Good thursday morning.
How to taper quantitative easing.
The federal reserve weighs its options.
Mark zuckerberg stages an event with linkedin.
Building a web empire.
How to from the founder of the news and entertainment rocket, read it.
I am matt miller.
Alix steel is here with me.
Tom keene is in chicago.
Good morning, tom.
Good morning, matthew.
Everybody tuned to a day of business discussion.
It is our year ahead, two thousand 14. a lot of conversation on politics and business.
The question for me is which one wears the bowtie better -- matt or tom?
It's a tough call.
I would say -- i tied this on my first try this morning.
I am not a practiced bowtie man.
Matt is giving you a run for your bowtie money.
Scarlet fu is off today, so i am in her seat right now.
I am going to give you a morning briefing.
In china, manufacturing decline for the first time in four months.
On the flipside, euro area manufacturing expanded.
No surprise that was led by germany.
The initial jobless claims kobe out at 8:30. we have been seeing the lack of inflation on the producer side as well.
In terms of earnings, it is a retail crazy day.
He for the bell we get sears, abercrombie & fitch, gamestop.
After the bell, we are looking for gas and pandora.
A busy day.
The most nerve-racking thing for me is trying to follow in tom keene's footsteps doing a data check.
I'm going to give it a shot, even though it is only 6:00 in the morning.
As np futures are up 2/10 of one percent.
A three-point game.
The 10 year yield is unchanged, although i will point out that tom told me to look closely at the two year yield coming in the last few years pointing to maybe a longer taper.
The euro-dollar, you can see $1.34. crude can be called unchanged as well.
93.0 810. -- 93.810. oil and beer are alix's strengths here.
Brent is down a smidge.
The dollar index is down even less.
Really unchanged at 81. the pound is 1.61. the euro and the pound not ever weakening the way i hoped they would over the last few years.
Outed matt do?
-- how did matt do?
A solid a plus.
What i see that has changed is the fed talk and then important speech by bernanke.
Tough economic data at of europe ends of the two year yield is very quietly coming in.
We go into next year with doubts about where the american economy is going.
In chicago, we will look at that from a business perspective and we will talk to michael chertoff about the dovetail of the government into business 2014. i have to work dovetail into the conversation.
We have scoured the papers and reddit for stories making the front page.
The first one we are looking at is the fed.
They're looking for an exit strategy.
The minutes were released yesterday and show policymakers spent hours searching for ways to stop the impact.
When they decide to and the bond buying program, it was interesting, i was reading what they lead with was that the fed my low other the deposit rates from -- lower the deposit rates from banks.
What do you think about that?
The ecb is thinking about pulling back the deposit rate a little bit.
They are playing at the margin.
The message i have heard is that they are totally data-driven.
We heard this from chairman bernanke six or eight weeks ago.
We will see it at the end of the year into chairman yellen's beginning term.
What you see is a tepid consumer.
The one thing that has changed that the fed has to be looking at are the reports, not the data, but the reports on weak retail sales into november and into the holiday season.
We will know a lot more in four weeks about holiday retail, what it means for the consumer, and as i give them hope for diminishing the taper into 2014. the obama administration is saying no to bruce berkowitz.
The founder of fair home capital wanted to recapitalize fannie mae and freddie mac and turn them into state regulated bond insurance companies.
Gene sperling says a sale is a complete nonstarter.
I would not address the issue.
They have relationships with hundreds of lenders, economy of scale.
They have a lot of advantages that will continue.
The question is -- what is the next step to fix fannie and freddie?
The housing industry is front and center.
It is considered by some to be a key leg of the economy.
Housing is the backbone of any recovery.
Austan goolsbee of chicago disagreed with them.
He said we cannot go back to 2005. we need much more than i hope and a prayer in terms of american business and export.
What i would suggest is fannie freddie is a huge football and gene sperling is right there will be -- gene sperling is right.
We have had news breaking out of the bloomberg conference in chicago.
Wells fargo ceo told you that the housing recovery has a way to go because mortgage rates are at historic lows.
Here's what he said.
The affordability of homes remains attractive.
My first mortgage in 1976 was 8%. i second mortgage was 11.5%. these are enormously attractive rates.
What other insights did he have on the housing market?
I thought that was a terrific perspective.
He has real knowledge of what the different cities are doing and made clear in dallas and denver that we see good recoveries.
He lives in san francisco which is arguably in a boom.
He had a good optimism about housing being part of the american economic recovery of 2014. he still has a weight -- and still has a way to go.
It may not compare -- the loss we are looking at -- may not compare with the estimate.
It looks like revenue for sears came in just a bit shy of the estimate.
A $.27 billion with the revenue.
-- $8.27 billion was the revenue.
Same-store sales are down 3.1%. for the sears brand stores down four percent.
Kmart domestic stores down 2.1%. not as bad.
Was in that the theme of jcpenney's -- it's not as bad as it was?
In terms of the stock not doing as poorly.
If you step back, it does not look good at sears.
Why do people not go to sears?
I buy my craftsman tools at sears.
This is the question.
Perhaps we can ask our guest host.
He founded reddit.
Reddit is cool.
Why isn't sears cool?
My first job was at compusa.
I think a lot of retail is moving online.
It is all amazon at the end of the day.
If they move into the idea of same-day shipping, i am already spoiled by the idea of walking into a store and test something out versus finding a blog to tell me what to buy, finding an online to buy and having it show up a day later.
We're going to tell you how to build a tech empire here we are going to talk to the reddit ceo.
