Obama Returns to Washington: Surveillance (01/06)

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Jan. 06 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Charles Phillips, Daniel Alpert, Shira Goodman, Paul Oyer, Kevin Mandia, and David Dewalt. (Source: Bloomberg)

The president returns to a washington fixated on and even an unequal economic growth.

It washington fixated on the 2014 elections.

John malone and liberty media want to buy time warner cable.

And bitcoin, i am sick of it.

Some say it is theoretical hogwash.

In the meantime, get out your bitcoin wallet.

Good morning, this is "bloomberg surveillance." we are live.

Joining me, betty liu.

She has never been up this morning.

Wonderful to have you.

Great to have you.

Are you going to do 6-8? and the 9:00 to 10:00. exclusive for betty liu.

Cristina alesci with us as well.

We pushed the camaro out on friday.

That was impressive.

We pushed it on 3rd avenue.

Not a good advertisement for camaro.

He had bald tires.

It was ok.

Thank you for watching the video of all of our snow.

The poor guy in his car.

It had a happy ending.

That is not on the morning brief.

Overnight, stocks are down.

That is led by emerging markets.

The chinese reported a service report that disappointed.

Concern there about slowing economic growth.

Here at 10:00, on the economic front, we have ism and factory orders.

We have the jobs report on friday.

And janet yellen is set to be confirmed by the u.s. senate.

I know that you love burgers -- after the bell, we will have sonic earnings.

Get started on a busy week.

Let's do a data check.

Futures are flat.

Ten-year year yield, we are where we were -- three percent.

Let's go to the chart.

Here is the great bull market.

The s&p 500 has been correction free.

What kind of volatility will we see into the new year?

The backdrop of that, chairman yellen will greet us tomorrow morning.

That would be the idea of the balance sheet.

It is a template over all of this mess.

All of economics.

We are at $4 trillion on the balance sheet.

She probably will not introduce on a much volatility.

She will be safe to start.

She has a big job ahead.

We scoured the papers.

I watched green bay and san francisco.

We got the morning papers.

What a game.

They are calling up and the coldest air of almost 20 years.

That is sweeping over the central united states and heading for us on the east coast.

The temperature in chicago may not even hit euro today.

That may be balmy.

In new york, it is expected to drop to eight degrees.

Freezing and orlando, florida.

I dressed warm and i made a mistake.

7:00 tonight gets cold.

Something like that.

You are sweating right now.

To beautiful women.

We were just talking about chairman yellen.

It is expected to be a historic day on capitol hill.

They will confirm her as the first female chairman of the federal reserve.

She is currently the vice chair.

Her views are in line with ben bernanke, who seems up the -- upbeat.

He spoke on friday.

There is a new discussion with the vice chairman.

I will be very exciting as he is vetted in the coming weeks.

We have jpmorgan.

They paid more than $2 billion.

There finds keep racking up in the bernie made off condit -- ponzi scheme.

This am and maybe announce tomorrow.

The government accused them of failing to warn about this.

The fines will be transferred to their vick tums.

What an ongoing saga.

What is interesting to note about the settlement is that again, the government is basically forcing jay p.m. to acknowledge -- jpm two not so much acknowledge, but they did.

They have to acknowledge the government's case.

We will see that in the coming days on the madoff case.

Washington got back to work today.

The president returns from white.

The senate returns to 88 -- a debate on benefits for the unemployed.

Our chief correspondent down there is peter cook.

He is looking up elections for 2014. is the january discussion in washington about washington or is it about the first tuesday of november?

It has a lot to do with the first tuesday in november.

Immigrants will make their push again for extending unemployment benefits.

It is important for the economy.

The unemployment rate is still at seven percent.

The big question is how it is paid for.

This is a much larger effort by democrats to change the subject.

Turn away from the problems with health care.

And turn toward incoming equality issues, like raising the minimum wage.

They will play much better with voters.

One of the things that you brought up is paying for this bill.

Is there a way to pay for it or is this going to be just a tapering over of a way to pay for it?

Right now, republicans are insisting they will not pay for it.

There are a couple of options for them.

It is not cheap.

Billion dollars is the price tag to extend for two months.

There is some talk about a trade-off here.

Maybe with the farm bill.

There are some subsidies being cut.

Maybe that could be paid for.

The republicans will insist that is assayed for in some form or fashion.

That is their line in the sand.

We need another committee to assist the president.

He is the former president of oracle, in for chief executive charles phillips.

An economic adviser to the president.

What was it like being on a committee to assist the president with perspective?

Does anybody listen to you?

We would like to think he did.

They did propose laws several times.

He was up against a very tough congress.

Very little was passed through.

What would you recommend here?

There is discussion of the idea of inequality.

What should be the effective political thrust forward?

We need to put people back to work.

Construction is one area.

Infrastructure gets it done?

You cannot outsource it.

We have a need for housing and roads and bridges.

They do this in europe all the time.

I totally agree.

What is it that we cannot do the europe can?

That was actually -- if you're going to talk about a bipartisan issue, you cannot get any more neutral than an infrastructure back.

The republicans putsch back on it.

They thought it was a state decision.

But they -- there were those on both sides who could agree to it.

Versus some of the other measures.

That is what i would've thought.

It did not happen.

Peter cook in washington.

What will be the effective strategy if they do not want a powerful government?

They will talk a lot about the health care problems.

They will go right back in the house of representatives and have a vote on legislation.

That will laserbeam on the issue surrounding healthcare.gov.

They will require the federal government to provide more information on enrollment going forward.

Problems with website include security problems with people.

Perhaps they give up some privacy.

This is all about politics in november.

There are issues that each sides believe will play to their bases.

Do not expect the conversation to change all that much.

We need a cup of coffee to decide if it is an economy or an election.

Peter cook it's a started.

Charles also continue.

This monday, it is a five-day work week.

We are back to normal.

