin.

They see this as an opportunity.

Is this an ultimate backgrounder for the politicians?

Are they coming in with staffs prepared for a political message?

There will be -- the folks leaving this meeting, the chairman, both are very familiar with this issue.

They may be the exception to the rule.

The members of congress do not know what the internet is all about.

They do not know what the point is all about.

This will be educational for them.

It is an informational session.

The folks who support the coin and want to make money off of it see this as an opportunity.

It is their first entree into washington.

A coming out party of support -- of sorts.

There is relative anonymity that virtual currencies offer to criminals.

This will come up a lot over the next few days.

All things being equal, they see this as an opportunity, not a threat.

Any sense of what the general counsel will say today?

I do know that the general counsel of the claim is among those testifying.

They want to make the story in washington and elsewhere.

You want to make the case that there are so many opportunities and upsides to bitcoin.

Washington should be pleased and supporting the rise of bitcoin.

The issues raised by law enforcement can be addressed.

There is no reason that law- enforcement cannot track down the bad guys using bitcoin.

The same way they do traditional currency.

The chicago fed came out on bitcoin a week and a half ago.

What is the impact on that statement on today's hearings?

The regulatory climate here is confusing.

That is one of the whole stories here.

These hearings were going to help to make the point that no one is clear where bitcoin falls in the regulatory scheme of things.

There are eight or nine agencies that touch bitcoin and subway.

The treasury to the election commission -- k street will not take bitcoin, but campaigns can get paid back in but claim -- bitcoin.

That would be precedent setting.

It is not clear.

It is a commodity and not a traditional currency.

That is a question.

Who regulates this?

Peter cook, our chief washington correspondent.

Are you pro-? i do not get it?

I am not on this bandwagon yet.

What do you think?

I do not understand it.

If there was in the apocalypse, there is no perp -- no possibility.

It scares me.

Coming up, we will look at bitcoin as an investment.

The ultimate alternative asset.

Maybe four when the apocalypse comes.

Also, the twitter of the question of the day.

What should top the next microsoft ceos agenda?

Tweet us.

You are watching bloomberg tv.

We are streaming live on your phone, tablet, and bloomberg.com.

? good morning everyone.

I am pondering jim rogers.

I am here with scarlet fu.

James rogers is joining betty liu.

What is up with the bow tie?

You do not give food on them.

When you spoil the first tie, you end up with a board -- a bowtie.

That is right.

Jim rogers is sounding off again on the fed.

That is a shock.

He does not like janet yellen.

Also, we are going to talk about the health care reform.

We will talk about hospitals and how they are being affected.

The ceo will join us.

I will have to be very serious and get my demeanor up.

Jim rogers -- twitter followers will go crazy.

Are we moving this monday?

We are certainly moving.

Microsoft is one of our big movers because the board of directors is meeting to discuss narrowing down the roster of ceos.

So exciting.

That is part of it.

They were also cleared of privacy violations.

They were cleared for not providing widespread data access.

Steve ballmer has been beaten up.

I have enough steve ballmer.

He needs a victory lap.

He will retire.

That may be.

I do.

Sony -- they are rolling out the playstation for consuls in north america.

They have sold more than one million consoles.

Users have reported glitches with the device.

It is suddenly turning off.

What is interesting about these launches is that we see a very strong demand in the beginning.

What will really count is what happens within a week or a month from now.

When the holidays are gone.

Are these sales sustained?

I am also looking at twitter.

They are coming out with an initiative to celebrate twitter.

Their value is $34 per share.

What is interesting here is that, overall, they had -- they are not getting their love.

Well, jpmorgan is also making news this morning.

The hits keep coming for this bank.

They have agreed with investors to pay $4.5 billion to resolve claims that they sold full fee mortgages.

Much more for you.

Good morning.

? this is "bloomberg surveillance." our guest host is scott galloway.

Let's get you some company news now from the files of "bloomberg west." samson could create a vendor the display.

This is according to the wall street journal.

The size of the phone can display pop-ups for text messages.

Judging by patents.

It is no word on when the phone might be available.

Google is opening up show rooms and six u.s. cities.

They will be called winter wonderlabs.

They will feature tablets and other devices.

Washington, new york, and chicago are among the cities.

Yahoo!

Is being sued over privacy issues.

They have intercepted personal issues to profit from ads.

That is today's companies news.

You go to the store and go like this?

Softly?

Winter lab?

Change the name.

I cannot imagine.

I do not get it.

Scott galloway nailed this.

It is about the product.

You have to crush ipad.

It is time now for the agenda.

