Twitter Rehearsals: Surveillance (10/28)

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Oct. 28 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: John Borthwick, Dan Goldenberger, Gilbert Harrison, Vincent Reinhart, Joanna Molloy and George Rush. (Source: Bloomberg)

This is "bloomberg surveillance." the dress rehearsal was a work of art as the twitter executives rehearsed and what to say and what not to say on their roadshow.

Will they serve rubber chicken or sushi?

Apple reports earnings but no one cares.

All are focused on whether sara eisen got her champagne iphone.

They are outraged over the united states of america overseas listening into their telephone conversations.

Good morning, everyone.

This is "bloomberg surveillance." it is monday, october 20 eight.

Joining me is scarlet fu and op ed in ungodly hour is betty liu.

Sara eisen is waiting for her iphone at home.

It is great to join you here this morning.

I can't believe you guys wake up this early every day.

Welcome to our non-life.

It is only monday.

Did you have a weekend?

Barely, i spent time at a hockey rink.

The bank of japan deputy governor reiterated the banks monetary policy.

It will hold its next policy decision on thursday.

In the united states, at 9:15 a.m., we get industrial production and at 10 a.m., pending home sales will he coming out.

In corporate news, merck will report before the bell at 7 a.m. and after the bell, it will be about apple and the gross margins.

I am fascinated to see what apple does.

In more tech news -- the twitter ipo roadshow begins today.

It is a 1.5 week long pitch to institutional investors and samsung is holding a developers conference in san francisco today as well.

This is its first in the u.s. it was a quiet weekend.

Look where the s&p 500 futures are -- 1758 with an upward feel and the 10 year yield has done nothing for two months.

The euro is slightly up.

Nymex crude is up slightly.

The vxx did not close with 12 on friday.

Here where we are in the equity markets.

Is it a melt up?

The dow is 15,600 insight.

The bovespa is the loser for the year.

The brazilian index cannot get it over.

-- going.

There is an fmo see meeting later this week.

Let's go back to twitter because the roadshow begins on the company will be traveling to eight cities to pitch stock sales to the biggest institutional investors.

Fidelity, blackrock, legg mason are included.

The tour kicks off this monday.

This is one of the strongest ipo's in years.

It is the anti-facebook.

You wonder what it is like if facebook had not screwed up so badly.

I think the new york stock exchange did a trial run?


You are not necessarily comparing apples with apples.

The facebook ipo was 11 times the size of twitter.

It is hard to compare it exactly.

We will see.

Our second story this morning has to do with the nsa.

President obama went five years without knowing that u.s. spies were bugging the phones of world leaders and the nsa ended a program that spied on the german chancellor and other world leaders after an internal white house review a good -- revealed the existence of this program.

The news flow this week and was slow.

The biggest story was draft beer or bottled beer.

This story got bigger.

Do you think they are that mad or they are just pretending to be mad?

I don't have a handle on it.

Richard falkenrath will join us on this.

This story grew over the weekend.

Our third front-page story is on the cover of "the financial times." emerate airlines is in a deal with boeing.

It is looking into buying more airbus aircraft.

This could be unveiled at next month's dubai air show.

Not as this is finalize.

-- none of this is finalized.

This is a big deal for boeing.

Boeing is critical to our export strength.

That's right.

Those are the front-page stories.

We are looking at twitter.

We will be all a-twitter all day.

That is a shameless plug for your show.

That's right.

Twitter kicks off the 10 day cross-country roadshow.

It is basically airplane after airplane, meetings after meetings in the company will try to convince investors that has a sustainable business model.

Christina alesci joins us with more.

What is the biggest question for twitter?

There will be a couple.

One will center around r&d and how much the company is pending to develop and innovate.

While this is not necessarily a concern for most new companies because investors generally want to see a lot going into research and development, for twitter, it is set apart because other platforms open up for other programmers.

That's at tech companies keep their costs down.

What do do learn about the rehearsal process?

Do you believe it's the same?

It's a very traditional roadshow.

That's what i have been hearing.

The twitter management kicked things off lasted by rehearsing in front of the salesforce at each one of the major underwriters but the real task will come when make -- when they bring that presentation to the investors and that will be the crucial meeting.

Let's get some expertise on the capital part of it.

Johnborthrak is an expert on all things media towards technology.

What do we need to know about your world and about twitter that we don't see in the media reporting?

From a product perspective, twitter tends to get bundled in with other social networks.

This company is an iconic company.

It is a different kind of experience.

It ages incredibly well to use this so people tend -- many other social media tends to stagnate but people get deeper into twitter.

You wonder about the valuation.

I don't buy a single digit price to sale valuation.

Do we have the metrics wrong when we value twitter?

There are very few companies out there that are fundamentally mobile companies that have grown up as mobile companies.

Twitter has been mobile from the outset.

Most of the experience is mobile and most of the monetization is happening on mobile.

As the underlying shift takes place, twitter is probably the best vice company to be the beneficiary of mobile.

What happens beyond the distribution of information?

Is there a retail play here and can people shop on twitter?

These are the questions that investors will be asking.

I know why we use twitter and companies use twitter but honestly, why does grandma need to use twitter?

Who does she broadcast to?

The main stream element is not necessarily the same.

One of the areas the company has struggled with over the years is what we call the onboard experience.

Why should someone get onto the product?

You have to think about twitter from two different perspectives.

There is publishing like when grandma tweets or maybe not.

You can use twitter very effectively without tweeting as an inbound force and it is incredibly malleable.

It lets you go very broad and go for celebrities or news hosts and lets you go very narrow.

There is a video posted by twitter to accompany the roadshow.