This is "bloomberg surveillance." we are streaming on your tablet, your phone, and bloomberg.com.
? good morning, everyone.
Bloomberg surveillance in chicago this morning.
The essay of the last two weeks -- our guest -- larry summers is driving the economic debate.
This is "bloomberg surveillance." i am tom keene.
I am live from "the year ahead 2014" business summit in chicago.
The view forward is not cloudy, but certainly there is a gauze to it led by enthusiasm over silicon valley and technology.
Matt miller is in chicago.
What alex ohanian launched in 2005 is now one of the most popular in in attainment news -- in entertainment use.
Reddit.com's start up story is one that many entrepreneurs want to repeat.
Alexis ohanian is the ceo.
He says the 21st century will be made, not managed, outside of silicon valley.
Am i going to be looking at a bunch of twitter startups?
Is this what that is pointing to?
The internet economy is alive and well.
What is exciting is that if you want to change the world during the industrial revolution, you need to open a factory.
If you want to change it during the internet revolution, you only need to open a laptop.
Doesn't that create a lot of bubbles and sustainability issues?
The advantage we have is that the cost of starting these companies is a fraction of what it was 10 or 15 years ago.
The biggest expenses are rent and food.
Server costs are a distant third.
It doesn't take as much to start these companies.
When they do fail, the fallout is not as big.
What is your biggest use of advice to people that want to start businesses?
Everyone says don't be afraid to fail.
The bigger thing is to identify a genuine need and try to solve it.
It seems evident, but online, you cannot create something and then smother everyone in advertising.
You have to build something compelling or people will go back to cat photos.
I like those cat photos.
What is the endgame?
We're seeing a lot of tech startups reject buyouts.
You had snapchat reject a $3 billion offer from facebook.
What does it look like two years down the road?
There will be companies like snapchat the resist acquisition and will want to grow into a large business.
Is that dumb?
I thought zuckerberg was when he turned down yahoo!, and look to the idiot was.
That was me.
There is an opportunity for these companies to grow into the next google or the next facebook.
That is a choice the founders have to make.
Acquisition is a viable alternative.
Growing a large company is the dream -- what does it mean to be the president of the internet?
You are a bus tour in john mccain's straight talk express.
We were shooting a documentary and we wanted to shut off the internet economy in the heartland.
After sopa, pipa, i wanted to draw attention to the fact that the internet economy is everywhere.
Farmers were saying i don't check my e-mail more than three times a week.
I am not a tech guy.
90% of my orders now come from the internet thanks to a marketplace for meat.
Are they profitable?
I would wager that because they have been seeking revenue since day one, it is not about tweets and cat photos.
They have a business model and it is affecting family farmers all over the country.
That is exciting.
That is the promise of innovation.
You are here for the whole hour.
Thank you, alexis.
Want to know the best ceo is?
We are going to hear from walter isaacs on who he thinks is the best.
This is "bloomberg surveillance." we are streaming on your tablet, your phone, and bloomberg.com.
? this is "bloomberg surveillance." i am alix steel here with matt miller in new york.
Tom keene is live in chicago this morning.
Let's get to our top headlines.
Representatives of the u.s. and iran will meet in geneva to discuss a land to limit iran's nuclear program.
-- a plan to limit iran's nuclear program.
Farmers in france took their tractors to the highways to protest taxes and new regulations.
The demonstration gnarled traffic around paris and forced commuters to mass transit.
It was the latest protest in france.
It landed, but cannot take off.
This modified boeing jumbo jet landed at the wrong airport.
The airport has a smaller runway then used by the boeing 747 so it raises the question on whether or not the lame will have enough room to take off.
Boeing says the company is trying to determine the next step for the plane.
Can you drag it out by the tractor?
Take off the wings and pull it down the highway.
It is our morning must read.
It is a must listen.
We will do a morning must listen.
I had a conversation with walter isaacson who is in chicago.
He is the author of books on benjamin franklin and steve jobs.
I asked about jeff bezos and his handling of the washington post.
Bezos is the best ceo around today.
He will be able to figure this out better than anyone.
He knows you drive it to customer service and you drive it to user generated contract -- content.
People like you and me look at twitter and go yeah, yeah, yeah.
I am reasoning -- reading more journalism through links than anywhere else.
Twitter and the linkage form, does that interrupt the rest of traditional media?
I think it helps traditional media.
We are going to want good narrative, longer form journalism.
What a terrific conversation.
You can see that at bloombergtv plus on the ipad.
I thought it was remarkable, talking about the speed of change that we are seeing in ale x's world.
We have alexis ohanian here.
Aside from yourself, and your cofounder, who is the best in innovation and sustainability?
I was actually thinking bezos, myself.
Do you have to be profitable to be the best ceo?
I would hope so.
We see bezos putting a lot of money into helping its margins.
I think he has always struck me as someone who is not concerned with orderly earnings calls -- with quarterly earnings calls.
So much of the internet economy is on the backbone of amazon's servers.
I don't think we appreciate how important that is.
It is good to have you with us for the whole hour.
We are talking about immigration and what will congress do with the legislation.
This is "bloomberg surveillance." ? this is "bloomberg surveillance." i am matt miller, here with matt -- here with alix steel.
Scarlet fu is off today.
Let's get to a quick data check.
A look at the board -- the s&p futures.
The only real movies in s&p futures.
The 10 year yield is unchanged at 2.79%. if tom were here, he would give it to you out four decimals.
The euro dollar is down a little bit.
1.3430. we had some big movers yesterday.
