Kn your customer.
Ow -- know your customer.
He is the economist's economist.
Slated to be the next chairman, vice chairman chairman, rather, of the fed.
I promise, i will not fall asleep and start snoring with those plush new seats at amc as they reinvent the movie experience.
Good morning, this is "bloomberg surveillance." it is thursday, december 12, i am tom keene with scarlet fu and alix steel.
It is a busy front page.
It is a busy day.
Retail sales for november as we get a check on the black friday sales, also in his -- initial jobless claims.
As well as business inventories for october.
Lulu lemon reporting before the bell.
After the bell, adobe quicksilver resources hardware.
We want to update you on the sec discussing the in-flight call ban.
Jamie dimon will speak in d.c. on closing the workforce skills gap.
Hilton begins trading this morning on the new york stock exchange under the ticker hlt.
Ipo at $20. star with things there's more value there.
But see that interview at bloomberg tv plus on the ipad.
And bloomberg.com, all of our television interviews out there on a glorious video.
Let's do a glorious data check.
Stocks, bonds, currencies, and we slipped into a december boredom.
I am going to do a half screen data check one of these days.
The euro printed 138 overnight.
Nymex does nothing.
Our next screen, the vix, dxy still under 80. it is a big deal to get that one point 38 print.
There is our data check.
Interesting in the papers.
We look at the web.
I wore out my finger on the mouse.
Our first front-page story, five years ago yesterday, bernie madoff was arrested.
Where were you?
I was at the office.
Today, "new york times" has jpmorgan may pay as much as $2 billion regarding claims tied to ernie made off.
Investigating how jpmorgan handled funds controlled by bernie made off and whether the turns -- banks turned a blind eye to the fraud.
Reading through that piece, cites it as one of the biggest threats among all of jpmorgan's legal issues because of the criminal element involved in the case, which i thought was a very staggering statement.
Given that jpmorgan has had to pony up a $13 billion settlement.
This is something we will keep an i on.
Our second front-page story, moving onto washington, has to do with the two-year budget deal.
On track to win passage in congress.
It is likely to pass.
It's most important settlement.
Is it a deal?
Is it handshake?
It is a deal.
It is a deal.
Is not a grand bargain but, yes.
The debt ceiling.
Offsetting the sequester.
Roughly a budget for both years, which was upsetting for republicans and democrats because it was in the middle of what they both wanted.
To i presume it is all clear?
It is not all clear.
We still need to do with the debt ceiling.
Deutsche bank writing yesterday this budget demeans the fonc might lower its threshold for the unemployed rate come next week which might pave the way for an early tapering because of dysfunction washington is sidelined a bit.
That was interesting.
Our third front-page story, stanley fischer will likely become vice chairman of the federal reserve.
He is president obama's leading candidate according to people familiar with the situation.
He would replace janet yellen who will become chairman of the fed.
The white house plan to announce the choice this week.
This is just based on our reporting.
Governor fisher makes a visit to bloomberg surveillance.
He is eclectic.
He is revered.
And he is professor to mario draghi.
He sold me a great story, and some in through a piece of chalk and threw it right by his left ear he was so angry at the young cub stanley fischer.
Here is why stanley fischer is revered besides mario draghi ben bernanke and others, this is the asian crisis, the korean yuan and this is the sweat of the middle 1990s. he was in the heart of this.
The managing director of the imf . he is widely credited some of the guy, on crisis.
-- he is widely credited, the guy, on crisis.
Proxy help made everyone take the tough medicine.
And we will talk to alice rivlin.
A little later.
Sam grobart is our guest host.
The new issue of "businessweek" is out today.
The new general is the cover.
That was done quickly.
Sam had to pull an all nighter on wednesday and thursday to make that happen.
Wonderful to have you here.
You nailed the apple store for 2013. when you met with the apple people and they were adamant, all three executives, they weren't going down market.
Have the executed that?
Yes, they have.
It seems to be paying off.
You look at sales of the new iphone 5s and 5c, and the 5c is not doing as well because the 5s is doing so well.
Is that good news for samsung?
Sam knows also about samsung and the boston red sox.
What is the story on samsung?
Samsung is trying to attack apple of the same rate that apple operates at, but also trying to cover the low end.
They have the integration be able to pull that off.
Whether or not they will be successful, there are serious tensions between samsung and google, which provides the operating system for all their smartphones.
It seems you're describing what is happening in the u.s., but the battleground will be china and their samsung has the upland, especially the novos of the world which are local.
And the chinese manufacturer are a to apple and samsung together.
-- are a threat to apple and samsung together.
It is just a matter of time before someone comes along -- apple says, no way.
But even as we pay so much attention to how much apple prices its i devices, yet reports that walmart will sell the 5c markdown and also the 5s at a discount.
We talked about how apple is held onto its price strategy, but it doesn't have the control of what the retailers do.
Walmart for $119? we will talk about that.
100 $27. that is a hairline fracture in what used to be an incredible -- impenetrable wall of apple.
Indications like that tells you something.
Let's bring it up right now, sam grobart effect.
Here's the chart of apple.
This has got to be a massive victory lap for tim cook.
Has he moved on from the legacy of mr.
I think he is beginning to do that, yes.
There's a huge shadow he is to operate under, but it has been some time and we're seeing the plans moving forward and they are successful.
That is a credit to tim cook.
Sam grobart with this.
We will talk about big seats and movie theaters.
Tom keene-sized seeds.
You could lie down as if you're lying on a bed and watch the movie.
And start snoring.
Companies thursday morning.
Partnership with general motors is disappointing, the british automaker says it will take a hit this year.
Part of the shortfall tied to the partnership with gm.
40% less than forecast.
The company's arbor day dropped plans to cooperate on subcompact vehicles.
