No Progress in Gov’t Shutdown: Surveillance (10/04)

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Oct. 04 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Scott Galloway, Jason Schenker, Francis Gaskins, Matt Salzberg, David Robert Malpass, Todd McCracken, Paul Kedrosky, Howard Lindzon, and Colleen Wakako Hanabusa. (Source: Bloomberg)

Day four of the washington shutdown, 800,000 federal employees still cannot report to their jobs, what will that we can bring us?

Twitter is not facebook, they need scale and international growth.

Twitter proposes to sell onegazilli9oon shares to the public, make that dollars.

How will investors reacted no data on the american economy today?

Good morning, this is "bloomberg surveillance." it is the first friday of the month, october 4. joining me is sara eisen scarlet fu and it's time for a morning non-jobs rate.

There was overnight news from samsung.

Their strategy has helped fuel record earnings for the company.

They said third-quarter operating profit rose to $9.4 billion which beat analyst estimates thanks to sales of cheaper handsets in emerging markets, something apple has steered away from.

At 830 eastern time, no jobs report due to the government shutdown.

At 10:00 eastern time, gop members will hold a news conference.

The government shutdown enters its fourth day.

We literally go to the sunday talk shows.

You don't even need them.

All the members of congress and senators have been out on the airwaves but have not been talking with each other.

No earnings today, no jobs report today.

It's a 10 minute " bloomberg surveillance" today.

Let's do a data check.

Futures are up or in the 10- yield is up.

I would watch the euro in the persistently weaker u.s. dollar.

Nymex crude churns.

There was a tweet talking about the market dad.

The dollar is under 80. the traditional partners signaled a weaker dollar through the week.

You see it with the australian dollar stronger today.

It has been the trade on the government shut down, no economic data and perhaps the federal reserve will put tapering on hold.

They will not get the jobs report and that makes for a weaker dollar.

We scour the papers for the most important stories.

On the front pages, the government shutdown.

It is day four and the fallout is piling up.

The president is scrapping his entire asia trip including plans to attend the asian conference net -- next week.

He needs to stay in washington to get this government reopened.

House speaker john enter will be under pressure from multiple factions in his own party because the republicans will meet and hold a news conference at 10:00 a.m. today.

We will see if there's any time of progress being made.

He is trying to unite republicans around the plan to reopen the government.

Of utmost importance to investors is upping the debt ceiling.

What about the back-and- forth and the theater of it?

They are staying hard and it may seem to still be far apart.

There does not seem to be one thing they agree on to get the government back open.

We all look at different news sequences.

Scarlet fu looks at something different than sara eisen and i look at different things.

Twitter announced its ipo yesterday.

That's our third front page story.

It is the most hotly anticipated stock sale since facebook went up like not too long ago and had flopped.

There is a suggested value of $12.8 billion in twitter plans to raise $1 billion.

It will be determined by the roadshow.

It is a placeholder so they can determine what the fees are they will pay to goldman sachs who is leading the underwriting.

We don't know how many shares they are planning to sell and how much the stock will be priced at her in twitter hopes to complete this ipo by thanksgiving but markets are unstable and the government shutdown extends, it could be delayed until next year.

What else do we have today?

That is it for now but we've got plenty more to talk about when it comes to twitter and jamie dimon.

The ceo of jpmorgan is stepping down as chairman, not of the bank, of the main bank subsidiary.

This took effect back in july.

There is a regulatory document released yesterday that listed him as chairman emeritus of the subsidiary which runs their deposit operations.

He still remains chairman of jpmorgan.

Tom keene is the anchor emeritus.

Jamie is still there as chairman.

This could be a sign of more changes to come, hard to say.

Look at all the regulatory headaches they face.

Let's get back to our top story -- the president canceled his trip to asia at no deal to end the shutdown in washington of our nation's government.

Peter cook is in dc.

What is the state of the unity of the republican party right now and what does it say about their strategy next in trying to get the government open?

There is some cracks in the armor.

There are some republicans not thrilled with where they are.

There was a group of moderate republicans who met with john boehner this week and continue to talk with him to urge them to effectively throw in the towel and except a clean spending bill and move on to fight the next fight over the debt ceiling.

There is more talk that these two issues are being combined and ultimately john boehner is looking at a medium-sized to larger size broader deal that affects both the shutdown and also the debt ceiling.

We are now moving from the intractable issues over the health care law to the intractable issues over revenue.

How do you reconcile those?

What is the back story of the republicans as they try to get to the sunday morning talk shows?

How do they position themselves?

This meeting behind closed doors this morning, they will be talking about the plan for the debt ceiling and what will they step or were it with.

You will see john boehner undoubtably with members of the leadership stepping in front of the microphone or the more important interviews that will be in the back door.

The most conservative members and the more moderate members have gotten their voice let -- recently.

As i understand, they will throw in the kitchen sink again.

At the top of that list will be entitlement program changes.

They would like to see a deal that addresses that.

The issue is if you get entitlement program changes, democrats will want revenue in return and how do we do it that issue?

That has been the stumbling block all along with the grand bargain.

The president says he is not willing to negotiate over the debt ceiling grid a government shutdown is one thing because we have been here before but are they willing to really play ball with the full faith and credit of our nation's government debt?

You ask every single republican if they are prepared to risk default and nobody says yes.

That should tell you something.

John boehner and his team up there know that is not something they can mess with.

It does not necessarily mean that the process allows them to get to the finish line.

We don't have the roadmap just yet.

That is one of the reasons for this meeting this morning is to make sure everyone knows that the stakes are extremely high.

This is not the equivalent of the shutdown.

