This is "bloomberg surveillance." apple, microsoft, and nokia oh go thinner or faster.
Will apple's free software give it the edge?
Viewers are flocking to the web -- we are examining who is winning the game online.
Warren buffett, jamie dimon, and buffets forecast on record office at ibm.
This is "bloomberg surveillance." i am sara eisen.
Live from our bloomberg headquarters in new york.
Joining me is scarlet fu.
Tom keene is in boston hosting a special edition of bloomberg radio.
We have sam grobart here.
You have your signature yellow glasses.
He is all fired up to talk about apple.
First, we have a morning brief.
Overnight, the european central bank said it will use stricter rules to balance its sheets.
The spanish recession comes to an end.
Nine quarters of contraction is over with gdp rising 1/10 of one percent.
The bank of england -- officials voted to keep policy unchanged as economic data pointing to recovery.
As for data here in the united states, we have mba mortgage applications at the top of the next hour.
It is also very busy day in earnings.
It is the busiest day so far.
At 7:30 a.m., we're going to hear from boeing and caterpillar.
U.s. will be reporting as well.
After the markets close him a we will getting the -- we will be getting the numbers from at&t. overall the reading is -- a lot of mrs.
Coming off of a record high, futures indicating a really -- a weaker start.
The currency market has been the big story.
I wish tom is here to pull up a chart -- we are seeing multiyear highs for the euro.
1.3761 -- it is a weaker dollar overall.
I am looking at copper, selling off today.
China is really big.
The central bank did not add fund to the market.
Remember we had the episode a couple of months ago and then it died down?
China had to come in.
Dollar en, weaker u.s. dollar.
I know we have scoured the papers on the web this morning for all of the stories making the front page.
The big banks are once again on the front page.
They near a $6 billion settlement.
It is another settlement for jamie dimon that comes on top of the $13 billion settlement -- reported settlement that it struck with the department of justice.
This has to do with investors like blackrock which bought some of the mortgage bonds at jpmorgan.
It all goes back to the financial crisis and some of these deals that the banks got sucked into.
People can get past it.
We will continue to see this play out.
A second on our front page -- apple.
They unveiled two new ipads.
What is your take on this?
They are more expensive.
They are keeping the older models around as lower-priced alternatives.
They do not want to surrender that market.
At the same time, apple wants to be a premium player in the tablet market, the mobile market, as they always have been.
That is the strategy.
As i was watching the launch, i was thinking of your trip to cupertino where they made it clear to you that this is where they're going.
They want to be bmw, mercedes.
They don't want to race to the bottom, they want to maintain profit margins.
There is debate whether they can do that if they sacrifice market share.
Is that going to damage the company in the long term?
Our third front-page story is about twitter.
They're following the lead of other social media companies.
Twitter said that mopod is starting to record sales.
That is more than double them what they recorded all of last year.
Their acquisition is starting to pay off.
It is good news for twitter that that is going very well.
Now they have a little bit of belt and suspenders -- and momentum.
Now they're going to embark on a roadshow and then an ipo -- everyone remember what happen with facebook.
The people at twitter are very conscious of that.
I think it will be a different story than what we saw the last time.
They picked a good time with markets on the rise.
We want to bring in the chief investment strategist at bemo.
Brian, to this point about twitter ipoing in this market.
The jobs report is good for stocks.
This counterintuitive strength is going to continue in stocks.
Assets run in terms of scarcity and capacity.
The scarcity is in u.s. stocks in terms of consistency and ability.
-- and stability.
Ipos are going to be hot, u.s. stocks are going to be hot.
Do you see that in the tech industry, whether it is apple or nokia?
I thought yesterday's apple event was a big yawn.
When they were talking about the superlatives about how it goes from four pounds to one pound -- this is unusual coming from you.
I am a fan boy.
I feel that this event brightened up the room by leaving it.
It was incredibly boring.
It was not a more it's sounding -- astounding presentation.
The iphone 5s compared to the iphone 5. it doesn't seem to be a problem for the company.
If you look at the stock, that was a boring reaction as well.
Not the kind of excitement you used to get.
They've already come out with the world beating smartphone, the world beating tablet.
They do not have anything new.
Been there, done that.
That is kind of the theme for the apple launch.
All of the data coming in and this idea tapering being pushed off yet again.
The tapering thing, the fed came out and said the economy is not growing as fast as we thought it was, employment is not on the right track, and they were worried about the washington silliness.
We have this rising tide market and we think that is going to continue.
Nothing on this stock, -- the thing on this stock, apple, this is no longer a technology company.
It is a consumer staples company.
This is coca-cola and pepsi.
How this stock, or samsung or google is going to do in the next couple of years -- very well.
You are a bull.
We are comfortable with that number.
We think we could see a rising tide market right into the year- end and sideways into the next year.
Asset allocation models start to point towards buying more stocks.
You're going to see all of this click off at the end of the year.
At the beginning of the year -- from cash or from bonds?
We're going to talk about the markets and earnings season.
First, we have some company news.
There is a setback to confusion oh -- peu got's -- qpeugeot reviews g.m. pact.
Rabobank will pay a settlement -- the settlement could be announced next week.
Heineken is taking a hand as -- taking a hit as their profit outlook -- that is today's company is.
Do not forget to tweet us.
What tablet would you purchase and why?
I am forecasting -- i am boycotting apple.
What do you think?
Tweet us @bsurveillance.
This is "bloomberg surveillance." ? also coming up, i will be speaking with alan greenspan.
He is the former chairman of the federal reserve.
I will be speaking to him in the 9:00 a.m. hour with -- on "in the loop" with betty liu.
He looks back at what went wrong during the crisis and why no one was able to reject it, including himself.