They talk about how they need to keep spending to grow and their profit will eventually come from that.

It sounds like it is out of the amazon playbook but amazon is an exception and people say twitter cannot follow that model.

I think amazon is a phenomenal tech company who surprises year after year and i think they built from a very narrow base, saying they were books, to being retail, cloud services and i think that twitter is positioned in a similar way.

The ipo is what they are trying to keep control of.

At some point, there is a frenzy to acquire these shares.

Do you anticipate -- i'm not asking you to to predic -- this is one of the hottest topics right now.

Will the price range increase?

To your point about control -- you have control up to a search and point but as much as you have locked up the essential insiders and the large investors, you have not locked up every one of the early investors and that is where the uncontrollable element comes into play.

Would you buy shares?

We own shares.

Would you buy more shares?

Are you allowed to say?

Are you locked up?

We are locked up for six months.

There is a massive jargon alert.

What is locked up?

It limits your ability to sell -- it's an effort to control the price especially in the first few months of trading.

Essentially, in an ipo process, to control the price, early investors are barred sometimes from selling into the market.

Why don't we switch for a week?

Can i get up later?

Will you continue to be betty liu on "in the loop?" thank you so much.

John borthwick will continue to stay with us for the hour.

Also coming up, leaked information about the u.s. spying on our allies hitting the white house at a crucial time and we will discuss this on "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and

. ? coming up -- robin lee, is number three on the chinese rich list is the co- finder of baidu.

He will sit down with emily chang on "bloomberg west." that is coming up all this week.

This is "bloomberg surveillance." we are joined by betty liu this morning in for sara eisen.

We've got to talk about surveillance and the nsa.

This is percolating.

This is what people are talking about.

It is the snowden effect as germany has unconfirmed reports of spying and the duration of spying by the tonight it -- by the united states.

" i am shocked" to find out spying is going on.

Richardfalkenrath is with us.

Richard, good morning.

How critical was the information that mr.

Snowden had to stirring up this debate in germany and the rest of europe?

It was central.

This would not have come out if it were not for edward snowden and these leaks.

This is a gift that keeps on giving because it has been going on for six months and this is a bad revelation about the direct spying on one of our closest allies abroad.

Did we listen to chancellor angela merkel and her staff order a pizza?

It sounds that way.

We only have published reports to work on.

We do not have details and we may have more but it was unclassified -- it was her unclassified personal cell phone including voice and text messages.

? according to the reports.

Is there no secret that is safe?

Why are we spying on german chancellor angela merkel?

In retrospect, everyone will agree this is a mistake.

Just as there was a failure and risk management in the financial industry in 2008, this is a failure of risk management in the intelligence community.

The risk reward was not there.

There was not enough to be gained from spying on her private communications to justify the risk of disclosure.

In retrospect, everyone will think this is a terrible idea.

At the time, the nsa thought it was just doing its job.

There was a tasking of the white house saying we need to know what germany is thinking about on geopolitical issues and they targeted her as they are legally and titled to do.

The legality of this in the u.s. is not the question.

It was the prince of this.

-- it was the prudence of this.

The white house is trying to develop the real facts of what happened and what else is coming.

They are worried that they will inadvertently say something that is not true and get caught in a lie and possibly at the presidential level and make this an even worse breach of trust and it is right now.

John borthwick is with us is as well.

Should we be worried about the technology?

The technology has been there.

I think this is one of the biggest stories in of the year.

There was an implicit decision that was made a couple of years back when the spies said we are going to collect everything and filter afterwards.

Somebody at some level said let's collect and let's filter.

In the old days, when spying used to be about selective targeting, everybody's information is in the cloud, on a server somewhere.

The presumption has gone to select and filter.

When you are at the white house, did you presume that the white house -- that you are spying on everyone's text messages?

They presumed you would spy on anyone that would matter.

When i was there, text messaging was not used as widely as today.

That is what officials and the national security use encrypted cell phones so that this is an possible.

The rest of it operates in the clear, you always assume would be targeted.

You had to be careful about what you said in incleared communications.

In this case, these numbers were targeted specifically.

This is different than the massive injustice and of meta data in the u.s. market that the nsa has undertaken as a result of a change in the law in 2007. thank you so much.

That's quite a statement that this is the biggest story for 2013. i think it is a huge technology story.

It is one where the news cycles tend to move fast but this one will keep rolling.

It is fundamentally changing the way technology and governments are interrelating.

John borthwick will stay with us.

Predictions of slow spending and the shopping season.

In the next hour, we will speak with gilbert harrison about that.

This is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and

? this is "lumbered surveillance." i'm joined by tom keene and the betty liu this morning.

Let's get you company news.

Toyota is tops -- they outsold general motors and all other car companies in the third quarter.

It sold 2.5 million vehicles, 100,000 more than general motors.

It was a rise of almost three percent from one year ago in the latest example of how the japanese manufacturers are benefiting from reforms put in place either prime minister.

The blackstone president cut his stake in the company.

J tonyanbe t --ony janeme sold 3 million shares of the company.

He told us he was not leaving blackstone.

Kkr does a deal to build wireless infrastructure.

It agreed to a one hundred million dollar venture with associated partners.

Kkr will make minority investments in three businesses managed by associate which is controlled by longtime can occasions investor david berkman.

It is monday and time for morning must read.

There is a lot of smart stuff out there.

I'm getting started with our in-house columnist, al huunt - he made a point that others have made but not white so six think like.

That's absolutely not true.

It is actually getting better.

It is better than i was five years ago but americans don't believe that.

Americans are led to believe that we are spiraling out of control.

It is part of the rhetoric.

They are not off when you look five or 10 years.

They are getting better because we have had sequestration.