Rbs settling an investigation into sanctions violations and will pay $100 million to settle with regulators from new york and the u.s. accused of violating transactions with parties in iran, sudan, and cuba.
Barnes & noble shares eating the company chairman.
He sold 2 million shares of the book retailer earlier this week.
His loss was $40 million according to "the wall street journal." that is today's company news.
The charter peugot doesn't look like ford.
Exposure to your.
That is where the struggle has been for the car market.
How do you say renault?
I don't know.
The man accused of being a fake sign language interpreter at the nelson mandela memorial says he actually had a bout of schizophrenia and told "the associated press" he had visions of angels coming into the stadium and has been violent in the past.
The man was just standing three feet away from president obama and numerous some in which experts say all he was doing was gibberish.
South africa's government says they are investigating.
That is terrifying on sunday levels.
Why isn't he on medication?
Where is the mental health in the country?
He has done this several times.
This is of the first time.
At this occasion.
When you have all of the world leaders together, this is the guy you want for that event.
Excuse me, why do i see cecily strum on "saturday night live"? that is true.
It was made for her.
But it is sad.
It is a mental illness that people struggle with an untreated it is very dangerous for the people around you as well as the individual.
This is a story that is not going away.
Much more coming up on "surveillance." facebook as soon joining the s&p 500, the biggest social network will replace an old tech company in the index.
What does that mean?
We will discuss the coming up on "surveillance." ? good morning.
This is an important conversation.
She is the senator from massachusetts.
Making news on democratic party politics.
"market makers" with senator elizabeth warren from massachusetts.
No doubt that will be a spirited interview with the senator.
This is "bloomberg surveillance." just out last night, facebook replacing card i'm in the s&p 500 index -- replacing paradigm in the s&p 500 index.
What is the timing?
It is not going to take place until december 23. that is the first day it will be included.
The transfer happens after trade on december 20. facebook with a big part of the s&p 500. there is a lot of money, passive money, that tracks the s&p 500. artificial pop if you will.
That is a huge amount of money that tracks the s&p 500. credit suisse says passive funds that track it would need to buy roughly 190 million shares of facebook.
That should give it -- you call it an artificial pop, but it is a pop regardless.
Is this a long time coming?
Facebook is art a part of the nasdaq.
Is the s&p a little behind?
In late october, facebook reported its fourth straight quarter of profits.
That was the last hurdle it needed before became a member of the s&p 500. the fact it was part of the nasdaq so quickly, mainly because facebook and nasdaq agreed to that -- as part of the deal.
When it chose to list.
Down to $20 a share.
Mastercard goes from 700 down to 70. you wonder what facebook will do on the up, up, up if they go over big in the next three or four years?
Sam grobart with us.
As you look at the hoopla, is facebook going to be a dow component one day?
It seems like it would be.
They have become the social web.
More and more, that is where people are going to do commerce, discover information -- not just communicate with each other.
I think if somebody wants shares in minnesota mining, how quaint, 3m. is the social world use whirlwind, is that equivalent to that old-style industrial world?
Is facebook equivalent to westinghouse?
In a way it is.
You have this well of information that if you mine it properly, you can really make a lot of money.
Facebook is where all of that activity is taking place.
For advertisers, companies, retailers, that is where they're going to find the people who are going to buy their products.
Are you concerned about the lessening of domestic interest in facebook spurs is a huge expansion of international interest in facebook?
It make sense.
In the u.s. we have been living with facebook for quite some time.
The idea the interest has plateaued since reasonable, but internationally, it is explosive.
Out the old, in with the new.
How long does facebook have until it is the old tech stock?
Those cycle seemed to be shorter the last 10, 15 years.
You are beginning to see some of the other cracks in the foundation of facebook.
They're coming out of europe and asia.
They're using the mobile platform to connect people in ways facebook has found, at times, other difficult.
If you think about your smart phone, you have a list of contacts.
The new app allows you to connect your friends, all it has to do is access your own contact list.
When we started on facebook, you had to build that network.
That was valuable, but is no longer such a necessary component.
The onus on countries like facebook, old guard -- and how old are they?
Six years old.
To go out and buy the smaller versions of themselves.
You see that sometimes with these talks about instagram's and snapshot.
You can't -- you can try that, but it is like playing whack-a- mole, you can't fully catch up.
Facebook is going to be part of the s&p 500 starting december 23 joining an old guard of other committees.
On the cover of the new "bloomberg businessweek," in inside look at mary barra.
How the automaker came back from the brink.
Her role in helping that out.
That comes out on shelves tomorrow.
It will be available on the free app later today.
This is "bloomberg surveillance." ? good morning, "bloomberg surveillance." it is time for morning must- read.
Looking at "the financial times" a columnist talking about silicon valley keeping the spies out writing -- good thing we have sam grobart hear from "bloomberg businessweek." how does the tech community reestablish its credibility as a business that sort of has confidential information won't betray you?
It was in the tech industry may have to take a much more adversarial position in relation to the government, something they haven't really done ever before coming order to win back some of the confidence of users.
The feeling right now is the government comes along and whether your google or facebook or apple or anybody else to say, here you go, here's what you need.
They all to the same course at stanford, out on the west coast.
I remember walmart prided itself on not wanting in washington.
Do they have any presence in washington?
They do, and the presence keeps growing.
Or they can get into bed with the government.
Amazon operates with cloud computing.
One of the largest cloud providers in the world has the cia, fbi, and nsa as clients.
My must-read also has to deal with washington.
It comes to us from a columnist at "bloomberg view" -- part of the effective management the white house has not proven to show is it will fire and replace staff when needed.
Has not been the whole cell cleanout usually see?
It has hired people to clean up.
They just did not rotate them.