He gets a lot of the criticism for not calling it earlier.
We will talk about what you learned about bubbles, the markets, and economy.
This is "bloomberg surveillance." i am sara eisen.
Tom keene is in boston for a special edition of bloomberg radio.
We have sam grobart with us.
It is a perfect day to have sam with us as we seek lighter, thinner, and faster ipads from tim cook.
Scarlet, it is not about the look, but the strategy behind it.
The ipad market is falling.
Apple invented this category.
The tablet the not in -- did not exist before steve jobs introduced the ipad.
Apple introduced the ipad air.
It is a lighter, thinner version.
It is $499. there is also an updated version of the ipad mini.
Price tag there is three under $99 and up.
The price tag remains -- the price tag there is $399 and up.
Better guts, but overall, same product.
Would you rather buy an apple ? are the specs better than nokia, microsoft?
When you're talking about which kind of tablet to buy, there is a matter of the specs.
There's also the question of the ecosystem.
Almost half a million apps that have been designed for the ipad versus some of the android tablets that have problems of fragmentation.
That makes it difficult for consumers to know which apps they can get.
This gets right to scott galloway.
You have called apple the best brand in the world.
That has to do with the ecosystem on how they sell these products.
It is the best brand in the world.
The one world -- the one word that will be used to describe what is happening is pricing.
They were at 70%. they could've come in at a more aggressive price, sucked the op -- the oxygen out of the room for everyone.
This is the debate.
I think you're pointing this out perfectly.
You have the issue of market share and profit.
You mentioned mercedes.
Mercedes came out with a $29,000 car.
Apple had an opportunity to own this market.
If they had reduced their margins, they could have made it impossible for anyone to come in your.
They created a ton of margin that has created a ton of competitors.
They're willing to give up some room on profitability -- on market share because it wants to maintain its profitability whereas amazon has indicated it is more than willing to give up profitability to a mass market share.
Brian belski is with us.
Which is more valuable?
The apple theme is the theme of the u.s. consumer.
It can -- it continues to be bifurcated.
If you are a u.s. consumer, if we want to buy something, we buy it.
If you look at personal consumption, it is the middle part that is in trouble.
The low-end is getting bigger and the high-end is getting bigger.
Apple is going for the high-end.
Speaking of mercedes, where they are going to get their volume growth is from the high-end.
That is where they make their money.
Apple is more positions toward the high-end consumer.
That is going to continue.
Tim cook said users on apple's ecosystems -- they spend four times more time on their devices.
This is what you say when you are you losing market share.
Itunes has a lot of the built-in audience.
Here's the scenario that frightens apple.
If users and app developers feel like there are too many people on the android side of things, they're going to develop apps for that group first or exclusively.
If that starts, that begins a spiral that is difficult for apple to get out of.
We have been to this movie before.
High-end, premium price, shrinking margin share, it does not end well for apple.
Only one company has been able to get away with the bezos strategy and that is amazon.
Apple will do double the profits that amazon has done in the last 10 years.
You're talking about amazon is something that no one else has been able to replicate that i have seen.
Scott galloway, much more with you.
We're going to be talking about warren buffett.
He was talking about corporate leadership.
He also waded into ceo concession plans.
He talked about jamie dimon and microsoft.
All of that coming up on "bloomberg surveillance." ? this is "bloomberg surveillance." i am scarlet fu.
Tom keene is in boston for bloomberg radio.
Sam grobart joins us instead.
You might call it an upgrade -- just hitting.
The u.s. central bank -- the ecb will ask the firms to set aside their risk adjustment capital.
A united nations agency says it needs hundreds of millions of dollars to continue feeding syrians affected by their country's civil war.
They need to feed 6 million people in syria and neighboring countries.
They are speaking -- seeking additional donors to help raise the money.
Fees at public universities rose a most three percent.
It is the smallest increase since the mid-1970's. when you add in that room and board, the bill rises to $18,000 -- $80,000. out-of-state, no good.
It is time for morning must read.
I have been following the debacle of the implementation of obamacare.
It comes from bradley allen who is a doctor.
He is a pediatric heart surgeon.
He says forget the implementation.
Doctors are declining.
With $300,000 in loans, eight years of school, and overworked residents, a physician would be starting a career at age 30 in a job that requires 70 to 80 hours a week to earn $100,000 a year.
He said it is no wonder that the best and the brightest go to silicon valley.
The shortage in primary care doctors -- he is linking it to obamacare.
Scott galloway -- does the affordable care act turn public perception against health care and working in that sector?
I think that is to be determined.
30 million people that were previously uninsured should have access to on -- to insurance.
Go have dinner's to -- go have dinners with doctors.
Like any other job, being a lawyer is not a great producer -- profession.
Doctors do not seem to lead the perfection and we still seem to find them.
Call me a waambulance.
When is wall street an easy job?
70 to 80 hours a week?
Starting thousand -- the starting salary is no longer $100,000 a year.
Also coming up, sluggish labor market.
How the party ends.
Next, on "bloomberg surveillance." ? this is bloomberg surveillance." tom keene and boston.
Sam grobart joins us instead.
We need a data check.
Heavy day of earnings.
You have this calm in the market.
A little bit of a push back after yesterday's rally.
The euro is weaker.
Bit of a risk-all feel where people are not pushing asset prices higher.
The money market rate jumped the most since july.
A little bit of concern over chinese interest rates.
The s&p 500 up more than four percent for october.
A strange dynamic in the market.
A weak labor report.
Unemployment stays stubbornly high.
Trading near all-time highs.
Ryan belsky is the chief investment strategist.
Is this all one day trade on the said?
It is to some degree but goes back to the notion of where to put your money.
I think the great rotation has begun in earnest.