The short-term cuts are sinking in but in the longer term on spending, yes, that has to be addressed.

I stay on the topic of allah text from "the financial times." i like how he ties together the different issues out there.

This goes back to campaigner-in-chief which is what the president has been called.

Apple will report earnings after the bell and samsung opens its first u.s. developers conference today.

? in terms of the pharmaceutical industry it is also innovative.

Especially in singapore and other places.

Good morning, it is monday.

Betty liu is in for sara eisen this morning.

I've got big shoes to fill.

They are foreign exchange shoes.

Say something about the swedish krone.

I am just imagining shoes.

She likes mew-mew?


Let's do a data check.

There is an up feel.

We know that apple reports earnings after the bell today.

The stock is trading higher in the premarket right now.

Samsung simultaneously is kicking off its first u.s. developers conference.

This is a boxing match and it continues because in one corner, apple is rolling out fewer products at higher price points and samsung is quickly and continually rolling out cheaper devices.

Apple gets flak for its shrinking market share but it's ecosystem reigns supreme as the samsung attempt to replicate its hardware/software/media empire.

Who has the right strategy?

We will talk to someone about the strategy.

John borthwick is chief operating officer of betaworks.

He has a first-hand view of how developers in the tech world measure what we are using.

He joins us today.

Dots - i'm addicted -- i hate you.

What have you anecdotally learned with a game as silly as dots?

We released the game in the early spring and i don't think of it as silly.

We've got about 60 million users now.

About 70% of them are apple and 30% are android.

It is another instance where we have seen the incredible uptake you can get organically on these platforms.

You can release a game and we are a small production studio in new york or it we got into the top five of games within the first week.

10 days ago, we were the number one app across the country.

What is the difference between apple and samsung as a platform for games?

It is still ios vs android.

People talk about number of phones sold.

The periods we are seeing that users have on the two platforms are radically different.

We have seen longer engagement on ios, higher volume -- why is that?

You are seeing the byproducts of many things.

The segmentation that apple does of the marketplace in general -- apple has the most active, the most engaged users.

They're using it on the desktop and the mobile devices.

You have seen this q who whole suite of engagement.

The android you have to tie together with the mac so engagement is different.

The kind of users you are seeing are different.

Does it matter which system you develop the games for first?

The big shift today, this year as a developer and game creator is building everything for android as well and one year ago, we were not.

Ios is still the first-class citizen.

When you are talking about the samsung developers conference, when you think about -- samsung has not been able to get it right in terms of being a coolt eech company.

You had to laugh at the developers conference because what are they going to show?

And why are they doing was on the same day apple results are coming out?

Why has samsung not been able to really hit that cool factor as much as apple?

I think it goes back to the dna of many of these companies.

Apple is fundamentally a consumer electronics, and a -- l company.

They are a tv company, chip company -- they are trying to reposition themselves in the have to change the dna of the company and that is hard for itsony did not match together and we will see if samsung gets there.

I think samsung this year -- one year ago, i think it would have been a mistake.

Apple does not want to depend too much on google.

The google relationship is fascinating.

You see that samsung is developing its own ecosystem with phones.

We saw samsung gradually getting into the software is nice and taking over some of the key anchor software points on the phone to make it android underneath.

Mark gilbert noticed that you cannot get a phone which is how successful apple is.

Do you presume that for years, apple will continue to mint money or do you look at it as sequential sequential where they have to stagger product launch after product launch.

? they are phenomenally good at filling out the entire product suite.

Everybody has been focused on the iphone and ipad in the last two weeks.

Those are critical pieces.

I think tv is coming.

I think it's about deals.

It's about deals with the cable guys and figuring those out.

Tv was not supposed to come in the fall but there were supposed to substitute it with the new ipad and iphone.

You have to think about it as an entire ecosystem.

On the high and you have the mac pro which is insanely powerful and you only find that in the nsa all the way down to the 5c. samsung really does not have that ecosystem?

That's right, we think about the entire system as a developer because we can touch people through that and cloud services tie them together.

How critical that the core language is being given away?

Steve ballmer said free software is communist.

Apple has gonered.

-- apple has gone red.

It's a big turn in the chapter.

They are a hardware company, a media company and a services company in the software goes for free.

They control the microeconomics of the system, no question.

On the new5s, the potential -- on the new 5s, i love the fact that i can sign in with touch id but if i want to pay for something on the -- in the apple store, i don't have to pull out a card.

Everyone is wondering what you meant by dots.

That is a game.

That's what tom is doing during the commercial break.

We need to get to the highlights.

It is tied up in the world series.

It is two games apiece and johnny gomes made his first hit in the series.

He gave the red sox a 4-2 win over the cardinals.

A runner was picked off at first base and that's the first on a playoff game has ended that way.

It has been the most bizarre series i have ever seen.

You wanted this to go to seven games.

Yes, i really don't care.

Yes, you do.

You could have fooled me.

The red sox and the cardinals are tied up.

How do you get picked off of first base?

Bad baserunning, you have to blame the coaches.

Coming up -- some say the affordable care act will discourage people from becoming doctors.

Our single best chart shows applications for medical school is breaking a 17-year-old record.

? good morning, everyone.

Betty liu is with us this morning.

Let's begin with the criminal trial surrounding the uk phone hacking scandal.

It begins today.

Eight people will stand trial in london.

Two former editors that work at news international both deny charges against them.

Millions of commuters in the uk were advised to stay on the spine due to a storm that packed hurricane force winds and torrential rain.

The storm was considered the strongest to hit the country in five years and forced railroad operations across southern britain to cancer -- cancel commuter services.

Lou reed has passed away.