If you merge the two issues together, john boehner believes he has more leverage in the president says he will not negotiate but somebody will negotiate for the democrats or we will go over that cliff and nobody wants to do that.

Thank you, peter cook.

We are looking forward to your interview with senator tim king and congressman darrell issa on friday night tonight.

Our guest host today is scott galloway.

He teaches brand strategy at new york university and founded firebrand partners.

Good morning.

236 pages of the s1. blah blah, all it comes down to his brand momentum.

How is twitter doing right now?

I think they are doing well and the market for social media is hot.

It looks as if across the social media landscape, these companies are trying to figure out how to monetize their of man's audiences.

I think they are doing well.

We will cover the nuance notes about what we have seen.

At the end of the day, it's not about metrics or ratios, they barely make money.

Nobody cares about that, do they?

It's a growth story.

Three years ago, they did 28 million dollars in revenue and it looks like they did have to know you and dollars this past year.

Coming up on do they need scale to become profitable?

Relative to facebook and facebook did not exist -- relative to yahoo as well.

100 million users seem to be active every day.

Is it something that mainstream america can adopt?

You are giving me a hard time today.

I think it has hard at a nice niche for themselves.

This is an impressive company.

2000 employees and that they have been hiring 60 people per month for the last three years.

They will go into a whole new building as well.

We will cover this and try to make you smarter on twitter.

Right now, friday, note jobs, i am on medication, here is scarlet fu.

There is a costly leak for citigroup in the bank was fined $30 million by massachusetts regulators after an analyst gave a negative report about apple to foreign investment firms before the information was made public.

The firm is getting the report -- the firm's got the report early.

Sac's is looking to sell the re- insurer unit.

The bermuda waste sac reit was formed to provide additional capital for investing in tax advantages and potential hires are other investment managers.

Pershing square takes a big hit.

It's humbled by $2 billion over the last two months.

Pershing now has 11.2 the onion dollars under management, much of the drop comes from soured investments.

I would think the jcpenney sale was a big part of that.

Not a good couple of months.

Coming up, we will talk more about the twitter filing and what you need to know and what metrics stand out.

Our twitter question of the day -- they are about to launch their roadshow and are taking questions and want to hear what you would ask.

Why it won't katy perry follow me?

That's my question.

We will be right back on "bloomberg surveillance," on bloomberg television and streaming on your phone, your tablet, and

? good morning, everyone.

This morning, he is the ever court chairman -- evercore chairman.

Also, he is a diehard red sox fan and we will ask how the red sox will do versus tampa bay and betty liu will have other questions at 9 a.m. this morning.

I have feeling her question will be on the government shutdown, not the red sox.

The twitter public filing is out.

It's a big moment for the company with investors finally able to get a look at some of the financials.

The big take away is that growth that twitter is robust.

It raises expectations for where it can go forward but user growth is overseas and revenue growth is mainly at home.

More than 3/4 of twitter users are outside the united states.

The fair value of the stock was $20.62. they stunned the number of shares out there, that would imply it valuation of almost $13 billion.

But we don't know the exact number.

But if you would were to extrapolate from that, many people say twitter would be valued at 29 times reported sales.

Facebook, for instance, debuted with a ratio of 26. it's a fascinating document.

Each one of these prospectuses is different whether you go back to the day of a physical document or you go to the pdf files we have now.

They try to set a tone up top.

Here is the resident and the first lady after four more years and this is the branding that you see which says -- which sends subtle messages.

Over here, we are conversational.

This is something i would never know about.

I cannot believe gavin rossdale is like mr.

No doubt.

This says more about twitter than any of the matthew ever -- this says more about twitter than anything ever could.

It is a ubiquitous service that people have.

That does not necessarily mean it will be a slamdunk when it comes to the company.

Twitter listed some risks which i found interesting.

They have 32 pages of risks versus facebook's 22 pages of risks.

They said they have a dependence on advertisers and they have stiff competition and acknowledge a fleeting popularity of past consumer oriented websites.

They acknowledged earthquakes.


All these people using twitter have an agenda, they are trying to sell something or get their point across.

What do mainstream americans have to get across?

The main risk is the san francisco giants.

Let's go back to square one.

Why are they not myspace?

Enough people see this as in an extractable part of their lives which has become valuable.

Myspace got traction with a lot of people interested in music and started dropping off pretty fast.

I think twitter is sustainable when the president uses it and corporations are incorporated into the media plan, it shows it's more sustainable.

You can see who owns the stocks, the executives that on it.

Dick costello, the ceo does not own that much.

He is the third ceo and the company's history and has a 1.6% stake.

There was also peter fenton and jack dorsey, the other cofounder has roughly a five percent stake.

I cannot wait to see the roadshow to see what they learn from facebook.

They have about three weeks to go before the roadshow begins.

On twitter, we will cover this throughout the day and "bloomberg west" will take you further through this this afternoon.

The cover of this week's "bloomberg businessweek," i keep the tease to and he lost his fortune.

? this is "bloomberg surveillance." president obama has canceled his trip to to work on resolving the government shutdown.

The president was scheduled for a weeklong trip to the region to focus on trade and defense issues.

Secretary of state john kerry will represent the united states at some of these meetings.

The bank of japan is keeping its policy settings on hold.

It decided not to add more monetary stimulus after business confidence has surged and confidence in the japanese economy is growing.

The bank will continue with his plan to buy $540 billion worth of japanese bonds per year.

In sports, clayton kershaw let the los angeles dodgers to win the first game of the playoffs against the cardinals.

He allowed one run in seven innings.

The st.

Louis cardinals won over the pittsburgh pirates in the opener.

Those are your top news headlines.

The pirates beat the reds pretty badly before, right?

It was embarrassing.

The third inning was painful.