It will grow more into equities.
Mom and pop in lincoln, nebraska, not purchasing stocks.
We do think we are in the very early stages of an 18-20 year bull market.
The problem is, some of momentum -- the momentum will clearly be where u.s. equities are persistent.
Europe still has fundamental issues.
What about the united states?
Don't we have fundamental issues with the government shutdown for 16 days?
You have a three legged stool . you have the consumer, corporate america and the government.
Two out of the three doing well in terms of fundamentals.
The government continues to increase its corporate america stays strong but we are in pretty good shape.
Eli lilly reported earnings.
Consensus was for $1.04. it will be the busiest day of earnings season today.
What have you learned from the earnings report so far?
What is the take of the economy?
Does this jive with the prices we have seen in the stock market.
You have to remember they have been compensated for being conservative, cutting cost.
Another opportunity for margins to be squeezed that much higher.
Interest rates have not increased dramatically.
People forget that the interest rate component is a major part of the profit margins.
This can be squeezed a little bit more, so next quarter when we talk about earnings in january, that will be the seam where we higher a lot of all.
We are are ready seeing that in the guidance.
These companies have to give guidance.
You look at the retail sector tom already talking about the u.s. government shutdown and the impact on consumer spending.
How much does this hit confidence at the executive level?
They are reading the paper, watching the television.
More importantly, budgeting for 2014 and beyond.
If they see him play him at cost increasing because of the affordable care act, they will be consistently conservative.
That will keep employment lower.
In terms of being conservative, that is a contradiction in terms of reed hastings talked about yesterday.
The stock has taken off regardless.
He even made a mention on the conference call, warning about investor euphoria and people treating this as a momentum play.
What do you make of the companies where investors are willing to give them a pass, whether it is netflix or amazon?
You have to be careful in terms of the momentum play.
Number two, so many people have chased this stocks as it was rallying.
The various way to play this is to wait for a pullback until you start to see a semblance of real half it growth.
It is really dangerous to be chasing some of these and making a market play based on that stock alone.
You have to be diversified.
I think too much attention has been placed on facebook tom a netbook -- netflix and amazon.
Same thing with financials.
Talking about jpmorgan.
If you really want to be positioned in financials, we believe over the next 5-10 years him and think about this, there are several trillion dollars on the bonds of balance sheets of north american clients.
Wells fargo, even bank of america.
That is 40,000 financial advisors.
Talk about investing were headlines are, we see them.
I am curious about health-care stocks with obamacare and health-care legislations that have been beaten up.
Can you own these companies with the unpredictable effects of the law?
Think about the big parts of been outperforming, health care, technology, and the drugs.
We think you want to own more of the drugs and biotech acres they are showing innovation and growth.
Hmos because what they are being charged with respect to the premiums.
Tech because of the negativity surrounding the affordable health care act will see more downside.
You want to be positioned more within the biotech and pharma space within health care.
Tips for investing in this market.
1800. already not too far away from there.
Coming up, want to know how popular your favorite sport is?
Depends on which season we are in.
The seasonality of fickle sports.
? this is bloomberg "surveilla nce." i am sara eisen.
Tom keene in boston today.
Sam grobart joins us for the morning.
Spain a merging from a two-year recession last quarter.
Gdp expanding by .10 according to an estimate.
This is a boost for the prime minister as he tries to repair the nation's finances and reduce 26% unemployment rate.
Fewer than half of wall street employees think they're been out -- bonuses will be bigger this year.
42% actually expect to see a larger bonus this year.
30% say it will be about the same.
10% expect to see a drop in the bonus.
The irs delaying tax returns.
They will now be expected january 28 at the earliest, a week later than originally planned.
They said they need the time to get systems ready for tax system.
One day that does not change, april 15, returns need to be filed by then.
Top news headlines.
Still tallying the impact and delays from the shutdown.
Time for the single best chart.
The world series in baseball begins tonight.
The data provided here.
We wanted to find out which sports attract the most interest, at least online.
Mlb is the white line.
Nfl is the white lines -- yellow line.
Interest rises in football in september.
Interest in baseball goes down, even as they head off to the playoffs and world series.
Mlb highest traffic during the summer.
I know you are a big hockey fan.
It is still early in the season, right?
Think about the nfl.
It is an event.
People have two or three fantasy teams and are into it.
I do have a fantasy team for hockey.
Look at me.
You think i would be into sports?
We have article and comments on twitter about your glasses.
The nfl has done so well monetizing the brand.
A lot of complaints there are too many games in the regular season and have diluted the brand.
Lex i do not think i have heard fantasy and hockey in the same sentence before.
The chart is misleading because major league ace paul has some of the best web properties in all of digital.
They are tremendous online.
They set the benchmark for a lot of corporations in terms of online activity.
The nfl is the best managed sports organization in the world.
What do they need to do then?
The nhl is doing quite well.
They have come back.
In terms of the dynamics of how the nhl operates, that is above my pay grade.
Maybe you have thoughts from minnesota.
The nhl does not get exciting to watch on playoff until tv.
You want to be their lives.
Especially the children i have that have played the game, you want to make sure you are there live.
I do not know the names of any hockey players.
You only need to no one in new york.
The one i did not know.
How about first look?
Photographs making news today.
Hard to believe.
Starting with a look back.
One year since hurricane sandy.
We were here on site, the largest atlantic hurricane on record.
We see all that remains of the historic boardwalk in queens following the storm.
That was a hard-hit area.
It remains under construction still.
The last two octobers following has been canceled.
As the parent of a seven- year-old girl my fingers remain crossed.
Make it work this year.
So far, relatively calm season.
Speaking of thanksgiving, just a month to thanksgiving.