He was one of the most inferential -- influential music stars for you is cofounder of the velvet underground and died from complications a recent liver transplant.

He was 71 years old.

Those are your top headlines.

I love his music.

Millions of uk workers are stuck at home and thousands are without power after the worst storm in five years took down power lines and toppled trees that blocked train tracks.

For more on the storm, we've got more from london.

It looked like a nice day behind you but there has been a lot of damage.

What's the damage?

It looks pretty docile right now.

The sun is coming out.

If you look at the stats, it has been a torturous start to the week.

Millions of commuters have not been able to get into central london as they close many of the railroads.

220,000 were left without power.

99 mile per hour rims were -- wins were ripping through power lines.

A real network affected, airlines affected, and they have been crammed on the underground.

Caroline, help me with the weather map.

Where in the united kingdom is the greatest risk?

It's generally the south of england.

It has been seeing places like isle of wight.

The coastal areas -- london has been exposed -- but it is generally limited to the south east and south west of the uk you've also got it in europe, france, netherlands, belgium.

We have 75,000 homes in france with no electricity.

Amsterdam airport is being shut down.

Is this an identifiable storm that has a name?

We have given it a name.

It's called saint jude.

It is the national feast day today so we call it saint jude.

It is the worst in five years.

Remember hurricane sandy.

It seems to be some kind of frankenstorm.

Thank you so much for joining us.

Coming up next, how the affordable care act is changing incentives in the medical business.

We will speak to the ceo of a medical device company that is changing its strategy.

This is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and

? this is "bloomberg surveillance." we've got betty liu filling in for sara eisen.

We've got company news.

The iphone boosted china telecom, the third biggest mobile phone company.

They have a 20% increase in profits and part of that jump came from a rise in data sales things to the iphone.

It is one of two carriers to offer the phone in china and the other is up as well.

Jkkr has agreed to it $100 million venture with associated partners.

It will make minority investments in three businesses managed by associated which is controlled by longtime medications investor bill and david bergman.

Nielsen will begin counting mobile viewers using digital markers to track shows being viewed online.

They will get a more complete picture of the audience for shows.

Our guest is the hour is john borthwick from betaworks and you talk about the link between twitter and tv.

Yes, i think twitter is a very come to sit way of looking at live events and tv is alive phenomena so it works incredibly well with tv.

Four years, we have talked about second screen versus first screen and which is the primary screen experience?

I believe tv is he coming the second screen and the primary screen is actually the interactions people used to navigate like a twitter feed.

Over the next few years, i think you will see that the relationship between twitter and television will get really close.

Does that mean twitter will drive viewers to tv?

If you look at the company, it recently did trials with a couple of tv stations where they are embedding clips.

I think it is happening now.

" game of thrones" is one example.

We have to get you started on a new show.

The people in england are not giving it away.

It is not only tracking the tv shows and participating or fake accounts -- you have phenomenal fake hosts.

You had all the main characters of "downtopnn abbey" in character on twitter.

It amplifies the live events but extends media far beyond the actual tv show.

Thank you.

Do you like my tight today?

It's my breast cancer tie.

The redskin quarterback had the whole thing thing going.

Here it is and it's about breast cancer.

You can talk about it and where pink bowties but that is baloney.

Someone like daniel goldberger out of stanford has spent a career doing breast cancer.

And doing the medicine and medical devices.

He has a machine for spinal cord injuries.

This is the reality that scientists have to deal with.

He is the ceo of bactarin.

They are changing because of the affordable care act.

We are thrilled to have you here today.

He's got his pink tie on as well.

When you see the media support of the industry or any other cancer, what would you like us to really know about the care of breast cancer?

It's a huge quality-of-life issue.

Our company is involved in the gift of life program.

We process various tissues that come from donors and bring them back into the system and dramatically improve the quality of life.

You can take bone that is crumbled and you sterilize it so it will not hurt the body?

You make a sponge out of bone?

We make a scaffold out of it and it is used in spinal procedures and lumbar fusions and reconstructive procedures to promote healing and get able back to work more quickly and dramatically improve -- this is like the doing of it.

It is not just the bow tie which is easy to do.

You talked about the affordable care act and how that will impact companies like yours.

The republicans have made a big deal about the medical device tax and how that will hurt companies.

Hasn't hurt you?

You are subject to that tax.

A portion of our business is subject to the tax and it is onerous.

It is 2.3% of revenue, not of profits.

At the end of the day, that is money we cannot reinvest in the company.

Those are jobs that we cannot fill.

It is innovation we cannot go forward on.

Why are they picking on you guys?

Good question.

Why are we going after medical devices?

Because we have our heads down and working to improve the life of americans and we are not paying attention to what is going on in washington.

You are making this shift.

Explain how your industry will benefit.

Biologics are a segment of the larger medical device industry.

Half of our business comes from biologics.

The overall trend of the medical device tax is bringing more consumers into the healthcare system, where do they go?

Is the tax to encourage companies like yours to get away from medical devices and move into other areas?

Not at all, we were in easy target and no one was defending us.

Is that all, really?

That's my perception, yes ma'am.

I have a single best chart to round out this conversation on the question of whether the affordable care act has hurt the medical profession.

So far, the effect on med applications is pretty much nil.

The total number of applicants has risen to over 48 house and in 2013, 1000 more than the previous record in 1992. our second chart shows that annual rose rate in med applicants has climbed by six percent, up from three percent in 2012. med to school enrollment is climbing.

What caliber of doctors do you deal with now?

Do you worry that with obama care that the caliber will decline and there will not be enough doctors in the profession to make the distinctions between medical devices or biologics and what's best for the patient?