They hired new people on top of the old people who were still there.
I spoke about this years ago with gene sperling.
It is exhausting.
In the private sector, apple screwed up maps and that guy was out.
It was clear, simple.
You don't see that same kind of action coming out of washington.
That is why tech is efficient.
You could make that argument.
They would not have rolled out the healthcare.gov.
There's not a company in the country that would have done that.
The message in our interviews is, it is getting better.
He couldn't get worse.
I have a must-read on stanley fischer coming up.
Is it a renaissance in manufacturing?
We will speak to the ceo of michelin about making tires in south carolina.
They 20-foot one.
? good morning, i am tom keene.
Alix steel and scarlet fu are with this.
Let's do a data check.
Some economic data, maybe that will move markets.
Retail sales front and center.
Euro, we had a print of 1.38. that is a huge deal in europe right now.
Consensus flat out wrong in 2013. in my be the year end, but there is still some dealmaking going on.
Scripps one of the big gainers yesterday which owns hd tv and the food network, rose the most in two years.
Pandora media down 7%. the ceo of spotify says it plans to offer free music service on apple and android tablets.
Pandora taking a bit of a hit this wednesday.
Can we call it a renaissance?
Bloomberg reported the bmw looking to build engines in the u.s.. car sales are back to pre- recession levels.
It is part of a resurgence manufacturing sector with airbus making planes in alabama, samsung building a plant in texas, another example, michelin.
They make tires.
Today they make tires in south carolina at a brand-new $750 million plant.
The ceo of michelin north america joins us now.
It is a pleasure to have you here.
It is your night plant in south carolina.
What is so attractive about being there?
We have been in south carolina now for 40 years.
As you said, we are starting up our ninth plant which will be making these large tires you see behind me.
That tire back there is the largest tire in the world.
It is 13 feet tall, weighs 11,000 pounds, it and used in large construction and mining applications.
This is the second earth mover tire plants we will have in the state of south carolina.
What is interesting about this, it not only is michelin building new manufacturing facilities in the united states, but 80% of these large earth mover tires we're making here will be exported around the world.
Teach, you make a good point.
That is a huge tire, by the way.
80% of those tires will go overseas.
If we look at the underlying fundamentals of the mining sector, we hear things from caterpillar, rio tinto also divesting assets.
What difference demand do you see in the mining sector?
The mining sector is very cyclical, as you well know.
It goes up and down.
There is still long-term growth.
This year, mining output will increase.
It is projected to increase next year as well.
When you make an investment like this of 750 million dollars, you're not making up for next year or the year after, but for the next decade.
The next 40, 50, 60 years.
Though question the minds need the technology we give them with these tires.
Pete selleck, what does the tire cost?
Is it going to cost me $5,000? it will cost you a little more than that, tom.
Clearly, the technology and innovation -- the reason michelin tires are so valued by our customers is because of their performance and their reliability and innovation.
Clearly, it is a good buy.
You did your graduate work at clemson university.
With the fourth infantry of the united states army.
Tell us about the manufacturing wars in america.
Do you have any sense that michigan, detroit, can compete with the advantages you have in south carolina?
We have been in south carolina now for 40 years.
Every company has to decide what they're going to do.
We came here for a number of reasons.
First of all, the infrastructure is right for us.
And the access to ports, in particular.
I will buy all that, but it was a union differential, wasn't it?
You went to south carolina for a low wage.
Have those wages grown on a real bases in 40 years?
Tom, i don't agree with your hypothesis.
We operate 14 plants in the u.s. three are unionized.
The pay and benefits between our union and nonunion plants are virtually the same.
We have to continue to move forward and we are determined as workforce in all of our plans, in particular in south carolina.
How many workers will you hire for your plants in the next year?
We announced with the $759 investment we will be hiring 500 people.
We're doing that -- one of the interesting things, the critical skill and a plan like this are reliability technicians.
These are the people that install and maintain as you quit it.
We work closely with the local technical colleges here to engineer the curriculum to provide scholarships, basically, to help the transition from high school into our or places.
It has been successful.
There were headlines that bmw is considering building engines and north america for the first time.
The auto industry has done a lot of the manufacturing in the u.s. what is it about that that makes it such a good candidate for domestic manufacturing?
First of all, in the market here is huge.
We discovered during the recession it was very important for manufacturers of these large products to be as close to the markets as they possibly can.
Not only does that improve your adjusted cost, but more importantly, making specific products for specific markets of the closer your are to the market the better.
Bmw has a right here in north carolina as well.
South carolina seems to be a good place to manufacture.
The turbine clocks in at 30,000 or 40,000. let me ask a rude question.
Do you make money on automobile tires?
Is that such a generic is missed that you just do it to do it now?
No, we do it because we want to create value.
We are creating value and all of our sectors right now.
Automobile tires, commercial truck tires, and earth mover tires.
We also do very well in oe when we sell to new car manufacturers.
It is all about value.
Fuel consumption is very important with oe.
Tires have a huge impact on fuel consumption.
We of innovations that improve fuel economy, for example, light trucks, which is tremendously valued.
Give me a broad look at how washington plays into your business.
What is it like?
As you know, there are many, many moving parts to the economy.
Most of what happens in washington doesn't affect us unless he gets in the way.
Basically, most of the incentives, things that are interesting for us, with a to the state and local governments to help us.
The thing we're most concerned about in washington today is the fiscal problem.
What is happened is because interesting, but is nowhere close to what is to happen.
If the federal government can solve the tax problem, that will provide a booster to this economy.
We have got to have the sense of urgency to move forward.
Thank you so much, p selleck, we appreciate it.
And more than $5,000. and they must wear out.
Can you just keep going if you get a puncture?
I should have asked him.