Turkey farms kicking into high gear.
A shot of turkeys awaiting their fate.
You work in canada.
Do they eat turkey?
The real thanksgiving is in america.
We're are going to enjoy it.
Can you tell us what to expect for our thanksgiving, having already experienced it?
A lot of turkey, cranberries but more in america.
You heard it here first.
Hockey in canada, not in america.
Across the pond, prince george of cambridge, third in line to the british throne will be christened today.
Only 50 guests invited.
Pretty exclusive crowd.
Photographs not released until tomorrow night.
You could purchase a commemorative coin.
Especially produced here.
This will set you back 13 pounds, $20. that is it.
You cannot have a christening and -- photographs tomorrow night.
Coming up, how important is a ceo to the brand of the company?
We will look at this and hear what the oracle of omaha has to say about it.
That is coming up.
? this is bloomberg " surveillance." i am scarlet fu joined by sara eisen.
Tom keene in boston for bloomberg radio.
Dan loeb taking a stake in nokia.
Did not disclose how big of a position he is taking in the company.
The company cash piles will rise to $19 billion once it sells the mobile device unit to microsoft.
Amazon hiking the minimum.
Orders will have to be $35 or more.
The change took effect yesterday.
It is aimed at moving more people to prime.
Apple doesn't own way.
Hiking the price on the ipad mini, even as rivals drop the price.
The new device starts at 300 $99, $70 more expensive in last years model.
They have introduced tablets at lower-priced points.
That is today's company news from the files of bloomberg west.
Warren buffett of berkshire hathaway was on in the loop yesterday with betty liu with his son howard and grandson how we.
-- how i hear he is talking about jpmorgan's billion-dollar settlement -- $13 billion settlement.
13 million is a lot of money and i think jamie dimon has done a great job and helped out the economy enormously.
There was not time for that sort of thing.
He took on wamu.
This country is a lot better off because jamie dimon has been running jpmorgan.
In support of jamie dimon.
Betty liu joins us now.
What not talk about the succession plan of his own company but did continue to back him in a big way.
I am not sure if he realizes how complicated his admiration in stance, how complicated it makes it for regulators in washington who are trying to go after the banks, trying to keep america safer.
Saying we want to make sure we do not let another too big to fail happen and then when you have warned buffett say i support jamie dimon no matter what, and that has been his position consistently throughout the crisis, it does complicate things for him.
Down in washington they love warren buffett, some love him.
The white house loves warren buffett, right?
White house and democrats love him.
Democrats who do read -- admire him as well.
He has been put in the position when has been asked, i support this one banker and admire him.
I am curious about your thoughts on this with your keen lands on management and perception in stewardship.
In terms of brands, i think warren buffett and george soros have the best land.
With respect to warren buffett, no institution has come out unscathed.
Ceo's now play a bigger part than ever before.
He is to look at mick jagger and troy aikman.
This is why so many people are concerned about the succession.
He said what he normally says, which is we have a ceo, we have artie picked, and no i am not telling you who the ceo is.
-- have already picked.
Because of my day, it would disrupt the operation of berkshire hathaway.
He said the board knows who's it -- who it is and are comfortable with that and says shareholder should be comfortable with it as well.
So far, most of them have been.
A lot of questions over what will happen at microsoft.
Chairman of microsoft, bill gates, founder and what his next role is after he finishes up.
Take a look.
I think the chances of that are zero.
I think he is doing exactly what he wants to do in life and doing it well and takes full-time energy.
He is flying around the world a very significant percentage of the time and is engaging governments in his efforts in many respects.
He has got more than a full-time job at the gates foundation.
Obviously cares about microsoft, but he is not going back.
Saying the chance of gates returning to microsoft are basically nil.
Pretty much that he will not come back.
You know the tech world very well.
I do not know if they really would have wanted him to go back.
Obviously it seems likely that gates will not return to microsoft, not in an active capacity.
They need new leadership, not necessarily a return.
Who do they need?
What would you want on your tombstone that you saved xbox or tens of millions of kids from malaria?
A wonderful man doing wonderful things and would be a huge regression to go back.
The next ceo will likely have mobile tattooed on the four head, whoever it is.
It really comes down to how the company is operating on a fundamental basis.
The ceo is becoming more of our brand issue with respect to that.
With respect to leadership going forward, we think it will be important to have the clean brand.
The key thing on the financial side of things is how it relates to the government.
What does regulation look like going forward and what does the endgame look like?
From an investor standpoint, that might be a good thing.
Do you have more faith in jamie dimon as a place to brian moynihan?
As a former employee of merrill lynch, i will not comment on that.
Doesn't former mean that you can comment?
I was there through the 2008 side of things so i will not comment.
I think leadership going forward will be all about listening and what kind of clarity of a ceo like jamie dimon typically provides.
Yesterday there was an important fund manager survey out.
Berkshire hathaway and warren buffett were preferred over apple for the first time.
That is true, top picks.
Another knock against apple.
Investors and brands.
Thank you for your conversation with warren buffett.
You can watch charlie rose tonight at 8:00 and 10:00 eastern time.
They will speak about his son's new book.
Closing out the hour with a forex report.
When you look at the dollar index, up .2%. almost 80. reddish pound weaker as well.
Policymakers unanimous on wanted it easing.
That with more in the next hour.
? rex this is bloomberg " surveillance." the rush to fix healthc are.gov.
Twitter lightning up a billion dollars in credit before going public, spewing -- fueling speculation it is planning and acquisition.
Small and medium companies driving growth in the company.
We talked to the ceo of a company innovating in the water business.
I am sara eisen live from bloomberg world headquarters in new york city.
Joining me as always is scarlet fu.
Tom keene in boston for a special edition of bloomberg radio.
