This is "bloomberg surveillance." day three of the shutdown brings more meetings and photo ops.
Washington braces for a prolonged battle.
Twitter unveils its business details.
We await the much-anticipated twitter ipo.
And america is awash and regulators regulating the regulated.
In a furloughed world, it is difficult.
Good morning, everyone.
This is "bloomberg surveillance." i am tom keene, live from our world headquarters in new york.
It is thursday.
Joining me as always, sara eisen and scarlet fu.
It looks like no progress.
Even after the meeting in washington.
We will get to that in the morning.
But first, catch up on news you missed overnight.
In china, the services industry index rose to a six-month high.
That is a good sign of a rebound in china.
Worth noting that german markets are closed for german reunification day.
We will get the initial jobless claims number at 8:30 a.m. eastern time.
That will not be interrupted, we're told.
9:45 a.m. eastern time, bloomberg unveils the consumer comfort.
Did :00 a.m., the isn nonmanufacturing index is out.
-- 10:00 a.m. eastern time, ism 90 manufacturing index is out.
This is when christine lagarde will speak.
You and i will be attending the meetings, but this is the one week get up there to the buildup of were we are in a global economy.
She puts issues on the table so that when leaders, finance ministers, senior bankers and economists to get together with -- it will be fascinating.
Real mystery to me.
What is the data doing?
Equities, bonds, currencies, commodities -- let's get right to appeared futures at negative six.
Yields move a little bit higher.
Euro-dollar is important.
Weak dollar, $13.3608. onto foreign exchange, start with the equity markets.
Holding pretty well.
Yen churning, australian haulers got a bid too.
Then there is the dx why index reaching 80. big psychological deal peer it all this is a weak dollar policy.
The u.s. dollar against major currencies at that an eight month low.
People are bailing on the u.s. dollar as the government shutdown -- maybe it is a litmus paper for what is going on in washington.
Giving away gradually here we're watching a weaker dollar.
We scour the papers in the webs this morning as we always do for the most important stories.
Scarlet, we do update pay because there was a meeting last night.
There was a long anticipated meeting between the president and congressional leaders, and it accomplished nothing.
House speaker john boehner said the democrats were not going to buzz.
Here is what he had to say.
Right after he got out of the meeting.
They will not negotiate.
We had a nice conversation, polite conversation, but at some point, we have got to allow the process that our founders gave us to work out.
That senate majority leader harry reid also spoke after the meeting, and he discussed the line in the sand for both sides.
We are through playing these little games -- is all focused on obamacare.
That is all is about.
The one thing we made very clear in a meeting.
We are locked in tight on obamacare.
We are locked in tight on obamacare appeared at the same time, neither side doing a whole lot with the debt ceiling.
Is there a gap year from day three two, like, we jump to date 12 or whatever the debt ceiling debate company -- debt ceiling debate?
The hope is that they can resolve that before the 17th because god knows what will happen if the u.s. actually defaults.
I was stunned at the lack of articles and the lack of read on this.
It seems like people do not know what to say.
One does not believe that they do not focus as much on the debt ceiling as compared to the line in the sand over obamacare.
Our next stories about the blackberry.
It has drawn interest from cerberus according to bloomberg, which cited people familiar with the discussion.
Cerberus looking to sign a confidentiality agreement with blackberry that would give access to more financial data on the company.
Window blackberry is trying to sell itself, and it had a preliminary offer to sell itself to fairfax financial for about $4.4 billion, but the financing there is -- of it is over patents, right?
Patents in the services from blackberry's existing customer service base.
Our third front-page story -- the price of bitcoin plunging as much as 33%. the value of the virtual currency really plunged after the fbi got involved.
They shut down -- come on, sara.
We have not been to that website.
Why is bitcoin?
I know bart chilton is here, and he will tell us what he is looking into.
The mere fact that regulators are going nuts over it, and one is very focused on trying to figure out what sort of illegal activity is involved.
I love the cocaine energy drink i got on it.
It sells all those things, illegal drugs, other illicit things, and people were using equine.
Cocaine it we don't think the government should be involved?
Of course they should be involved.
But that would help legitimize it -- oh, stop, i do not want my kids buying cocaine energy drink off the web.
Big one is on the website.
I also want to make it clear -- the german markets are open even though it is a reunification day.
I mentioned they were close.
They are open.
We've got to get back to the top story.
Day three of the government shutdown.
Scarlet just mention the top between president obama and congressional leaders yesterday evening, but both sides left without budging.
Let's get straight to washington where watching an correspondent phil mattingly has the latest.
Did anything to college here?
Are there any more meetings?
No peer it what the lawmakers were saying it at they come out of the meeting -- they are very entrenched in their positions are now.
President barack obama has made very clear publicly and privately he is not going to negotiate over the continuing resolution or the debt ceiling.
John boehner is in a position where he needs something.
To get to the table, he needs them to offer something so he can take it back to their members and say maybe this will be a victory.
Right now, that is not happening.
Behind the scenes, john boehner, according to aides familiar with this, they tell me has been quietly meeting with his members, trying to that the temperature.
He wants to keep everybody unified as this shutdown continues and they start getting a lot of rusher, but he is trying to find a way out.
There are a couple of options that are starting to percolate right now.
Time is leading toward a bigger deal.
Trying to wrap and some of the debt stuff we saw last year during negotiations.
The white house very wary of this.
At least we are starting to see something happening.
President obama also met with wall street bankers yesterday, and a debt ceiling of course front and center there.
Lloyd blankfein, one of the ceo's with the president, he professed the dangers of a default.
There is a precedent for government shutdown.
There is no precedent for default.
We are the most aborted economy in the world with a reserve currency of the world, payment have to go out to people.