Seven runs in the third inning.

It's not a quiet morning must read.

Sara eisen has brilliance.

I went to take he noonan of "the washington journal." he is the former secretary of state -- former treasury secretary.

He personified mainstream republican conviviality and consensus.

Here is what he says -- he takes a reasonable stance and says the house of representatives, the republican party, should get blamed for a lot of this but he points his finger specifically at the president for not taking a more prominent leadership stance.

The idea of no negotiations is not realistic when you look at past debt ceilings.

He says presidents always negotiate in order to get an increase in the debt limit.

You cannot say i am not negotiating.

He said he should take a page from ronald reagan.

Coming up, who needs the labor department anyway?

We've got our own jobs report instead of the government won at 8:30 a.m., next.

? this is "bloomberg surveillance." it looks like there is a positive note when you look at u.s. equity futures.

A higher start.

We look at equities, bonds, currencies, and commodities.

The euro dips back a little bit and nymex crude was at 101 earlier in the week and we are up two dollars.

That's all you can say in the data check today.

Take a look at what the big gainers and losers were from yesterday's trade.

We mentioned tesla motors and the fire and the stock took a hit, down more than four percent.

Video of the fire went viral and tesla said it was caused by a collision with a large piece of metal and not a battery issue.

Still, the stock was punished.

Herbalife was off by almost seven percent.

The lack and says he stands the claim that the company is a pyramid -- bill ackman says he stands by the claim that the company is a pyramid scheme.

Bank of america had an analyst that set the company is well- positioned for growth.

Ron sloane seconded that.

He was adamant and loves healthcare.

You wonder how much has been baked in.

Here we are the fourth day of the government shutdown in the damage is piling up.

Jobs of and furloughed and services have been cut and how it has ruined our economics super bowl.

We will not get a job support at eight or he a.m. -- at 8:30 a.m. we have our own sources on hand.

Jason shenker, bloomberg's top ranked economist for his crystal ball call over the past two years and particularly last month where he absolutely nailed the nonfarm payrolls call.

We were supposed to have the report at 8:30 a.m. and we dragged them out of that to give us his wisdom.

Good morning.

Good morning.

The number one telling data is claims.

Bring up the bob cicnh charts and the idea of the yellow line is claims are doing well and the unemployment rate does not come down all that fast.

Do you just resume a lower unemployment rate to come?

Over, i think we will have an inch down but the rate will be slower over the next two years than it has been over the past three years.

That has a lot to do with some of the drops in the labor force participation rate.

I don't see that dropping a lot lower from where we are now which means the only way the unemployment rate goes down is if you actually create jobs at a faster pace.

I don't see anything other than a modest pace of continued job gains.

We don't get the number at 8:30 a.m. what is your call on what it would have been and what it should be?

This month, we would have been looking at about 160,000 new jobs.

It would've been a little slower than last month.

I would have been concerned that there might be a slight loss in construction jobs.

Some of the seasonal adjustment factors i had anticipated before the last numbers were way down and this month i thought there could be more fundamental factors that would keep the rate a little bit contained in terms of the number of jobs.

I expected the unemployment rate to inch up a little bit to 7.4. jason's calls are accurate but are not the consensus.

The consensus was 180,000. he is a little less optimistic.

We took up poll to see where we thought nonfarm payrolls would come in and here are the numbers -- that's a photograph of me from 19 -- i'm talking about the number.

It is a waltzing ma-tilde.

180,000 is my commitment.

You know the standard error or the wiggle room around this number is huge.

Why do we go to one single point when you know it could vary month to month and a huge way?

The numbers can vary but at the end of the day, this is what really matters for everything.

Fed policy is being driven by the jobs numbers.

Like it or lump it, this is the way the data is put together.

This is the number people care about and the number the fed makes its decisions around.

Right now, being a little less optimistic, maybe the right way to be because anyone who has been very optimistic about this number has been continually disappointed.

There has been lots of financial heart rate around people who continually expect the bigger numbers.

Modest job gains is the story and that will continue, i think.

This is a data dependent fed and ben bernanke said we are watching every data point.

Does this mean that gets put on hold, the tapering?

I think that's the risk.

When is the fed going to announce the taper?

The next real time be december, 2013. ben bernanke said at the last press conference that they would not make the decision at a fed meeting without a press conference but they could add a press conference to any meeting in order to make the change.

I cannot imagine right now the economy running and growing in leaps and bounds and the fed would need to have an emergency press conference just because things have heated up so quickly.

I think december is the first shot.

After that, we are well into next year.

I still think mortgage backed securities are a third rail.

I still think they will not touch mbs until they are done with treasuries.

We will have to leave it there, thanks so much.

We don't know the job report today.

Do you think that the fed knows the data even with the shutdown?

I don't think so.

It is such important data, are they sitting at home?

Next week, we are supposed to get the trade report which we won't if the government to still shut down and there are other reports.

What are we going to do?

When the government takes away our jobs report, we come up with our own.

Total nonfarm payrolls in the u.s. are still 1.9 million short of where they were at the peak in january, 2008. not all sectors are created equal.

Some industries are better off and are above their 2008 peaks.

For instance, education and health services and leisure hospitality, professional business services have record high employment numbers.

On the flipside, manufacturing, construction, trade, transportation, utilities, government and financial sector.

The unemployment rate is over seven percent which is socially unacceptable.

The fed's target is 6.5%. we have a long way to go.

Where we are is just shocking.

Obviously, jobs is a big theme.

We don't get it today at 8:30 a.m. coming up, twitter is looking to cash in a $1 billion ipo for a messaging service that is losing money?

More on that in a moment.

? this is "bloomberg surveillance." twitter opera shall he files its ipo.