We do with physicians later in their career that are practicing and doing procedures.

Physicians are under a lot of pressure.

Many just because of the uncertainty of the profession.

Will they be employees or continue to run their own small businesses or be in larger practices?

The fee per procedure tends to be getting compressed and positions are trying to figure out if they want to maintain the revenue, they've got to do more procedures -- what that means about bringing young people into the profession i think is next.

Thank you so much.

Please come back.

It will price at $100. thank you.

Are you with us tomorrow?

Are you with us two days in a row?

Is that an invitation?

We look at euro-dollar.

Dollar yen -- ? this is "bloomberg surveillacnce." twitter executive to rehearse what to say on the roadshow.

Apple reports earnings.

All the focus on whether sara eisen will get her champagne 5s. celebrity gossip worse aliens and billions.

Two of the biggest gossipers of all time are here to whisper into scarlet fu's year.

Rush and molloy.

Good morning.

This is bloomberg "surv eillance." i am tom keene.

Monday, october 20 eight.

Joining me is scarlet fu.

This is a big eel.

I stayed up all weekend to read this book.

The ultimate trashy book we have ever done.

And you will love every minute of it.

Lex i probably will.

Stay tuned, everyone.

I am excited about the morning briefing.

Overnight the bank of japan deputy governor reiterating a commitment to easing monetary policy.

The bank of japan next monetary decision is thursday.

This feeds into a weaker yen.

We will see if this has any effect.

The federal reserve expect to report.

Industrial production up the same as august.

Then we get pending home sales.

This is more timely than existing home sales.

Not all of the contracts come through.

Corporate earnings out just moments ago.

Merck beating.

Estimates were higher.

Sales down.

After the bell, all of us interested -- apple earnings.

How many besides her iphone did they sell you go -- did they sell?

Tom is holding out.

Getting excited about our interview later on.

A developers conference today.

We will keep an eye on that.

Likes getting to company news.

Twitter executive hitting the road.

Launching a roadshow for the ipo today.

Blackrock and legg mason.

The two were -- tour kicks off in the mid-atlantic region.

Icing stay.

Emirates said to be in advanced talks to buy $30 billion of boeing jets according to the financial times.

The largest operator of the triple seven aircraft.

The airline considering purchases -- purchasing jets from airbus.

They may well failed the he'll at next month air show.

Kkr does the deal to build a wireless infrastructure.

A agreeing to a deal with associated partners.

Kkr will make i nordion investments.

That is today's company news.

Lex twitter, the frenzy kicks off today, 10 day cross-country road show.

Rehearsals begin yesterday.

Cristina alesci solve the rehearsals.

She joins us now.

What is the first question that smart people will ask twitter and will they want to answer it?

There are strategic questions about ways to monetize the model . also, very practical questions here.

Not just about the meetings with fidelity and blackrock.

Also about meetings with the institutional investors who are already invested.

What is jpmorgan going to do?

They own 10-12% of the company.

There are really three questions.

How will they monetize?

What can you do beyond advertising?

What is the plan retail-wise, and what will you do about the soaring research and development cost.

We want to see this with early stage companies him about what happened going forward?

Lex i am onto my rubber chicken.

There is another guy in the back row with his hand up going like this.

The ugly question is what is your commitment from your earlier investors in the long term?

Will they be in it for the long- term.

This company was sold by venture capital firms.

The management team really relied on those guys like spark capital and union square.

What is the motivation to stay in the stock now?

These guys are economic animals, financially driven.

Investors will want to know what the private ones want to do.

Is this such a big deal because it is a tech stock?

Or is this a company with potential that real investors are interested in?

Real investors right now are interested in growth.

Anything that has a growth story will see interest from investors because they are not getting it anywhere else.

When you look across the array of options, go to investment grade debt?


It will be in the growth companies.

The question is, are you being rewarded for the risk?

We have seen a tremendous run-up in tech stocks are us year.

Last year it is up over 400%. how much more run room is their?

That is the question twitter executives have right now.

Our guest host for the hour, gilbert harrison.

An investment bank focused on retail.

I know you look at apple from a retail perspective, they made a big, splashy hire as ahead of retail operations.

Is she the one that can get growth back into apple?

She is a great retail and apparel executive.

I first met her 20 years ago when she was a liz claiborne.

Then she took over as ceo at berg very.

She did a remarkable job in terms of intent viewing their growth.

I think it is an interesting, unique choice.

Le is there a good match?

Berg very continues to communicate the shareholders and employees.

Every time she makes any kind of announcement, she goes to every store, every employee can take a look at their iphone, computer on their screen.

She knows that.

She has made her very a great place to shop.

What is the role of retail for apple?

We tend to think of it as a neat product and buy it because it is in the product.

Apel credit it ron johnson with everything done at apple am a but he had the product.

And retail it is merchandise, merchandise, merchandise.

The boom and upscale retail, the frenzy in new york that you mentioned in select parts of europe, do you look at that as a permanent event?

Is this a sea change?

There are slowdowns.

You will see peaks and valleys.

Everyone is aspiring to buy something better.

Whether it is aspirational retail or full luxury, the money is out there.

You look at meryl streep.

The whole aspirational thing that is the backdrop of the movie.

It is like it is on steroids.

Look at the armani show last week.

I was in europe.

Close to $9 million to put on that show.

It was picked back you where.

My friends who were there said it is unbelievable.

A true luxury artist.

What is the connection between luxury and retail?

If you take a look at what facebook is doing in terms of trying to push retail, i think twitter will do the same thing.

When people e-mail each other through twitter and give the different vibes, it can make or break a product.

Where is inventory?

I go into stores and they do not have anything?

I think retailers are being cautious.