If money does not flow in, then money does not flow out.
So we really have not seen this before, and i am not anxious to be a part of the process of witnessing it.
Lloyd blake find there.
Phil mattingly, are other business leaders getting face time with the white house or congress?
Death really congress.
Here's what the white house wants -- they want these guys to his breast to the american people what would really happen -- to express to the american people what would really happen if we do fall.
Is anybody listening to that message?
I really don't think that is clear yet.
The whole nation is concerned.
Phil mattingly, our washington correspondent, joining us from washington today on the latest.
Day three of the shutdown, no progress between the leaders after meeting last night.
Our twitter question of the day --what would happen if we don't raise our debt ceiling?
As we barrel ahead to the october 17 day.
Cletus @bsurveillance -- tweet us @bsurveillance.
We have a great "bloomberg surveillance" for you.
A lot of smart guest.
Our best toast this morning, bart chilton of the cftc.
He wrote the agency's best selling book, of for pulitzer, "ponzimonium." also joining us, cameron and nzari.
How is your life changed in day three of the shutdown?
The markets are not being looked at, the sox are being looked after by the sec because they are funded with these, but -- the stocks are being looked at by the sec because the stocks are fees.
This is not a linear function, day one, day thrwo, day three.
Everyday gets worse.
Things pile up on our list am a we get e-mails, people conduct it looks -- contact us with tips.
We're thrilled to have you here.
Our children on what will actually happen when you shutdown.
We will continue this escutcheon -- bart chilton.
Bp getting a win in court battle over the gulf oil spill.
A federal appeals court has ordered a judge to re-examine key terms of become k's settlement related to the bill.
New standards for claims could make bp pay hundreds of millions of dollars in payouts.
J.p. morgan analyst seven percent of the sales last quarter.
I made the number one underwriter for corporate bonds for eight straight periods.
Citigroup went from fourth to second place.
In move higher in the rankings . a micro blog in talks to lease a 2300 housing -- 23,000 square- foot place and twitter.
Twitter has about 2000 voice, more than 12 -- more than triple what i had two years ago.
It turns out bart chilton is not the only one feeling the impact of the shutdown.
Now the private sector is saying before i spared one of the biggest defense contractors may cut thousands of jobs.
Pastorius nexon "bloomberg surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
Good morning, everyone.
"bloomberg surveillance." one of my favorite people.
You need to listen to peter fisher of black rock.
I called him a tripod guy with terrific experience in business, and government, and academics.
Peter fisher, must listen, must watch this morning, "market makers," 11:00 a.m. only on bloomberg television.
This is "bloomberg surveillance," i am sara eisen, here as always with tom keene and scarlet fu.
Defense contractors are starting to feel the impact.
We heard from united technologies, which according to the cfo gets 18% of its sales from the federal government.
They make the sikorsky helicopter, and they will lay off about 2000 people in connecticut, florida, and alabama, monday because work on the helicopters has to slow down.
Pentagon inspectors could not going to do the reviews that -- so they had to slow down.
If the slowdown continues to next week, another 2000 will be furlough.
If it extends into november, more than 5000 total would be affected.
It is a scary prospect when you have already heard the defense and aerospace industry has already suffered from the sequestration.
Goldman sachs did a study estimating that the sector gets 70% of its sales from federal funding.
In the last month, the sector has been hardest hit by the job losses.
They lost jobs at an annualized rate of 1.8% during the period.
To a two percent return for the last 10 years, devon group -- dividend growth is a miracle.
Here they are affected by this.
Here they are personally affected.
They put out that statement.
The director of national intelligence, jim clapper, spoke out on the security impact from the government shutdown.
This seriously damages our ability to protect the safety and security of this nation and its citizens.
Is not just the government tractors -- contractors.
You have a lot of information technology companies they get hit as well because they get contracted work too.
Bart chilton with us, does it threaten the security of the markets and the way they function?
The shutdown is costing our economy about $10 billion a week.
It is not just these layoffs in the defense sector, it is the layouts in a related contracting with the government, whether it is janitorial, computer services, etc.. is a big deal.
The bigger deal comes on the october 17. 750 employees -- yeah.
Help me of them are sitting on this one, watching "bloomberg surveillance," shameless plug there, please, they are watching you on "bloomberg surveillance" going on, that presidential appointee.
But they do not have a paycheck.
Some are sitting at home and wondering what is going on and they are real people.
Folks that work hard and look at these markets.
Real people at your cftc -- i wonder what that means for the vulnerability of markets.
This is the key thing.
Do you presume your people will get a rebate on the time off, the government will make off -- i do not presume that.
That is something for congress to consider.
If they are looking at their checkbook center mortgage payments, they certainly cannot count on that happening.
The bigger concern for me is who is looking after these markets.
The answer is only exchange it officials and, like, two guys at the cftc.
This is an open invitation for those who would go out -- today, high-frequency trading marathon day.
Yeah, a free-for-all pure the other thing is when you see some volatility in markets because of something like the government shutdown, they are even tougher for us to look at.
We're looking at 10, 20, even more million trades a day.
How has this affected your work?
You are up a skyscraper?
Are you affected by the shutdown?
The biggest concerns the companies in our sector had is the sec and if it will affect the ipo pipeline.
That has been a feel.
-- a fear.
The broader ecosystem about the ipo window and feeling comfortable in the process is the biggest part where private technology companies are concerned.
Twitters ipo could be delayed.
Hold on, we will talk what the twitter ipo affected, kamran ansari.
The key metrics you will want to look for as twitter prepares to file publicly for an ipo.
That is coming up on "bloomberg surveillance." betty this is "bloomberg surveillance." i am sara eisen, here as always with tom keene and scarlet fu.
The european central bank is exploring its options on the bank funding.