We are joined by the director of research

No question this one is highly anticipated.

Now that you have had a few hours to go through the numbers, what is your number one question about the long-term viability of this business of a public company?

The question i have is -- what is happening with the growth rate in the number of users?

Which seems to be declining a little bit right now.

That's an interesting one.

This is the heart of the matter.

It's a 236 page document and you are legendary for going through every page of an s1 document.

There is the growth rate of the users.

We don't really know who all those users are, do we?

No, we don't know who they are but what's interesting to me is i have looked at the come parroted of -- i have compared it with linked in and facebook and what really counts is the growth rate in top line revenue for these kind of ipo's. twitter had a 60% growth rate for the six months into june this year vs 2012. facebook had 29%. what is the gross margin and what is the growth rate in the gross margin?

Linkedin and facebook are both flat.

The other thing you are great at is taking the temperature of the roadshow.

What do you expect to see in the twitter roadshow that is different from the facebook roadshow?

Twitter is run by a group of professionals.

It took 12 months for facebook to get into the professional mode but once they did, the stock went up.

Twitter has the button-down approach down right now.

They have a great set of vc's and they will do well in the roadshow.

Twitter has made a couple of notable acquisitions and partnerships lately.

How much stock you put in these numbers?

They don't add to the cumulative effect of these new deals.

They made interest in acquisition last year.

The strategy is interesting.

They are trying to be more efficient with tv advertising and figure out a way of that they can skim more off the advertising in television market.

Tom was watching the red sox and he was treating other people so they can target you.

It's a unique strategy.

Most of the other platforms are distinct ad words but twitter says they will partner with tv.

2/3 of their revenue has come from mobile.

Francis, my question is about the price.

They cannot price it too rich because they want to avoid the facebook fate but they cannot go too low.

How do they do that?

It's a $13 billion projected price.

In 2014, they are estimating $1 billion in sales of that is 13 times revenue for 2014. when people look ahead, that is a favorable comparison.

Let's ask you our twitter question of the day -- what is the question you would ask at the roadshow?

My question would be -- the specifics on the growth rate of users from the filing -- is it from the june quarter compared to the march quarter?

I would say how are you going to boost the number of users?

I love him.

He has a bs factor of zero.

It is a simple website but has everything on it.

He takes 236 pages and distills it right down.

It is day four of the government shutdown and comedian stephen colbert had a field day.

Take a listen.

It is day three of the government shutdown.

It is a critical moment in our nation's history.

Not just because yogurt was left by federal workers in refrigerators.

There is a lot of cleanup to do.

Is that true?

Is our food safety at risk?

Bart chilton yesterday talked about this.

He says he has 28 employees working out of 700. they get fined if they work from home on their laptop.

That's a sad state of affairs.

Coming up, one company that is cooking up a big business across the country, the ceo of blue apron is next.

Yes, scarlet and i tried it out in the kitchen.

I cooked.

You don't want to miss this, it is classic.

? ? this is "bloomberg surveillance." we've got some company news -- hgc posted its first quarterly loss after going public 11 years ago.

It lost $100 million in the third order and blames higher manufacturing and marketing costs.

A different story at samsung -- it had record earnings last quarter and operating profit tops nine ilium dollars.

Samsung has expanded its range of midpriced dons to capture sales in china and india and benefited from rising prices for its memory chip.

Amazon is ready to roll out a tv set top box.

The box would work as a platform to run their streaming video service and they are working to have the box available for the holiday shopping season.

We are starting a new segment today.

We are looking at companies driving a new economy.

Today, the exploding business of online food delivery.

At blue apron, customers get tension convenience.

For nine dollars 99 sense, it delivers -- for $9.99, it delivers all you need for a meal and operates an eight percent of the nation.

We have the founder and ceo of blue apron.

Your background is in venture capital.

Why did you start this?

Food has always been a passion of mine.

When we started the company, my cofounders and i were working hard and wanted to cook at home more often but found it too difficult to find the ingredients we needed to cook at home.

We came up with the idea for an ingredient delivery service.

We wanted to test out the product ourselves.

I am a non-cook like never.

We got a chance to test out the recipes.

Have a look at how it went.

This is not easy.

This is like a test.

Turn over the salmon and cook 2-3 minutes.

Do we put the quinoa on it?

I think so.

I like the dressing.

I did so much work today.


More for you?

Thank you.

Mm, there is no seasoning in this?

As you can see, we had a ball.

Do you eat tv dinners at home?

I ordered delivery.

Might i guess takeaway it was good and all the ingredients were there but i did not think it was that easy to follow the directions and cook it.

She's a non-cook.

It's a piece of salmon, you put it in the skillet and cook it.

Who is your target demographic?

We make this accessible to novice chefs but interesting to expert chef.

The key demographics are from young professional couples, young families, and older couples whose kids have grown up.

What is your customer acquisition model?

What does it cost you per customer?

Right now, the biggest weight we acquire customers is word-of-mouth and we have a great referral program.

People hear about us from their friends at the water cooler at work.

We also do direct marketing on the internet and elsewhere.

The first thing i went to was the size of the portions and everybody in the control room rate about --raved about not shorting the portions.

How do you expand?

Sara eisen is living in a shoe closet downtown but how do you go to scarlet fu in the suburbs?

How do you deliver across america?

How do you scale up?

That's one of the most complicated things we do after creating recipes.

We deliver in refrigerated insulated boxes.

We can deliver a box to you and keep it in transit tummy tuck.

Even if you are not home, it can sit on your stoop or porch while you are waiting.

It is quite easy for us to reach the country that way.

$9.99 seems high if you are used to going to the grocery and buying your ingredients.