That means we need a new normal.

Company news.

Here is betty.

Let's start off with ford.

They passed toyota and china.

They surged 49% of the country last year.

And hundred 35 thousand vehicles.

The job report has been outselling toyota for the first time in china.

Strong sales of the ford focus get credit.

Jeff bezos -- the story -- was airlifted from the galapagos.

He suffered from kidney stones.

They amazon ceo -- that is painful.

Airlifted by a neck of dorian navy helicopter.

A spokesman said no surgery was necessary.

He had a good outcome following treatment.

Bitcoin is back above $1000. that is thanks to zynga.

They said they would accept bitcoin for online social games.

His is the second time it has crossed the $1000 mark.

The first time, back in november, it once shortly after.

That is company is.

A lot company -- coming up.

We will look across business and politics.

We will also go to germany.

Hans nichols -- chancellor merkel suffered an injury over the christmas break.

? good morning.

Coming up, "in the loop," the founder of shutter stock.

He is a gazillion air.

-- gazillionaire.

They all know betty liu.

Good morning, betty.

Scarlet fu is off.

I am here with tom keene.

John malone at liberty media has made it clear that he hopes to consolidate the nations time warner cable, the number two cable operator.

There are some wrinkles in this complicate it story.

Every time he is involved, it is very complicated.

He is a financial engineer.

At the core, he buys himself companies.

That is what he does, in the most tax efficient way possible.

Let's not forget what the news is.

He is offering to buy, liberty media is offering to buy siris us.

They already own a majority.

What is going on is that he is hoping to take full control of sirius to leverage the cash flow.

He wants to raise money to make that bid for time warner.

That is the second-largest cable operator out there.

It is a big fish for liberty media to swallow.

That is why they are using charter and sirius assets.

They have been a cash cow.

They have been lucky.

They bought it and watched it grow.

Cash cow for everyone but the shareholders.

Does he give a care about the shareholders?

He is part of the group.

He should care.

We are on sirius xm radio.

You bring up a great point.

Most of the analysts put out reports over the weekend and said they expect a bump.

If they are able to get this done and make everyone happy.

We could see a bump.

Who is against him taking over time warner cable?

Sirius xm radio spun a problem child for years.

May be time warner cable itself.

They are opened at the right price.

This all comes down to money.

Dollars and cents.

We would have thought the regulators would've had a problem with this.

More consolidation in the cable industry could potentially mean a higher price for customers.

Regulators have actually come out on the other side and said they would approve -- or signaled that they would sign off on further consolidation.

They do not compete in the same market.

This is another world for malone.

The regulators are involved because of media.

Is this a precursor for more activity this year?

These companies are all under attack by the internet.

I can see where they want to consolidate.

Regulators are saying they need to do this to survive.

I think malone is a great operator.

So is the guy in charge of serious.

He is the one driving this.

What are his best practices?

Number one, he is a financial engineer.

He is an operator at the same time.

It is hard to get both in the same person.

That is why they are such a great fit.

This is the team you want.

This is a lean machine.

The team at liberty media.

They do not hold their assets for long time.

There and then they are out.

Compare and contrast the comments they say -- you are suggesting that john malone is a financial operator?

Is that too harsh?

I think that is too harsh.

They have been very successful for a long.

Ofdespite what you may say, they are still doing $1 billion.

We have breaking news.

Cristina alesci continues the story.

John malone is so active -- this is out of europe.

Let's not forget, we are talking about heaven america.

He is also very active in europe.

Liberty global is reporting that they are making a bid or putting the final touches on an acquisition for dutch broadband provider ziggo.

Let's not forget that he is active on both fronts.

U.s. and europe.

In europe, the consolidation play is much bigger.

He is making a lot of moves in europe.

Much earlier than what we're talking about here.

The market is more fragmented.

They have to give a bump to sirius to get this done.

Are you a guru?

Guru-ette?

Deal slated.

We going to talk to the staples executive of global growth.

Extending way beyond notebooks and pens.

This is "bloomberg surveillance ." you are watching bloomberg tv.

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

? good morning.

I am tom keene.

With me, i can barely speak, betty liu.

Cristina alesci as well.

Scarlet fu is having a tantrum somewhere.

Someplace warm.

I am here.

We have a busy monday morning.

Here are the top headlines.

Angela merkel was heard in a ski accident at the end of december.

She suffered a hell that in -- pelvic injury in switzerland.

She is canceling appearances and appointments over the next few weeks will she recovers.

I will not ski anymore after hearing about this.

Much of the country is bracing for the coldest day in almost two decades.

The forecast is calling for frigidaire to sweep over the central u.s. to the east coast.

Amateurs will be below zero or in the single digits.

Chicago's daytime high maybe 10 below zero.

This has already caused flights to be canceled across the united states.

And in sports, a field goal as time expired gave the san francisco 49ers a playoff win over the green bay packers.

The victory sends them on to play the carolina panthers in next weekend's playoff action.

The temperature in green bay, two degrees above zero.

They have to get used to that with the super bowl in new york.

You wonder if this is a lesson for the meadowlands in february.

I think it would be great to have it that cold.

Why?

Real football.

When they made that kick last night, you watched the guy getting the ball and he puts spin into it.

He spun that just a little bit.

That has nothing to do with temperature.

The colder football -- snowbowl.

Charles phillips is our expert.

Hard to catch.

Hands are cold.

We have been successful.

What do you have, cristina alesci?

I like the recommendation -- a new tech through is recommending that users boycott snap chat as a result of their lackadaisical response.

He says only if they see that their users are serious will they adopt a new attitude towards your data.

If you do not do this, if you keep using snap chat, you are part of the problem.

He is telling users to take it into your own hands.

Tell the company you are serious.

They need to protect your data.

That is the heart of the matter.

You are working for fortress allison for a number of years.

This is a big deal.

He giggled during the quote.

