The New iPad: Surveillance (11/01)

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Nov. 1 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests include Bloomberg Businessweek's Brendan Greeley, Donald Katz, chief executive officer of Audible and Mediadata Solutions CEO Tarek Sherif . (Source: Bloomberg)

This is "bloomberg surveillance." the spy who came in from the cold.

The ramifications of the spy scandal on google, microsoft, and verizon.

Should brazil lot google?

Hong kong was the first to buy the ipad air.

Matthew miller is in new york.

Sara listens to a book on foreign exchange while cooking.

We look at the billion dollar business that is audible books.

This is "bloomberg surveillance" i am tom keene, live from new york.

It is november 1. joining me, sara eisen and scarlet fu.

You do not cook?

I really don't. this is a billion-dollar industry.

We will talk to the ceo of the biggest one.

72 degrees in new york.

A gorgeous halloween.

Did you really go with dollars/renminbi?

That sounds like a good costume.

Manufacturing day around the world.

The manufacturing indexes across asia have strewn -- shown strength.

China's pmi at an 18 month high postop here -- high.

The ism will be out for the u.s. today.

Total vehicle sales will trickle out, a final tally at 5:00 p.m. eastern.

Other events -- earnings, chevron before the bell.

After the bell, berkshire hathaway.

The food stamps cut will be starting today.

It will affect retailers like walmart, target.

These are deeper cuts to the food stamp program as part of the budget deal.

It affects almost 50 million americans.

This is a busy economic day.

Manufacturing is big.

Very busy, equities, bonds, currencies, commodities.

Futures up, 10 year yield to a 2.56% on great data from chicago.

The euro is what everyone is watching.

Cover of the "ft," deflection watch.

-- deflation watch.

Next thursday.

The ecb decision.

Deflation is down, perhaps giving written for the ecb to cut interest rates.

What to do about deflation?

Rising bonds across europe and weakening euro.

We have scoured the papers for the most important stories.

On the cover is this game changing decision from the faa.

Relaxing rules for mobile device use.

In the end of this year, most passengers will be able to use smart phones, tablets, you readers gate to gate.

They will need to keep it on airplane mode, you can do everything but using a mobile phone to talk and text.

Airlines will have to submit plans.

We will talk about how airlines are affected by this.

Jetblue and delta have already put in their plans.

Our second story is one on companies.

At&t laying groundwork for a vodafone takeover as soon as next year, creating the world's biggest telecommunications operator by sales.

They have not entered formal negotiations.

They are focusing on which vodafone assets they would keep.

This is not its first attempt at trying to merge with vodafone.

It approached verizon about a deal to buy vodafone's european operations, verizon rejected that.

You have to wonder how the nsa negotiations are going to factor into this.

Europe is highly sensitive.

Will talk about that with richard falkenrath later on.

This is on the cover of the wall street journal, the cftc.

The leading cases and shelving investigations.

It decided not to file charges against two former traitors against the jpmorgan london whale -- fioormer traders against the jpmorgan london whale loss.

The commissioner will be on bloomberg television later on.

It is a huge problem.

They have an increased responsibility post.

Frank to regulate derivatives.

I am thinking about fruit ninja gate to gate.

You can just not talk on your phone.

Or text.

I don't know how they are bowing to monitor that.

We will talk about that and our other stories.

First, to washington.

A month after its launch, healthcare.gov is experiencing outages.

Silicon valley is coming to the administration's rescue, google and oracle contributed engineers and programmers.

Peter cook joins us with the latest.

The text search -- tech surge, now we know the identities of people involved.

What can you tell us?

We know a few companies, google, oracle contributing to this effort.

They are being hired by the contractors who were responsible for the website.

It is not like they are coming to work directly for the federal government.

They are there and trying to help with analytical problems that have plagued the website.

The administration will take help anywhere it can to address those problems.

In the meantime, republicans on capitol hill hammering the administration over problems with the website.

Asking tough questions about how many people are signed out.

We had darrell issa release some the most late yesterday, internal memos from the hhss.

-- hhs.

Only 248 people had signed up after the first two days.

That is the number front and center.

Help me out, i don't know the washington red ends -- redskins.

What will be the focus of conversation for the sunday talk shows within all the health care must -- health care mass?

Health care and the nsa.

That issue is dominating as much as health care.

There are big implications for the business community.

Our cybersecurity conference this week focused on the fact that the edward snowden situation, the disclosures come any questions about surveillance are having an impact on what should be a separate issue.

Beefing up the digital defenses.

That issue is as big an issue in washington as health care.

Francine lacqua went to hans nichols where this is front and center in berlin.

You wonder if it will hurt u.s. corporations abroad.

Blocking confirmation, this came out yesterday, a new republican tactic.

It does not bode well for some upcoming battles over the budget, the shutdown, have a poisoned the waters?

We had about two weeks of company after the shutdown, we got right back into partisan politics.

Mel watt, block to be the fhfa director with oversight over frannie mae and freddie mac.

The first time a sitting member of congress has been blocked since before the civil war.

People talking about the nuclear option, filibusters are being used to block the president's picks.

Harry reid has some decisions.

Another judge what's blocked, this is heading for another showdown.

We enjoyed the column in washington.

-- the calm in washington.

Peter cook on the nsa and the latest confirmation votes.

Our guest host this hour, richard falkenrath, former head of counterterrorism nypd.

Brendan greeley joins us as well.

It still comes back to edward snowden.

This is a massive cost of the security screwup.

This is the worst security screwup anyone care member.

-- can remember.

It is terrible, it keeps getting worse and worse.

In the interview with keith alexander two days ago, he was trying to explain the latest revelation.

They don't even know what is coming next.

It is terrible for industry, for foreign relations, four operational security.