What sort of margins are you seeing?

We make healthy margins.

That allows us to build a scalable business.

The $9.99 is cheaper than you can get on your own at the grocery store.

To me, that's a steal.

Even if you buy all the ingredients?

999 -- $9.99 per person.

We are giving you fresh, custom- made pastas.

They are leftovers.

It saves people a trip to the grocery store.

We looked at the bigger numbers behind the online food as ms.. the whole industry is booming.

$350 million in funding, the number of deals jumped 37% from one year earlier.

What is the goal here?

Do you go on a another couple of years before you do an s1? maybe someday but we are a a capital efficient business.

Customers pay us nine dollars 99's per person per and stay with us a while.

We have a negative working capital cycle.

What does that mean?

That's what happened when you talk to harvard mba's. our customers pay us up front and we pay our food vendors weeks after.

How often do you change the menu?

Every week.

We have a team of people in our test kitchen creating 60 recipes.

You've got to have a kitchen to use blue apron.

This is sarah's kitchen downtown.

I think that's bigger than my entire apartment.

It's beautiful.

You need to have pots and pans.

They don't ship you pots and pans.

Thanks for joining us.

One new economy company to watch.

Coming up, david malpass - ? . . .. speaker boehner push for unity but 230 two members cannot agree with each other.

Twitter needs scale, they need to international growth.

One billion shares -- $1 billion in shares.

And there is no jobs report.

How will investors react to know data on the american job economy?

It is jobs day, friday, october 4. a non-jobs day job stay.

-- non-jobs day jobs day.

We have all the usual people and nothing to talk about.

Perhaps you will get a more accurate sense of the economy.

Time for a morning brief, overnight news, samsung, that strategy of selling smartphones at every price point is helping fuel record earnings.

Thanks to sales of cheaper handsets and emerging markets.

That is the distinction between samsung and apple.

No jobs report, we will keep an eye on washington to see the latest on shutdown talk.

House republicans will be hosting a news conference after a short -- after a closed-door meeting.

It is fascinating what is going on.

Or what is not going on.

Morning brief, there it is, scarlet has the company news.

A costly league for citigroup.

It was fined $30 million.

This was after an analyst gave a negative report on apple to for investment firms before that information was made public.

Kevin chang was fired by citigroup last month.

Jamie diamond giving up a title, he steps down as chairman of j.p. morgan positive bake -- jpmorgan's main bank subsidiary.

Jamie dimon is now listed as chairman emeritus.

And bill ackman takes a big hit in pershing square.

$2 billion find over the last six months.

Rushing has $2 billion under management.

Much of that decline comes from soured investments in herbalife, j.c. penney, target, as well as borders.

Let's get back to our top storing, -- our top story, twitter to go number one.

We have woken up cory johnson on this story in san francisco.

Thank you for getting up early.

What makes you think i sleep?

Why would i sleep?

You were up all night poring over the sec filing.

What is your take away?

We had a regular guest of bloomberg west, he calls it boring.

I don't know about that.

The business is interesting.

The twitter business is interesting.

But it is somewhat consistence.

-- somewhat consistent.

You have fantastic sales growth, fantastic youth of -- fantastic user growth.

You have 440 $8 million in sales and operating a loss of $93 million, $100 million.

They have lost $100 million in the last 12 months and no free cash flow.

What will be the frenzy to acquire shares?

Isn't twitter a must buy for most every mutual fund out there?

I don't know.

It is an interesting technology company.

I have never understood technology investing.

When you pay -- this deal may go on 20 time sales if the numbers -- may be to 30 time sales with no profit evidence.

People who want to buy those kind -- i don't understand why tesla is more valuable than clorox.

What i will say about the businesses they are growing users like crazy.

The user numbers are crazy, doubled users, 218 monthly users in -- much it overseas.

The company had 32 pages of risk in its f1. what do you think is the most significant?

The most significant risk is the advertising out of the -- the advertising environment at large.

They talk about places where other advertising happens online.

Let's talk about billboards and radio and all the places were advertising happens.

The medium is new and i think the most important thing is how advertisers react to it and how to use it, whether they find that it has the efficacy like google has had, find out if it is successful and spend a lot more from the same kind of ads.

The numbers start to suggest that the sales per user are increasing every corner.

That is important not just because of the number of users but they are monetizing that they are monetizing users and encouraging a young business.

Can they find the answers they need, can they get the results they want?

That will be a question that no doubt shows up on the roadshow.

Thank you for joining us early this morning from san francisco.

The president cancels his trip to asia.

Day four of the shutdown in washington and peter cook is our chief political and washington correspondent.

He joins us for the soap opera this morning.

The speaker, to me, is front and center.

What does he want to say that the 30 or 40 republicans are blocking this effort?

The question is whether he is going to hear from those 40 republicans or if he's going to hear from the 20 or so moderate republicans that are hammering him or not ending this drama.

-- hammering him for not ending this drama.

He is starting to hear it from both ends of his conferences.

His job is getting harder, not easier.

The one thing for john boehner right now is the turkish starting to stray over to the debt ceiling.

That is what he is going to talk about behind closed doors with all of his members today.

He thinks he can get a broader budget deal over the debt ceiling.

I am fascinated by this question, i do not have a clue on what the answer is, the speaker aynor go on conservative talk radio?

Is he the friend or the enemy of that dialogue that is supporting those conservative republicans?

John boehner chooses his words very carefully and he chooses his outlets very carefully.

He does not knew a whole lot of media.

When he steps to the microphones, again, he has a very careful message.

He does not take a whole lot of questions because he knows his words matter.

If he gets on that conservative talk radio and they love to hear from him, he is going to get in your full from some listeners -- get an earful from some listeners who do not think he is pushing hard enough to the right.