I do not think snap chat users know the wall street journal.

Exactly.

We have to want greater security.

We have to want greater security and effect greater security.

I do not see an uproar about this.

Electronic army.

They do not care about it is the last generation.

They accept things and enjoy it.

Can i just challenge that?

I do not want to see those pictures.

They do not care about it until the cost somebody their job.

Or if the consequences us direct that.

They do not see the consequences.

Most of them say who cares.

This is a company that has built its business model on keeping it secret.

This is fundamental.

This could be a game changer.

The new generation could be more aware of these things.

The model is keeping it secret from your parents.

What are you sending me on snapchat?

She doesn't even have it.

Pictures of bowties.

We will come back and talk to mr.

Phillips about whether he cares greatly about economic growth and the various inequalities of the united states.

Good morning everyone.

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

I am tom keene.

Betty liu and cristina alesci are with me.

Scarlet fu will return at some point.

Lawrence summers, an economist at harvard, often disagrees on economic issues.

They both agreed in january this year that economic growth is returning to america.

Is it the right kind of growth?

It is growth for the tech savvy.

Growth for the one percent.

The growth for the rest of america?

Charles phillips has served on the president economic recovery board.

He has ample experience linking politics and policy to business.

Wonderful to have you with us.

What kind of economic growth do you want us to have?

You wanted to be more broad-based.

Interest rates are about to take up here in if you look at what investors are anticipating, they are anticipating rates going up.

There are redemptions for the fund.

Mortgage rates are 4.5%. probably going up again.

That is a damper.

As long as it is a slow taper, the economy can deal with that.

The bigger issue is the euro.

We need them to participate.

We need a global economy.

The thrust for me, with your biography and heritage with the marines, with oracle -- is all of these games -- if all of these gains are going to capital?

Labor has been out to lunch for over a decade.

Du invision labor finally getting its fair share?

We have a problem.

A lot of those jobs that were high wage are being automated away.

We have to do something very different to address that.

We have not taken that on in a big way.

I earlier comments about construction and trade jobs -- you agree that that is a short answer?

Long-term is education.

Skills gap.

That is what is most disturbing.

At a time when we have record low interest rates and stock markets are at record highs, housing it coming back.

We still see income inequality at the widest it has been in decades.

Robert rice has been writing about this for 25 years.

It is now happening.

No one took it seriously.

It is a major problem.

We have to create new segments of jobs and educate people differently.

The educational system is set up for an economy of 50 years ago.

What do you do for a guy with a high school degree?

Secretary rice has been a leader on this analysis.

Republicans push back and say there is a trickle-down effect.

What is that new economy that will him fully the millions of americans longer than 26 weeks?

It is more like a model of germany.

You have some colleges and a lot of trade schools.

So you are saying more trade schools?

Is part of the solution a higher minimum wage or will that create some problems for a lot of companies and affect their bottom line?

I think it would be helpful.

It only affects about 50 million people.

As long as it is nine dollars or so, the long time we've -- the last time we did this, there was no job loss.

I understand the concern.

Is there another way to go about it?

There was a column in the times over the weekend about a better way to approach this being an earned income tax credit.

Instead of taxing corporations by increasing minimum wage.

That is another way to get there.

If you look at the history of increases, there is no evidence to suggest that.

Around 2000 seven, pennsylvania did not increase in new jersey did.

Two neighboring states, no change.

We have seen over time that it helps quality of life.

Every time you raise the minimum wage, it is in adequate.

It does not keep pace.

That is not an argument for not raising it.

You should raise it some.

Not as much as they would like.

Either $9.50 or $10.00. that is a big change for the people affected.

When i look at the challenges that you have oracle has, entry level for a coder out of college is what?

Is not relevant.

The minimum wage is not even relevant.

Is there a multiplier to your world?

Or is your world discrete and separate from some guy in toledo who wants to make $14 per hour?

I am competing a bounce -- against engineers all over the world.

They are all very mobile.

Is delusional to think that silicon valley well -- that is why they push for immigration reform.

The the jobs act really kind of -- it passed, but it fell flat.

People cannot see that multiplier effect.

That is separate.

I think that immigration would be good.

You need specific skill sets and population growth.

That is what is wrong with japan.

People comment like wheel have and what you need specific skills.

Really interesting.

We could go three hours on this.

I do not think the multiplier is as great as a lot of people would believe.

See "bloomberg west" at 1:00. shameless plug.

It must be the heat.

Single best chart.

Do we have a shameless single this chart?

Silicon valley.

It shows you a list of initial public offerings since january 1, 2011. based on the total of returns.

These are just a standing.

-- astounding.

Twitter is up almost 73%. yelp is up almost 80%. that is the point -- software.

That was a huge part of the story.

The software companies are killing it.

Is hardware dead?

It is all about intellectual property.

Is it 2000, 2001? we have home away.

Are they going to be a thing of the past?

There are always edge conditions.

By and large, the trend of adding software is not going away.

That is a shameless plug.

Of course.

Can you say at condition?

I think you can.

What is an edge condition?

An unusual case.

It is a silicon valley thing.

That whole chart, to connect the dots, is the income inequality.

Exactly.

Those companies create that kind of wealth for silicon.

Despite all the talk about manufacturing.

Cristina alesci, what do you see?

Do you think there will be more ipos?

? i do, so long as the markets are cooperating.

They're rushing.

We will have that as a buoyancy.

We have seen more optimism, none of them more than the fate -- changing of the guard at the fed.

Look for that today.

A lot of ceremony with the new chairman of the federal reserve.

Let's go to our twitter question.

How does digital security impact you?

I'm curious.

Futures are up to.

Dow is up 25. ? good morning.

I am tom keene.

Scarlet fu is decidedly off today.

Betty liu came in appalling way or -- early.

She is trying to give us our top headlines.

I'm still waking up.

The u.s. senate is excited to vote on janet yellen's nomination to lead the federal reserve today.