You should see the piece of aluminum that goes on that tire.
You end up with that thought on washington.
The senate pulled an all nighter in washington to take care of some contentious business.
We will explain next on "bloomberg surveillance." ? good morning, "bloomberg surveillance." i am tom keene.
Alix steel is here with top headlines.
Mourners have lined up for a second day in south africa to pay respects to nelson mandela whose body lies in state in pretoria were thousands are waiting in line for hours to get a glimpse of the late leader.
The third and final day of viewing is tomorrow.
His body will be transported saturday to a village where he spent part of his childhood and buried on sunday.
The fda phasing out the indiscriminate use of antibiotics on farm animals raised for meat.
Rangers feed into cows, pigs, chickens and endeavor to have them grow bigger.
Experts say the practices behind the rise of resistance of antibiotics in humans, estimated about 23,000 people die from antibiotic resistant infections in the u.s. every year.
Canada's post office inning home delivery in cities.
It will phase out the door delivery over the next five years and replace it with community mailboxes.
The move will lead to as many as 8000 job cuts will stop canada post says it will save almost $150 million annually with the change.
Staggering, canada post.
That is a pretty big shakeup.
A huge deal.
There is no way they could do that in the u.s. they been talking about getting rid of saturday delivery and there's been an uproar.
In canada, they will be getting their mail a different way.
In the west, when it comes to watching movies?
Between netflix, red box and movies on demand, physical movie theaters have pledge of competition these days.
Some say it is enough to force the multiplex into extinction.
Amc is fighting to stay alive.
Take a look.
Promised as long as movie theaters have been around, they have been threats.
First it was to tv, then the vizio, then the internet.
-- then the vcr, then the internet.
They fight back.
Big old sees.
Look how big these are.
Amc is renovating its theaters and in the process, ripping out the older, smaller seas, reducing tacit the dutch capacity by 40%. these are not your usual seats.
But my drink here.
In your armrest here.
Why are they doing this cap go to make more money.
It is working.
If you go back to 1995, the movie theater industry had total revenues of $5.3 billion.
Today with comfy seats and better snack bars with fancy machines, those numbers have doubled.
There is an irony to what they're doing.
In order to compete with your home set up, maybe now you have a 60 inch led tv and surround sound, in order to get you out of your house and into a theater, amc has made its theaters more like your home.
Sam grobart joins us now.
Tackling the real issues out there, movie theaters.
80% increase in attendance is big.
They're packing more people into fewer seats, basically.
I have gone specifically to 84th and broadway to go to this movie theater because it is so amazing to see a movie and those reclining seats.
Another thing we did not get into, the spacing between aisles is so wide you don't have to do the whole shimmy.
It is a nice big isle in front of you.
I did a price plug-in.
Units down 64% you said.
Back of the envelope with my chubby pencil, $35 movie ticket.
Right now the price is about $15 or $19 depending on whether it is 3-d or imacs.
They do feel they can go up because they've already indicated their earning about $.92 per new seat they have, but they have always said -- arty said, we will adjust the pricing based on supply and demand in the future.
That a customer loyalty program where they will reward them with the prospect of buying shares.
That is unusual.
The stock option purchase for those who want to get a good deal over time and feel they can build loyalty if your shareholder, you will choose amc as opposed to another.
Is the movie theater dead?
As you mentioned, it died like eight times.
But he keeps coming back.
It is like an episode of " dynasty" or something.
Alix, that was a tv show a few years ago.
That people were rich.
That is pretty much it.
They slept with each other, killed each other and through each other in pools.
They slept with each other?
He managed to keep revenues going up as an industry.
1997, $5.3 billion, now $10.6 billion.
What the theater chains are realizing, they probably build as many theaters as they can and now they're trying to turn each one into more and more of an atm machine.
Optimize, make it nicer.
What is systemic for people to pay over $20? the pricing keeps going up.
People start to say, it is becoming like $50, $60, $70 proposition to go to the movies.
Forget it, i will watch something on tv.
There are babysitters involved.
I am firmly with this concept.
What's -- what are -- were the aisles dirty with popcorn?
They still have the guy who comes into poor the grape soda from the back of the theater, so it all flows down a makes a good and sticky.
That is an extra service they're doing.
Let me tell you something, i grew up going to that movie theater.
I went my first data that theater.
Clara camapos, i still remember watching "top gun" with you.
I haven't seen her in a while.
She went wicken for a while.
-- wiccen for a while.
Now it is a great place.
I would love to go there.
Thank you for this wisdom.
Where are we going to read about amc?
You're not going to read about it, but you can watch it.
Bloomberg.com, check out the new video.
On the right-hand corner, the radio and tv button.
It is amazing.
Another shameless plug come on the cover of the new "business week," mary barra.
That is out on shelves tomorrow.
Our twitter question of the day -- we will be speaking with the purveyor of watches in the next hour.
? good morning.
There is the capitol building.
The senate is still in session.
It hasn't stopped working all night.
In fact, we have just confirmed georgetown law professor has been appointed to an important d.c. court.
This all nighter is a result of the political standoff between democrats and republicans over judicial nominations and so- called nuclear options.
We need to bring in our chief washington correspondent peter cook who joins us by phone.
You have not pulled an all nighter, but this is an example of the insanity of washington here.
The schoolyard fight has resumed in washington.
This is not totally unexpected.
This is the retribution republicans are inflicting upon democrats for changing the rules , for going nuclear.
They're going nuclear in response.
They promise to pull out all the procedural stops they can to try and delay work in the u.s. senate command that is what they're doing right now.
This means we are going to have a sickly a flight -- four flight for the future nominees.
They want these nominees down before the holidays.
This could be the politico between senator leahy and grassley.
Tell us about the distinctions of that polarity.