We look at the stories that are shaping our day.

Mine is american exports.

We take it for granted.

Boeing really matters.

It is not just about making the airplanes that we come to trust every day.

It is about aerospace engineering and expertise.

You have 100 billion and counting.

Or just airplanes.

It is about technology and suppliers.

It is critical.

Our government needs to do everything they can to supply this leadership.

The same for copyright in entertainment business.

Those three.

Airplanes, entertainment copyright, and agriculture -- that is our export juggernaut.

It is why the u.s. dollar is weakening.

That is part of the mix.

In our economy, we have to compete every day.

Airbus is good competition.

Absolutely.

Fierce competition.

I did an interview and million years ago with a guy who wrote a wonderful book on the airline business.

An airplane is two engines and the other stuff.

The engines are so expensive that they look at it as the rolls-royce engines.

Do you ever pay attention to what?

I do.

We look at the seats in the lights and the pilots.

The pros -- it is two engines with metal strapped to it.

The product algorithm is the biggest to that requires two engines.

The player that has the biggest plane with two engines is boeing.

It is about fuel efficiency.

It is great.

I can see this.

Their radio.

I like that.

That is my agenda for the day.

I think boeing is critically important.

One alum is currently the ceo of ford.

He is on the shortlist for ceo of microsoft.

The board of directors will make a decision.

They are meeting today and they will narrow down the list to three to five people.

Allen -- alan mulally is on the list.

The goal is to have a list by next month to interview the candidates and move forward with naming a successor.

Scott galloway -- steve ballmer is leaving.

Is this why the stock has rallied?

It is because he is leaving?

There is energy around bringing somebody new.

We talk about mulally being a favorite.

Is microsoft really a turnaround?

They missed social and mobile.

They missed the search.

Profits our -- our fourfold.

. profits have doubled.

Is this a turnaround?

We talked about this in the break.

Sony needs a turnaround.

Sony is apple longer than apple has been apple.

They have literally been giving it away.

Do you blame japanese management?

Do you blame howard stringer?

That is a tough one.

I would say that they let other people come into the market.

Think about all the excitement and discussion that is taking place in the living room around tv.

Sony is not even part of the dialogue.

They have the playstation four.

It will be cheaper than the xbox one.

That is the idea of tying everything at -- together.

That is the base camp.

You want to plug into your tv.

I do not have sony in my house.

I have a sony tv in the southeast -- sony playstation.

Good point.

Our twitter question of the day -- what should top the next ceos agenda.

Got galloway says it is not a turnaround story.

Here is one.

Make business mobile.

You forget that microsoft owns skype.

How about focusing on consumer products?

That is critical.

One other thing is that devices and services are number one.

Microsoft does a terrible job of marketing.

What do they need to do to better market themselves?

There are three priorities.

The first is mobile, the second is mobile, and the third is mobile.

They have to show that they will play.

What is the next big shift in business?

They have carved out a whole with their phone.

They are a player.

Their market share is growing.

They grew more than any of the other players.

They have a small base that is growing.

That is more than anyone can say.

They do have a foothold.

That goes against the grain.

They should shed their devices.

I should say, i am seeing more nokia in the last couple of weeks.

It is not just apple anymore for you.

I know you have to get to radio.

All right.

Looking forward to that.

Christina, what are you looking at?

There are reports that the federal reserve is considering a delay in this role.

You have to wonder if this is the best -- the next big health care debate.

Could this actually become a giant mess for the administration?

This will actually fall on the backs of the regulators and congress.

Maybe the white house will take a step back here and walk out.

Arguably, it is already a mess.

When you look at the white house and the things it needs to take off -- how do you fix what they have done so far?

The take away from a marketing perspective is how important -- a strong signal to your brand -- your website is.

If they had had registration on paper that was bad, it would have been bad.

If the website is not an order, your organization is not in order.

If the engine is dirty, your ship is not running.

People take their cues from how you operate your website.

The president was so out front when it came to raising money on the internet.

They communicate through social media with constituents.

How did they missed the boat?

It is an interesting contrast.

They got a lot of kudos for operating soundly on the ground.

This was a surprise.

You would think they would have access.

Let's stay on that theme of washington.

Here is another story.

Who says that congress cannot get anything done?

A sitting member of congress is finishing a triathlon this weekend.

She finished an ironman and her own state.

She finished in 15 hours.

She tweeted a picture of herself finishing the -- crossing the finish line.

She would get up at 3:00 to get in a workout.

Does this help the perception of congress?

Who has that time to train?

We continue.

"in the loop" is next.

?

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

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