The key quote, david drummond for google was adamant that google has got to get out in front.

How would you suggest these corporations will get out in front of general alexander and the government?

They are between a rock and a hard place.

It is not optional, they are subject to u.s. law, the law says they have to cooperate.

It is terrible for their image, for their philosophy, for their customers, for their global competitiveness.

They are stuck because the law is that they have to cooperate.

Will talk about the implications in the u.s. and abroad later.

Can you assume that everything he is revealing his true?

Snowden?

The last one was interesting.

Washington post -- the one i cannot on wednesday.

If something he reveals is false, the government will deny it.

They have taken half of that and thrown it out.

They have said we will not confirm.

They did not confirm the tapping of internet -- of andrea merkel's cell phone.

If they are not denying it, it is a confirmation.

You never confronted anything like this in the white house?

We had a few, they were smaller.

They involve u.s. journalists.

The one that was disclosed, the worst one in my time was the predecessor of the nsa metadata program which had a questionable legal foundation at the time.

There were allegations that this was illegal and a legitimate form of whistleblowing.

Today, no one is saying that this is illegal.

It is affirmed by law, both chambers of congress, the president.

That is a big difference.

Richard falkenrath with us.

We will continue this discussion.

Some company news.

Shares of the container store trading on the new york stock exchange.

Reason $225 million in its ipo.

Shares were priced at the top of an increased range.

Elon musk's tesla seeing a pothole.

Shares had their worst month, losing 17%, a $4.1 billion drop in market cap.

Investors concerned that the stock price is out pacing growth.

Shares up 372% this year.

The royal bank of scotland setting up a bad bank to handle bad assets.

George osborne decided, the camera is trying to convince voters that they are trying to recoup the cost of bailing out rbs.

29.6%, apple's tablet market share in the third quarter compared to samsung.

The new ipad goes on sale today.

We will bring you the latest on whether apple can keep dominance.

? he is arguably the most acute, the most mathematical of the too big to fail managers.

James gorman of morgan stanley.

Look for that and the 9:00 a.m. hour with erik schatzker.

This is "bloomberg surveillance," we have all gotten up too early.

Sara eisen with tom keene and scarlet fu.

Apple's new ipad air goes on sale across the u.s. and in 41 other countries, including china.

A first for the company.

Matt miller has been surveying the scene outside of apple's midtown store.

Not the same favor as an iphone launch, what do you see?

It isn't, there are a number of people waiting here since 6:00 p.m. last night to get this new ipad air.

There are still some diehard apple fans that will do anything to get the product first.

They could probably come back a little later and get it this afternoon or tomorrow without having to wait in line, but a lot of people have the urge to have it before anyone else.

You see that with other apple products.

How important is the tablet to apple's strategy and growth going forward?

We know the iphone is the benchmark product.

The ipad is important, too.

It is incredibly important because of the fact that so many people are starting to use tablets in place of computers.

They no longer need a macbook if they have a tablet is the idea for what regular people would be doing.

That is why this new ipad air is such a step forward, it will be using the a seven check, a faster chip that allows you to do the kind of things you would do on a pc or a mac on a tablet.

That is what apple is hoping.

It may cannibalize mac sales to a certain extent, people are going to be using this as their daily computing pool -- computing too.l. we will see how many people lineup.

Matt miller outside the apple store in manhattan.

It is important to do this sort of thing.

And analyst actually does this when he gets securities on apple stock.

We saw this with sam grobart's story.

Did you get your iphone?

I did.

Ta-daa.

Richard falkenrath will not let me do the fingerprint.

The nsa will know what you are doing.

There are still questions about how secure biometric authentication is.

Bloomberg businessweek, you have an iphone, you have finally made a switch to t-mobile.

I had to buy my iphone for $200 from at&t to switch to t- mobile.

With a 4 phone family, we are saving $200. i will live with my 4s. i have an iphone 3. i have got to keep up with sara eisen.

Walmart is discounting the new ipad by $20. the distinction of this announcement, you have a lot on this.

Matt is in front of the apple store, they plan to boost their spending to $11 million.

-- $11 billion.

This chart shows the number of visitors to apple stores per quarter.

Lots of seasonal peaks, when you smooth it out, the dotted line, it held steady since 2010. for that, from 2007-2010. there was a jump condition, what caused that?

Probably the ipad.

The store has become a brand ambassador.

People need to go to the store to understand how to use it.

Ron johnson left, the woman from burberry -- angela current -- angela ehrendt.

She is in charge of the stores overall.

The stores are going to look different, they might replace those new -- those blue shirts.

Matt miller mentioned the chip speed.

The chip speed and that hd screen.

At some point, the naked eye cannot tell the difference.

Are people going to shell out the extra money to go with apple, will they stick with the icon -- the iophone 3. should i get a champagne iphone?

Not manly enough.

This is the problem the gaming companies had, they were improving performance, but people do not care.

Then the wii came out with a terrible performance, but it was novel and it outsold everything.

I have not impressed by a better chip.

You when a new out of -- you want a new product.

I went and -- i want a laptop i can put my phone in.

The new bloomberg businessweek is out.

On the cover, the president, health care.

The debacle.

Download it on your ipad, your tablet.

This is "bloomberg surveillance." ? this is "bloomberg surveillance." i am sara eisen with tom keene and are lifted.

Scarlet, you found a good one.

The business of doing business from laura tyson, former chair of the lighthouses council of economic -- white house's council of economic advisers.

There is simplicity to making money.

The view that business's responsibility is to increase profits assumes that the government provides the code for a past month -- the government provides the goods for a prosperous economy.

Companies need to pick up the slack.

Ronald, who just passed away, this is his shop.

Business is supposed to pick up the slack.

They need to not -- the broader social context in which they operate.