What do we need to know about the fistfight in the senate this evening?
What you need to know is this does have potential to delay things in the short term.
I am large, this is politics.
-- by and large, this is politics.
They're promising to do it for all of 2014 as well.
It is not just on the fight over nominations.
They have the ability, and did it the other day, considering the irs commissioner in the finance committee and basically used a procedural move to be able to walk out of the room at that time and stop the consideration of that nominee.
These little things -- congress isn't doing that much anyway, it will just make it more complicated.
If the democrats lose the senate, those three senators and the south are shown the door, will the republicans did the same thing to the democrats in eight months?
No doubt in my mind if they have changed the rules here against republicans, the republicans will use these rules to their own advantage and may even go further.
That is been a threat, -- that would be the threat.
It is huge still.
Mitch mcconnell is offended by what has happened, not just politically, but personally.
He thinks it is an affront to the senate tradition and pulling out all the stops to make his point.
We're looking at a live shot and it doesn't look like they're doing much of anything.
People are barely moving.
What is the distinction between that and what we saw in the house with ted cruz filibustering and reading "green eggs and ham"? excuse me, senator ted cruz.
Ted cruz was fighting over legislation.
He was waging a personal filibuster there where he had to occupy the time.
What is happening now, this is a clock that has to run in republican say it doesn't. they're considering nominations and there's a time period of about eight hours unless republican say, no, we will concede that time from and reduce that time frame, they are not conceding it on each and every individual nomination.
So they confirmed judge bullard at 1:00 in the morning and moving on to homeland security nominees.
It is going to take several hours in between them unless they basically standdown and there's no indication they will do that.
Peter cook, thank you so much.
I said eight months until maybe the republicans would take over, i think they need to have the election next november.
I had a brain freeze.
The senators have something they can do later, when district or judges approved for their state, to have the option of blocking that if it is from their state.
They have another like they can do to hamper moving forward.
They tend not to you -- use it.
Will they, is the question.
When you talk to the executives at apple and samsung and you can track your productivity versus what is going on in washington, what do they say about what our leaders are doing in washington?
They stay pretty mum on political issues.
They don't want to comment on individual politicians very often, although, i'm sure they look at it and think they could do a better job themselves, most likely.
Is in sore need of disruption.
Sam grobart, appreciate it.
Congratulations again on her journalism 2013, particularly on apple computer.
"bloomberg businessweek" she is the electrical engineer from general motors institute, stanford, takes over the helm at general motors.
That is our focus.
Tomorrow on your newsstand, out on digital today.
Euro, euro, euro, euro.
Got to be 1.38. a huge deal.
Much, much more for you.
Coming up, thoughts on stanley fischer as the fed vice chairman.
? . . this is "bloomberg surveillance." know your customer -- bernie made off's ponzi scheme.
The finest $2 billion.
Stanley fischer is slated to be the next vice chairman of the federal reserve.
And will you pay for your chicken fettuccine out all curry with rice pilaf with bitcoin?
Matthew miller tipped the waitress to the percent --or to percent --30%! --in bitcoin.
She threw it back at him.
I am tom keene.
I will not be tipping in bitcoins.
Alix steel and scarlet fu.
Will you tip 30%? i would like that when i was a waitress.
Let me tell you, when you are a waitress, it doesn't matter.
8:30 a.m. initial jobless claims.
9:40 5 a.m., bloomberg consumer comfort.
Then business inventories for october.
Before the bell, earnings from lulu lemon.
Some other things happening today.
The sec holding a hearing to discuss ending the in-flight phone call ban.
Really don't want that to happen -- that is the most important thing of the day.
And jamie dimon speaking in d.c., speaking about closing the workforce skills cap.
Could you see me and michael mckee on a phone call together?
You would scream and be terrible.
It just won't work.
What does work is the comforting news of scarlet fu.
I do not screen, to -- scream, tom.
Just that you sometimes.
A probe madoff focuses madoff on whether jpmorgan north signs of's -- a probe focuses on whether jpmorgan a norton signs of madoff -- ignored signs of madoff's ponzi schemes.
Facebook's run-up comes as it rebounds from the botched ipo a year and half ago.
More than $5.1 trillion is benchmarked to the s&p 500. a record-setting ipo for hilton.
The hotel operating is raising $2.2 billion after pricing shares at $20 apiece.
It will begin trading today under the ticker symbol hlt.
On the news yesterday afternoon of stanley fischer suggested to be our next vice chairman of the fed.
It would be almost like a central bank hall of fame, that according to the esteemed economist robert hall of stanford.
The duo of janet yellen and stanley fischer at the helm of the fed would provide the academic abilities, decades of policy experience.
At m.i.t., stanley fischer was a mentor to mario draghi and ben bernanke, among countless others.
He all but stabilized the israeli banking system.
He is now the leading candidate to assist chairman yellen.
Michael mckee went in search of the vice chairman.
When you introduce him like that, it raises an interesting question -- why would he want to be number two at the fed?
We went out and found a number two at the fed, also widely respected economist.
Alice rivlin joins us now.
Thank you very much for being with us.
What does the vice chairman at the fed do?
Why should we care somebody like don, roger ferguson -- these are not household names.
Know, but they were very capable people.
It is important to have a good vice chair.
The duties are ill-defined.
They are what the chair once the vice chair to do, basically.
I was vice chairman john greenspan -- i was vice chair to alan greenspan.
He wanted me to do administrative things at first.
I became the administrative governor.
I did a lot of traveling, mostly to europe.
A little bit to asia.
At that time, the central bankers met very frequently, more frequently than alan greenspan wanted to go there.
I did a lot of that.
What does stanley fischer walked with the job if it is so ill-defined?