Republicans want changes to the president's affordable care act.

Are they willing to concede at all on that point and not make that part of this deal?

I think it is pretty clear that starting today you are going to hear less about obamacare and more about entitlements.

I think that shift is underway.

The medical device tax is going to be in the mix.

Tim kane told me that himself yesterday.

A lot of democrats do not like it.

Expect that to be in there but not much else.

Looking forward to all of your interviews with a number of republicans and democrats.

Either cook on capital gains this evening.

Thank you for joining us, our chief washington correspondent.

David, it has been an exciting week.

What we look forward to today?

? ayin going to look forward to that point sarah was making, if they can broaden the menu away from obamacare and add in restraint on government -- the big issue is how do you find any technique to stop the government from expanding rapidly?

Are you talking about entitlement reform?

Also the powers of the federal reserve, for example.

They are expanding rapidly.

The federal reserve is buying debt at a premium and it is not counted in the national debt.

That problem is -- the consumer finance protection bureau is this giant new agency inside the fed, not shut down by the government shutdown.

They are operating completely separate from the appropriations process.

In some way the republicans have to give the water debate.

-- give the broader debate.

We have a related topic here coming up for you, 20% is the number, the proportion of small business owners who say they understand how to affordable care act will actually impact their companies.

It is the first friday of the month, that means jobs day.

It is a data-driven federal reserve that confronts a data- less jobs report.

It is a most interesting day.

We are to, every month, getting this -- it is important data because we are trying to figure out whether the economy is slowing down or speeding up.

The key, doesn't the fed get some form of -- i do not know the answer.

We think the labor department was pretty close to pleading with the data.

Normally the fed chairman gets the data the night before.

Could he have gotten it, i go to know.

-- i don't know.

You have been out front on pushing back against bill gross's new normal and the idea of a permanent tepid economy.

We have job growth.

It's not all that great weather we get the data today or tomorrow.

You say forget about the new normal.

Do you stand by that?

I think we can accelerate.

I think there is an issue in terms of two things-in 2012 and 2011 we had that tax increase hanging over our head and private sector credit was not growing.

Those two things have improved a lot.

Private sector credit is growing because of nonbanks being able to have around the regulators and push credit into the economy.

Bill gross -- they have had a great call on the concept of new normal.

I think it is the fault of bad policy.

It was not inevitable, it could have gone another way.

That was the choice of washington.

Remember who it is working for read the median income is going down.

They're running a policy that really helps big corporations and the government, that is what shows up.

You ran for republican office.

Is the republican party at risk?

I don't think it is at risk.

They are not putting their seats at risk.

The problem is a missed opportunity.

The opportunity right now is to put the case to the american public that the american government is growing too fast and the restraints are not there.

I want them to rewrite the debt limit.

To get the debt limit, that sounds like next week's eta.

The number is 91%, that is twitter's sales growth compared to facebook.

I am sara eisen.

I'm here as always with tom keene and scarlet fu.

Top headlines, president obama has canceled his trip to asia to work on resolving the government shutdown.

The president was scheduled for a weeklong trip to the region, the focus on trade and defense issues.

Secretary of state john kerry will represent the united states at some of those meetings and the bank of japan is keeping its policy settings on hold.

The boj decided not to add more monetary stimulus after business confidence surged.

The bank will continue its plan to build -- to bill japanese bonds.

The los angeles dodgers am a 61 win over the atlantic -- 80 6-1 win over the atlanta braves.

The st.

Louis cardinals were power to a 9-1 win.

Cincinnati would have done better.

At least the text for pirates got killed in that game.

-- at least the pittsburgh pirates got killed in that game.

The are over the impact of the affordable care act, millions of people have looked into joining the health care exchanges that went live this week.

Most people and businesses still do not have a clue about it in a recent poll found that 80% of small-business owners have a limited understanding of how the health care law works and how it impacts their business.

Is why they assume a small business is not able to afford cadillac plans.

It president of the small business association, his members are miserable.

A scientific survey, i'm trying to find someone in small business who benefits or enjoys, or is in louisiana stick about the affordable care act.

-- or is enthusiastic about the affordable care act.

It is not that they do not understand the basic framework of the law.

The understand the individual mandate, the subsidies, what they do not understand is what the home market price will look like in three years.

Will they be more likely to offer coverage to their employee?

What will be their responsibility as an employer?

That is what they do not know is going to look like.

Our guest host from inseam of global, you come from and economists standpoint.

What is your assessment on small business and the health care law?

Small business happens in hiring, and part of that our concerns over how much the health care is going to cost.

From the standpoint of the economy, the dramatic thing we see over the last five years is a lack of growth in new businesses and in small businesses that shows up in the abp surveys, in the number of workers part-time versus full- time paid this is a big problem with the economy because it is getting dynamism out.

I think there's something to do the -- i think there something to that paid there's a potential silver lining.

One positive thing about obamacare, one of the reasons people do not start new businesses has traditionally been the health care security, they are concerned about their inability to get health care as a new startup.

If obamacare is able to convince people they are going to have a safety net, that free ups -- that frees up some of those people.

I believe there is a 50 employee break.

Do you see a lot of small businesses with 200 or 300 employees and are trying to get under the 50 employee limit?

I do not see companies that are that large trying to get under the 50 employee limit.

Those that are on the cusp, it is a significant barrier.

It is worthwhile to try to take the steps if you're very close to it.

I will also say, if you are close to it, the complexity of figuring out if you are at the cusp -- it is much more complex to figure out where it applies.

The data yesterday was remarkable in that middle sized companies, 50 employees to 250, coworkers.

It was an anomalous piece of data.