Richard falkenrath, the talk about the government spying, companies finding themselves in the back.

They are collateral damage and required to be part of the government response.

That puts them in a difficult position, even when they err -- are only operating.

You one as paul krugman for halloween?

I did not.

He has enough twitter followers.

The nobel laureate.

There are not enough trick or treaters on the lower east side.

He is writing that republicans have a tactic, a war on the poor.

Entitlements and health care.

He does not get it.

The federal government would pay money and benefit hospitals and the local economy.

He says this is the latest sign of the parties problems.

Paul krugman.

I do that for you.

Coming up, some of the tech giants coming to the aid of healthcare.gov.

We will talk about the business implications.

? it is the morning after halloween.

The empire state building still dressed up.

A special light show last night.

15,000 channels of led light, you could see it all the way to connecticut.

Still orange and white in honor of halloween.

This is "bloomberg surveillance." here with time and scarlet.

We need a data check.

One of your kids went as janet yellen.

Futures up 2, 10 year yield is the big mover to 257 -- 2.57%. the euro, 1.3530, and credibly important inflation.

Higher unemployment, and overall sluggish economy.

Will they cut rates last thursday?

-- next thursday?

I think the germans need to cut hundred -- take ownership of that economy.

They are not willing to recognize -- who is pushing the germans?

The treasury department is attempting to.

What then the french do?

Nothing.

The germans do not feel shame, they don't understand it was their hot capital moving to the periphery of the eurozone that inflated those economies.

When you read the german press, they don't feel guilty.

We heard this at the imf meetings with axa waiver -- ale xel weber.

He did not budge one iota.

When it comes to interest rates, he did say there are challenges ahead for the eurozone, including a flare up of the crisis.

Can this come over to the u.s., do we need to worry about deflation?

No, we have been willing to take the steps that we need to.

Half loser central-bank policies then the ecb.

We have the ability -- as strange as it seems, we have the ability to take some decisions that the europeans cannot.

It is all about the fallout from the nsa scandal that has rocked relations with major allies like germany.

Follow for american business might be bigger and longer lasting.

Some of america's companies stand to lose millions of other governments follow through on calls to restrict them.

It is front and center.

Does brazil need google, does google need brazil?

Richard falkenrath has the price of security.

He was counterterrorism director to nypd.

This gets worse and worse, what is your to do list so europe can trust the cloud?

Were so that europe can trust our cloud?

It is not simple, it is different depending on which side you sit on the planet.

The most important thing is to keep a safe harbor agreement in place.

This is from the clinton administration.

U.s. companies have permission to do business with european origin data and not to comply with all the various european data protection laws.

Instead, to certify themselves to the u.s. department of commerce.

If that goes away, as some politicians are threatening, it would be a huge regulatory burden for every u.s. company.

Let's name some names.

Who stands to lose the most because of what is being revealed from the nsa?

Google, facebook -- all the household names, leaders of cloud computing.

These are all the ones you have heard of.

Cloud computing is growing and dominated by u.s. industry.

Their ability to go into other countries, particularly europe and south america, is constrained by this.

Europeans are already putting in place privacy laws against these companies.

They have very different privacy laws.

What they are now talking about is reducing some of the exceptions that u.s. companies have had.

I will go to my security analyst keanu reeves.

The matrix.

Keanu reeves.

The matrix, you have the servers, the boxes.

Is it as simple as the boxes, where are they located?

In the u.s. or are they elsewhere?

Is the box in europe the same as a box in manhattan.

They keep multiple copies in multiple places.

The architectures are built up in different to geography.

There may be a copy of the data in norway or iceland or ireland, and in new jersey.

In this modern day -- jargon alert.

Package switching takes the data and breaks it into millions of package and reassembles it.

It is unpredictable.

When you have one file and you move it to frankfurt, it is not living as a single file, it is broken up and switched around.

The government of brazil, if they have a server in brazil, do they feel better than a server in frankfurt or palo alto?

What is going to happen, one of the things you have seen with the chinese market, they have got all sorts of roles for server somatically in -- for servers domestically and china that has prevented u.s. companies from expanding.

You can look at that as a trade barrier.

Companies that have national -- nascent web industries will try to have security concerns as an inhibitor to trade so they can have their own companies.

Protectionism?

Internet security can be another word for protectionism.

Don't we have the most advanced servers?

So could take the market share overseas from google and oracle?

There are a small european companies that could step in.

They could take advantage if it goes the way of an economically protected cloud computing in europe, these are the companies.

Drummond came out front and center at google yesterday with a quote on what google needs to do.

"we have been concerned about the possibility of snooping, we are outraged at the lengths to which the government has gone." is he shocked?

The revelation on wednesday, he was probably shocked.

They were shocked?

A couple things going on, they cooperate with the nsa by court order and through the fbi.

They have no option.

The revelation on monday concerns the hacking of a third- party that was involved in connecting their data centers together.

You know, i don't know exactly, this was different than the sort of things they have experienced before.

Can we get you a raise -- can we get keanu reeves?

The winners are the general counsels at these companies.

The full employment act, no question.

For reporters, compliance with these programs is within the companies themselves.

When the legal order comes, it says you cannot tell anyone else, including people in the company.

Richard falkenrath.

Our twitter question of the day, keeping cell phone calls out of airplanes?

Do you want them to be?

@bsurveillance ? this is "bloomberg surveillance." i am sara eisen with tom and scarlet.

Only 248 people signed up for insurance in the first two days of the health care exchange.

That is according to notes from an administration war room obtained by darrell issa.

A spokesman says that as of last week, 700,000 people had applied.

A former top regulator said the cftc decided not to file charges against two traders in the london whale loss.

The miami dolphins at -- ended the bengals' four-game winning streak.

Tackling the quarterback in the end zone, a 22-20 win.