The confirmation is expected.

She will be the first woman to head the central bank and its 100 year history.

Liz cheney is dropping out of the wyoming senate race.

This is interesting.

The oldest daughter of dick cheney site serious health issues in her family for the decision.

Her campaign has failed to gain check -- traction.

At the box office, "frozen" took the top spot.

If you are a kid, you love this movie.

It rang up almost $21 million in sales over the weekend.

The second place went to "paranormal activity." have you seen it?

People are telling me it is spectacular.

I want to see "the willful.

He." that is not a disney movie.

You saw it?

No.

i have a six-year-old telling me you will see this.

And you shall.

Speaking of challenges, we need to go to our speak -- ski instructor.

Hans nichols.

Angela merkel is not -- she was out doing what the germans do, cross country skiing.

This was in switzerland.

The currency conversion kilter.

Hans nichols is in berlin with a perspective on an injured chancellor.

This has not altered her government or her actions.

No.

the only thing it alters his planned travel to poland.

It also means she will not be going to davos, but it was not certain she was going there anyway.

For certain, new burkle -- no merkle at davos.

My take is that a pelvic injury is painful.

She is tough.

She injured it over the holiday cross-country skiing.

She came back to record her and of the year address on december 30. she thought she just had a bruise.

It was not until january 3 that the doctors told her she had a hairline fracture.

Now she is on bed rest.

It may not be for three weeks, but she is not traveling for three weeks.

Was this accentuated because of the tragedy with mike schumacher?

There is a lack of snow in europe this year.

I do not mean to compare her injury, but nevertheless, there it is.

Tom, here is what we're going to do in davos, i'm going to take you skiing.

We will go off piste.

You can go off territory.

It is dangerous.

It is a different legal culture that allows for more accidents in switzerland and southern germany.

Thank you so much.

I believe you will do that stuff at erik schatzker, who actually has a talent and can ski.

I will be at the piano bar.

My favorite part of skiing is sitting in front of the fireplace with hot chocolate.

I used to do it.

Did you really?

I do not -- what is that kind of thing?

Hard boot snowboard.

I do not think i could do it now.

You would have to go with the helmet.

You have to have a helmet on.

If we learned anything thisweek,, seriously.

What photos to we have today?

We have a photo of a mountain in indonesia.

It forced 20,000 people to evacuate over the weekend.

Look at that.

This was on 60 minutes last night.

Is this active usually?

There are a lot of active volcanoes.

No casualties reported.

It is one of 130 active volcanoes in indonesia.

That makes it tricky to be one of these -- near one of these things.

What else do we have?

We have a japanese sushi chef.

He cut 70,000 fresh tuna weighing 500 pounds in tokyo.

They are known for their fish market.

Do you know -- i did a whole show on sushi once.

Sushi started outside of l.a. near a toyota factory.

It did not start in japan.

It started in america.

The toyota guys came over.

We talk about entrepreneurial vision.

They said they did not like america munches.

They wanted to make something up.

The guy in the restaurant and l.a. made up sushi.

They loved it so much that they took it back to japan.

They are feeling a lot of heat for their demand for domestic tuna.

A lot of groups that are protective of the ocean have taken issue with the way that this is done.

The christmas tree world championships or held in germany yesterday.

The eighth annual competition, competitors can participate in distance throwing, height throwing, and swinging of trees?

How do you get rid of your tree?

The tree justice appears.

-- just disappears.

I dragged my tree out.

This was the first year i had a real tree.

Did you get rid of it yet?

I did.

I got my tree from oregon.

I love it.

Take you to the people in oregon who sent me a live christmas tree.

It came with spiders.

Do not tell them that.

Do you now own bitcoin?

We will talk to a ceo of a company who just had their wallet downloaded.

The conversation is next.

? we have some breaking news.

Men's wearhouse is going hostile.

This is a long-running battle between men's wearhouse and joseph a bank on who will be the ultimate winner.

Whose management team will keep their job?

We have men's wearhouse taking the fight to shareholders direct a beginning a cash tender offer.

They would value their suit reads taylor at $1.6 million.

Who knew that they could be so catty?

Is the 13th day of bitcoin.

A seller of the corn wallet -- of bitcoin wallet is celebrating the one millionth sale of a wallet.

Nicholas, great to have you this morning.

Put that in context.

Your one millionth wallet.

What does that mean exactly?

Pinkie so much for having me.

It is a pleasure to be here.

I do not know if you checked the price of that coin, but it might have been wise to buy one before the holidays.

We are the premier bitcoin wallet.

We're the first online wallet to reach one million users.

This is a historic a compliment.

Never have we seen so much traffic.

It is a real validation for the entire industry.

Is a validation, charles?

Anytime you get one million downloads, that is progress.

There are questions about the business model.

Your biggest question is?

We have a pretty good currency system as it is.

What are the efficiencies gained by having a bitcoin wallet?

There are plenty of efficiencies to be gained.

In terms of how the bitcoin works, it is a 100% bitcoin only business.

We pay our employees in bitcoin.

The entire company operates that way.

We have sold advertising.

We have hundreds of millions of views per month.

We have sold the advertising for bitcoin.

The price went up fivefold since then.

That made our deal even more valuable.

We are in a special position.

Is that how you make money?

By advertising?

We are a 100% free service.

Anyone can sign up.

There is no cost to them.

That allows them to send to anyone on earth.

We are a free service.

We have a chart of the growth up to one million.

This is nose apprise.

It has been within the last 18 months or so.

Anytime somebody looks at this chart, they think are we here getting into a speculative bubble?

What is your argument that this is not?

There is an old proverb that the second best time to plant a tree as today.

We are still in infancy.

We have seen a lot of maturity.

Best men's and lots of companies moving in.

We're going to see even more maturity and this year will be huge.

The amount of energy and off to miss him and intellectual capital moving into bitcoin is astronomic.