Ecb president mario draghi has directed a panel to study the liquidity option body.
The central bank wants to make sure that the options are available to banks in case the fed tapering threatens the region for the economic growth.
Secretary of state john kerry is in japan where he says the two countries will expand their military ties for the first time in 16 years.
The two companies have alleged to create a more robust alliance.
In sports, the tampa bay rays of rogue open a tight game and the forts -- in the fourth inning and beat the cleveland restaurant tab of moves on to play the boston red sox starting tomorrow.
Both national league playoff series gets underway tonight.
sam graves -- dr.
Sam graves and the -- dodgers and rays.
Even better, hockey started as well.
Infinite warm out for hockey?
It is never too warm for hockey, sara.
I have a regulatory overreach must-read.
Hank greenberg writes that the regulatory filing for jpmorgan feels familiar.
He says when we took aig public, he chose new york at the place of business because the state offered a protectable regulatory environment, yet what i see in new york and washington is a regulatory culture that seems determined to make this state and nation the last places were any reports possible ceo would want to do business.
He adds that he spent his entire career opening offices in china, eastern europe and across the world, and he is stunned by what he sees in the states right now.
Bart chilton, cftc commissioner.
I am stunned that the u.s. taxpayers would've bailout aig, 100, 100 $85 billion, and his fellow would be criticizing that we need a little bit of regulation.
I wait to rip up the script.
You've got a great hair over that dude, don't you?
Yesterday rex wyers you -- yes.
Why are you so critical of hank greenberg?
To say that we have an overzealous or over regulatory system right now is crazy.
And we bailed out firms -- $400 billion.
This was front and center, how do you guys as the police officers, police 30 guys on and aig london desk?
30 people caused this.
How do you police that.
Right now, we do not police anything because we are onff the job, but it is difficult for us to get people particularly overseas.
They have an impact on u.s. markets, we have got surveillance, too.
There you go.
We're looking at times, guys, 100 to 500 trades per second by these high-frequency cheated trades.
It is a rough job.
To say that we do not need more regulation, to say that we should not try to fix what went wrong in a decade of deregulation is a mistake.
We're going to have to come back and talk to you about that.
Some projects you are working on because i know the shutdown comes at an awkward time for the cftc.
Also, i want to point out the cover of this week's "businessweek." how batista last $34.5 billion of his fortune in one year.
Dropped off the billionaire list.
You can download the story tonight on your ipad.
We will be right back on "bloomberg surveillance." we are talking bank regulation and twitter's ipo.
This is "bloomberg surveillance." i am sara eisen, here as always with tom keene and scarlet fu.
Tom, it looks like we're headed for another load a on wall street.
We talked about dxy index.
Futures negative five.
10 year yield is 261, even to 60 yesterday.
-- 2.61, even 2.60 yesterday.
I'm guessing 1.3670 back in february.
Nymex crude, 103.84 as well.
Tomorrow will be day for.
As we headed today three of the government shutdown, let's talk about some big gainers and losers.
Global payments was a big winner yesterday.
Montgomery also upgrading the stock to a buy.
We considered a gained more than 11%. best advance in five years.
Tesla motors plunges as much as five percent -- nine percent yesterday.
Its model s electric car on fire yesterday went viral.
Tesla said that there was a collision that caused the fire.
The collision with a metallic object.
Kamran ansari is with us from greycroft.
This is elon musk's worst nightmare.
Imagine what the battery in a car is going to do.
This is something that years ago at tesla invents they would call it a thermal event.
Not a fire.
A thermal event that occurred with the battery.
It has been a known issue for a while.
They have mostly gotten around it.
The collision caused the fire.
A lot of other cars go on fire when they are hit.
But this is people's worst nightmare about driving an electric car.
Suddenly will go up and lands because the battery got too hot.
Fortunately, that is not what happened, but people will draw their own conclusions when they see pictures like that.
I am sorry.
I'm not doing it.
I thought tesla on the road the other would day.
Let's talk about bank regulation.
Federal regulators rolling out these new rules that are required under the dodd frank law.
The government shutdown.
It is especially bad timing for the commodities, futures, trading commission or the cftc.
No question about the cftc -- a young agency started in 1975. it had to fend off critics sending -- claiming it is a redundancy.
Chicago white sox, chicago cubs, bart chilton is a cftc commissioner.
You heard about this from day one.
I want you to reaffirm what we need somebody regulators in a 2013 or will do we need a simpler structure like canada or the united kingdom?
We went to a senate where structure in the 1980's good we had a decade of the regularization -- de regularization.
It rolled over our economy and our people.
The question is balance.
I will give you an example of why we need regulators.
We run -- we look at roughly $5 trillion in volume a year.
But he swaps, the ones that caused the problems in 2008 are hundreds of trillions of dollars.
And now we have to look after part of that.
Do we need a simpler structure on where we are now going into to only 14 -- to 2014? what would be wrong with fewer regulators?
Why do we need state and federal organizations instead of a more coalescent regulatory body?
I will not argue for state regulations, but as a federal regulator, i will say that as federal regulation with consistent rules makes sense.
It is already difficult to deal with these global markets, to deal with the regulation overseas, also we certainly need consistent roles from the federal side.
We do not have to have regulators, but then they have to look after markets fared if you don't have capital standards, margins, if you don't want consumers for that day, fine, fire us all.
If you want is secure, efficient, effective, you've got to keep us on the job.
I want to learn more about the efficiencies between the united kingdom approach and the u.s. you are not the only one.
You just got a letter from michelle garnier of the european commission.
You have been tasked with helping regulate this.
This was supposed be a key week, open be the electronic exchanges or swaps.
Did they go through?
They started yesterday.
Swaps execution facilities.