It was such a hot streak for the bengals.

They were on fire.

I thought they were going to the super bowl.

Let's not get too crazy.

They need to recuperate.

T-mobile's ceo has gone crazy, that is what his rocketing experts would like to think.

T-mobile's un-carrier strategy promising deals too good to be true.

So good -- so crazy it just might work.

What are some of the crazy things that john legere is doing?

In that picture -- he wears t-shirts.

He wears a black leather jacket.

A maverick.

That is symbolic of what he is doing.

He is not so crazy.

What t-mobile has realized is -- two years ago, there was a failed merger attempt with at&t. that was a catastrophe for everyone but t-mobile.

They came away with a breakup fee from at&t. at&t was confident, they offered $1 billion worth of spectrum and 3 billion dollars in cash.

T-mobile realized they needed a new network that could compete with the other two, they spent $4 billion on another network.

Then they brought in john legere to solve their problem.

They had a network, people looked at t-mobile as the offbrand carrier that you went with if you did not have enough money.

He is going out there, he says rude things, he wears pink t- shirts.

He gets iphones away, kind of.

He gets iphones away.

He is pointing out that all of the other carriers, at least verizon and at&t, their business models are built on extracting money way above cost.

He is breaking this up among carriers and saying i am going to charge you a little bit above cost.

Let's cut to the chase, is this a desperate attempt or is it genius?

It is genius, it depends on one thing, next year the fcc is auctioning off a new block of spectrum, the 600 block.

If t-mobile cannot cough up the money to get a significant amount of spectrum or get the fcc to keep t-mobile and verizon out of those options, it will be able to keep up.

That is the cost of a duopoly . are we debating duopoly, utility, money up front for spectrum versus the gouging of us in monthly bills.

How can an entrepreneurial model compete against a duopoly?

Most markets are converging to 4 strong carriers.

We have two dominant carriers, and to carriers with ideas to compete.

We have a duopoly and some opposition.

At&t is considering getting into the european market with the purchase of photo fun -- fo vodafone.

Randall stephenson of at&t has gone to europe and says you need to regulate like the americans so we can make more money and invest more in network upgrades.

It is an interesting experiment.

Brendan greeley, great story on t-mobile and the crazy strategy of john legere.

Download it or get it on the newsstands.

Coming up, $69 99 sounds from a listening to the bible on audio books.

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

We talk about digital destructing old media.

The rise of ebooks is feeling another industry, audio books.

It has grown to be more than $1 billion and is a source of job growth.

Reading a book is easy, listening to an audio book is easier.

Narrating an audio book could be a full-time job.

The industry is worth $1.2 billion, demand for the narrators is on the rise.

Elizabeth has recorded about 80 bucks for audible, the largest provider of audio books.

Summary actors will come out and say how can my agents contact audible?

The patient -- the paycheck can go up to $1 million for celebrity voices.

You know him from "perfect strangers," he narrates from his home studio.

I put in five days to six days a week in that box.

It is the difference between loading trucks and having a desk job.

It is real work.

It is a real growth story.

13,255 audio book titles were released in 2012, up from 2009. auto recruits from schools like juilliard and yelled,. -- yale drama.

We try to actually use their training.

It is not just trained actors.

The best way to understand -- maybe it is the next career for a financial reporter.

The largest producer and seller is audible, a unit of amazon.

It adds 1000 titles a month, and employed 2000 actors in the new york city area last month.

What rereading -- what were you reading?

Joining us is audible founder and ceo don katz.

Audio books have been around for decades, tom remembers them.

We are in the age of the raiders and tablet -- ereaders and tablets.

Millions of customers tend to listen on smartphones.

The average audible member listens to over 18 books a year.

It has been repositioned as a service.

60% think of it as a service.

110 million people drive to work alone, that has become our market.

Audio books were stuck in an industry, and the back of bookstores.

It never made much sense.

They made dozens of discs, they would melt on your dashboard in the summer and freeze in the winter.

The little iphone can hold 800 audio books.

The industry is valued at $1.6 billion, revenue jumped 22% in 2012. may raiders get paid up to $3000 per book.

What do you do it to keep it from being a short-lived trend?

Audible was a nasdaq company, we are amazon now.

This growth track has been very consistent and accelerating.

It is a great service.

Once people listen to it, they become addicted.

We have lifelong customers.

Where is our comprehension fast, with a traditional book, a kindle, ipad.

Is it better or worse with what you do?

We have academic studies, the comprehension is equal between reading and listening.

When we put reading and listening together, which we do with new technology, it goes up.

What is interesting is that the emotive parts of the brain are lit up by listening.

Our guest richard falkenrath, you use these?

I really like the new feature that allows the audible book to be synced with your kindle book.

I want you to sync the notes.

You don't have that yet.

It is coming.

I know you are innovating in terms of content.

You are working with "homeland," other series.

"ender's game.

A -- you can listen, the backstory is available from audio.

We are coming out with new kinds of programming.

People will write to this forum in the same way the sopranos and the wire launched a long arc storytelling format.

There is something about theater in your ears.

It is -- we are developing new kinds of ways to do this.

We have people reading like brian cranston.

Tom hanks is curating a line.

A lot of celebrities.

$3,500. is there a celebrity angle?

We have audio books that we have commissioned by nicole kidman, claire dance, dustin hoffman.

Dustin hoffman reading "the graduate here, -- "the graduate." i would pay for that.

Has there been a bestseller that began as an audio book?

Stephen king wrote one that became a bestseller.

We create best-sellers in the original programming.

I like the shot of you reading the book.

What makes for a good narrator?

With a famous actor, you realize why they are at the top.

They make these choices in the studio, it is a subtle art.

It is the performance of literature, you get more -- it is longform acting.