Tom -- sam grobart is here for both hours.
Guest host is thomas gens and berg.
-- thomas ginsber.
U.s. chief strategy officer at a firm.
We will talk public relations and just a moment.
First, kicking and not with the morning brief.
The european central bank said it will use stricter rules when stress testing alan sheets next year.
A new way of quantifying capital.
The spanish recession seems to him come to an end.
Bank of england officials voted unanimously to keep policy unchanged.
In terms of economic data, mortgage application numbers right now.
Import price numbers is due out.
Also before the market, the house price index as well.
I really busy day for earnings.
We heard earlier from eli lilly.
This hour we will hear from boeing, caterpillar, bristol- myers, and motorola.
After the bell the focus will be on at&t. ryan miller says caterpillar is the one to watch.
A lot of people expect and weakness.
We will bring you the earnings in the 7:00 hour.
We're seeing futures point to a lower start for wall street, off of the lows of the session.
They were down 10, now down eight.
Stocks have been rising five days in a row.
Up more than four percent for october and data record high.
The big story has been the currency market.
The dollar at a two-year low.
The euro marching towards one hundred 38. europeans will be shopping on madison avenue very soon.
I know you have other company headlines for us.
Jpmorgan in talks for yet another multibillion-dollar settlement.
Think negotiating close to the $6 billion agreement with a group of institutional investors including blackrock.
Investors say jpmorgan misrepresented the value of the underlying mortgages.
Apple rolls out two new ipads.
Devices are light and thin.
The new ipad mini starts at three hundred $99. $70 more than last year's model.
This comes as amazon, samsung, and google have introduced price points at lower price points.
-- products at a lower price point.
Twitter disclosed sales at an advertising start up it bot are soaring.
Revenue topped 6.5 million dollars in the first half, up from 2.6 million all of last year.
That is today's company news.
What is twitter going to buy next?
It is in about -- about mobile for everyone.
Twitter specifically so.
As far as what they will do next, we will have to wait and see.
Joining us as the guest host, thomas consumerginsomer.
Before we get to you, a perfect topic for you to discuss the president health care legislation.
Phil mattingly joining us as well.
Her rock obama said he was matter than anyone about the problems with the website.
Why now is he doing to advertisement online saying it is easy to sign up?
Odd timing but underlying the problems they're facing.
Regardless of how bad the rollout, still a target of 7 million enrolled by march.
What you see is the obama administration is trying to activate grassroots.
Sending a video message out to organize for action, trying to engage them.
Enroll for america, another grassroots agency working in the same way.
Getting people out.
While it seems belated if they are doing it now, it is so important if they want to hit the target numbers.
They need to spend millions of dollars to get people on the website and to work.
There was tremendous demand when the exchanges opened.
Is there concern of the news how things have not been working out going to scare people off and trying to maintain the deep interest people had on day one?
It is completely necessary.
Here is why.
One is the bad headlines.
You start sending people back when you need them now.
So republicans seized on that as well and continue to hold the law up as the bogeyman spends billions of dollars working against the law.
They are getting outspent.
Forget your experience on the campaign for a moment and what you do now.
They go somewhat in tandem because so much of the advice we give is to prepare for the next crisis today.
Somewhere in the 20 million lines of code that need to be reviewed.
There is the reality of the scale of the challenge.
We see tech entrepreneurs raising their hands wanting to get involved.
A massive undertaking.
Yes the quality assurance of the software was not there.
Now we have republicans jumping on to say isn't it ironic?
It is unforgivable in many ways.
Obviously a big mistake.
You saw the private sector when apple launched the maps application.
Perhaps we will see something.
We have other laboratories in the model that are working.
It seems like very little was done to review those.
One of the articles was talking about five steps it would do, learn from mistakes that were made in the past was goal number one.
Was the goal they did not want to get too far ahead in themselves setting up exchanges during the election season because they did not want to give republicans ammunition?
And the process.
Much of the process was put forward in january after the election.
This compressed the timeline for developers.
The u.s. government is planning to spend $82 billion on information technology in fiscal 2014. why couldn't they have gotten the logistics of this right?
I think you have people scratching their head trying to figure out what happened.
I think the compressed timeline is huge.
The ability to get everything together.
They were trying to do this in months, and it was extremely problematic.
She should not resign.
I think that would give too much in musician -- ammunition to it.
Look what happens when apple made a mistake.
Scott had a lot of things going on an apple besides the failure of maps.
Why can't they get inside this?
A challenge this big is not about how big you spend.
It comes down to timing and testing.
The reality is this was more lead it from day one.
Goes back to the idea it is a process not a product.
How would you swoop in public relations?
I think they are going back to the grassroots to support.
Not really a one-to-one match by getting positive sentiment.
They are in listing the off-line support with consultants on the phone to help people through the process.
You have a timeline to find things away for -- around the way of technology.
Now the signature legislation impacted by it.
We are where we are.
You need to add the human element to it.
We are dealing with 20 million lines of code.
Great to get the perspective from you specifically on the issue.
A lot more with you.
Digital technology now.
We will talk about public relations for some of the big banks later in the hour.
Phil mattingly, good to have you here in new york.
In the meantime, company news.
A couple of beats from defense contractors.
General dynamics reporting shares of one dollar 80 four cents.
We talk about how revenue miss has been a big theme.
Northrop grumman doing fairly well as well.
Coming up, we will look at jpmorgan in the headlines again.
There can billion dollar agreement last week.
Now there is talk of bigger fines.
Talking about the politics next.
? this is bloomberg "surveilla nce." this matters now to our guest host.
To million gets a billion dollar credit line.
Lots of buzz on the roadshow and ipo.
You work in the pic's and digital space as well.