It will be well defined by stanley fischer and janet yellen together.
I think janet is very lucky to have a very strong person if this happens like stanley fischer.
I'm sure she knows that.
It is a very big job, hearing head of the fed, especially now.
It is a bigger job than it was 10 years ago.
Stanley fischer will be a huge help, in part because he actually has run a central bank.
But more importantly, i think, because he is very smart and because he has had a lot of international experience at the world bank and the imf and that will be very useful to janet.
This reminds me a bit of the 1980 ticket floated for a while of a reagan-ford almost co- presidency.
Stanley fischer has criticized quantitative easing.
He has raised questions about forward guidance.
Who is going to be the number one voice at the fed?
Doesn't this lead to the possibility of confusion in the markets?
No, i don't think so.
I think that of stanley fischer is prepared to take this job, he will do it extremely well and in close corporation with the chairman.
Janet is a strong personality herself.
I think will find herself very closely working with fischer.
It could be a dynamic duo but it will not be confusing.
rivlin, stay with us please.
Our guest with evercore, a nice synthesis of wall street wisdom and washington wisdom as well.
You and i lived 1998. it was ugly.
Stanley fischer was front and center.
What crisis skills did he learn in 1998 that he can bring to 2015? first of all, as alice said, he has skills that are extremely copper memory to janet yellen's -- extremely complementary to janet yellen's. he has experience at the imf, is really central bank, financial crisis.
He has lived and navigated through global financial crises at very senior positions, and he has done that and focused more on the emerging market economies and other developed economies rather than the united states.
If you look at the fed's role not only in the u.s. economy by the global economy, it is expanding significantly.
He brings some very, met three skills to janet yellen.
-- he brings very complimentary skills to janet yellen.
rvivlin, i'm sure you knew him when you were at radcliffe years ago.
he has tactical experience, doesn't he?
I actually got to note stanley fischer when he was at the imf and i was at the fed in the asian financial crisis and got to observe how skillfully he handled that.
He is a very good person to work with.
He is sensible and not dictatorial.
I think he would be a big asset to janet.
The fed has got some real important policy decisions coming up.
He has, as i mentioned, questioned qe and forward guidance.
How does he change what the fed does from here on out?
The fed, you have to remember, sets monetary policy in a committee.
There are very diverse views on the current fomc, much more diversity than i think you would find between janet yellen and stan fischer.
They will talk about it a lot and work something out.
But i would not expect great controversy between fischer and yellen.
I need to ask you a quick question about the budget as well.
The 2 sides seem to have agreed to a copper mines now, short- term budget deal.
Does this go far enough, and what needs to be done next between republicans and democrats?
It doesn't go far enough for my taste, but it is a lot better than nothing.
I'm very reassured that the 2 budget share man -- budget chairmen were able to find common ground.
They haven't done this in years.
The good news is that we won't have another government shutdown until at least the end of 2015, fiscal '15. and it looks like there is enough common ground so we also won't have another debt ceiling prices, although that was not included in the agreement.
Vice chairman rivlin, thank you so much.
Alice rivlin, now with the brookings institution, we thank her.
Fischer and yellen, that is just a top-tier duo.
The thing we should not overlook his 2 things.
Number one, stanley fischer has experience in a collegial environment.
While he was the head of the central bank of israel, he did in fact brought in the decision- making body.
He expanded -- he brought in a committee to help the making of monetary policy.
He is highly cognizant of the benefit of different points of view.
Second, the fed's role is so much greater.
We need more than one strong person there.
Ralph schlosstein with us through the hour.
Coming up, we will discuss which asset class provides high returns in 2014. ? good morning, everyone.
"bloomberg surveillance." i'm tom keene.
To our guest host, ralph schlosstein.
schlosstein has witnessed the effects of partisan divide in washington and wall street and there is a new thaw.
Senate and house leaders agree on a budget agreement.
Wonderful they do have you here.
I guess it is a budget agreement.
Do you believe it?
It is certainly a really encouraging first baby step is the way i would describe it.
It is far away from what all of us would hope for, the grand bargain, which addresses the long-term entitlement and tax policy issues.
But it is indicative of and ability on the part of the senior leaders of both parties to work together.
We know that share man ryan -- chairman ryan has challenges to his right with the fiscally austere republicans.
Tell us about democrats supporting senator murray's efforts.
Democrats have an equal challenge on the left ear there was a very strong push on the part of the democrats to include an extension of emergency unemployment benefits.
That was not included.
All those democrats.
Well -- that is the issue.
We have a very strongly held views on the wings of both parties and egos of gerrymandering, it is party and each congressional district has been driven a little bit -- each party in each congressional district has driven a little bit more to the wings and to the center.
Hopefully this agreement is a first baby step towards more consensual public policy.
How do you respond to the cliche gr"gridlock is good"? that is a shortsighted view.
There is certainly a legitimate view that less governmental interference in the private economy is constructive in terms of economic growth.
However, we have some pretty substantial problems in this country.
A government that is handcuffed in its ability to deal with those problems saps confidence on the part of the private sector, and we have seen many examples of that over the last couple of years.
Very quickly, do you see a more confident wall street in 2014? in reality, this is, as i said, the first baby step.
We have the debt ceiling extension and we have to deal with in february.
That is an incredibly important moment.
I think that if we can navigate, as we did at the end of last year on the extension of the bush tax cuts for low income people, the budget, and the debt ceiling him and then you will start to see -- ralph schlosstein, thank you.
Good morning, everyone.
"bloomberg surveillance." i'm tom keene.
And ever-a stronger euro.
Into the new year, that is a big story.
Strong, strong euro.
What that means for the united states.
Ralph schlosstein with us, chief executive of a sort -- officer at evercore partners.
Alix has top headlines.