Sef's. they are having fits and starts, sort of like signing up for obama care.
But they seem to be working.
Some of the volume is down.
We are not able to monetary, sara, because we are off the job.
We want a vibrant swaps industry.
We just want some basic broker real -- parochial regulation.
There's also question about who is going to lead this agency, cftc.
Gary gensler said to set down, his fifth year of the term request what are you doing at the beginning of the year?
Are you offering me the job?
Incident uncertainty for the agency that you do not have a leader?
We're just about finishing some of the key things in.
Frank gore and we want to ensure that we get that done without the leadership that gary has provided, i think that's somewhat is in doubt.
I am hopeful that we will get some of the him play at the beginning of the year, but it is coming up late because the president would have have to nominate and become burned by the senate, and we know how well everybody up on capitol hill is getting along.
Like they are a little distracted.
He also has to choose a fed chairman.
I want to ask you about a coin.
I know you are looking into this as many regulators are.
My morning must-read comes from bloomberg view after the end of the silk road, this website that used bitcoin to find illegal transactions and other activities, here is what kirsten sellalyer from bloomberg view said -- any three months ended in june, the equine start of race almost $12 million from venture capital investors.
Equine may still be hybrids, but a consumer base of legit startups and fewer druglords probably both well.
What do you think echoplex i support -- what do you think?
I support keyword druglords.
It is potentially being used, according to customs officials and others, poor illegal money laundering and drugs and weapons.
I have got some concern about it.
Kamran ansari, you've got to jump in here.
I think it is an absolutely legitimate platform.
But it the fact that it lacks identity behind the purchases which is why people are using it for reasons that maybe elicits -- sara and i have argued, we make a lot of jokes about it, but the truth is we do not get along, but there and i have been talking about bitcoin -- where is the microeconomics for this?
Where is the currency stability?
We have a price?
Iron ore has a price, -- the price of bitcoin plunged 30% -- kamran, help me.
I think it is kind of whatever the markets can bear.
It is totally synthetic.
There is a lot of jargon here, but you are a true authority on this, bart, what is the underlying value or reserve currency cents?
There is none.
Which is why you see the volatility and appeared seras is saying 30%. it went from $140 down to $110. and a volume increase after the silk road bus.
It trades about 5000 times, and it was trading 65,000 times.
Huge increase in volume.
That is why you see the volatility.
Those that think them they do not like the dollar as much or don't like gold and silver and they want to invest in this cyber currency, all i'm saying -- it is not regulated, be careful, you will see this volatility.
Tom, you asked about the regulatory agency's alphabet soup.
The fbi is looking into bitcoin.
You are looking into bitcoin.
What is the role for the cftc here?
We are only a derivative of it.
The regulators have a primary role in it.
There was a derivative earlier in the year when they got questioned by federal authorities.
In new york, they close up shop and left.
When somebody closes up shop then leaves, that is not something -- your book is "ponzimonium," the book about memorial day, 2016, i'm going to nail you on this, is bitcoin a ponzi scheme?
I do not want to say this yet.
There are no rules or regulations based upon it, so it is hard to say, but i certainly think it is a risky endeavor.
Kamran, is bitcoin may ponzi scrim?
-- is bitcoin a ponzi schem e? i don't think so.
Stay with us.
Also coming up on "bloomberg surveillance," meet the man who may have changed the future of silicon valley.
He was the first to higher steve jobs.
The atari founder, nolan bushnell, and our next hour of "bloomberg surveillance." on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
? this is "bloomberg surveillance." i am sara eisen, here as always with tom keene and scarlet fu.
In the top headlines this morning, more signs that north korea has restarted its plutonium reactor.
A satellite images show it releasing hot water, indicating it is operating.
The facility is capable of making enough plutonium for one nuclear bomb a year according to a group.
Mark cuban takes the witness stand today in the sec insider trading trial against him.
The dallas mavericks owner accused of selling the most $8 million worth of stock in the canadian search firm mamma.com after learning confidential information.
Cuban says he was not told the information was confident appeared holiday sales may run for a .9% according to forecasts.
That increase would top the gain of -- may run 4.9% according to forecasts.
Those are your top news headlines.
Did you get there before the cincinnati reds?
It was a bad loss.
It was a biggie, and they lost a good are they out totally?
And they are out, yes, oh, you are really up to speed on this.
They are out, totally.
It is time for our single best chart.
The reds are out, but eight other teams are in.
Now that we know who is in the baseball playoffs, how much to see them live?
This is based on price tickets -- ticket prices are based on tick iq.
The brazen the cardinals tickets will go for anywhere from $106 to $124. about double the regular season prices.
The dodgers over three times, and the pirates #322$322. six times the regular season price.
Because it is their first trip to the posies and since 1992. i know you care about the red sox went like it is a rumor.
Let's look at what the red sox nation have to pay up.
It is pretty high.
$329. that is the highest so far.
Only about double the regular season tickets.
That is because the regular season tickets are so expensive as it is.
It is very extensive to get with.
It is limiting seating, but it is like religion.
Like dallas football.
There is just something different.
Everyone worldwide, go to boston, it is not matter what game it is, go to fenway park, it is just different.
I will be rooting for detroit or boston just for sentimental reasons.
It would be a feel-good story for detroit to win.
Corrects -- bart chilton with us, kamran ansari as well.
Chicago white sox, 2020? quite that is what i'm hoping for.
Kamran, this is exciting.
You are a dodgers fan.
I grew up in l.a.. you a replacement?
He is a legend.
Are the bengals doing well?
Oh, very good.
They are rocking the house.
All right, coming up, no more sports then we will talk about twitter's potential ipo.
Two dollars $.17 third that of facebook's revenue per user in the second quarter.