Can you successfully advertise on 140 errs in?
There is a mix of monetization efforts that they can refine.
We use it a lot with sponsored tweets and the data that comes off the back of it to learn more about the audience.
There is opportunity there.
The question is, how much will the audience be willing to advertise against and can they involve the policies and still make people spontaneously involved?
That is the problem with facebook contracted now.
It is so simple.
It is so simple.
You do not have angst buried in sponsored tweets.
You reveal more.
Rex the usage of it, ---- the usage of it, it is so immediate.
You learn is so more valuable.
Facebook is finally getting there.
What about e? they have long been mobile made up because of the simplicity of the platform.
They have not had to squeeze what it was used to, a full- screen platform into something small.
140 characters that is on every device around the world.
Simplicity is key to the brand.
What about the timing?
What does it say about the environment?
I think it is incredible how we fixate on individual companies globally and what it says about the economy.
I think we are coming out of the post-shutdown kind of days and malaise.
We have stress test coming on.
We will see, we will repeat what the facebook reality was, whether it is facebook or the individual company or not.
I think it will go into the end of the year and set the tone.
There is talk of a new funding bubble.
Third round of this.
Our guest host.
You do not want to miss.
We will get a preview of a special tonight.
Top investors and money managers go face to face on the poker table.
We will take a look coming up.
Coming up, chief operating officer of goldman sachs will join us at 11:00 eastern time.
Gary: sounding off on regulation on the banks and the economy.
Later on this morning.
-- gary cohen.
Top headlines for you this morning.
The european central bank will review the balance sheets of 130 banks starting next month.
The ecb will ask the firm to set aside the risk-adjusted capital to serve as a bus -- buffer.
Spain emerging from a two-year recession last quarter.
The positive growth and your abyss to the prime minister.
Tries to impair the nation's finances and reduce the 26% unemployment rate.
The irs delaying the start of tax filing season due to the government shutdown.
Tax returns now accepted on january 28 -- expected january 28. the irs saying they need time to get the systems ready for tax season.
One date that has not changed, april 15, returns still need to be filed by then.
Jpmorgan preaching at tenet of $13 billion agreement over the mortgage bond sales.
The bank is in talks over a nearly six billion dollar additional settlement.
This really ties together the news from jpmorgan and bank of america dealing with liabilities inherited during the financial crisis.
Last year we were talking about it and still persists.
The co-author of reckless endangerment.
Has written extensively about the mortgage crisis of 2008. phil mattingly also with us, leading coverage of the $13 billion settlement.
$6 billion is the latest number on institutional investors.
13 billion is not a done deal yet.
You try to project out what the final tally could be?
A keeps moving.
-- a keeps moving.
I think we cannot really access -- assess what is coming down the pike.
How do we get down to 13 billion dollars?
It is like overnight.
13 billion the number that has been out there for a couple of weeks.
Originally much smaller than that.
What changed was first enrolled in the fhfa director claims, $4 billion.
Use all that potential settlement of the overall deal gets done.
That boosted it up.
Then i think they went back into a full assessment.
I did not think it has gone terribly smaller.
If you think about the tax implications of 13 billion, it comes to about what jpmorgan set aside last quarter.
I know you have done reporting on the break down of the fines and settlements.
It has been a shifting target.
We have had the top line number.
The breakdown is four billion for the fhfa director 4 billion to consumer.
They are trying to do something new on this.
They are trying to target metropolitan areas with distressed homeowners.
They will try to keep them in their home.
What i am told is some of the details of this may not be finalized by the time it is done.
The big question remains, where are investors?
A $3 billion pool.
What the payouts will be to investors who bought the bonds.
This is problematic if you think about it.
The investors, the trustees who represent them are nowhere to be found at the table, not part of the discussion.
The government in negotiations to settle without the trustees of the table.
The consumer relief aspect is curious.
Therefore the harms party are investors.
You wonder where consumers are getting paid out on this.
Not to say there were not consumers harmed, but by these offenses, it does not make sense consumers are in the mix.
The government clearly wants to close the books on who cause the financial crisis.
Does this help banking in any way?
To my view, capital markets are about buyers and sellers of securities.
The banks are primarily issuers.
Look at the weapons dealers.
I think if we end up with investors feeling they have gotten some closure on and result in increased transparency to investors going forward, then i think it does help put it behind them and fix them stabilize the system.
It is not just that department -- justice department.
You have u.s. attorneys offices.
Those are the people who will decide.
The biggest issue is each entity wants to pay out their specific set of investors they were looking too.
How much money goes to who and how that gets passed along is the question.
And you have the critical question of the fdic.
Jpmorgan has contended the washington mutual liabilities do not reside with them but the fdic.
The question is, will the fdic gets rolled here?
That is an important question for the first almost year after the transaction jpmorgan reserved for it before saying these are not our liabilities.
That has implications not only for the settlement but implications.
Jpmorgan still dealing with the legacy issues.
Max phil mattingly, with us on this topic.
Coming up, some water mains are a century old.
We will talk to a company updating the infrastructure.
? this is bloomberg " surveillance." i am scarlet fu joined by sara eisen.
Tom keene in boston for bloomberg radio.
Time now for company news.
A lot of european companies making headlines.
The european carmaker is reviewing its alliance with general motors.
Reaching a settlement on the this is according to people with knowledge of the matter.
The settlement could be announced next week.
Heineken taking a hit as sales in europe slide.
Cutting the full-year profit after her quarter sales fell short of estimates.
Waning week concession -- blaming weekak consumption.
The heavy hitters of wall street take to the poker table.
Mario cavalli -- rank the top investor.
Trish regan, anchor a bloomberg television will be there.