Are you the friend of copyright and the author's royalty stream?

Are you a friend of the book publishing business?

We are a friend of the author, the actor.

This is great for the listener and reader.

What is happening in digital is clear.

The connection between the writer, the actor, and the consumer has become more direct.

Are you a companion with blogs, have you supported -- have you replaced podcasts?

We are a supporter of podcasts.

It is very particular eyes screams -- it is very particularized streams of people talking.

Did you read all of game of thrones on audio books?

I am going to do the bible.

It is $15 a month, not $70. thank you so much, don katz.

We will do a forex report.

The focus is the euro.

It has been weakened, it weakened one percent yesterday, down almost 0.5% today.

The ecb might cut interest rates to help the economy.

You are not going to be able to sleep wednesday night.

In anticipation for next week, reading to see if mario draghi will cut interest rates.

Unemployment is a huge problem.

Robert kapito of block rack -- blackrock, coming up.

In the next hour, he is our guest host.

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

? america can't retire and most of us have completely missed affordable mark.

Are you brave enough to invest?

Scarlet fu is addicted.

It is time for a digital scrapbook.

Your worst nightmare, thank you faa, the guy next year is playing fruit ninjas from boston to st.

Louis.

Good morning, everyone heard this is "bloomberg surveillance." can you believe it?

November 1. joining me as always, sara eisen and scarlet fu.

Our guest host is our is an important interview with robert capito from blackrock.

Fruit ninjas.

I will only play the zen mode of the game.

You're a liar and you have never played food ninjas.

What is your favorite fruits of flash?

The watermelon is easy.

All the reading research notes in the meantime.

Gate to gate, using food ninja and other electronic technology.

It is manufacturing day around the globe and we saw signs of strength that of asia from china to south korea.

Manufacturing growing.

Chinese pmi.

South korea, taiwan and australia also doing better.

The isn manufacturing report.

Also today we will get total vehicle sales trickling out the final tally, 5 p.m. eastern.

The markets have been quite, at chicago yesterday, i sm today , booming pmi's, and then there's europe.

Will next week, ecb president mario draghi cut interest rates?

I hear jeffrey rosenberg at black box that blackrock just as mario draghi.

The foodstamp cuts actually go into effect.

It will affect retailers like walmart, target and kroger.

These of the deeper cuts that are looming as part of the budget deal.

The aroma today, almost 50 million americans in the program.

To be clear, this is not cut out, but you have a diminished amount of monthly support.

Exactly.

On top of that, daylight savings time ends this weekend.

Everyone has to turn the clocks back.

One more hour of sleep heard this is crucial for us.

Exactly.

To have some news for us?

I do.

At&t is laying the groundwork for a possible takeover next year of europe's largest mobile carrier o vodafone.

At&t is still can't figure out which assets it will keep and who will buy the others.

They former top regulator says the cfc is so starved for cast -- says the cftc is so starved for casth.

Anions are following up on the faa's decision to loosen the rules on use of mobile devices during takeoff and landing.

Regulators say that when you're allowed to use those devices depends on the airline and what kind of aircraft you are on.

You still won't be able to make phone calls while actually flying.

That is today's company news.

Sarah?

Should we be able to make phone calls?

Who are senior bunch of chatterbox is on the airplane.

That is my question today, do you want to keep cell phones out of airplanes.

Tweet us at @bsurveillance.

Now to washington.

Health care., still experiencing outages.

Silicon valley is coming to the obama administration's rescue.

Google, we know, and oracle are coming to the rescue with programmers and engineers to help fix the site.

Now we know some of the identities of the secret text search -- of the secret tech surge.

Now we have a couple of names , some engineers and top professionals from google, oracle, red hat, also contributing in this effort or he did ministers rotate the help from wherever they can get because website continues to be plagued with glitches.

It is getting better, but indications are that is the case.

There are still problems for you republicans up in washington who are continuing to make hay with this.

You general i said the chairman of the house oversight committee releasing numbers of comedy people have enrolled heard six people have enrolled after the first day, 240 after the second day.

The good something along those lines in mid-november, but darrell issa china point out it has been rocky from the start and it is still a problem.

He also has said he meant hhs secretary kathleen sibelius.

Crexendo we will hear a lot of that on the sunday talk shows and into the week.

There's also this idea locking nomination votes.

We saw a big move from the republicans on this front yesterday, what are the ramifications of that going forward.

To see another show down?

We could choose showdown at least over the issue of nominations after threat from harry reid to impose nuclear option.

The fight yesterday was over mel watt, a democratic member of congress nominated to run the fha.

He was basically held back on a procedural vote to democrats in the white house for its upset.

They're going to stick with what . for the first time that a sitting member of congress was nominated for position in the administration has failed to win confirmation since 1848 date they are hot about this.

As a much larger five-year and it does threaten to also perhaps touch on janet yellen's nomination as well.

We know when it comes to janet yellen, we lived to rand paul.

In the old days you could put the whole darn keep it forever.

Unified wisdom of the four and filibuster and personal fashion.

Or she's going to be confirmed.

Yes.

Now that the fed has been held hostage listen or read for three years, once upon a time he was for her on the fed.

Now is following in his fathers footsteps on auditing the fed.

How many employees do you have?

11,000. you have to meet payroll and meet healthcare.

These people are blocking nominations.

It is very difficult and it is destroying confidence in an economy that could actually grow if people would just get out of the way and help restore some confidence.

I was a ge capital in columbus ohio.

1100 people by the acid services with your 401(k)s or retirement plans.

How intrusive is washington now into our economic recovery and into creating economic growth?

Is just making it more difficult.

We need regulation but we need good regulation.

I think is important to understand the unintended consequences to the end client in the end client is the public.

Cost arising -- costs are rising.

People have not saved enough for retirement.