It is a number that investors are dying to know what this four twitter ahead of the ipo.
? good morning, everyone.
"bloomberg surveillance." all of our digital media happened today, "businessweek," this is on brazil and the ugly week mr.
Batista is having.
It is not over yet.
I will tell you -- this is a must read article.
Not only on this mining story, but really on a nation.
All of a sudden, brazil is -- i mean, sara, seriously.
It could lead to a huge corporate default.
I am reading as much as i cannot brazil just to get up to speed on the collapse.
This is "bloomberg surveillance." i am scarlet fu joined as always by tom keene and sara eisen.
From the files of "bloomberg west," cerberus capital interested in blackberry.
The firm wants to sign a confidentiality agreement to gain access to my financial information according to a person with knowledge of the metal.
Cerberus has invested in distressed companies in the past including chrysler in 2007. verizon and turner broadcasting have signed a long-term distribution deal for turner's network to be carried on verizon fires service.
It is the second major deal turner has inked in major -- in recent months.
The u.s. does not want google and other tech firms to disclose how much data they give intelligence agencies.
The department of justice lawyers say that revealing the information would harm national security according to workpapers your google and other tech companies have asked to be allowed to publish the data that they turn over.
That is today's company news.
Twitters big ipo filing is expected this week.
Investors will finally get the chance to look at the company posted financials.
One key metric to watch -- revenue per user -- per user.
Kamran ansari is an investor in mobile technology and social media.
This is right in your wheelhouse.
Revenue per user.
Is that the key metric to watch here?
I think that is the wall street metric or certainly one to watch.
But i think the people should look for one, growth, two is monthly active users, daily active users, those are the big areas.
Is the goal to beat facebook?
I think that is an unfair and unflattering comparison for any social network.
They spoke, the scale is tremendous, over 1.1 billion monthly active users, generally defined as somebody's logs into the site at lease once a month.
Twitter has two or 3 -- 200 million or 300 million.
Everyone was looking at the risks of that facebook had to fight.
But they didn't cite mobile as a glowing platform in their ability to monetize it.
That turned out to be a significant risk.
What do you expect from twitter?
What facebook showed in its more recent quarter is i think they were doing 30% revenue for local, now around 40% revenue for mobile.
Twitter i don't think we'll have the same concerns going into the ipo because over half of twitter's traffic is mobile anyway.
So we expect 40%, 50% of the revenue should already be mobile.
You are one of the happiest guys in the island of manhattan.
You did your transaction, braintree, paypal, i was stunned at that transaction.
It is about that appetite to buy something.
Paypal wanted to buy braintree.
What if the appetite for twitter?
Is it a frenzy to get twitter shares?
I think it is going to be.
It is the biggest highflying ipo since facebook came out.
After twitter comes out, i think it will be a little while for the next top companies, uber, air b&b, dropbox, i think this will be the big one for a while.
What is the knock against twitter?
What could go wrong here?
I think the revenue will be relatively low.
Close to $500 million, which is substantially less than facebook , which will make $8 billion this year.
There is a little but of a cultural backlash against social network.
A writer says that silicon valley late this of open to satire.
What the social and networks really do is try to build business but they say that they are trying to liberate individuals from main or for fill their natural desires to share.
Does that create problems for the ipo going forward and for other companies that follow twitter's footsteps?
Some company has sharing even deeper than on twitter, so i think that -- i mean, that is certainly a great commentary.
And do you care what the executive -- how much stake they have in this company?
Because we are going to get that to any filing.
We are going to get a lot.
What did not go well for facebook, which they are selling.
How much of the company is really being offered.
Facebook toward the end upped the shares it was selling, which flooded the market and made the price drop.
I think that will be a key metric of how much is being sold and who is selling.
People like us who invested twitter.
Bart chilton from the cftc with us as well.
This is outside your prove you -- your purview, but this is the animals.
Your how do we not lose this?
-- animal spirit we need.
Had we not lose this?
Not physically to one form or another, but the thing like a government shutdown, the thing like the debt ceiling crisis coming up, anything about not over regulating but having appropriate regulation are all conducive to a great business environment.
We are starting to see a lot of change.
The deficit is down.
Some of the numbers are looking good.
Just at this time, we are pulling the government shutdown, and the debt ceiling crisis, so it is a bit of a concern not just for individual firms but for the economy in general.
What would you recommend to twitter in their roadshow besides nobody were hoodies?
What is your advice to go to institutional wall street is a here is our story?
The stories about international and national growth.
It is not a u.s. story, it is a domestic but also international story.
I think you have got to point to the growth rate and a great mid- level.
People on twitter are on 20, 30 times a day, not checking in once a month.
Fascinating conversation as we await twitter's ipo.
Good to have your, kamran ansari , as well as bart chilton for the hour.
We are seeing the u.s. dollar rating at an eight month low against other major crises, including the euro rocketing above $1.36. mario draghi of the -- you did the euro twice in your data check.
Cracks it was -- it was supposed to be bitcoin.
I love it.
Such a strong mover.
Dollar yen is higher today as well.
That is a positive sign leading into the opening bell.
Futures under a bit of pressure.
Coming up in the next hour, the man who has run chrysler and home depot, bob nardelli on the shutdown.
. day three of the shutdown brings more photo ops, but no results.
Washington braces for a prolonged battle.
The endless search for talent.
We speak to the man who was the first to hire steve jobs.
Sara's reputation is suspect.
Mine is worse.
Scarlet's is pristine.
It is embarrassing.
This is bloomberg "surveillance ." i am tom keene, live from our office in new york.
Our guest hose is robert nardelli, former executive officer of home depot, formerly from generous electric as well.
Michael will be with us.
He is great, i know him well, from dominoes, and it is a serious issue.