They're holding down their hiring because they are in that middle range.

Perhaps it might be an inflection point.

I want to ask about debt levels.

The percent of small businesses carrying debt has approached 90% and the average amount of that they have, or than $800,000. -- more than $800,000. what kind of financial status of leave it m -- leave them in to deal with the affordable care act?

Clerks companies -- companies take on debt when they are trying to grow and they need to add equipment, staff, office space, inventory.

Having worked in capital and being somewhat in debt is a good sign for a lot of growing companies.

Very quickly, i want to ask you while we have the politics at play in the fourth day of the government shutdown, do you support the hard-line public and -- hard-line republican position to defund obamacare and shut down the government?

Works we believe obamacare needs -- we believe obamacare needs to be dealt with.

But this has a real potential to stall the economy.

Day for -- day four.

Coming up, 800,000 workers have been furloughed.

A why he is getting hit particularly hard.

We will look at the local impact -- hawaii is getting hit particularly hard.

We will look at the local impact.

Plexus is bloomberg surveillance, i am scarlet fu joined by tom keene and sara eisen.

We have some company news for you, starting with adobe.

Attackers broke into its network and stole personal data on almost 3 million customers.

The customer information included encrypted debit and credit card numbers.

The company is notifying individuals affected.

It also stole source codes for its products.

Steve:'s hedge funds -- steve coll win's hedge fund firm is -- steve cohen's hedge fund firm is up for sale.

And microsoft pages windows to htc, the software giant discussing adding windows to htc 's android-based smartphones.

This is according to people with knowledge of the matter.

The talk highlights menu -- that talk highlight my croissants push to get its software come -- software carried by manufacturers -- highlights microsoft's push to get its software carried.

You say it is an exciting company but a boring filing, you are not excited by the revenue growth?

Clerks all of those things are exciting.

We do not have any deranged letters found inside.

We do not have multiple class or shares.

This is a straightforward -- i was characterizing it as a midwestern filing.

It is the thing you expect from professional managed companies.

The exciting part is they're pretty revenues are exciting, it is a great growth story.

Is it to dole in the sense that it is nothing to trip investors up and say, here is where the thing is going to go awry because the share classes are so bad.

Has twitter succeeded the echo -- succeeded?

Clerks it is engineered to be the anti-facebook.

-- it is engineered to be the anti-facebook.

We don't want to replicate that on any level.

You are with us the day of the ipo for face took -- for facebook, i look at the document and i say on page 61, can you try -- can you trust the numbers?

Twitter breaks out users who actually visit its feed from those that don't. if that number is a significant percentage of twitter's total user account, bankers may want twitter to disclose it.

Is there a mystery as to who is actually on twitter?

I think there are all kinds of mysteries.

Who is on, how often they are using it, what the breakdowns even our -- even our, it is a $100 million hit.

-- 100 million pitch.

We have some -- insofar as we have no information, people will have questions.

Will the company pay attention to those subjects?

Are they going to break out more and more over time?

I would be troubled if we never sought.

What is your prediction if they can pull this off and if and still get some long-term buyers in the company?

I think the company has done as much as it can to make sure it has a piece of institutional investors who are not driven by the secondary market price.

It has been a big effort of the company to do that.

As filing reflects that mentality.

It that is one of the things that went badly wrong.

They have to see a high price on the day and although those sort of things.

I think the company is doing everything they can read that is laurel -- everything they can.

What is in their controls how they value and price their shares.

Right now there is a valuation of $12.8 billion.

That would give twitter a price to sales ratio of 20.6, much higher than facebook or linkedin.

Is that a problem the echo -- a problem?

Depends on what numbers you are using.

My expectation is people will tell you a hybrid of the two.

-- will value a hybrid of the two.

Were you are is a fork of but his trade in the public market around that level as the median number of read -- number.

It would not surprise me in their category at this time.

Thank you very much.

He is a bloomberg contributing editor.

He has seen his share of tech ipos speed he calls this one a midwestern filing.

I think that is a compliment.

Futures are a little higher right now, perhaps ending this recent weakness we have seen, but there's no jobs report, which would normally be a catalyst.

Limericks surveillance, we are on bloomberg television, bloomberg radio, all of our interviews on bloomberg tv will plus -- liberty the plus and i am tom -- on bloomberg tv plus.

Our guest host this hour, david -- our guest host this hour, david malpass.

The government shutdown has furloughed more than eight hundred thousand government workers.

Hawaii is feeling the hit particularly hard.

We want to welcome democratic congresswoman, helene hon abu sub.

She's joining us now from washington.

Please tell us more about the direct hits that your district is facing on the shutdown.

Good morning.

First of all, as you know hawaii has a large military presence but in addition to that the dod numbers are 20,000. when you look at what is happening and the fact that so many of them were furloughed, even under the sequestration they would need to be essential.

The sequestration has our hold shipyard -- our hold shipyard deemed nonessential.

We have two thirds now furloughed.

You can imagine the impact it is having on the families.

What is your prediction about how this plays out specifically in your house of representatives?

What is your assessment of the republicans and whether they can come together on some sort of strategy or solution to entity e two and it -- to and it?

-- to end it?

They haven't decided on sunday, they have got enough in the hopper to keep this going for a long time.

It is difficult to understand what they're doing.

Many of them are just as fed up as we are.

It is just a matter of holding together.

You covered the first district, that would be honolulu . you carry the legacy of senator daniel in you -- of senator daniel in a way -- senator d aniel inouye.

What is the pac manic approach of your president as he looks at fractious republicans?

I think the pragmatic approach is something that you just have to park your ego at the door -- is something -- you just have to park your ego of at the door.