Robert capito, hundreds use on a day-to-day basis?

We talk about confidence being hit, what does that actually mean for some of your clients?

Most of our clients based on a survey of sitting in cash and this is a good bad thing to be doing because over a. of time with inflation come half the value of the cash is going to decline.

Or disappeared from actually.

What we need to do is talk to people about getting invested.

You can invest for the future in the future.

You have to be in the markets now.

I'm wondering, how bad to the polls have to get for congress and for the president to change this country environment?

Look, you can't get much lower.

John mccain says they're down to blood relatives and employees, their own staff.

The political fallout will only happen around election time when somebody gets voted out of office.

One of the most striking things from that new wall street journal and pole, they would be willing to vote out of office or particular representative.

The numbers pretty high.

The number has risen dramatically.

They wanted all the bums out including their own bomb.

I think were starting to see those numbers dipped so low that something is going to have to happen.

His problem and afterward to election day.

Peter cook, chief washington correspondent.

All things health care, congress, nsa spying and of course blocking confirmation.

Robert capito with us for the hour.

This idea retirement, the failure of american retirement, sarah, is just a huge deal.

We are going to dig into this coming up here on bloomberg "bloomberg surveillance." ? apple's new ipad air goes on sale today.

41 other countries sold out.

A first for the company.

Matthew millionair miller finished trick- or-treating.

Matt, will you buy an ipad air, whatever it's called?

Will you buy one this morning?

I've actually got one already right here, tom.

A new thinner, lighter ipad air.

It runs the new ios, has a chip and faster wi-fi.

Is a product that i guess hundreds of people feel the need to stand outside all night for an weight online.

It is amazing.

This many generations, this is the fifth generation ipad.

You still have hundreds of people waiting since 6 p.m. last night made i'm looking at whole groups, tourist groups, bunch of guys from russia.

Budget 12-year-olds waiting here . where did you get that freaking umbrella.

That is not an official bloomberg umbrella.

I thought it would be better to have a transparent umbrella and it was also the only one i could find in my house.

You look like julie christie in one of those movies.

Is a good look for matt miller.

Matt, the people standing in line behind you, there are a lot of tourist tackle a member those people coming in from other countries who wanted to get the ipad or whatever iteration projectduct it was.

I talked to everyone here.

Their are a lot of -- you're not a lot of tourists, there a lot of best from russia.

But they live here in the states.

There's a hold delegation by me from chinatown here.

About 20 of them are from the same neighborhood.

They all came up to get together.

There are some tourists, people still adding onto the line this morning.

They're going to open up in just about an hour.

Everyone who came overnight looks to be pretty prepared, except for the couple of 12- year-olds, they all have umbrellas.

They're all willing to brave the kind of weather and to wait all night.

There was no pre-order for this ipod in this case is not a pre- order.

In a way it is forced a little bit of a line.

We are doing umbrellas here, matt miller.

We have to go.

I'm sorry, matt.

I'm going to walk over.

I made to go.

We will see you on fifth avenue.

It is too much bad luck.

Put that away right now.

We'll talk about the big changes in the faa on "surveillance." "bloomberg surveillance." this is "bloomberg surveillance." only 240 people signed up for the government health plan in the first two days.

Notes were obtained by republican congressman darrell issa.

A government spokesman said last week at several hundred thousand people had applied for insurance.

Shares of tesla had their worst month ever, losing 17%, that's 4.1 billion dollar drop in the market cap for the electronic card company.

Investors are concerned now.

Tesla stock rices out running the prospects for growth.

Tesla shares up a whopping 372% this year.

The miami dolphins ending the cincinnati bengals four-game winning streak with a rare lay in overtime.

Dolphins tackle bengals quarterback in the end zone.

That gave miami a 2220 win.

The dolphins have lost four in a row.

A safeties two points.

Odd play.

Very nicely done.

In overtime, very good.

The bengals will recuperate third it has been five years since the financial crisis jolted markets around the world, despite markets at record highs, most investors in the united states and internationally remain risk-averse.

This is according to a survey from blackrock.

Nearly 18,000 investors.

It is a loneliest rally since the red sox were won the world series.

He wants you to invest in blackrock funds heard maybe should consider overweighting equity investors.

Wonderful to have you here.

This is an incredibly important study that you have done.

Why can't we invest in equities?

People that remember when they made money, but they remember every single time they lost money.

This is a really disturbing survey that half the people that responded to the survey are concerned about their financial future.

If you look at the end of the survey, we asked people who are older who have retired what would they have done differently huge amount of them say they would have saved more and they would have started earlier.

We should learn from the elders and that wisdom and unfortunately it is not happening because most of these people are sitting with over 50% in cash and cash is something that as you know with inflation is going to hurt you in the long term, especially when you're not earning anything for cash.

Numbers here are staggering.

We're talking about this this morning.

Only 18% of u.s. investors are stocks.

I couldn't believe it or it and it was many majority of people, but only 18% third this is why there is his concern for the stock market is rising, the economy is great, everybody is getting wealthy.

That is not the case because not everybody is invested in the equity market.

Who are these people would cash check our 50s and 60-year- olds with cash?

The most concern people are 45 to 55. they start thinking about retirement.

The ones that are over 65 and the ones that are under 45 are still spending more time thinking about what vacation, what smartphone to buy and they are -- then they are about retirement.

You some like my father.

-- you sound like my father.

Compare that to some place like hong kong or china where rates of savings are higher and therefore people are more invested in equities.

We are definitely not a saving country.

That is very obvious when you take a look at these results.

People also said that if they just had a little more money, even $200, which is an interesting number.

$200, they would put that in savings.

In different countries like australia, they forced savings per they take that out of your paycheck and then when you're 65 you have actually saved enough to retire.