You're right, we have seen parabolic growth.

We are seeing it accelerated move more quickly.

The whole number is unknown.

We're watching companies lead the way and get one million users.

That shows that there's real value for companies to get into this space.

I anticipate more money moving into it.

Charles, does this not like a trend that will go from the fringes into the mainstream?

I do not see a yet touching the mainstream.

Who knows will happen next.

It is a challenge.

You hear the skepticism.

We had a former ceo of paypal al right college hog wash.

-- call it hogwash.

Do you think there is a structure that benefits and some stains -- sustains the efficiency of what you're doing.

In a lot of ways that is true.

I saw that interview as well.

I have a different opinion than he does.

Realistically, in the next year, and there is a lot of obligation for software companies to build amazing technology.

There was a real tip of the spear in the last 18 months.

We had a lot of people who are tech forward.

The next group of adopters will be regular folks.

They want a more convenient way to make transactions happen.

Especially online.

Instead of your private information, you can make a payment and get goods and services without having to use credit card companies.

There are efficiencies to be had.

I think the whole challenge is to grab that mind -- share.

That is one of the things that we will do.

Thank you so much.

They carry of block share.

I do not think it is a foreign exchange.

That is a different discussion.

These guys, i get the efficiency.

I get the tech savvy angle.

I do not suggest it is transferable to the broader public.

You have any optimism that rotter technology will pick up bitcoin?

I am not that optimistic.

It is too volatile.

There is paypal.

If american express wanted to do this, they could.

There are a lot of ways to do this.

It is about innovation.

How would you suggest that the bitcoin saga ends?

Someone has to be a loser here.

There are a lot of moving chairs.

I do not know where lance.

It seems like there are moving chairs.

Over the weekend, the wall street journal was asking what is going on at microsoft?

I know it is a sensitive issue for you.

As mr.

Ballmer need to exit?

I cannot comment on ceo stuff that microsoft.

We would love to see you there.

Charles phillips is with us.

Dodging the bullet.

Thank you so much for being with us.

We appreciate it.

We appreciate your perspective.

A lot going on.

We await the frigid cold.

7:00 tonight.

An age of oversupply and the need for heat.

All that is next on "bloomberg surveillance." ? this is "bloomberg surveillance." the american economy recovers.

But for whom jacob america in a time of oversupply.

Staples -- they run out of staples.

We speak to the two ceo's of a most intriguing merger.

Fireeye and mandiant.

A cyber mating.

Good morning, everyone.

This is "bloomberg surveillance" live from new york.

Monday, january 6. it is very warm.

Joining me, betty liu and cristina alesci.

Our guest host, "the age of oversupply" is the book, daniel alpert.

Acclaim for his book "the age of oversupply." we will talk about this.

There is a lot.

Let's get to the brief.

I have got my eye on the chinese stock market.

Stocks there were down as the service report pointed to slower growth.

Here in the u.s. at 10:00 a.m., ism nonmanufacturing and factory orders.

Later on, we have janet yellen said to be confirmed by the u.s. senate.

After the bell, some burgers -- sonic earnings.

Quite on the economic front.

The earnings front, too.

Adp wednesday, claims on thursday, then the jobs report.

Betty liu will have the entire jobs report on 8:30 friday morning.

She has the entire company is -- news.

Jpmorgan may pay more than $2 billion in penalties to resolve claims related to bernie made off's ponzi scheme.

The penalties may be announced tomorrow.

The government accused the firm of feeling to war the government of the fraud.

Ford passes toyota and china, surging 49% to 930 5000 vehicles, outselling toyota for the first time in china.

Strong sales of the ford focus give credit for some of the gain.

High in redemption at bill gross ' pimco total return fund.

Clients pulled -- poured $41 billion -- clients pulled $41 billion from the fund.

I think bill gross can buy the san francisco 49ers if he wants to.

Daniel alpert of westwood capital, his book is "the age of oversupply.

Where is the tipping point on our confidence in bond funds?

Price down as yields go up, when do we look at price, are we there?

I think we are.

It is not just gross, bonds are a piÑata.

Against inflation and economic growth, almost any measure.

Bonds are massively oversold.

Eventually, we will catch up -- it is difficult.

The fed is tapering, you are trying to catch a falling knife if you buy bonds.

I want to make that clear.

The falling knife is a great way to put it.

Do you acquire bonds today or do you wait for another event like stanley fischer?

The buy side is very weak, everybody is wondering when the knife is going to stop falling.

Whether the bottom is a few tens of basis points from here on the 10 year, i don't know -- what is your measure that says it is oversold?

If you look at the supply and demand over the bonds out there.

Fed is unlikely to sell bonds, bank of japan looking at japanese jgb's is unlikely to sell.

They are likely to let these mature and portfolio.

If you look at bonds in hard currency countries out there.

What are the ramifications of reduction of that bond funds?

We make an inflammatory moment about it.

What does it mean when there are redemptions, why is that a bad thing?

It accelerates the same talk we had, creating less buy side interest and more falling knife concept.

Everybody assumes it is going to rotate into equities.

Do you?

Equities are so highly valued, it is hard to assume there will be more rotational -- where would the money go?

Cash is a wonderful place.

Hide under the desk.

What else?

The president returns to a divided washington.

The senate ready to debate reinstating benefits for the long-term unemployed.

Take a listen.

I am not opposed to unemployment insurance, i am opposed to having it without paying for it.

It is wrong to borrow money from china or simply print money for it.

I am not against having unemployment insurance.

If, on the first day of the new session, the republicans say what they will not support unemployment -- the original round was started by george bush when unemployment was 5.6%. it is going to hurt them.

Peter cook joins us.

How does this get resolved?

Not without a lot of politics.

You heard that directly from chuck schumer, this is as much about the midterm elections as the short-term impact on the economy.

There is a short-term impact.