First a morning briefer you.
China services industry index rose to a six-month high, adding to signs that china is rebounding.
We will get the initial jobless claims numbers out at 8:30 a.m., then 9:45 eastern, the weekly read on consumer sentiment.
The comfort index is out.
10:00 a.m., the iso non- manufacturing, all of this ahead of the non-jobs report friday because of the government shutdown.
Unless they can reopen, the labor department not putting out -- are they putting up the black screen, "this is a test"? speaking about the global economy, speaking at george washington university, christine lagarde.
Scarlet has company news.
Ep gets a win in the court battle over the gulf oil spill.
-- bp gets a win in the court battle over the gulf oil spill.
Millions of "fictitious payments." that could save bp hundreds of billions of dollars in payout.
The price of bitcoin falters this morning.
The online website for illegal drugs -- silk road was one of the -- and cerberus capital interested in blackberry, trying to gain access to more financial information.
This is according to a person with knowledge of the matter.
Cerberus has invested in troubled companies in the past, including chrysler in 2007. that is today's company news.
With us, robert nardelli, former home depot and chrysler ceo.
The smartphone maker of canada looking to sell, and there is further interest from mr.
Nardelli's cerberus capital.
It is a deeply troubled company, cerberus known to always look at troubled companies.
What is cerberus seeing?
I cannot comment on what cerberus sees, but they have done a masterful job of going in and turning around troubled companies, saving thousands of jobs.
I remember going way back, my first palmpilot, blackberry.
It is just a shame that they have fallen behind.
You were known as executing tangible products, whether a piece of lumber from home depot, or an automobile from chrysler.
Are you looking for the tangible product of the palmpilot, or is this just about an analysis of patent value?
I am not sure, not really in position to comment on that this morning, but i think cerberus has a long history of going in -- they have done a remarkable job on yellow pages.
They have gone into a variety of different businesses, hard-core assets like the bird and other companies and have been very successful in turning those around.
Did he give us an answer?
That was a bit of a dodge.
We will talk about some of the other businesses you have commented on.
Day three of the government shutdown.
We saw the first face-to-face talks between president obama and congressional leaders last night, but both sides left without budging.
But go to washington where phil mattingly has the latest.
What is it going to take to get some sort of august if nothing came out of last night's meeting?
We know two things right now.
One, funding the government and raising the debt ceiling are quickly moving into the same fight.
We have two point five weeks until the debt ceiling limit is hit, maybe less than that.
The other is there is no game plan here.
Usually we know what is going to happen.
People will come out and rail a little bit and calls will come out, procedures will come out, and then we will get a deal.
We don't have that laid out, and that is worrying people in the administration and on capitol hill.
House speaker john boehner came out of the meeting with the president saying the democrats were not going to budge.
They will not they go she ate.
We had a nice conversation, a polite conversation, but at some point we have got to allow the process that our founders gave us to work out.
Senate majority leader harry reid weighed in as well.
We are through laying these little games -- playing these little games, all focused on obamacare.
That is what it is about.
The one thing we made clear in that meeting, we are locked in tight on obamacare.
So the budget and the debt ceiling are becoming one issue for both sides.
Does that mean we will get traction in the next two weeks, or do we have to go past the deadline to do anything?
Both house republican leadership and the obama administration are aware of what is at stake when it comes to default.
The problem is what john boehner was saying, they white house refuses to negotiate.
They feel like this should just be regular order in the government.
John boehner cannot go back to his members with nothing.
This is kind of at the crux of the problem right now.
Away from the reporting of this, you said there is no game plan.
I don't buy that.
What is john boehner's game plan into the weekend as he staggers to the sunday talk shows?
Tom, i am being serious when i say that usually we get a good sense of behind-the-scenes phone calls, meetings.
They are not happening right now.
John boehner is focused on, at least yesterday, he is meeting privately with his own members, it's trying to get a sense of what he can do for them that would get them to vote with him on something.
Again, he has not been talking to the democrats.
We have about five steps more before it even starts the real process.
There is nothing on the table , it sounds like, at this point, that they can negotiate on.
Phil mattingly, thank you for the morning report on day three of the government shutdown, are bloomberg washington correspondent.
He really captured totally it is not just republican- democrats.
Boehner is not even talking to republicans.
There is no middle ground.
I think the people who thought this was going to be a short shutdown are going to be woefully disappointed.
My sense is this will drag out.
What will it do to the state of the economy?
Can i be gloomy enough saying that it tilts us to recession?
It puts another card of uncertainty on the growing stack of business.
You saw this morning united technology is starting to see it, so the military industry, i think corporate america overall is keeping a watchful eye.
The president signaled wall street should be more concerned than ever on the shutdown.
5000 jobs could potentially be at risk.
The shutdown comes at the least is he quarter for government -- at the least busy quarter for government contractors.
That could be its saving grace.
In 2012, agencies placed 12% in the -- what is the most effective kind of pressure that ge, uts, business in general can exert on lawmakers?
They have to keep talking about getting a resolution.
It is unconscionable what we just saw from these two lips that people elected to represent our country and the majority of -- that these two clips that people elected to represent our country and the majority of the people do this.
I would hope that they would have that sense of responsibility and accountability.
That is why they are there, to resolve these problems and not get locked in these ideological positions.
There are really deep lines in the sand here.
What happens if we hit the debt ceiling?
I think that would be catastrophic for our country to default on commitments we have made her payments.
Working on the budget to -- to have made payments.
Working on the budget, reducing the deficit, we have got to go faster.
That is our twitter question of the day -- what will happen if we don't raise the debt ceiling?
Tweet us at@surveillance.
Data check -- equities, bonds, securities.
Futures, negative five.