One in particular was jcpenney, hitting its highest level since september.
That is impressive.
It is less bad.
Revenue declines slowed in the third quarter and outlook wasn't terrible.
Sales and profit margins might actually improve during the holiday shopping season.
They had their first monthly revenue gain in two years.
They got rid of their old customers and are trying to bring them back with their discounts.
What is interesting to me with lowe's is it is different from its competitor, home depot.
It was really the broader issues facing the housing markets going forward, rising rates, the homeownership rate is falling.
That is weighing on lowe's a little bit, but home depot is a little bit resilient.
In d.c., the other change president obama is pushing for.
A lobbying group held a hackathon for immigration reform last night.
We are at a critical moment in the movement where it is important to keep pushing ahead.
We have had more progress than we have had in almost 30 years to have a bill passed the senate.
The house wants to do stuff in a different way.
That is fine.
We need to keep making sure that everyone knows this is an important thing.
This is something that the vast majority of americans want to see happen and it is important for our families to do the right thing and it is also important for growing our economy and our country.
John boehner said last year he would take action on immigration, but he opposes the senate bill and has not moved on the house bill.
Will the new attention from silicon valley break the logjam?
Tom, what is the importance of immigration reform there?
It is part of the discussion, no doubt about it.
Wrapped around the business summit is the mystery of politics in washington.
Lonnie chen teaches at stanford law.
He is policy director for mitt romney's presidential campaign.
He is a voice for republican public policy.
Wonderful to have you here today.
We're talking about immigration and jumpstarting policy making.
Is it completely on hold until the affordable care act is beaten to death?
We have a pretty crowded agenda.
We have health care reform, the budget deadline on december 13. there are a few other odds and ends.
Immigration reform is going down in flames.
What is different this time?
People are saying this is the year that we are behind this except i don't hear any political mass or inertia to get it going.
We lost momentum.
It was there during the summer, but we have lost some of the momentum.
Some republicans are looking ahead, paul ryan being one of them.
I had a moment in the basement of the cato institute where i listen to guys like you go on about policy and then a policy came -- that a politician came in and it was a totally different speech and body line which.
It was a totally different culture.
With the affordable care act, our politicians remotely near people like you?
The interesting thing is the president, in doing what he did last week, may have hurt himself and of the law itself.
When the public perception of the affordable care act is that the obama administration does not know what they're doing right now, the reality is that republicans want to capitalize on that.
You are going to see polarization.
The idea is, it is law.
Do we amendment -- amend its?
Is there a hope and prayer of eliminating the affordable care act or are we just amending the affordable care act?
M a i think the idea somehow the law gets delayed long enough to have it overturned.
The wheels are in motion.
We are heading towards implementation.
There are ways that people have said we can improve the law.
The challenges that there are some fundamental flaws that the president is unwilling to fix.
Where he we get smarter on this?
Where can we get smarter about this as we go into the new year?
There are a few different leases.
There are some of my colleagues at places like the american enterprise institute, gentle product, is a terrific analyst -- jim cupretta is a terrific analyst on this.
You are so balanced about bringing in all of the different voices.
Lanhee chen obviously has his own voice.
When you talk about obamacare, what do the doctors think?
I think it depends.
There are some doctors that are concerned about what the affordable care act is going to do to their compensation levels, their ability to see enough patients.
I think a lot of them are going to be seeing a lot more patients and their concern about whether or not that patient load is reasonable.
A lot of them will be fine.
I think it depends on the kinds of doctors you are talking to.
The opinion i have gotten from doctors has been pretty negative.
Is the socialized medicine?
We are on the pathway to a different health care system.
A lot of people on the left see obamacare's failures as a very different pathway than what america has been on.
It is a big day here in chicago.
It is the business summit.
A terrific set of ceos.
Why is that important?
They are dealing with their business plans for 2014. we're worried about the holidays, i am looking out the -- i am looking at the windows.
I was shopping on the magnificent mile last night and thinking about the holiday season.
Ceos are looking at 2014. i hope you bought me a present.
That leads to our twitter question of the day -- what is your favorite american city and why?
This is "bloomberg surveillance." we are streaming on your tablet, your phone, and bloomberg.com.
? this is "bloomberg surveillance." i am alix steel with matt miller in new york.
Scarlet fu is off today.
Tom keene is in chicago this morning.
Now for our top headlines we are watching.
Manufacturing in the euro area expanding for a fifth straight month.
Germany drove the expansion, but manufacturing in france did slow to a six-month low.
It was a different story in china.
Manufacturing fell for the first time in four months.
A preliminary reading show the manufacturing this month found that new orders --. the full senate vote for janet yellen may come in early december.
Five senate republicans say they will support yellen.
That should give her the votes she needs for confirmation.
If they do not confirm her, doesn't she automatically move to bernanke's position in the interim?
President obama can probably a point that for an interim basis.
If you look at the markets, they cannot escape the fed.
It is the central bank of the world.
All of that is a litmus paper of the dollar as well.
Markets are at record highs, but we need to know, can the euphoria hold?
Investors are wary.
In a recent panel discussion, i spoke with robert cinched and i asked -- robert singe and i asked him about volatility.
Volatility comes from big shifts in monetary policy.
It doesn't look like you have major shifts in monetary policy coming in 2014. the ecb adopted and ease in policy.
That continues on well through 2014. the fed does not look like they're ready to move anything too quickly.
Unless you start getting shifts in monetary policy, you generally do not get big movements in volatility.
You get short-term, little spikes, but it stays subdued.