There is much more business going online every day.

We have clients where sales are going up to 15% of total sales.

What is the designer right now with the greatest momentum in new york?

Tom ford, how is he doing these days?

Doing a very good job.

The problem is the business is focused at the real high-end.

In order to- that is christina.

Yeah, right.

Take a look at what michael kors has done.

It is incredible.

The bulk of his close our affordable prices.

It is tremendous.

Nice try, tom.

Now you are faking it.

Calling, out completely.

As the government shutdown?

Morgan stanley's chief u.s. economist will come on to join us.

This is rumored -- bloomberg "surveillance." ? good morning worldwide.

I am tom keene.

Elbert harrison, chairman and founder of finance:, knows every measured square foot of retail.

Holiday sales are upon us.

The season in general, i do not buy the gloom.

Retailers are scared.

Every day you get a new score -- store opening on thanksgiving day, which is unheard of before.

I was on the eighth floor of saks fifth avenue this weekend.

Total mob scene.

How can you say retailers are scared if i am seeing thousands of shoes just booming?

Their shoes floor is unique.

In addition, all it has gotten cold.

We are into november and the temperature has been 60-70 degrees every day the consumers are not buying the booth and other things.

What is the trend of the holiday season now?

We go in with the coupons in cards in january.

What is the new cycle of cash generation?

Certainly much earlier.

Buying through e-commerce, you want it as soon as possible.

Every company will fedex it to- three days before.

Are you going to have the ability to get it out?

One difference this year is that hanukkah falls earlier in starting thanksgiving so you have the different timeframe when the lot of her choices are made earlier.

Lex if we were to parachute to nordstrom's or macy's, what is the biggest headache?

What is the biggest worry right now.

The psyche.

There are a lot of people out of work.

A lot of people do not understand what the economy is doing, what the government is doing.

Lex ro -- are we over retailed?

The consolidation has continued for years and will continue on.

This is good and bad for the consumer.

They can share production and get the product to the consumer cheaper than before.

What joseph frank, when he proposed a merger with men's wearhouse summit it was interesting.

Best deal ever in 30 years doing.

We will come back and talk about this in a minute with gilbert harrison.

A conversation with richard lee.

? good morning, everyone.

Surveillance correction.

I said richard lee, robin lee will discuss this all day.

Her important interview with robin lee.

Michael mckee is in for sara eisen.

The guest host this monday, gilbert harrison.

Focused on the retail world.

November is almost here.

Top headlines, what do we have?

The criminal trial surrounding the phone hacking scandal.

It begins today.

Randy colson will stand trial in london.

The former editors who worked at news international, both deny the charges against them.

At the box office, bad grandpa took the top spot.

It rang up $32 million in sales in the opening weekend.

It bumped gravity from the number one spot after three straight weeks.

Took an tournament -- $21 million and has earned almost 200 million since opening in the u.s.. in sports, the boston red sox top the st.

Louis cardinals.

The series is tied at two games apiece.

Game five tonight in st.


The game ended when the relief pitcher picked off the runner.

If you are listening to the cardinals playback, you can hear the play-by-play announcers say they are holding him on first.

I do not know why they would do that.

Now you know why.

It is a clumsy series.

Fun to watch.

Not as exciting as in the past.

I liked that segment.

2:00 wednesday brings a clumsy fed announcement.

Complete coverage for you.

Rand paul will hang on every word.

Considering the laying janet yellen assent.

This would normally be a boring to-day meeting.

Vincent reinhart joins us.

Chief economist for morgan stanley.

What is rand paul doing?

Lees explain this to me.

His father routinely put in for legislation.

The federal reserve webpage.

Is the fed audited?

. this goes back after a long time.

We are all invited to the birthday party, i am sure.

He probably cannot stop the nomination or delay it much because she is not controversial enough.

It does show still the fed remains controversial.

Mainly because the fed is so controversial.

Central banking is complicated.

There is a certain mystique about central banking.

We do not go that far back in time to hear about constructive ambiguity.

It is complicated.

Central bankers love option holiday.

You do not want to lay out everything you can do, meaning you tend to try out judgment.

It seems the more they talk, the more open they get, the worst tickets for them.

This is a group of people who believe in transparency.

For them the solution to a communications failure is sometimes the talk more.

Does not always work that way.

Monetary mob -- policy is made by a group of people.

Let's dovetail history.

Robert samuelson on the former chairman alan greenspan.

After every crisis there is the culprit.

Alan greenspan was the culprit because his legacy is now tarnished.

Neither critics nor defenders acknowledge the real source of failure, he was too successful.

This is not an omniscient fed today, is it?

Never has, never will be.

The basic point is you can go back to speeches and testimony.

The great moderation made investors complacent.

It made them confident they could reach four return without taking on risk.

It made supervisors and regulators overly confident about the ability for markets to discipline and financial institutions.

Did not work out that way.

With the site, undecided on the exact timetable, what does that mean for this?

There was an interview this weekend with alan greenspan where he admitted he made a mistake.

He said the fed that every model that was conceivable on how to regulate policies but did not take into account the fact that banks would keep lending it would not control themselves.

I thought it was a fascinating comment.

You were there on the chairman's watch.

If you could speak to the critics, whether it is fred the long ash brad delong, what would you say to critics as he brings the second book out?

First of all, he never called himself the maestro.

Second, the hardest question for everyone who believes in markets is what happened to market discipline?

I think the answer is we have let the financial system become too complicated.

What do they do wednesday?

Not much of anything.

I think they get out of town as gracefully as they can.

They of date the paragraph describing the economy.

The forward guidance over vincent reinhart.

Greatly appreciated.