We documented that.

How this gets resolved, today we had a procedural vote.

Unlikely democrats can get the 60 votes they need and the senate to move this forward.

It will start a conversation.

Don't be surprised if there is a three-month extension.

They will have to find someway to pay for it, that is the real debate.

What is the likely compromise?

Not clear what the offset will be.

They made their life more complicated with the budget deal last month.

The low hanging fruit is effectively gone, they have got to find another way to come up with $6 billion over three months.

If they want a full year, 20 $5 billion.

One of the ideas is tapping into some of the farm bill subsidies being cut.

Maybe both sides could agree to that.

Not a lot of easy options.

$6 billion is $6 billion.

T-mobile buys spectrum from verizon wireless, that is a $2 billion plus transaction.

Peter cook, is this president a lame-duck president?

He is on his way there.

There is going to be an effort by democrats to try to reassert the president's influence when it comes to economic matters.

The debate over income inequality.

Democrats believe this is a debate that plays to their advantage when it comes to midterm elections.

If you look at polls, americans a great income inequality is a problem.

You will hear the president meeting with folks who have been hurt by the support -- the suspension of these benefits.

You will hear him talking about raising the minimum wage to $10.10 an hour, these things poll well.

This is a president who is on the ropes because of healthcare.gov.

He needs successes to reassert influence.

Thank you.

The obama daughters have all gotten bigger.

They were supposed to stay cute and little.

Kids do not stay cute.

You are telling me?

Tell us about t-mobile and verizon.

We have some breaking news out of carlisle.

They just named the managing director on the u.s. buyout teams.

Former head of the fcc.

This just continues the theme that we have seen over the last couple years.

By all firms are ramping up efforts to hire former washington insiders.

We had kkr hire general petraeus.

Recently, tim geithner going to warburg pincus.

More evidence that private equity will lean on washington insiders to clean -- go -- to glean an edge.

Why do i care, peter cook?

It is more of the revolving door, a few will.

What happens when you leave government.

You can step back into the private sector.

Julius genachowski has experience, an old friend of the president.

He made a lot of contacts at the sec and had a lot going in.

He was a venture capital guy.

This is a hir -- this is a hire that makes a lot of sense.

Julius genachowski is going to make some money.

Peter cook, chief washington correspondent.

Separately, t-mobile and verizon wireless, a $2.4 billion deal.

T-mobile has been trying to expand its network and when customers away from at&t -- is working?

-- they are speding a -- they are spending a lot on tv?

They are paying customers to come over.

This will be an ongoing battle and build up.

They are fattening up to be acquired?

Sold, exactly.

Sprint is now backed by a japanese bank, speculation and reporting that sprint may make a bid for t-mobile.

A lot of news today.

Features up 2, -- dfutures up 2. dow futures up 19. staples is no longer just an office product chain.

You can watch all our interviews on apple tv.

This is "bloomberg surveillance." ? good morning, everyone.

"bloomberg surveillance." this matters now to daniel alpert, author of the acclaimed "the age of oversupply." the mystery of what will happen when central banks take away the atlantic ocean size punch bowl.

We do not know.

This is the heart of your book.

You look at business and economics.

Chairman yellen, as of today.

The theoretical foundation around it is no.

-- is new.

It flows through every aspect of the economy, domestically and globally.

People act -- people argued about what affects the stock market from this excess liquidity.

It is hard to argue that the market has not been effective.

With the market feels it is going to be withdrawn, god only knows.

When it is withdrawn, do you suggest stability or instability?

This is playing out within the story of larger global imbalances.

The same things we have been dealing with for 20 years.

Larry summers made a remark two months ago when he gave a speech on something he called secular stagnation.

He writes about it today and "ft." look back to low inflation, during the bubble itself, you had tons of cash, doubled the amount of debt outstanding in the u.s. the price -- wages and prices barely moved, wages continue to fall in real terms.

What is your prescription?

We have been kicking the can of global rebalancing down the road.

We have excess capacity, excess labor, not just here, globally.

You saw at the end of the year, the manufacturing numbers out of china start to weaken.

What happens if manufacturing in a company that depends on high-growth begins to weekend?

-- to weakenz/ -- begins to weaken?

What happens in 2014, do we confront -- this is a battle.

Someone will turn out to be right this year.

Last year was a year of indecision, no one came out on top.

Maybe the secularists.

Who will play you in the movie "the age of oversupply"? i was in one movie playing myself, "inside job." a wonderful book.

I cannot convey enough the importance of "the age of oversupply." we will come back.

Betty liu insists i learn about online dating.

Are you kidding?

Online dating?

? good morning, everyone.

"bloomberg surveillance." futures up 2. dow futures up, emerging markets decreasing.

Other than that, quiet.

It is not quiet on "bloomberg surveillance." scarlet fu will return sometime in january.

Our guest host, dan alpert of westward capital.

His book "the age of oversupply." german chancellor angela merkel was her in a ski accident.

She suffered a pelvic injury cross-country skiing in switzerland.

She is canceling appearances over the next three weeks while she recovers.

She will not be at.

Us and january -- at davos in january.

Janet yellen's confirmation by the senate expected.

She will become the first woman to head the central bank.

A 33 yard field goal -- yes!

A gave the san francisco 49ers a win over the packers, sending them to play the carolina panthers in next weekend's nfl playoffs.

The temperature was 2 degrees above zero.

It was truly -- it showed his skill.

I was morning bagels -- i was mourning the eagles' loss.

Staples sales office products, it has been a loss decade.

Shira goodman is executive vp for global growth.

She joins us from massachusetts.

Shira, wonderful to have you.

You go onto staples, let's admit it has been a ten-year train wreck.

What is your to do list in 2014 to reinvigorate staples?

Good morning.

We are starting off strong.

Today is the day we relaunch our brand.

It is all about making more happen for businesses across america.