But, more people are turning 65 than ever in history and the thing that they're finding out is they thought they had 10 years left to live, they actually have 20 years left to live and they don't have enough saved.

Your research, whatever fund group you go, peter or zach is right.

The opt in feature as a first step to getting a successful retirement system in the united states.

You automatically are in the 401(k) or the ira with the like it or not and then you can opt out if you're an idiot third i would think more of a forced savings plan would be better.

To undergo back to the 1950s to get that benefit?

I think it is important that did somebody get a paycheck every week.

The education is that there are people are not getting it and they're not putting enough money way.

Cannot the survey came back?

The average amount of people that people have for retirement?

$25,000. that is staggering.

Are numbers are very close to this.

I'm just what the younger generation's, the twentysomethings and the thirtysomethings.

Whether putting their money?

At saving.

Quit frankly with the debt that people have with costs going up, people are living from paycheck to paycheck.

They're just not saving.

When they do, they're nervous about a risk to principal, so they're putting it in cash.

Went on to tell people, it is not timing the market, it is time in the market.

Use that longevity for you.

The fact that you're going to live longer is a good thing for your investments.

Don't look at the daisy trading of the market printed in the market, because we approved, and people were nervous last year, they're nervous the year before him and they have left 15% each year.

I keep saying you got to be in the market, and we have hit new highs.

Not many people are experiencing -- how must you put in and what you put into?

Coming up with them to talk about social media, linkedin and facebook having some trouble with user growth this week and we will speak with the ceo of shutterfly.

How to retain customers and how to make money doing it.

This is bloomberg surveillance.

On bloomberg television, bloomberg radio, streaming on your phone and bloomberg.com.

? this "bloomberg surveillance." is working at one of the companies driving growth.

Medidata solutions provides cloud computing services for the fast-growing healthcare business.

The stock price certainly shows it traded is grown more than 500 are sent since the 500 kids at 2009 ipo.

The technology is finish 1965. except for medical data, while it may be in the cloud.

Our guest is sharif.

He is chief executive officer medidata solutions.

He wants grandma to be comfortable.

Grandma just wishes see but 10,000 shares in 2010. you're making money?

Yes we are.

Howdy do that we're helping our pharmaceutical customers to develop better drugs, helping them create more value in their drug development efforts.

Because of our business model we are actually making money doing it.

You take your i.t. function and the data function and you will it away to you.

How can you scale that business in future so our medical feet bills won't go up?

Currently, people spend about $90 billion developing new drugs.

It is a very inefficient process -- out of 1965? development casa been growing at 10%. we really help them to reduce the cost of development but also get the cost of the products to market faster with higher quality and lower risk.

We are actually getting good drugs to market faster and that is helping grandma.

To your biggest clients?

All the big top 25 pharma.

Amgen, j&j. if you look at top pharma, they're all our customers.

Our biggest competitor is oracle, but we have a number of other competitors as well.

You're going up against mr.

Ellison's big deal.

Is the new pharmaceutical world.

Can you sustain this in five and 10 years?

I think we are experiencing a privileged moment in the organization.

We have a leadership role in the industry, we have the best technology out there and the industry is in the midst of a transformation.

From has been very far behind in adopting the cloud.

If you doubt survey -- top executives say the five years from now they will be 100% in the cloud.

We are going to be there.

With your etc.

-- with your advantages to though the cost, was it nit substitution for merck tackle or are you helping -- we're helping investigators so that the doctors and scientists will be helped as well.

We are bringing efficiencies into the itn's infrastructure.

We -- we're helping on that site as well.

The academic area, as well as the commercial area of drug development and let me go completely off script.

When you hear about spying on servers, worries about the cloud, to the germans and the brazilians have justification to be worried about your cloud?

We use all the best encryption technology out there and refocus for a much on making sure that the data that we collect is kept in an anonymized way.

Spying is not an issue that we were about or our customers in a survey worry about.

How complicated a task is this that the government has taken on and have a jumped the gun on a? i think the government took on -- healthcare in general is a very confiscated -- is a very conscious complicated ecosystem.

It is going to take a lot of work.

Tarik sharif with mds oh.

Scarlett?

The earnings 10 q. is a supplemental information that jpmorgan file to regulators.

Among the headlines.

They receive government assistance on foreign trading.

They're cooperating with investigations.

It says that other jurisdictions are programmed to reporters heard practices overall.

Some numbers keep in mind as well, jpmorgan says it's his loss is possibly of anywhere from zero to $6.8 billion.

The losses now will be zero to $5.7 billion.

As of like pennies.

Newburg radio, all of our interviews out at bloombergtv plus on the ipad.

Bloomberg radio plus on itunes and entered as well.

I'm tom keene, with me, sara eisen, and scarlet fu.

It hasn't been the greatest week when it comes to making money and will social media.

Jeff has an gold.

Or visual, the stock is certainly up.

Good to see you.

November 1, the business day for you in terms of photo sharing?

It is, moms and dads are loading up tens of millions of their kids.

I know you're also big in the gift business, i would think that would be optimistic?

2013 was a good year for us.

We ended art of our costco relationship which had eight -$8 million hit in the fourth quarter.

We took down the high-end of our business by $3 million.

All the things that we can control in the fourth quarter in terms of product and services, we are very excited about the upcoming holiday season.

The holiday season is key for you guys because of fourth quarter mixup over half of your full-year revenue.

I know lester during a holiday season you ran your first ever national cable to campaign.

Are you looking to repeat that kind of spending to ensure that you can repeat that performance is your?

The market leader with about 60% of her market, we are able to drive from an integrated marking first get this -- from integrated marking perspective.

We are doing online marketing and direct marketing as well or it we are all users of instagram.

For those of us who might not be as familiar with shutterfly, how do you make money?