I would say, the key thing i am looking at within dollar dynamics is what the yen does.
There is so session that autonomic's -- abenomics will be successful.
I know a lot of japanese ceo's and american ceos that would like to be skeptical for 2014. he managed arian efforts can can you in the -- humanitarian efforts continue in the philippines.
Here, soldiers loading food supplies into a navy helicopter.
Getting supplies out has been a big problem.
Also, we have a look at -- did you have a filipino comment?
I was just going to say it was staggering.
It was not a deep comment.
It is staggering, and much more so than the flooding in venice.
You would imagine if you lived there, you were prepared -- you are prepared for flooding.
I wasn't sure if this was a photo of the flooding or a regular day in the square at the nest.
Good business for rain boots.
Surfers in indonesia made the most of their rainy season as they compete to catch waves in a river.
The rainy season creates a way that count reach up to 10 feet high.
Is the wave brown?
It does look brown.
It doesn't matter to surfers.
The waves are known as bono tidal waves.
They were named after the singer of u2. he is a big taiwanese surfer.
I did it once.
It is really fun.
For me, it is swimming out past the breakers.
I don't have upper body strength.
We asked of the question, what happens if janet yellen does not get confirmed.
Michael mckee is here.
What actually happens if janet yellen does not get confirmed?
Ben bernanke has two jobs.
He is chairman of the federal reserve board of governors and the open market committee.
As far as chairman of the federal reserve board of governors, janet yellen, the vice-chairman would get a promotion.
He can stay as a governor until 2020. his term is not up.
His term as chairman expires -- he is not going to.
We assume he is not going to.
He may stay on for a little bit.
As far as a policymaking role, the vice chair of the fmoc is elected once a year in january by the members of the fmoc.
It always goes to the chairman of the fed, but in this case it would be an open contest.
You could keep ben bernanke because he is on the board, or you could put in janet yellen if you thought she was going to be confirmed.
The fourth option, you could pick anybody in the world.
There is no requirement that the chairman be a member of the fed.
The most likely thing is they would put janet yellen into the role.
There are a lot of different possibilities.
Didn't ortiz get in the most bwrite-in votes?
You could end up reporting fed chairman david ortiz.
We're going to hear from james buller.
That is coming up next.
? this is "bloomberg surveillance." i am matt miller with alix steel in new york.
Scarlet fu is off today.
Tom is live from the year ahead 2014 conference in chicago this morning.
He will be joining us throughout the next couple of hours.
Company news from the files of bloomberg west -- charles schwab waves on the microsoft ceo search.
He says bill gates should return.
He thinks that bill gates is the only one that can reshape the structure at microsoft.
The nsa spying will probably hurt akamai's business in germany.
It reflects poorly on u.s. companies overseas.
Anti-u.s. sentiment is being whipped up in germany.
Sharp may exit its mobile phone deal with foxconn.
They have seen disappointed sales with sharp branded phones in china.
The deal started last year and that is today's companies news -- today's company news from the files of bloomberg west.
Have you bought a new phone yet?
I am waiting for the six.
I have the five.
I am thinking of buying the samsung galaxy note 3 as a second phone.
It is so much fun to use.
I have the notes.
I have over hands.
It feels like it is the right phone for me.
Tom, i hope you're having fun in chicago.
You are there with the year ahead 2014 conference.
We also heard from federal reserve, bank of st.
Louis president, jim bowler.
He spoke yesterday.
This is what he had to say on the economy.
I think the right assessment of 2014 is still to be optimistic.
I think a lot of the drags that were did -- that were affecting u.s. economy were waning.
In the global situation, europe has been in recession for quite a while.
It looks like they're coming out.
I know the recent day that was weaker, but i think they will come out of recession in 2014. jim bullard speaking carefully.
It is really the background of this business summit.
Lanhee chen with us.
There we are with jim bullard talking about the struggle, how is the policy debate changed now versus seven years ago?
There is a lot more polarization now than there was seven years ago.
Republicans and democrats have a tougher time getting together that made it then.
That makes policymaking harder.
If we get a better economy, will that diminish the fractious meness in washington?
Can we believe that if we get a better economy may be washington will calm down?
That may help.
Ultimately, the challenge is that republicans and democrats have such a different view of the economy.
There is not a lot of middle ground.
Thank you for coming to our summit.
Lanhee chen with bloomberg view.
Thank you so much, tom.
Alexis, i want to ask you before you run off, we what does a tech startup not do?
What is the best non-practice?
That would have to be missing out on creating an environment that maintains the best talent.
The competition for talent is already so fierce.
There's a company called hub spot that is offering $30,000 for the referral of the developer that they hire.
30g just for a referral.
Treating your customers has also been important, but your employees is most important.
Do look at read it every morning?
-- reddit every morning?
Great to have you here.
Thanks for being here.
We are going to give you a look at foreign exchange moves.
The pound up against the dollar.
The euro up against the pound.
The u.s. dollar up against the japanese yen.
We will be back in just 30 seconds.
? how to taper quantitative easing.
The federal reserve weighs its options.
Retailers weighed their options.
And electronics rice war looms.
-- an electronics price war looms.
Is this a bubble or the new disruptive economy?
We speak with a venture-capital ceo who has placed his bets.
Good thursday morning.
I am matt miller.
Live from our world headquarters in new york.
It is thursday, november 21st.
I am here with alix steel because scarlet fu is off today and tom keene is in chicago for bloomberg's year ahead 2014 conference.
Good morning, tom.
It is going to be an interesting conference today.