The united states may hit the ukraine with sanctions after the country crackdown on protesters.
A state department spokeswoman says that all policy options including sanctions are "on the table." in kiev, protests continued in independence square.
Protesters rejecting a request to meet with the ukrainian president unless you promises not to -- unless he promises not to use force.
Nelson mandela's body lies in state in pretoria, where thousands are waiting hours to get a glance of the late leader.
The third and final day of reviewing is tomorrow.
The faa is phasing out indiscriminate use of antibiotics in meat.
Experts say that the practice is behind the rise in resistance to antibiotics in humans.
It is estimated that 23,000 people die from antibiotic- resistant infections in the u.s. every year.
Those are your top headlines.
I feel like that is the makings of another movie yet again.
Like michael moore -- when i actually studied in college -- antibiotics?
This is a huge, huge deal.
Every hospital, every day.
I can do a gram stain right here if you want one.
Staff are caucus, this is a huge deal.
I thought you are studying for your -- it involved genny cream.
The survey finds that professionals are cautiously optimistic about 2014. this same survey finds that financial firms need to fix their ethical culture to solve systemic problems.
You guys did this survey where it shows 90% of investment professionals acknowledge a current lack of trust in the financial industry.
There is a lack of integrity in markets.
Is this because of too much government relation or not enough regulation?
It is a tale of 2 cities could investors are optimistic about local economies in the first box to other asset classes, but as you said, still do not have a lot of confidence in the market itself.
That is caused by 2 factors.
One is lack of ethical culture at the firm level.
The second is the systemic risks around bank, derivatives, and systemic risks.
You are talking about compliance and making sure that employees know what the boundaries are?
Comes down to tone at the top, professional standards, and it comes down to the cultural values of the firm itself.
Let's talk about the cultural values.
Ralph schlosstein with us.
To me, ralph, this is incredibly solvable.
Bonuses, compensation, led by ethics much derived from the income statement.
When are we going to have a uniform compensation structure not based on revenues, not based on unit sales, not based on going from number four to number two and if you don't do it in a 9 months, you're out the door?
That is wall street, isn't it?
Well, i think you have a clash of objectives on wall street.
Clearly we went way too far in the other direction.
There is an entrepreneurship and capitalist system which encourages making money.
A higher return on equity.
Clearly, wall street went way too far in that direction.
Every day, every employee in one of these large firms is balancing the interests of making money and am i doing absolutely the right thing?
Clearly, what we need is a world -- that is where the tone at the top is critical -- where they always do the right thing and then make as much money within that constraint.
John rogers of the cfa institute -- i should point out that i'm a member of mr.
Within what you just heard mr.
Schlosstein said, can we have a self policing effort, or does the government have to step in?
Trust in the markets is a three-legged stool, and the first is caveat emptor.
Investor education matters.
Appropriate policy by galatian matters.
Enforcement of the existing rules, but without that firm- level culture, that self policing, self-control, the whole system.
-- the whole system falls down.
We have a discussion about the fiduciary standard.
Should brokers and insurance agents be held to a fiduciary standard when dealing with customers?
In terms of what to do with that money in 2014, your survey finds that equities with asset classes have the highest expected return next year.
This is even with stocks at record highs and european stocks at multiyear highs.
Should people take this as a contrarian indicator?
They often view sentiment that way.
This is not an absolute return question we are talking about.
Commodities and precious metals have dropped in terms of relative expected returns, and equities remain at the top of the heap with bonds and cash trailing far behind.
We have had an amazing year in the equity markets.
Our members still feel that equities are the most attractive asset class.
When taking a look at financial stability, what is the distinction of our government response validity versus the bank, versus in a visual response validity?
-- versus individual response ability?
The more rapid disclosure of impaired assets and higher capital adequacy levels are 2 things that banks themselves can choose to do even without government relation.
John rogers, thank you so much.
Graduations on the new survey.
-- graduations to our new server -- the graduations on the new survey could we need to say congressional versions do at the miller.
? all nighter -- that would be in washington with the sun rising.
If a registered it on the senate floor on this new idea of -- a ferocious debate on sinful on this new idea of judges.
Senior senator from texas, john cornyn, getting his two cents in after a long night of debate.
He recalled the filibuster debate.
The reality of that, less than 60 votes needed, and so-called liberal judges appointed.
That according to the senator from texas.
There he is in the senate.
The morning, everyone.
"bloomberg surveillance." scarlet fu has some breaking news for us.
Shares of lululemon down 10% in the premarket.
It announced changes with the new ceo but it also announced results.
Fourth-quarter outlook as investors worried.
Fourth-quarter earnings per share more fourth-quarter revenue, fourth-quarter comparable sales all trail analyst estimates.
The controversy surrounding founder chip wilson's comments and there is no competition from the likes of sweaty betty -- they didn't want me to wear my lululemon pants.
You know what, i don't want you -- product delays, also.
We will have more on this later on.
Lululemon shares down almost 11%. futures at negative one here.
Back in new york, 'tis the season, particularly on 57th street.
Your fancy watch store as we begin our gifts in gotham moment here, as we do each year.
They're authorized to sell you the real rolex and the collectible [indiscernible] others beware -- between the fake rolexes and the chinese watch industry -- the director of taking my money -- i ignore his store like the plague.
How have the chinese changed your business?
They have had a tremendous impact on the business.
They are listed in high-end -- they are interested in high-end pieces.
Most of them give to their comrades back at home.
Are they competition for the top shelf brands?
Are -- accuse me -- excuse me?
Are the chinese competition?
this was still have finest timepieces out there.
How have you seen this change over the years?
Rolex still has a strong market.
China doesn't just buy the luxury watches.
They are buying the lower end $1000 watches as well.