Year over, 1.36. nymex unchanged.
Bloomberg "surveillance," television and radio.
? good morning, everyone.
Bloomberg "surveillance." i am tom keene.
Our guest host robert nardelli is with us, former chief executive of home depot.
He could not hammer a nail straight.
Then there is chrysler.
He could not change the oil on a chrysler car.
Can alan mullally)? -- can alan mullally write coed?
-- write code?
Look, i think alan would be -- i am a huge fan of him.
I got to know him when i was in detroit.
He would be an excellent candidate for that opportunity.
How did it happen question there was a lot of dialogue about, bob, you are not a car guy.
I said but car guy's got you here into the situation.
It was helpful for me going into home depot not to be tied to the past but looking to the future.
Same with chrysler and alan would bring that same thing to microsoft.
Are they one and the same?
I think the concept of one ford, one microsoft, one honeywell is very important to get everyone in an organization.
We had 330,000 associates at home depot.
One-page strategy, make sure we are executing toward that end.
Fancy degrees writing code?
Alan is not going to write code.
He is going to bring relentless vigilance on performance, day to day, week to week.
Can he transferred the enterprise profit area to microsoft?
The consumer area?
I think so.
About 70% of what we know as ceo's is pretty portable.
Our fundamentals of running a corporation.
The other 30%, you are a dry sponge, you had to listen, learn.
You are a sport about the oil change.
Bob nardelli knows that if you put the screw down the distributor cap of a 1967 chrysler barracuda, you have got a problem.
We will continue this discussion on auto sales.
It is ancient.
We are going to talk about autos in detroit.
This is number "surveillance." distributor, you know, the rotary thing goes and the screw goes down.
Good morning, everyone.
Bloomberg "surveillance." steve kuhn from pine river capital management, this morning on "market makers," here on the state of investment.
This is bloomberg "surveillance." i am sara eisen, here as always with tom keene and scarlet fu.
Our guest host is robert nardelli.
The european central bank is explored options on bank funding.
Mario draghi has directed a panel to look at liquidity options.
The central bank wants to be sure captioning -- cash operations are available.
Secretary of state john kerry is in japan where he says the two countries will expand -- the two countries have pledged to creating more robust alliance.
That company -- that company -- of course north korea's expanding arsenal.
And a tight game in the fourth inning.
Tampa moves on to play the boston red sox in the a.l. division series.
The dodgers and the braves in one, the cardinals and pirates in the other.
Which one will you watch in the american league?
I will watch the red sox.
But in the national league it is four great teams.
The national league is the cincinnati reds.
I know, they lost.
Do you know we went through the entire show y free?
America needs a makeover.
You may find a photo or story or a video you are not too proud of.
You are not alone.
The market is estimated to be at $5 billion.
The twitter vigilantes can be vicious.
The comments on linkedin cruel and unusual punishment.
Whether you are siren eisen -- sara eisen or a corporation are here to save the day.
The founder and ceo -- and i should note also he and i moved beverages of our choice at the pn o bar.
He's -- at the piano bar.
This gets more and more serious.
When i first met you in.
Close, yeah, this guy, great.
Thank you, i will take a drink.
But the answer is all of a sudden you are front and center.
Because reputation is everything.
20 years to build it, two seconds to lose it.
The big change i have seen is that the global 2000 community are picking up on the importance of reputation online.
They spend so much money on marketing and advertising, but they understand transactional exercises by consumers are made at the moment.
We make jokes about it, sarah and i and scarlet.
You are in.
Close -- you are in.
Davos talking to a guy like bob nardelli.
What is the risk?
First of all, a lot of them are already aware that their stores and products are under fire online, and they want to know how they compare to their competitors.
If they are unaware of that at first, i nailed him to the wall and tell them.
Whether you are a big bank, or retailer, oil and gas company, a big medical company, they want to know how although -- how all their stores and products compared to one another.
They care about online reviews.
In the last two years, online reviews have matched or eclipsed word-of-mouth is the most important reason people -- for those of us who do not get to schmooze with you in dav os, what exactly do you do?
We want to make sure that everybody in the company has a clear dashboard of how your story, your brand, your company is viewed online, and how it compares to other competitors.
A large company like the big three automaker wants to know also how it stores compare to its other stores.
So the stores in michigan, versus the stores in twitter, the other big three automakers, the other big three automaker in california.
Programs are built on per-store performance, so they want to push products, they want to make sure their management teams are reporting faithfully and accurately, and you cannot deceive the internet.
You can't deceive the internal surveys, but not the internet.
There are a couple of different rankings.
Harris interactive says amazon, apple, disney, johnson & johnson are the most reputable companies for 2013. you have a lot of fortune 500 companies.
What do you say to them about the risks and dangers of tying their corporate identity to one guy?
Most of the fortune 500 and not.
Most are built on decades of commerce, decades of teams.
But even ge is linked to jack walsh, right?
But the reputation of the ceo and the team are tied.
The perfect example, you get a bad review, i think of yelp.
I think of yelp as your worst nightmare and the client hoss worst nightmare.
What do they do when they get a stream of male ripping him to shreds in the digital space?
-- a stream of mail ripping them to shreds in digital space?
People want to go online and say i was at a restaurant and -- what do they do when they are torn to shreds?
Collect real reviews from a large number of your customers.
That is what our customers want most.
They want our help to collect real reviews from their customers to get a complete picture online.
I don't want to remove the bad stuff, fake the good stuff.
They just want a real picture of the complete picture.
Michael for check -- michael fertik, thank you so much.
Norman bushnell coming up on bloomberg "surveillance," on television, radio, and bloomberg.com.
? this is "bloomberg surveillance." we have company news starting with bill ackman.
He is reworking his bed against herbalife.