We have ceos from some of america's leading companies.
The ceo of walgreens will join us, with google.
We will talk on medicine with the ceo of mayo clinic.
It is our year ahead 2014 from chicago.
Alix will have that all through the day on bloomberg television and radio.
I don't have to miss your bowtie because matt has his own bowtie.
We're safe here on the surveillance set.
We need people to tweet in -- which one has the better bowtie?
You should tweet us in.
I tied minus lead.
I went to bed last night with this bowtie.
I believe tom never takes his bowtie off.
Chinese manufacturing declined for the first time in four months, but it was a different story in the euro area.
Manufacturing expanded for a fifth month in november, led by germany.
We have economic data and the u.s.. 8:30, jobless claims as well as reduce or price index.
At 9:45 a.m., a bloomberg consumer comfort.
Before the bell, we have target, gamestop.
After the bell, gap and pandora.
Interesting to see what they say about the holiday season.
It never ends.
The holiday season, it never ends.
We just had a ten-month break, i guess.
Let's get you company news.
With obama administration starting off first, it says no to bruce berkowitz's plan.
They want to recapitalize the two and turn them into stay regulated bond insurance companies.
Gene sperling says a sale or recapitalization would not address danny and freddie -- fannie and freddie central role.
The tribune will cut about six percent of its workforce.
A total of 700 employees according to the new york times.
The cuts will come from staff that the newspapers, including the los angeles times and the chicago tribune.
Ikea is being investigated for possible spying in france.
There are allegations that management illegally obtained police records of staff members.
Nana smith is also alleged to have gather personal data -- management is also alleged to have gathered personal data on customers who made purchases.
That sounds crazy.
A furniture company investing clients for complaining.
A robin hood investors conference kicks off in a few hours.
What happens in the conference today will move the markets.
Stephanie ruhle is there all day kicking off her coverage.
If you were wondering what h #rainvestors is all about, it is robin hood's first conference.
You have been part of robin hood since 1989. why an investor conference now, years later?
All about higher returns.
800 people will gather here to hear from some of the best investors of all time.
They're going to raise more than $5 million to help the 1.8 million new yorkers who live in poverty.
Let's talk about who you have speaking today.
Only robin hood could bring together this lineup.
Larry summers, john griffin, today alone.
How to get this group together?
Why would they want to share their ideas?
They want to save lives.
This is a great way for them to use their expertise to help our neighbors in need.
They have the biggest hearts and the biggest mines.
What should people expect to get out of a day like this?
They're going to get some of the best tips they have ever had and the knowledge and satisfaction that they have saved lives.
David i learned -- david nine warned -- david einhorn -- what does he say?
Time to put our business to work.
A group came together and said let's throw the mother of all investors conference is to save some lives.
That is why we are here today.
How hard was the stupid together?
It was easy.
Today you're sitting down tim diner and larry summers at one table.
What is the goal?
If you look to the market, all people needed to do was buy it.
Things are getting more consultative.
Is the take away that people want to know what the landscape is going to be in the year ahead?
I think that is right.
They want to hear war stories.
They want to hear what happened in washington over the past few years.
How about your moderators?
Do we want to have an inside look about how big guys like this think and talk to one another?
I think you are to peer interviews are rare and special things.
-- i think peer to peer interviews are rare and special things.
I am going to be sitting down and i will be sharing my interview with our viewers.
Good luck raising money.
Alix steel, i am going to be covering this live, all day.
You want to stay right here on bloomberg tv.
I am jealous.
You have the best seat in the house, all day.
We're looking forward to that.
Larry summers is coming up with stephanie from the conference at 9:20 a.m. you do not want to miss it.
It should be a great interview.
We're going to move onto another great interview.
What do you think, moe, about what we see -- we talk about a tech bubble all the time.
You cannot base them on profit because a lot of these companies are not making money.
Like anything else, you have to take it in its parts because -- i approach it differently than the public markerts do.
Generally they look day today or quarter to quarter.
When we invest in the earlier stages, we're looking at the disruptive trends in massive industries.
If you come from that point of view, you understand why there is so much attractiveness in the markets for these kind of businesses.
Emmie how long do you give them to make money?
-- how long do you give them to make money?
Is the question how long or will it return the invest in?
I am a -- the investment?
I am a very patient investor.
What i found is when i look a public market investors, they invest in companies the same way venture capitalists do.
They look for great management teams, disruptive products, and they take a long view on these businesses.
The reality of why the market is so hungry for these kinds of businesses is because they realize technology, internet, mobile, they are changing.
It is the growth engine of our economy.
They are changing industries from financial services to automobiles to everything in between.
We are talking about some of the biggest sectors of our economy and they're going to be massive winners in these categories.
Investors are hungry for growth.
They know we are not always going to ride on what we used to come up our economy.
They want to get involved in businesses that have impact over the next five to 10 years.
We're going to continue talking about those businesses with mo.
I have a quick data check.
You cbs and the futures still up -- you see the s&p futures still up.
The 10 year yield down a little.
Not a lot of moment.
We're getting into black friday.
Will sales be strong?
We will talk about it, coming up.
? good morning, everyone.
"bloomberg surveillance." i am tom keene.
Our conference with chief executive offers -- officers on their business plan.
Henry paulson, comes back to talk about china.
This is "bloomberg surveillance." i am tom keene, live from our year ahead to thousand 14 conference in chicago.
-- 2014 conference in chicago.
One of my important conversations yesterday with john stump.
It was a terrific conversation and weight focused in on the -- and we focused in on the affordability of housing.