Whether it is more products, more values, more ways to buy.

We have been working on this strategy for a year.

I remember the excitement when staples first launched, it was an original idea.

How do you create an original idea competing with it -- a small group -- a guy named bezos ? amazon!

How do you compete with amazon?

It is all about helping small businesses.

When we launched, it was about office products.

We have expanded to every products that businesses need to succeed.

If you are a startup, ping p ong balls, some technology.

If you are a medical office, exam equipment.

Several scopes.

A retailer, bags.

No matter what businesses need, staples has it.

Forget amazon, one of your biggest competitors just merged and got better -- office max and office depot.

How might that impact staples?

For us, it is all about helping the customer.

Actually, our strategy enables us to focus on what our customers want.

We're not looking inward, we don't need to be integrating companies.

We are focused on the customer and expanding our product line.

We think 2014 is a great year for staples.

My question is inventory.

When you are expanding your product line to something so diverse from spiral notebooks to dog biscuits.

How do you manage the inventory?

Great question.

In our stores, we still have the most commonly requested items and things that folks need immediately.

When you're in the store, you can go to our online ts, which our associates are terrific -- our online kiosk, which our associates are terrific with.

That opens to hundreds of thousands of products.

We do next day delivery every day.

Some of which we partner with other resellers to sell.

Within a decade struggle, it has improved.

Dog biscuits, pet treats, how are you going to drive that down the income statement to get net income margins and operating margins back to where they were?

What is the new pixie dust for staples?

It is all about getting our customers to think about staples beyond office products.

When they take an order and they add dog biscuits or they add an apple product or they add toilet paper or cleaner, their order becomes larger.

The economics of a larger order is very good for the business.

The other thing i would say, the more we deliver.

We are working off of a smaller inventory days.

The return on assets is very beneficial for the business as well.

Shira goodman with staples.

Dan alpert, you and i know staples is a 12 year train wreck.

That is a tough business.

Retail is tough right now.

The largest retailer in the u.s. , walmart, used to have an enormous share of the marketplace.

They are in competition with the guy you mentioned, mr.

Bezos at amazon.

Amazon is moving into the food area.

Amazon is going to the having one day delivery, i am not talking about the helicopters.

I have got to make some news.

Do you buy dog biscuits at staples?

I do not have a dog.

We have got a lot more coming up.

Cybersecurity, good morning.

? good morning, everyone.

"bloomberg surveillance," i am tom keene.

Betty liu and cristina alesci.

A new team for 2014. scarlet fu will return sometime.

2014. company news.

I am keeping the seat warm.

Bowling strikes a deal with its largest union.

Boeing will be able to develop a new version of their best-selling jets without a strike.

Jeff bezos was airlifted from the galapagos islands.

Having a hard time.

Galapagos islands after suffering from kidney stones.

The amazon ceo was airlifted by an ecuadorian navy helicopter.

No surgery was messick -- no surgery was necessary.

Bitcoin back above $1000 thanks to zynga.

Zynga said it would accept the virtual currency for online games.

It is the second time the virtual currency has crossed the one thousand dollar mark.

It plunged shortly after as china crackdown.

Cap ipos teach people how to date?

That is what a stanford professor says in his new book.

"everything i ever learned about economics i learned from online dating." this is all about markets.

You had to bring your work into your dating life.

He did online dating?

I did.

And you ended up with the woman you are with.

A very have a relationship.

-- happy relationship.

Did you go in thinking this is what markets are like?

You quickly see it.

It is not like the stock market where every good is the same at every stop within a given company is the same.

It is a market of differentiated goods.

Everything you might find in the market -- you had better, you had better chances when the markets were more liquid, so to speak.

That is an economic principle that holds in dating.

How does that apply?

More liquid?

More women?

More people.

You want a stream of people with certain qualities.

The likelihood you are going to find somebody who is attracted to you is greater if you have a bigger choice.

Behind online there is serious.

You are a professor, you write -- this is what he will be known for.

You're going to be known for online dating.

Page 199, series economics, the iconic american couple from "leave it to beaver." that is ancient history within our social dynamic.

Family -- the last chapter of the book is about family economics.

Once you have found the right person online, you might think it is done.

But the family is economics, too.

There is economics going on.

That dynamic has changed as women have gone back to work.

As women -- things have really had a big influence.

Divorce is so easy.

Have a really changed for women?

The income gap, the wage gap is high on the economic front.

It seems to be worsening.

She is working harder and earning about the same or less.

What has changed?

Women have made strides and will continue to make greater strides.

You see them getting educated more than men.

The economy of the future will tell towards women.

I want to hear about dating.

What is your biggest lesson?

A couple things.

Go to a big site, where the markets are liquid.

The other thing, you are not going to find the perfect one.

It is not out there.

Like stocks.

Like stocks or a job or buying a house.

Find a great one.

At some point you have to settle.

Tom, which one are you on?

I am on a number of them.

You found yours on j date?

How does this go over at stanford?

You are at some alumni function.

Really?

How does this go over?

I have lost all my academic -- [laughter] paul oyer.

This is great.

A serious book on economics.

"everything i ever needed to know about economics i learned from online dating." my total lack of a social life.

A data check, non-data check.

Futures up 4, dow futures up 32. euro, 1.3603. turkish lira weaker today.

Good morning, "bloomberg surveillance." i am tom keene with betty liu and cristina alesci.

Scarlet fu is off somewhere.

With us is dan alpert.

His book, the age of oversupply.

The real-time -- i love this.

The real-time detection in threat intelligence.

Not my social life.

Cyber attacks.

Fireeye is acquiring mandiant at $1 billion.

A site -- a cybersecurity juggernaut.

David dewalt and kevin mandia.

We have both of them with us.

Wonderful to have you.

When you look at your merger, everybody goes yeah, yeah.

Top of the markets, synergy.

What is your number when to do list?

Work together as two ceos to integrate the two companies.