Brings us a sneak peak of two nights -- tonight's game.
Amazing that these fantastic investors are fantastic volker players.
He said there is a lot of similarities.
Very much a calculated risk you are making.
Differences as well.
It is your money, as opposed to someone else's money you're taken risk with.
We really focused on the rivalry between greenlight capital david einhorn and bill perkins.
Not the first time they had faced off across the poker table.
Take a listen to this.
He deserves to go with the chip.
I woke up with him online.
Legendary poker player, david einhorn succeeded by the perkins . both ready for the rematch.
Who do you think is the biggest challenge for you here tonight?
David might have a marked out for me.
I am feeling a lot more pressure of upcoming earnings releases over the next few days.
Although they are staring each other down over the table, they see the game the same way.
Winning at poker is about much strategy in luck.
The skills overlap.
In poker it is very similar.
Try to identify what the other players styles are and try to react what they are doing.
Over time, as you invest in a lot of stocks over a loss of time, skill dominates.
The same is true in poker.
Eventually the better players will come out on top.
A lot of these players have been waiting for years, since they were in high school.
David einhorn just started playing seven years ago and has gotten really good.
Playing at the world series of poker.
So this is the first time they are facing off tonight in this tournament since then.
You are there to witness all of it.
Was surprised you the most in talking with players and hedge funds managers?
-- what surprised you the most?
It is really something to see it play out and see these terrific investors make decisions at the poker table.
Blessing him it is really amazing.
As they stare each other down at the table, a very exciting and interesting thing.
They are very competitive.
All of these guys incredibly competitive.
Playing for charity.
We raised nearly 500 million for charity.
An exciting night.
I am terrible at poker.
It is more about the attitude.
The blessing and confidence that comes.
It is really about your approach to risk.
Spoken like a true pr man.
You can catch the entire tournament at 9:00 eastern time on bloomberg television.
Poker night on wall street.
While we have you here in talking about big-money investors, another story you are watching closely, carl icon.
He sold roughly half his stake in netflix.
I talked to him over the past several months since he made the investment.
He stressed he was going long for a while in this position.
Interesting to see him get out.
One of the points he made is this is a stock that is up nearly 500% since the day he got in.
He recognizes an opportunity when he sees one.
He still has a position in the company, but less than five percent.
This was an investment that was done for brett icon and david prester.
They still not only have a position long, less than five percent, but they have a derivative products that gives them exposure to upside going forward.
Nonetheless, saying it is time to get out, a stock that has appreciated a ton.
This has gone through huge cycles.
Trish regan, good to see you.
The back story on harel icon selling more than half his stake in netflix.
Cutting the 2000 13 earnings forecast.
Uncertainty could tap their economic growth in 2014. big mess on the profit line.
The stock is down in premarket trading.
Now it is time for our news series where we look at businesses writing growth in today's economy.
Focus today is the water utility operator, aqua america.
The company is growing.
Up almost 25% year to date, completing 18 acquisitions last year alone and experiencing continued growth from an increase in crackling.
The ceo of aqua america joins us with years of experience joining us from philadelphia.
Before we dive into your strategy, we know you are driving growth by acquisition, what is your business model?
Business model first is to be a reliable service or a product.
Specific is to fix infrastructure where we get rewarded i regulators through a return on the investment and to grow our base by buying small water companies.
We are the second largest.
Ferris -- sarah mentioned revenue but where do want to be and 5, 10 years?
Right now very small because we only have one pipeline to deliver water to the drillers.
The joint venture with pvr partners, a midstream gas mlp, and we have a 55 mile pipeline that is servicing a number of drillers.
We anticipate that being duplicated.
Pennsylvania is booming with gas drilling.
We are the largest supplier for the gas industry.
Infrastructure is a hot topic in washington these days.
What is the state of america's water and sewer infrastructure and do we need to see more government intervention their?
Overall about d+. that is what the society of civil engineers gets the great because we have basically lived off of deferred events.
Time to start fixing.
Most high-tech companies have been systematically changing out the system over the years.
That is why we spend 350 million dollars on capital improvements.
Are you looking to make more acquisitions in doing that to improve and five more public minutes of full water plants and add to the portfolio?
This is been around since i came to the company over 20 years ago.
It has helped to spare growth in the customer base and net income.
We are looking for the 14th year in a row of record earnings this year.
What kind of effect is all the political uncertainty of washington happening -- having on the acquisition strategy?
Actually helps us.
We do not like to see see -- free federal money going to minutes of polities.
The more we let the private sector compete, the better it is for a company like ourselves.
We cannot compete with free money from washington.
If that is what they will give for them to help the infrastructure.
We would rather see a pay-as- you-go.
Next how many times have you raised the dividend?
23 times in the past 22 years.
Average is seven percent.
This year we raised nine percent and split the stock five for four.
Nicklas steve benedict ceo of opera water.
Hot topic, what tablet would you purchase and why?
? this is bloomberg "surveilla nce.
I am sara eisen.
Sam grobart is with us.
He will kick off our morning movers.
I am looking at apple down half a percent right now.
Obviously coming off of yesterday's event where they introduce new ipads and imac.
I think what is most significant is they drop the price of the operating system and some of the software suite 20. this basically cuts to the hearts of the entire strategy, which has always been to get people to pay a lot of money for an operating system.
You have to spend about 120 or $200 for a license.
Apple said we're going to zero.
Apple is the morning mover wrought to you by sam grobart.
We want to check in with tom keene and boston for bloomberg radio.
He joins us by phone.
How is boston?
It is really great.
Wonderful to see old teams playing in the world series.
The place is on fire.
A rejuvenated boston.
10 years of construction making for a gorgeous city.
I was at fenway park last night.
I have never seen it so nice.