If ford ability of homes -- the affordability of homes remains very attractive.
If you are less than 50 years old, you think 3% or 4% is normal.
John stumpf really pushing against the gloom that is out there.
Not so much to worry about recession, but he says he does not see it.
What are you paying attention to in chicago outside of the conference?
What are the headlines of the city of chicago?
The headlines in the city are a different story.
Within the conference that we have underway, it the linkage of housing into a better american economy.
Housing is the underpinning of the economy.
Others, including austan goolsbee, saying forget about that, chicago is important as an export dynamo.
I have mo shaking his head saying housing is not the underpinning of the economy.
I think housing is an important part, but i think, since reagan and before, this has been the mantra of the u.s. economy for a wild, which is we keep interest rates low, owning a home is the american dream.
What we saw with the mortgage crisis in 2008, we have to remember that.
At the end of the day, housing goes up and down, but it is not a growth engine of the economy.
We're talking about that here with mo.
Coming up, a conversation with -- on his disruptive media.
? it is our twitter question of the day -- a subject of great discussion -- what is your favorite u.s. city and why?
Tweet us @bsurveillance.
New york, born and bred.
There are so many different cities.
It is a huge country.
It is a big question.
I am alix steel.
Tom keene is live at the year ahead 2014 conference in chicago.
Our guest is thmo of spark capital.
Additional talks will include representatives from the u.s. as well as china, they trying to agree on a draft grows old that would limit iran's nuclear program.
Commuters were forced to use mass transit in paris when farmers protested.
It was the latest protest in france against higher taxes.
Farmers protest a lot in france.
The full senate vote on janet yellen's confirmation will come in december.
We heard from mike mckee that she is basically going to take over as head of the board of governors of the federal reserve.
That is regardless of what happens.
There is a vote -- there are a lot of options if her confirmation does not go through.
We are closing in on the holidays.
I am making a list on amazon.
I am waiting for the price to come down than i am pressing me order button.
-- pressing the order button.
Am i putting big-box retailers out of business or will i have to visit walmart?
Is there walmart in new york?
I have never seen one year.
I love going into stores.
It is difficult to return stuff.
I don't know how to use the mail.
Sales riseose 4/10 of one percent.
A gloomy forecast for the holiday season.
What exactly is going on?
Here with clarity on the retail landscape is our guest.
Wendy, welcome so "bloomberg surveillance." -- welcome to "bloomberg surveillance." people are going to buy more stuff, but the outlook is gloomy.
It is not stopping them from spending money.
They are going out and buying stuff, they are just not buying tons of stuff.
They're being selected.
They're doing a lot of research.
They're checking their list, they're looking at prices everywhere.
They are doing a lot of homework.
They're doing what they have to do.
They are very cautious.
It is going to be one of those cautious, now you see it, now you don't holiday sales.
We hear that they're cutting prices, boosting sales, who cares about margins.
Is that a good strategy, longer- term?
For most retailers that is how do you keep people in the stores?
They have thousands of stores, all that real estate.
If people keep going online, they have got to get people in.
The way to get them in over the holidays and then into the new year is cutting, cutting, cutting.
That is a big challenge.
Mamet nobody is going to shift completely to online, right?
I think what we're talking about is the reaction to amazon, who has taken the position that they want to grow the top line at the expense of margins and they are doing it successfully.
As a comes to retail specifically, i am a believer in retailer.
If you look at warby parker, their growth engine on top of the web is stores.
They are killing it.
They have hit on something that is important for other retailers to understand.
Stores are not just transactional places.
If you try to make them transactional, you will lose to amazon.
Stores have to be experiential.
They have to be a place to go to and you feel something interesting.
Could we have room for pop-up stores?
Google is thinking about winter wonderlabs.
I think the big boxes have to create a much better experience.
Warby parker is a great example.
You can go a get your eyes tested there.
There's a sense of community.
It is a special experience.
It is the integration of the two.
You have to try on glasses.
You can't order -- they send them to you.
There is a label that comes, you stick it on.
You ship it back.
This boy needs help.
I think it is the integration of both.
What big-box retailer is doing it the worst?
Putting you on the spot here.
That is an interesting question.
Who is doing it the worst?
Jcpenney -- one of their strengths has been jcp.com.
They have had an extraordinary online business.
They went through the fiasco.
I would not say they are the worst.
I say they are not being very good at the store experience.
Wendy, thank you so much.
We appreciate you spent -- shedding insight onto the retail landscape.
? good morning.
"bloomberg surveillance." i am matt miller with alix steel in new york.
Scarlet fu is off.
Tom keene is live from the year ahead 2014 conference in chicago.
We want to get a company news.
Credits weise will separate -- credit squeeze will separate its operation.
The swiss unit will include its wealth and asset management and institutional client businesses.
The move is due to new regulations in switzerland and the federal reserve in america.
The tribune company is slashing jobs.
They will cut about 6% of their workforce.
That is according to the new york times.
The cuts will come from staff at tribune's newspapers including the los angeles times and it chicago tribune.
Shoplifting is now on the list of jcpenney's problems.
The retailer said that despite last quarter after it removed security tags.
It shaved a full percentage point off their profit margins in the quarter.
Mike ullman told us that.
That is the company news for today.
Without to tom in chicago.
Everything you're wearing -- let's head out to tom in chicago.
Everything you're wearing, you purchased?
That is true.
The collapse here of the tribune in chicago and the great reporting on the violence that they have seen in chicago is really something to behold.
I am here at the art institute my late michigan.