Is this just a knockoff?
Or are they actually buying a new product?
They are buying -- would and that put higher and watches out of business?
No, not at all.
A lot of those armadas gifts for -- a lot of those are made as gifts for their friends and family.
Are you back to 2008, 2007? we are definitely back there, yeah.
Are people buying the first watch, or are we still in the mania -- scarlet, you have one of these at home -- a thing in your bedroom that rotates?
I have one watch and the timex keeps ticking.
Are people still doing that?
We need to change that.
We need to get you more than one watch.
I haven't worn a watch in 10 years.
Oh, come on!
Doing only one i would where is my grandmother's because it is a luxury.
Timepieces are about more than just telling time.
They are an indication of style.
The art of making the watch.
What is the hot watch this year?
Is there an individual watch you cannot keep in the store because people are screaming about it?
Certainly be -- what about the rolex?
The hot pieces the daytona platinum.
Does that say matt miller?
That screams matt miller.
We represent the branson sell at retail prices.
But there is -- we represent a brands and sell original prices.
But there is room -- if you come in we will give you a nice little gift.
What is the conduit between the watch in ralph schlosstein's world and west 57th street?
Michael, thank you so much could we begin to look at your holiday season.
Many more atrociously expensive gifts coming your way only on "bloomberg surveillance." we have to start with the big ones.
Key economic data later this morning could we have jobless claims coming out, as well a consumer confidence.
Futures pointing to a lower open.
S&p futures lower by one point.
Euro-dollar, not moving too much.
"bloomberg surveillance," bloomer television, bloomberg radio worldwide.
We are thrilled to tell you that all of our videos -- all of our interviews in video and live streaming, you can see it on apple tv.
We announced the agreement yesterday.
Thrilled to tell you that.
We are out on apple tv as well as many other digital platforms.
Tom keene, with me, alec still, scarlet fu.
Ralph schlosstein, evercore partners chief executive officer could once again come he is wearing out his welcome -- matthew miller.
Fourth day of 12 days of it going -- 12 days of bitcoin.
You are going to an exchange.
Is this an actual physical exchange?
Webster hall, where i saw depeche mode.
I want to talk about the big exchanges first.
They're basically just gathering -- sometimes they are kind of cloak and dagger.
They are a little difficult to find.
Going to the back corner of webster hall tonight to meet a bunch of guys and women who trade the coin.
We will walk up to each other with smartphones.
Are they and you affected by the volatility of the bitcoin price?
Can i suggest you get the biggest paycheck at bloomberg this week?
I bought it for $800 and it went up to $1000 yesterday.
Lunch on matt miller.
A lot of people send me these coins randomly.
I am actually giving people bitcoins who are trying to start.
I don't understand.
It is part of the way the community works.
You transfer it around because it is fun to shoot value around the internet.
? we are the world ? what kind of rumblings have you heard about this as your bitcoin travels continue?
Talking to companies and other investors, what is the concern?
I hear investors say it is a commodity right now.
But everyone we hear from -- the president of paypal, he is long it going -- he is long bitcon.in.
That e-mail yesterday -- yes, we are sitting matt miller as we go through the 12 days of bitcoin.
Ralph schlosstein needs no sedation.
David wu writing this up and giving it great legitimacy.
Is there any hint of legitimacy to a digital trading mechanism?
No, i consider this a phenomenon, not a currency or commodity.
That doesn't mean there won't be lots of activity and it won't run up in value and decline in value, but it -- i forget what the name of those things were, but the beanie babies we had 20, 30 years ago.
I have only spent bitcoin for the last week.
Well, i'll tell you something, at some point beanie babies were going up and up in value and 70 realized they were just a pile of fur and what are ashes somebody realized they were just a pile of -- somebody realized that they were just a pile of fur and whatever else they were good as long as some fulltext -- some fool takes it, you will be living off that.
When you see that chart of the bitcoin price, matt, to be fair, 100 - 1000? does that screams you of a traditional bubble and hysteria?
Well, let me ask matt a question.
Would you take your way -- would you take your bimonthly paycheck in bitcoin?
I'm not quite there yet.
There are certain things i cannot pay in the coin -- bitcoin.
You have a huge buzz on this thing you are doing.
You are going to webster hall the day.
What are you doing tomorrow?
We have heard similar stories of a guy losing his hard drive and yet $6 million in bitcoin on it.
Matthew miller, i thought this was a joke.
It is not.
12 days of bitcoin.
I think we should start a new currency, keenies.
Tradable by boat s -- by bowtie.
The year of the bull market continuing?
One keenie is worth 10 bitcoins.
? good morning, everyone.
"bloomberg surveillance." i'm tom keene.
Scarlet fu, alex do.
The world stops for "in the loo p." the black clothing today -- what if you got today?
Everyone has seen that selfie seen around the world, the president with prime minister david cameron.
We are putting our lives on social media more and more, right?
We have seen people fired over tweets, companies reprimanded, inappropriate pictures or whatnot.
Anyway, my point is that we're digging into the do's and don'ts of social media, of a selfie, a tweet.
Where is the gray area, where are the lines?
Randi zuckerberg will join us to tell us what's is a social media etiquette?
If you posted an embarrassing photo of me -- we did that the other day -- you and i did the scotch and you don't remember the selfie.
I remember the scotch.
Betty liu, thank you so much.
Randi zuckerberg will join her at nine a clock a.m. speaking of the zuckerbergs -- facebook will be added to the s&p 500. it is already a member of the nasdaq.
Now it will be on the s&p starting december 23. more than $5 trillion of money tracks the s&p 500, and one analyst says that funds that track the s&p would need to buy 190 million shares of facebook.
I'm checking twitter, testing redesigns of profiles, hoping to keep users engaged.