There are synergies we have.

The biggest is putting products together.

We have had a partnership for a couple years already, we want to do a little more and connect people.

Work together with customers.

What is the employee response?

I am fascinated by the business part of this.

Virginia and out west, two separate cultures.

Can you make this work?

One of the things that is interesting, when you think about security, you think about the nsa and d.c. when you think about software, you think about the bay area.

This is perfect.

You decided to merge instead of taking the company public.

Why?

I try to build the best company i can.

How that plays out -- i am going to eliminate breaches.

That is our mission.

Is the business so hot, we have been reading every company has demand for these products and services.

Every single one is concerned about security.

How much of a push is there for you guys to develop new products and services?

If you look at the global landscape right now, cybersecurity is really important.

It is pretty critical.

We are watching tremendous amount of pack -- of hacks, they're hacking critical infrastructure.

The world needs improvement in the security world.

We are seeing demand for services for mandiant.

How much pressure do you feel to launch new products?

From fireeye, we have launched 7 new products in the last three months or four months.

The combination lets us innovate faster.

The company is bigger with more engineering.

Kevin mandia, to the global reach.

With the excitement of this merger, is there a shortage of talent?

Where do you get the bodies from?

Whether it is mandiant or the crossover to fireeye.

Is there a shortage of skill, a bidding war?

There is a dearth of talent and cybersecurity.

It is similar to the military.

Bring people in and train them.

In virginia and now california, are you friends with senators and congressmen who are in an uproar?

Are you their best answer or their frenemy.

We understand what they want to do and we do our best to advise them.

Can i ask a question, are the 49ers for real?

Absolutely.

If they can go to the cold and win, that is a good sign.

You can i get your mind off of football.

Tom is hardwired for football.

A very focused merger of west coast-east coast.

Are you going to do a case study?

We are west coast and east coast, fireeye has operation on the east coast and mandiant has an operation on the west coast.

We are global companies.

Just because we have headquarters on one coast does not make a difference.

Thank you for coming and this morning.

Congratulations on your transaction.

We hope to get in every 90 day preview for the conference call.

David dewalt and kevin mandia.

What is the name of the company?

Fireeye.

Stay with us.

Our twitter question of the day.

How does digital security impact you.

Tweet us at @bsurveillance.

Streaming on your tablet, your phone, and bloomberg.com.

? good morning, everyone.

"bloomberg surveillance," imed tom keene.

I have no idea why betty liu is here.

I don't, either.

Cristina alesci as well.

Kevin mandia of mandiant and david dewalt from fireeye.

They are on the first name basis with the searing electronic army.

-- the syrian electronic army.

Who is the syrian electronic army?

Some folks think it is a spontaneous group that assembles online and hacks.

Whether they are spontaneous or pro-assad, it is immaterial.

The results are the same.

They're hacking western press and changing things.

You watch things and other people.

David dewalt, you say let's protect ourselves from this.

Is it a lot of fancy consultant fees or can you actually protect any company from an interest in?

-- and intrusion?

We are seeing a lot more attacks.

The attacks are coming from all over the world.

Whether it is a politically motivated group or a crime based group or they are stealing intellectual coffee -- intellectual property :00 where do you see the most sophisticated attacks coming from?

Nationstates.

We are seeing military operations ramping up -- chinese military.

China gets the most headlines.

Almost every day.

The question i have for you, governments should assume that other governments are spying on them.

Governments should assume -- companies should assume that the government is spying on them.

Why does china stand out in this regard?

Or is it just like any other country?

I will start.

What we are watching.

The internet has created a perfect platform of evil.

It has a lot of anonymity, it is hard to the skies -- are you scaring people for your business model?

A good business strategy.

The reality is, the internet has created an interesting world.

The innovation is creating and helping attackers be successful.

The chinese military, russian business networks, searing electronic army.

-- syrian electronic army.

It is easy to attack corporations and infrastructure.

What is so shocking about companies spying on each other or governments spying on other governments?

Is there anything surprising about what we are seeing?

You asked about china.

One thing interesting, their government used to just hack our government.

Overtime, government entities starting to hit the private sector.

They want intellectual property?

Yes.

That is where you cross the line, government going after corporations.

Thank you for coming.

Fireeye and mandiant.

The name will be fireeye.

You saw what the acquirer's stock die.

If you need it -- did.

If you needed approval.

China's reserves have ballooned two over $3 trillion.

? good morning, everyone.

He was out on twitter this weekend with tweets on inequality.

Ian bremmer will join us tomorrow.

President of the eurasia group.

Looking forward to speaking to him tomorrow on "bloomberg surveillance." i am tom keene, with me, betty liu and cristina alesci.

Dan alpert will talk about his book in a minute.

Here is company news.

Google makes a move to bring android to cars.

The company has rolled out a mix of tech and car companies, trying to integrate android software into cars.

General motors and hyundai are among the alliance.

Thtc misses estimates as competitors take a bite out of sales.

The taiwanese smartphone maker posted profits short of wall street forecasts.

China's lenovo and huawei have been taking market share.

Louis robel -- liberty global near an agreement to buy dutch broadband provider ziggo, that would help expand european operations.

They hope to announce a meal -- a deal by the middle of this month.

That is today's company news.

Economics, finance.

The investment of 2014. one thing is for certain, not of this is in the text books.

After a financial crisis.

The rookie elites and flooded the system with liquidity and there is an oversupply -- the w orld elites flooded the system with liquidity and there is an oversupply.

Dan alpert has written "the age of oversupply." china -- it does not seem to be a hard landing.

Are they the victim of oversupply or is china and their communist default -- did they cause oversupply?

The emerging markets as a whole.

China, india, they were the supply.

This was a shock the rest of the world did not expect 20 years ago.

They do not expect it so quickly.

When you look back, beginning in 1997 and into 2000's, a surplus of productive capac

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

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