Andy let's spoke tx spoke about creating a wedge in the industry.
I felt that the long close circle on broadcasting and satellite is going to break up your to one not maintain itself on into the next decade.
Aerio is a platform that i think is a wedge in that.
When he entered the art institute, sparks went off.
Mo, barry's disruptive in an old media style.
Can fossils like him come over to the world you are in?
I was trained by barry diller.
The question is can guys like him help create guys like me.
I think the answer is yes.
I work for him for six years.
I think barry is one of the most creative, thoughtful, and piercing minds that i have ever worked with.
He is not afraid to take anyone on.
Whether he is right about the cable industry is a different story, but he has the stomach to go after them.
I think that is brilliant about you train a young guy like you.
He has trained so many others.
The idea of mainstream media coming over to your world, are you optimistic in 2014 that that trend can continue or is it a wasted exercise?
If you look at the media landscape, you have to break it into its components.
People talk about media with a capital m, and that is not the right way to think about it.
If you look at the newspaper business, historically it has never been the best of the media businesses.
The cable business on the other hand, it may be right for disruption from a programming point of view.
It is going to be undo any time into the foreseeable future.
If you look at the stocks, they have shown profits.
We have to understand who is vulnerable and who is not.
The people most vulnerable are the newspapers and in some instances, magazines and niche properties.
I don't think comcast is in trouble anytime soon.
Aren't kids going to stop?
My kids -- my younger brothers do not want to pay a cable bill anymore.
Why should they pay for internet?
How do they get a netflix?
The same people providing you with a cable services providing you with internet.
The ticket prices lower.
It is, but you have to imagine that ticket prices for internet are going to start climbing.
They will do differential pricing for different levels of service.
Kids are going to want faster internet.
I am not saying over the top will not disrupt cable programming, we did that with fox.
-- a company we invested in.
We want to get a quick data check on the mat.
Take a look at where the movement is.
Futures are up 2.5% on the s&p. good morning, everyone.
"bloomberg surveillance." all of our interviews, including our conference here in chicago out at bloombergtv plus on the ipad, bloomberg radio plus on itunes.
It is the year ahead 2014. a terrific set of interviews today.
We have the ceos from walgreens and the mayo clinic.
I am tom keene.
In new york, matthew miller and alix steel.
Alix, good morning.
I'm freezing on the set.
It was windy last night.
It is not pretty when you're by linkmen if -- lake michigan.
We're talking about twitter.
It doesn't make any money and investors do not care.
Stock is up.
It doesn't seem to matter what comes to yelp, groupon, zynga, you name it.
Mo knows a little bit about this phenomenon.
When you take a look at the tech landscape, it seems littered by the startups.
What is the most interesting?
At what stage question mark does that include twitter, facebook?
Maybe the younger ones.
If you are looking to put money to invest, where would you do that?
I think i pinterest is an interesting company.
Is it worth its valuation?
I have to see its members.
It is worth a big number.
The other one i think is going to be a barn burner ipo and is leading the way for what our next generation businesses will look like is uber.
I think they are interesting because it is a mobile first product.
It takes something that is very complicated logistically and makes it feel like magic in the palm of your hands.
That is what i am looking for in future disruptive businesses.
One more to add is a portfolio company of ours called oculus vr.
They're doing the virtual 3-d glasses.
All we're starting to see in the hardware space in marrying hardware, software, and technology is starting to get interesting.
We will see innovation in that area over time as well.
The internet of things is coming and it will be interesting.
What you call that?
You knew even before i asked.
I think they need work on the programming side of things.
They have not gotten great at anticipating where i want to be.
I think from a user interface point of view and from a product one of you, they have done a great job.
Tom, what are you hearing in chicago?
I'm not hearing a lot of talk about technology.
I have an important question.
What is the difference between the enthusiasm now with a lack of profits and what we saw in 1999 and 2000 where we saw the same lack of profits?
In 1999, it wasn't even a lack of profits, they cannot sustain the revenue growth and the user growth that they were all missing investors area what we're seeing now, facebook is having 1/5 of the world population on its flat form, twitter is right behind it.
Instagram is catching up behind that.
Beyond that, if you look at facebook and twitter, revenue growth is phenomenal.
Investors are betting that the company is choosing to forsake profitability at the expense of growth.
As long as users and topline continue to grow, investors are going to be excited about them.
You are sticking with the.
We want to hear more about uber.
Coming up, toyota is looking to a whole new way to power its cars.
We will take a look at that next.
This is "bloomberg surveillance." we're on bloomberg tv and bloomberg radio.
? coming up on lumbered television -- larry summers, he joins in on the loop -- he joins "in the loop." i am alix steel here with matt miller.
Tom keene is live from the year ahead conference in chicago.
President obama awarded the medal of freedom to former president bill clinton at the white house.
15 others were also honored, including oprah winfrey, gloria steinem, and loretta lynn.
The president laced a wreath at -- placed a wreath at the grave of john f. kennedy.
Kennedy came up with the idea of the medal of freedom.
At a dinner last night, president obama spoke of kennedy's legacy.
He stands for posterity.
Young, bold, and daring.
He stays with us in our imagination, not because he left us too soon, but because he embodied the character of the people that he led.
A massive legacy there that seems to transcend party politics.
I was in dallas for a conference and i went to the book depository museum and what struck me was the documents related to before he was president and before he was assassinated.
Truly and optimistic -- an optimistic view of kennedy.
He had a lot of affairs.
Before -- he wound up bringing troops into vietnam which we associate more with johnson.