He has changed his equity position by changing to 40% long put options.
He had lost more than $300 million as shares rose recently.
Jpmorgan fends off a challenge from citigroup and corporate bond sales.
They handled seven percent of sales last quarter, making it the number one underwriter of bonds last quarter.
Citigroup went to second place.
Twitter is looking for bigger offices.
They are in talks to lease a 320,000 square foot space adjacent to its san francisco offices.
Twitter has about 2000 employees, more than triple what it had interview will years ago.
Speaking of twitter and social media, here is a quote f or you -- that comes from michael fertik.
We are talking about is big business of protecting reputation.
How can you put value on a pristine reputation online?
Reputation is bigger than brand.
It is not just how people think of the quality of your product, it is the premium you can charge, the trend line, how people perceive you as an employer, a green employer, manufacturer, supplier.
Customers are making decisions based on what they perceive accurately or inaccurately.
Given that, how do you charge your clientele?
The average consumer will pay about $100 a year, the average lawyer, about $4000 a year.
Then there is bob nardelli.
The zeros go so far out to the left.
Challenged for his reputation with home depot.
What do you think about all of this modern, digital talk about your lousy reputation?
I hope that we are on par, you and i, tom.
What michael is talking about, what i was at home depot, we would take is very seriously.
Today, with the speed of information, it is unbelievable.
People can burn rate you in a moments notice.
Everyone is under a microscope.
What i found is the ceo cannot defend himself.
Then it sounds like you are being defensive.
Somebody like mike, who can do that, is help all.
You and you are in a room with james diamond.
How do you repair his reputation?
He was cleared given the approval within his own company.
I think his reputation is very good.
His banks reputation needs help, and the way you fix that is to highlight all of the things that are true and good that the bank is doing, the management team, what they are doing.
There is a lot of good news around the company, you just have to make sure that you highlight it.
Did you take on a lot of wall street firms as clients?
We have lots of them.
They are often the punching bag, correctly or incorrectly -- now you are going to take on members of congress?
There are some things that are too tough to fix.
[laughter] i think he is doing the right thing.
He is on their conducting business, is very visible, and is forthright taking these issues on.
Is he your client?
Mark zuckerberg did a good job coming back.
I have an idea, fertik, a- rod, perfect combination.
Let's get a check on were stocks are trading.
Futures are down.
The yield on the 10 year is hovering.
The euro is stronger against the dollar.
In terms of economic data, the big focus will be on jobless claims.
It will be one of the last government reports we get for a while because the bureau of labor statistics will not release the nonfarm payroll report that would normally be coming out tomorrow because of the government shutdown.
Tom, that is a big loss for you, i know.
Good morning, everyone.
I am tom keene.
With me are sara eisen and scarlet fu.
Our just for the hour is robert nardelli.
He is with cerberus capital.
There is a talent more out there for capable ceo's. who can lead a company in an era of disruption, or more importantly, who is the next steve jobs?
With me is the man that founded chucky cheese and hired steve jobs when he was at atari.
You have had a slew of successes.
One of the greatest is hiring steve jobs.
Basically, you want to be a meritocracy.
Do not care how people look, how they smell, do not care about whether they have a degree or not.
Just hire for intensity and the rest of it can take care of itself.
Take us back, how did he look, how did he smell, what struck you?
[laughter] steve had one speed, on.
He was intense, aggressive, he did passion really well.
You quote the american philosopher frank zappa in your book, you talk about the process of finding creative people.
What are some of the things that all of these assured self-help books get wrong?
So many things.
Most of it has to do with the fact that being truly created is being a little bit of an outlier.
Some would say being a bit of a not -- nut.
You have to be on the edge.
That is not a place where a lot of people are comfortable.
I love this from your book.
This is not from mr.
Why do hobbies matter?
These are self driven things, things that people become passionate about, just because they are passionate about life.
I would much rather hire somebody who was a self-taught computer programmer, then a phd in computer science, every time.
You mentioned earlier, do not pay too much attention to the degree that people get.
Peter thiel decided to give fellowships to students who dropped out of school to pursue the program.
It has not yielded any superstar talent yet, it is early, but the idea that you have to go to school to learn to manage people , doesn't education play a role there?
I think higher education, in particular, has really dropped the ball.
It has become extremely irrelevant.
The speed by which today's industry moves means that what you learned in college today is probably five, maybe 10 years out of date.
When you were in school, when i was in school, a quality c mattered.
Have we lost the rigor?
The very accreditation process slows the curriculum.
But you can meet other people who have been mentors, who have made the mistakes already.
The people right now who are driven cannot put up with the busywork and the baloney that you get in college.
Is the next steve jobs in silicon valley right now?
I think there is the next steve jobs in virtually every company.
The real problem, in the book it says, they are there, but their work product is ending up on the cutting room floor.
You have to fix your infrastructure to say yes more.
Five seconds, which color iphone are you going to buy?
I think i am going to go to the android.
Good morning, everyone.
With me are sara eisen and scarlet fu.
They are excited for the baseball playoffs.
"in the loop" this morning at 8:00. she is here.
Which team are you looking for?
I am the worst person to ask about baseball.
No, i am.
We are tied for that title.
We are lightening things up by talking about oil and foods.
I am talking about the owner of the heart attack grill in las vegas.
He is fighting against the healthy fast food movement.
He has quadruple bypass burgers, 10,000 calories in one burger.
His fries are fried in lard.
If you weigh over 350 pounds, you eat for free at his restaurant.
Not very long.
They have an industrial scale in front.
You have been there?
The interesting thing, he actually used to own a jenny craig franchise, fitness center.
He thinks the entire industry is a sham, so he went the other way.
Thank you so much.
I want to see you chowing down on one of those things th