Have you heard the latest on taylor swift and johnny depp?

A game of gossip coming up.

? this is bloomberg " surveillance." i am scarlet fu joined by tom keene.

Company news.

The japanese car company outsold general motors and all other companies in the third quarter.

They sold 100,000 more cars than gm.

The latest example of how japan's biggest manufacturers are benefiting from reforms put in place by the prime minister.

Blackstone's president cutting his stake in the company.

He sold 3 million shares in the company last week.

He has sold more than 8 million shares this year in eight different transactions, prompting speculation he may leave the firm.

You told bloomberg over the weekend he was not leaving blackstone.

Work top estimates.

-- merck topped estimates.

$.92 per share in profit.

Analysts predicted $.87. revenue at $11 billion for the third quarter, slightly below.

That is today's company news.

Baidu, the leader in china.

Just out front.

A huge deal.

Handles more than 80% of internet searches in china.

In an exclusive interview, the ceo sat down with bloomberg west anchor, emily chang.

She asked him how tech companies grow by acquiring smaller ones.

Never rely on acquisitions.

I have never seen a successful company grow by acquisition after acquisition.

That is the wrong strategy.

It just happened it was a right fit for us, complementary to existing business.

We always focus on growing organically.

I think that is the only way to make a big, successful company.


You want to grow through acquisitions but through organic growth.

I want to bring dilbert in here.

In terms of the chinese consumer, do they use the internet the same way we do?

Do they shop?

E-commerce a big deal there?

It is very slow.

They still did not accept credit cards.

They come up to the house and give you the goods.

If they do not like the goods, they give it back to the person delivering it and do not pay for it.

It is slowly coming into its own . i am told it is about to change where credit cards can be used but has been a bit problem.

The chinese consumer is still looking for new goods.

And they are just now opening a new store that has had a phenomenal day.

You said you do not agree with the idea where you grow through acquisitions.

I think a good company has to grow organically and externally.

A few -- if you look at the bell curve, in order to go to the next stage, you need to buy something that is complementary.

He was talking specifically about the chinese market.

I think the chinese market has so far to grow and is so big that if you are producing the right product, the sky could be the limit in china.

Different than the united states.

What do we need to know about the retail expansion?

You are knee-deep in this?

-- you are need -- you are knee- deep in this.

The growth is not really china at all.

The department stores you see in beijing and shanghai are nothing more than huge buildings where every operation is leased and every retailer is running their own shop.

Will that change?

If lafayette is successful, that will change.

We've represented company that wanted us to put a 600,000 foot department store in.

The problem is basically every good luxury company is in china on the streets and all over the place.

If you walk the streets in shanghai, you will see every product and company you know.


You will want to catch bloomberg west all this week at 1:00 eastern.

Right here on bloomberg television.

We do not hear from robin lee much at all.

Getting you a data check.

Industrial production coming up.

Futures of that elevated.

A lot of unchanged there.

One dollar 38 for the eurodollar.

The yen of the -- that weaker.

Committed to easy monetary policy as they get ready to meet.

Good morning, everyone.

Streaming on the tablet.

All of the interviews of bloomberg tv plus.

I am tom keene.

With me is scarlet fu.

Michael mckee in for sara eisen.

Guest host this hour, gilbert harrison.

For those of you on radio, i am the beebs this morning.

It is a scandal.

Almost looked better.

I know i am certainly guilty of it, consuming gossip of the rich.

I share it with sara eisen and tom we're still teaching about it.

According to one estimate, $3 billion per year industry.

Like everything else, going through a major disruption.

Joining us now, scandal emanuel.

The two original disruptors.

They wrote the infamous new york daily news column.


It's thank you.

I think i do will do almost as well as justin bieber.

Celebrity gossip used to be a fairly local phenomenon.

We have transformed to the digital area where it is global and instantaneous.

I wonder who is making the most money in the industry now?

Celebrities themselves.

But the reality star shows or traditional movie stars like johnny depp?

That is a great question.

And we first started we use to write about artist expressing themselves.

Now you can become famous for being famous and really pays off.

Everyone is getting their 15 minutes?

I wish tim cardassians -- kim kardashian's time would be up.

There is a difference between a celebrity in star, right?

Not a big difference.

I love this sentence, where was the weekend where we are not pulled into help with a storied?

I missed half of my son's childhood because of evening events.

I thought we were past this.

This is like a real industry, a real job.

The folks that were paparazzi have become millionaires.

Is there's still reporting in this industry?

Everyone hears something and get aggregated and repeated.

I sometimes say the gossip columnist is dead, because we are all gossips now.

We have the ability to connect with our network of sources and tweet it out.

Most people do not have the ability to check information about the famous.

Planting sources.

A lot of the stuff you got from people was because people were telling you.

Did not want stories written about himself.


You read the book?

I did.

Devoured it.

What do you are talking about is a phenomenon where a person you would write about or tweet about does not want you to so they become a source that is too valuable to burn.

With twitter ipo coming and glenn beck and the whole thing of gossip, will you survive in the twitter world?

I really do not know.

If i could just say that justin bieber has 46 million twitter followers yesterday.

He is the man.

Taylor swift has 35 million.


It is again -- scandal.

Authors joining us with the business of celebrity gossip.

Coming up, apple expect it to report.

Earnings after the bell coming up.

? good morning, everyone.

President and chief executive officer of choice hotels.

Join us this morning with betty liu.

Good morning, everyone.

I am tom keene.

Joined by taylor swift and kanye west as well.

For those of you just joining us we just looked at the scandal emanuel and we were brought upon some because she does not want to take off the taylor swift.

Does she talk about movers and apple?

I am glad we did this.