Tom, are you hearing anything about this?
It is a little bit of a play here, i think we will see more tomorrow.
I was a child.
It was a shattering moment.
It is much more about the look back to the summer nests of the -- the somberness.
It was a very difficult time.
I am going to write about it in the coming days.
I level is written this morning in the washington post.
The memories of my mother stories about how you were glued to the tv for three days.
I saw in reddit how castro says it was not lee harvey also all.
Just [indiscernible] -- understanding it from my point of view my parents point of view, that was a unique time.
A young, bold president and it was taken away.
? coming up tomorrow, the professor of international and public affairs at lumia university.
He will discuss the -- at columbia university.
He will discuss the 50th anniversary of john f. kennedy.
I am matt miller.
Scarlet fu is off today.
Tom keene is in chicago for the year ahead 2014 conference.
Time now for company news.
Charles schwab weighs in on the microsoft ceo search.
He says bill gates should return and run the company for one year.
He thinks gates is the only one who can reshape the culture at microsoft.
He made his comments at the year ahead conference in chicago yesterday.
The nsa is spying -- the nsa's spying on foreign countries reflects poorly on the u.s. company, akamai, overseas.
They operate computer servers around the world.
Sharp may exit its mobile phone deal with foxconn.
The japanese electronics maker has seen disappointing sales of the sharp branded phones in china.
The deal started last year.
That is today's company news from the files of bloomberg west.
A busy day.
A lot coming on here.
We look at the stories shaping the day.
Tom, what is on your agenda today?
We are here in chicago, the year ahead 2014 conference.
The 55th mayor of chicago is on my agenda this morning.
He spoke with "in the loop," anchor, betty liu.
That is the three things i think is part of our ability.
The mayor on a most vibrant chicago trying to reform themselves.
That is after decades of being something else.
We are at the chicago stock exchange and it was vibrant from another time and place within equity and commodity transactions.
Some of that has slipped away.
What is behind that is the centrality of chicago.
There big benefit is they are in the middle of it.
It was mentioned that yesterday, the idea of chicago being central will be their future.
When you look at the agenda item for chicago, they are right in the middle of the canadian, the u.s., the north american economy.
That is a perfect lead-in to our twitter question of the day.
We asked what your favorite american city is and why.
One said santa barbara.
Another answer said new york, the perfect combo of class, arts, majesty, wonder and amazement.
I totally support you and agree with that.
The last is san francisco getting a buzz from the biggest i.t. companies in the world.
You cannot have both.
You cannot have brooklyn and new york.
I am confused.
I just moved to brooklyn so my loyalties are confused.
I think you can have both.
Brooklyn is in new york.
You get manhattan, brooklyn, the bronx, queens.
You get it all.
Tom, what is your favorite city?
I am looking at miami as a crucible for the future of america.
You look at the shifts in our demographics -- the idea that in california there are only 29% republicans registered.
There is a demographic shift.
We saw then in the last election.
Front and center in that demographic is miami.
That is what i am watching.
I am going to call i don't believe you.
I think boston is tom's favorite city.
If you think about the latin population in this country, the beating heart of the land population in this country is in miami.
It is a really nice place to live, weather-wise.
Tom, you have to say goodbye.
You are running to radio.
I will see you in miami.
I will be there never.
I am going to move onto my agenda.
Toyota -- the automaker is going hydrogen.
The prius carmaker has unveiled a concept model of a hydrogen fuel cell that they plan to watch in 2015. -- plan to launch in 2015. they have had trouble with the technology being too expensive, but a lot of carmakers are planning on coming out with hydrogen fuel cells and 2015. -- in 2015. we will see.
Is that the next iteration of the car market?
Is it tech startup to help rejuvenate the technology that seems difficult to implement?
I think you will see technology and everything.
It is the nature of living in a connected universe.
Connected is the theme of the l.a. autoshow.
If you have driven in a tesla -- i drove in a friend's the other day.
When you get back into a regular car, you cannot believe it.
When are we going to see tech companies involved -- you ball into -- eveolve into car companies?
Does that mean the ford's of the world have to go by techstars?
There has been consolidation in the auto industry for as long as it has existed.
Who knows what else can come out?
I want to point out that tesla has done an amazing job with that product.
I hope he gets better and i hope it's cheaper so more people can drive it.
It is all about lithium.
Lithium and aluminum.
The fix that chevy volt had to make so that its battery was safer and did not explode and burn after you run over a tire on the road is that they had to put another aluminum sheet under it.
That would drive the price up of tesla substantially.
I am looking at retail sales for my agenda.
October sales were up narrowly.
Ready gloomy on the forecast for the holiday season.
We got the numbers out this morning.
Sears just lost $2.88 per we do not know if that is comparable to other estimates.
Revenue came in $8.3 billion.
In terms of target, net income fell 40%. we continue to hear that from the likes of walmart.
Big-box retailers trying to fill market share.
If you look at what walmart is doing, they have built an office dedicated to technology in san francisco.
They have to do that.
They're behind the curve on that.
Have to play catch-up now.
I am going to go into jcpenney and a sears.
Going in there will not work.
You have to buy something.
I will probably buy something at sears.
I don't know what they have a jcpenney.
You can get a new bowtie.
This is just for tom i am wearing a bowtie.
I don't think having a website is associated with cool.
To be cool, you have to be cool.
Can retailers become cooler?
It has been a pleasure having you on the program.
Thank you for joining us.
I have a whole day ahead of me now.
"bloomberg surveillance" continues on radio.
? . .