The republicans started defunding and repealing parts of obama care.

Now it is all about opening government in little segment at the time.

It does not make sense.

I even got him on the floor and said, what do you want to?

What is the endgame here echo clark's -- endgame here?

Would you support reopening certain parts of the government, for example veterans affairs or the budget you're talking about for honolulu?

I will tell you the problem with that is that i have looked at each one separately.

Veterans have said they did not want to be pond.

We have looked at how much veterans need and because there is enough to keep it going for at least two to four weeks, it does not need to be open at this time.

The problem with picking and choosing is you are picking winners and losers.

That is not the way that works toward reopening government.

We have to get the leadership to sit down and say enough is enough, let's get this underway.

What ever it takes to get them to the table, only they will know.

They need to tell us what it is going to be.

If we do this it's only going to be in the way because people are going to say, why not this one why this one?

You are going to cause dissension in the workforce.

We are going to be saying you are more important than you.

That is not what we want.

We are ready have a workforce that is struggling on how they are going to do this.

We need to leave it there.

Thank you for joining us this morning.

Our twitter question for the day, the roadshow starts in three weeks, what question would you ask in twitter's ipo roadshow?

Good morning everyone.

It's jobs day.

Joining us in the loop, betty liu,@8:30 there will be a moment of silence.

You can't call it a job stay.

It should be a job stay.

We are going to -- you cannot call it a jobs day.

It should be a jobs day.

We're are going to have a lot of guests.

He believes this economy -- he thinks the naysayers of the economy have been wrong.

He thinks we should be growing much faster than we are.

All the caveats of washington -- he's a donor must fan -- he's a giant norma's fan of the red sox.

He's a red sox fan and a hockey fan, no wonder tom likes him.

The kicker here is aes ti, and -- is asti.

This company is a maker of electronics.

They agreed to sell their products online.

It is getting a nice lift the simple -- i slipped the sum -- a nice lift this morning.

I am watching facebook because twitter stole the spotlight with its f1 filing.

Facebook made an interesting announcement when it comes to monetizing its social network.

It is going to start selling ads on instagram.

Facebook now owns instagram, which is the biggest acquisition they have made on record.

The trick was getting ads out there.

Now it is finally going to do so.

There are photos of you guys cooking.

Scott galloway was calling instagram the best tech acquisition of late, much better than yahoo!'s purchase of tumb lr.

The growth rate has gone parabolic over at instagram.

Now it is going to be selling ads.

The new phone and the resolution of the instagram photos, gorgeous.

I like instagram.

I am fascinated by it.

I don't know if i like it or not.

We use instagram.

I don't. your kids do.

It's the thing of the future.

It's the new economy.

Sales are rising, so our expenses.

Twitter is next.

Our guest host is even now pass -- is david malpass.

Htc posted its first quarterly loss since going public 11 years ago.

They lost $100 million in the third quarter.

Htc blames higher manufacturing and marketing costs.

A different story at samsung, which saw a record earnings last quarter.

Operating profits are better than what analysts predicted.

They had expanded their range of midpriced posts -- of midpriced phones.

It has benefited for rising prices -- benefited in rising prices for its memory chip area and the wall street journal reports -- memory chip.

And the wall street journal reports that the set top box for amazon will be available for the shopping season.

That is from the files of bloomberg west.

It is time for what is becoming a very popular segment on bloomberg surveillance, the agenda.

I hope matt miller is watching.

We look at the stories that are shaping the day.

I totally agree with paul, we're talking about this being a very industrial s-1 filing.

The investors are parsing the data.

236 pages.

To its cofounder and shareholder of twitter.

Howard, good morning.

Hello, tom.

You look at the s-1 filing, what will be the next step for these executives see e they have to go out on the roadshow, they have to not be facebook.

What is on the to do list?

This is an opportunity to show how twitter works, the benefit of using it.

And obviously the --revenue model.

One more question, if you look at the valuation, do you have any idea of valuation, the $1 billion number?

We all know that is a public in -- that is a plug-in.

What powers this working number?

I think you can easily get to that $10 billion to $12 billion.

When you look at the amount of money -- the $400 million, if you put that into context of the boom of the 90s and how big is global brand is, it tends not to get to that $10 billion.

Thank you so much.

We appreciate it.

He is a twitter shareholder.

They get up there near $10 billion, maybe beyond.

On my agenda, following on twitter's tale is facebook.

Instagram is making some big moves.

The photo sharing service announcing yesterday that it will start showing image and video advertisements on its newsfeeds.

What is interesting here, when you compare it to twitter, is that facebook is about 41% of its revenue from mobile.

Twitter has 60% of its ad revenue from mobile devices.

It has the mobile thing down and a lot of people question why instagram did not move more quickly into advertising.

All we are comparing, certainly they have the edge on mobile.

The question is international growth and where the capability lies.

For facebook, that is going to be a huge point of growth.

For twitter the question is how much can they grow in places like china where they already have their own.

What i notice in this twitter discussion, 5000 employees, 2000 employees, that does not create jobs in america.

I think it can spread out.

What we are missing in the current expansion and very weak recovery is that spreading nature.

Silicon valley is fabulous.

Washington dc is busting out.

This is a key question that comes up constantly.

David malpass, is twitter and facebook part of our manufacturing renaissance?

They're oftentimes offshore.

I don't think that is what is causing these upticks in the isn indicators.

The manufacturing in the u.s. that is coming back in because of the competitiveness, that goes into auto parts.

Germany is feeling the pressure from electricity rates in the u.s. being lower than germany.

We have some good things going for us in terms of energy, in terms of the autos and other parts of manufacturing.

Is there any economic data that captures the services that twitter and facebook are creating?


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


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