What is your monetization versus a and instagram owned by facebook to starting to do as?

We pioneered online photo sharing in 1999 and we are one of the few companies that is monetized photos and profitably.

We have done about $800 million this year and we will spin off more than $140 million.

You into ebay with things that make money.

How quaint.

Why have you not been taken out.

If i'm one of the big giants, i'm looking at shutterfly, isn't it basically take him out a replicate the strategy?

Y bezos hasn't replicated you.

We get up every day focused on our customer and how to grow the relationship with them and the lifetime value.

We have been doing at successively.

But wait a minute you are holding up the prophet.

You actually make money.

You actually wake up worried about replica to businesses or somebody coming in and offering your ton of money?

We've competed with for large companies like walmart, yahoo, facebook, apple over the years and we about sony, we bought fuji, we bought american greetings business.

We have been -- we have internationally consolidated this business.

I don't understand why someone doesn't take you out.

What about mark zuckerberg?

Is to them is going.

If they added rent button here, you guys will be a logical partner for and instagram.

Have had discussions on that?

Will be happy to mark monetize and the -- we know the folks at facebook quite well.

We have a number of patients into them.

We are providing trick arts for them physically and spiritually.

We were one of the beta customers for facebook exchange.

Iris is going to ask how you're doing with the shift to mobile.

Mobile is an important part of our overall strategy.

We had over eight new apps launch in the last year.

We're seeing increasing never do from profits.

The resolution of the new iphone camera come as a good or bad for you?

Definitely good.

I'm going to do a high- resolution copy mud of the picture i just took of tom on shutterfly.

Our twitter question of the day is now that the faa lets a user phone gate to gate, what about the cell phone cause accor should you be able to use them in airplanes?

Hit us up, this is bloomberg surveillance on television and radio.

I'm tom keene as always joined by sarah is in and -- by sara eisen and scarlet fu.

What were you for halloween?

I hid behind the bushes while my boys ran to ring the doorbell.

I was never trick-or-treating tom unfortunately i was traveling.

They told me they had mounds of candy.

They said it was heroically awesome.

Jimmy lee is going to be on exclusively with us at 8 a.m.. he's going to be talking about what life is going to be like after dell.

He was in the thick of the hotel transaction.

You would tell us play by play what happened in that deal.

Also erik schatzker is going to bringing us an interview with the wall street parade.

Look at this, scarlet.

The back of your phone, they make iphone cases.

That is gorgeous.

Were the people in the picture?

Those are my boys.

There is your phone.

That is very cool.

I'm going to do david ortiz hitting a home run for the red sox.

Us have a first look from the photos that are making news today.

We will start with the white house getting in the holiday spirit.

They went all out for halloween, decorations, candy.

The president and the first lady just festively in orange and black and handed out candy.

He went as john boehner?

Illegal to england.

Fox hunters gearing up for the start of the season it is a huge deal in a controversial sport because a pack of hounds i can was it you can see here are used to snuff out foxes in england countryside.

This is quite.

Adam johnson does this on the weekend.

Is technically banned, but people still do it on private property.

From tokyo, this is in the ginza shopping district.

The lecture shopping district in the heart of tokyo where the ipad went on sale.

There is a line forming.

Apparently it went all around the block.

The apple staff there in the blue.

41 different countries, the new ipad went on sale today.

We love your photos that you can send in.

Some of them we will use, to move them we will not use.

Jeff, what camera do you take your pictures on?

Besides my iphone i used a canon five d mark three.

My new iphone five x in gold has an amazing camera.

Don't forget to pick up the latest issue of bloomberg businessweek" with the president on the cover.

? boy do we get mail when lakshmanan archer tochuthan comes on the show.

Let's get to some company news now from the files of bloomberg west very there is more than enough command for twitter to sell all the shares in its ipo.

According to give what knowledge of the matter, banks were oversubscribed even before they began taking orders.

Twitter such go public next week.

They said the price on wednesday and begin trading on thursday.

Shareholders at oracle have rejected the pay packages of larry ellison and other top managers.

His pay package fell 18% for fiscal 2013. microsoft cofounder paul allen is making it clear where he stands on the companies future.

Microsoft should consider spinning off consumer businesses such as the xbox game console.

Microsoft should focus on selling software and services to business.

We know they're certainly trying to do that.

Is very interesting to hear paul allen say that.

The faa out with news yesterday that by the end of the year, flyers should be allowed to use mobile devices on all phases of the flight.

Scarlet, we need more details on that.

Right now passengers need to turn off all their electronic devices.

You know the whole drill.

A sickly, passengers will be allowed to do everything but use a mobile phone to talk and to text.

This is a big change.

It ends years and years of safety debates.

As for when this actually goes into effect, we're hearing that it will happen by the end of the year.

It is not universal.

Each airline will have to submit their plans to regulators on how they plan to implement the changes.

Apt tops, tom, i know you're big on this one, will not be part of this.

Not they have a laptop on board, but it is a real sea change.

It the question is what his impact on fliers?

For the airlines themselves, was going to be the biggest impact accor i would imagine they returned arrays to make his regulations and use that as a marketing ploy.

Absolutely.

So far, the uptake rate for on board wi-fi has not been all that hard.

Part of it is that a lot of the flight to take on all that long.

I've been up there on a 45 minutes to an hour flight and a minor pay for 10 or 15 minutes in the middle of the flight?

As that changes, changes especially on the short-haul markets.

Southwest airlines let's say, which is the shortest haul in the u.s. carrier.

The flight of 700 miles, lesson 200 -- lesson two hours.

Over the past decade with all the security hassles of the airport, people have sort of pushed out that boundary come how far they're willing to drive and supply.

Maybe this could bring that back in a little bit because flying now you can do more productive.

I thought the electronics a

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

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