You actually went to fenway park?
I went to fenway park, walked around the field, looked around.
Not a cincinnati red insight.
Talk to the boston globe at link and a lot of the different media types there.
Really what struck me is seeing these old teams playing in the world series.
I just hope it goes six or seven games.
I kind of wonder whether you got to see any of the players around.
We know they like to grow their beards for the playoff.
A lot of them have gotten a lot scarier.
It is a good luck thing.
You cannot cut your beard he cousin is bad luck.
I know you have been threatening to grow a playoff year.
I wonder in the one-day we have not seen you whether that has started to materialize.
We cannot see you right now, with so we put together an image of what we think you probably look like this morning.
That is a great beard.
I am working on it.
It is great to be up here.
I will come back for tomorrow's surveillance.
Again, the state of the ballpark , i cannot convey to all worldwide and across the nation, you have to make at least one visit to fenway park.
Tom keene, great to check in with you.
You are a pr guy.
Only one day growth.
That is impressive.
Coming up, we will talk more about the glitches with the online health-care rollout.
Our top story.
? coming up tomorrow, the guest host for deloitte ceo.
Can business still move the needle in washington?
We will talk to him about that and other things tomorrow.
This is bloomberg "sur veillance." tom keene in boston for bloomberg radio.
Our guest host is thomas ginsberg.
The chief strategy officer.
He do have company news for you or the -- from the files of bloomberg "west." dan loeb taking a position in nokia.
They may add pressure to disclose plans for cash.
The cash pile will rise to $19 billion once it sells the mobile device unit to microsoft's. amazon will have to be $35 or more to be shipped at no cost.
The old minimum had been a place for decades.
This took place yesterday and aimed at taking more customers to amazon prime.
A line of credit.
Securing a $1 billion line.
This is according to a regulatory filing.
Figures also revealed that revenue is soaring.
This is up from 2.6 million for all of last year.
This is today's company news from the files of bloomberg west.
Time now for the agenda where we look at the big story shaping the day.
A guest star in today's agenda.
Yesterday microsoft and nokia brought to market to new tablets of their own.
I am looking at this a little bit like thunder dome.
The nokia tablet was developed before microsoft initiated the purpose of the device.
They have the surface and nokia has the loop via tablet.
Seems unlikely that both will survive.
The question is, which one?
Nokia has a really good brand, particularly outside of the u.s. . are they willing to give that up?
How do you market to and nokia tablet?
They have an interesting position.
Think of them almost like ibm.
People think of them as a reliable solid brand.
Maybe not quite what they used to be, but capable of good things.
What is your perspective on what they should do?
More and more people are buying this as part of an ecosystem of devices.
It is an interesting challenge.
We asked everyone, what tablet would you purchase and why?
We want to share some of the answers.
The large screen size and thin, lightweight package.
Do not forget the price type.
Hardware a side, windows 8.1 vastly superior.
Didn't get a lot of chatter?
Not a whole lot.
Microsoft product service, will me a products, as products are actually quite good i would say.
Generally well received.
They cannot write breakthrough.
They are actually going after the enterprise market.
They are offering a model that provides full support.
It is fully compliant with security and so forth but very expensive and heavy.
Does not have the same kind of ecosystem and support.
What is your advice to microsoft?
I think right now you had to stick with the power in clash -- cash flow.
What is interesting with apple yesterday announcing more innovation on the office suite for free, directly going to take on the relationship they have.
You have to stick with office and the enterprise buyer because you are not going to get the app economy to catch up.
The enterprise side of microsoft remains a very strong business.
Nothing wrong there.
The problem is the consumer side and getting app developers.
The windows mobile platform has famously last instagram.
They announced there will be a new version of that.
Le do you think steve ballmer is going about this the right way?
I think that is the only option he has right now.
You cannot turn your back on that an attempt to go back to a consumer play.
Moving onto my agenda item.
This is on caterpillar, which reported earnings.
The stock is down in the premarket.
Third quarter analysts missed estimates.
This makes the heavy earth moving equipment cut the 2014 forecast saying uncertainty could temper global economic growth in 2014 and does have a prediction of three percent gdp across the world.
This is why i love caterpillar earnings.
An economic indicator.
They came out with different forecast for the different regions.
Caterpillar has been hit hard by the slowdown in commodities and slowdown in china.
This is the real economy.
You like the big machines.
Lex on the other side -- on the other side did well.
Raise the profit forecast.
A couple of defense contractors have done well.
So this whole sequestration and the reduction in government spending will hit the defense contractors down the line.
So for not taking too big of a fight out of revenue.
They are making it up through commercial sales online.
The faith of kathleen sebelius is on my agenda this morning.
Shouldering most of the blame for the troubled rollout of president obama's health care.gov website.
Some are calling for her resignation.
We know she will have to testify.
What would be your advice?
Formerly in the presidential campaign for obama.
Such washington culture to blame it on one person.
It is part of it but it involves so many other departments.
The challenge is that 20 million lines of code is we're trying to cobble together a series of government systems to get people to qualify.
Two-putted on one person's shoulder, i am a fan of kathleen sebelius -- to put it on one person shoulder, i am a fan of kathleen's ability as i cannot really say.
There is no claims of incompetence.
When can you stop calling this a glitch?
A glitch is those who do not understand technology.
The scale of this is huge.
Pre-k's people would say that is the white house worst offense, two.
What is your feeling about companies brought in.
Cgi and others brought in to manage this.
I think there may even be too many of those involved.
A depressed timeline, not revealing the details of the plan because of the political realities and not leveraging the existing state market.
Some were involved in building california exchanges and different things that are working.
Now there are smaller footprints, but still the timing was as much the problem.
The white house is showing adv