A huge economy.

It is what people care about.

Let's do taylor swift as an apple analyst.

Apple shares are moving in the premarket.

She probably has an iphone.

Apple shares are moving up .3% to 500 27. the company reports earnings after the bell this afternoon.

The question is, what does the company say about the outlook.

We will get the numbers but does not get included in this quarter because of the supply constraints for the high-end phone.

On a financial basis as they transformed to a some form of chip stock, what is the cash generation?

I would suggest it is massive but i do not have an important opinion.

The first thing i will look at is gross margins.

Right now estimated to be 36 point nine percent.

A lot of question marks whether they can get back to that level.

Earnings committed $.92 that are then that earnings that $.87 forecasted.

The stock is down at the moment, one .35%. disappointing quarter for investors it appears.

A first look at photographs making news today.

The u.k. battered by storms.

Millions of workers forced to stay home.

Cancel most rush-hour services.

Winds in excess of 80 miles per hour recorded.

You do not think of surfing in the u.k.. this was taken in cornwall, england, at the heart of the storm.

There is something with storms in october.

This is moving on to indonesia.

Something unusual being offered.


A snake's ball -- spa involving several different pythons involved on the body, the adrenaline issued tends to be good for overall health.

I think you should look into that.

Finally, legendary rock musician, lou reed passed away at the age of 71. he began his career as a record label songwriter, eventually breaking out as a solo artist.

He was 71. ? you were brave enough this weekend to open your 401(k). you need to listen to the balanced approach.

Adam parker, and u.s. equity strategist at morgan stanley.

He will join us with a nuanced view.

Really looking forward to see how he is handling the outfit in thousand 570. adam parker, must watch and listen tomorrow.

This is bloomberg "s urveillance." i am scarlet fu joined by tom keene andover harrison as the guest host for the hour.

Time now for company news.

Iphone boost china's telecom.

The third biggest telephone company topped estimates with a 20% increase in proper it.

Part of that came from verizon data sales because of the iphone.

On of two carriers to offer the phone in china.

Bench cable company new america -- numericable filing for an ipo.

Pricing will be set on november 7 with trading starting the following day in paris.

Nielsen will begin counting mobile healers.

They will use digital markers to track shows being viewed online.

This is a way to measure viewers on various screens and get a more complete picture of the audience.

That is today's company news.

The morning, everyone.

Back with our guest host, gilbert harrison.

Almost november and holiday season upon us.

A good time for mergers and acquisitions and fistfight.

Are you involved in the transaction or everything else?

We are the investment bankers for jolson inks -- joseph inks and goldman sachs.

-- joseph banks.

We made an offer that was 42% above the price the day we made the offer.

The direct heirs just do not want to sell the company.

The shareholders of men's wearhouse have overwhelmingly told the company that they think it is very good for the company.

Almost 40% of the shareholders overlap with joseph banks.

For them it is a win-win situation because they can get the cash we offer to pay and hold onto the joseph inc.


Is this a classic class a /class b shareholder?

A classic example of entrenched direct heirs that are not looking at fiduciary duties.

They are saying they will improve the company.

We have not seen it so far.

Our price is 18% higher than the six-year high for men's wearhouse.

There is nobody else.

A company that is an identity crisis.

George cymer is no longer there, the founder.

-- george zimmer is no longer there.

They do not even want to talk to us.

We have told them we are open to talking.

A name that everyone knows, allen question.

He is on the board.

One of the finest retail executives.

A friend of mine.

I have not talk to alan, maybe i should.

I do not think it is my place too.

He has to make his own decision.

He is one of the finest corporate people i know and understand fiduciary duty.

Why they will not open up and talk to wes, i do not know.

To the products gross over?

To me, they do not.

Joseph inc.

-- banks is a little bit higher.

I buy a lot of products.

Today it is you buy a shirt and get something else for free.

I told them do it with bowties.

They are a total vertical company.

They manufacture products.

Tremendously good gross profit margins.

The guy who built the company in 1999 when he took over as the ceo, he was on the board, i think 1.2 million of stock would be worth a billion -- it is huge.

He took it from 19 million -- how far do they take the effort right now?

You will have to wait and see.

Not going to give away any secrets right now.

We will do everything we can because we think the acquisition makes sense.

You represent trying to acquire men's wearhouse.

Yes, sir.

The drama continues.

Time now for the agenda early look at the stories shaping the day.

That's an interesting meeting in washington.

Secretary of state, treasury, commerce hosting foreign investors.

Foreign direct investment in the u.s. has fallen way off, 28% in the past year.

Seeing a decline.

Bonds being bought by foreigners and equities being bought.

Foreign investment melts away.

We lose in the united states.

There is a group politically who does not agree with what you just said.

You want the money.

The money is disappearing in part because the financial crisis has gone away and have less need for the safe haven kind of trade.

Also in part because trusting the united states as a graphic -- great investment after everything we have been through.

I know the president has spoken about the declines we have seen.

Foreign investments match them up with state localities and try to get something going.

I am not sure that is the way you do it.

Might want to improve the educational system, infrastructure him of those things first.

We will see.

L twitter on my agenda kicking off the 10-day cross- country road show to pitch to institutional investors like infidelity and black rock.

-- like fidelity and blackrock.

They gave a video presentation late last week.

They met projections talking about adjusted ebit off to signal profitability.

-- ebida.

I would go back to topline analysis.

A terrific paragraph this morning of the nine valuation.

Linkedin further than that.

They are above facebook.

Twitter has priced itself very carefully.

What i am skeptical of is it will be any type of disaster.

Normal sized ipo.

They will be able to handle this, i think.

Maybe a littl

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


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