Larry Summers Withdraws: Surveillance (9/16)

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Sept. 16 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Julia Coronado, chief economist: North America at BNP Paribas, Bloomberg Editor-At-Large Cory Johnson, Bloomberg political analyst Matthew Dowd, Douglas Lebda, CEO at, Gerald Lipkin, CEO at Valley National Bancorp, Bo Peabody, co-founder at Greycroft Partners, Allan Meltzer, professor of political economy at David A. Tepper School of Business and Bloomberg View columnist Simon Johnson.

Lawrence summers will not be the fed chairman, the president considers janet yellin at a chairman to be named later.

Goldman sachs will do whatever it takes to not do a morgan stanley on taking twitter public.

We will be acquiring new iphones.

Walmart will give us a discount.

Good morning, everyone, this is "bloomberg surveillance," live from our world headquarters in new york.

It is monday, september 16. you are going to walmart?

I'm going to walmart for my new iphone c which is cheaper.

We will talk about that and what it means for apple and larry summers.

Asian markets were higher overnight.

No real economic data to report.

In the u.s., we will get manufacturing numbers from empire manufacturing and also industrial production.

7:30 a.m. eastern time, the united nations will hold a news conference word they will likely concern -- where they will likely talk about chemical weapons and the president will make in a dress from the rose darden on the fifth anniversary of the financial crisis.

Let's do a data check.

Futures are up huge.

A solid one percent,. the 10-year yield is up seven basis -- is down seven basis points.

Euro-dollar is more week.

Crude oil was $107 and the goat back down to $106. -- and we go back down to $106. you have to believe we will see a strong 13 handle once the markets open.

The two-year yield migrated and that's a huge deal and gold is up a little bit.

The yen just not get an abenomi cs move.

It might be off the larry summers news.

If someone comes in as fed chairman beside him, that may move the markets.

There was a deal between the u.s. and russia on syria and that may play into it.

It is vice chairman yellin as something known versus the unknown.

Is janet yellin an unknown?

We scour the papers for the most important stories.

Larry summers faces plastered all over the paper.

Larry summers with drew his name as a candidate for the federal reserve chairman.

This comes after democratic senators campaigned against him even before the president nominated him.

Opponents see him as too lax on financial regulation.

They want to focus on welding support a military strike on syria.

The time frame got dragged out and janet yellin is the front runner.

That comes before the fmo see announcement wednesday.

It is time for a moment of silence -- dark horse candidates include stanley fischer, an american citizen who stepped down as the bank of israel.

He has dual citizenship.

I talked to a former administration official says the fact that he is from israel is ok politically for democrats and republicans but he is not a front runner.

You have general -- you have janet yellin and donald cohen.

You also have roger ferguson and we will talk about these names.

Our second front-page story is what happened are earlier in the week in which is the u.s. and russia making a deal.

The syrian president bashar al- assad will dismantle chemical weapons stockpiles which is a diplomatic solution that ends weeks of speculation whether the u.s. will strike syria.

There is plenty of skepticism about whether this plan can succeed.

The president spoke yesterday about the current situation.

As a consequence of the pressure we have applied over the last couple of weeks, we have for the first time , we have syria acknowledging it has chemical weapons and agreeing to join the convention that prohibits the use of chemical weapons and the russians are the primary sponsors saying they will push syria to get all of their chemical weapons out.

The distance we have traveled over these past couple of weeks is remarkable and my position and the united states position has been consistent throughout.

We have this agreement but it is highly -- it has highlighted the white house clumsiness handling the military strike option.

Brent crude is $109 which is a solid six dollars underneath the peak of the syria worries.

We will watch that.

On the cover of "the financial times," chrysler is whining to go public.

-- is planning to go public.

This is the u.s. taste union -- this could take place as soon as this year but this was not the first choice for sergei marchionne.

We can get another high-profile ipo.

That's another milestone potentially.

That's a monday front page we have a busy week.

We will star with larry summers on the cover of all the front pages and go to julianna goldman, our white house correspondent.

The president has to go back to the drawing board.

What is the process?

Janet yellin had already been vetted as well as donald cohen so they have a list of people to go to but it's a short list.

I was working the phones last night and talk to current and former administration officials and they said that janet yellin right now is likely the leading candidate.

She and her supporters have to be careful not to do a victory lap.

There is a lot of resentment and frustration inside the white house.

They think is anti-larry summers campaign was pretty unfair and helped liberal democrats block this nomination from happening.

You know the hallways of the white house -- who is getting the blame this morning?

Is this the president doing that they did so poorly with professor summers or is it one policymaker or a set of policy makers?

Who is having a bad morning in the white house?

Many people in the white house were surprise yesterday and they heard that larry summers had spoken to the president and turned in this letter to withdraw his nomination.

You had a perfect storm of sorts.

Time was not on his side.

Ever since the president, in june in the interview with charlie rose, came out and indicated he was not going to re-nominate ben bernanke, larry summers name was out there and according to people close to him, he said he was hung out there to dry and the white house never really launched an effective campaign to go on the offense or defense to set him up for confirmation.

Whose idea was it to select lawrence summers?

I don't have an answer from anyone.

Who decided this was the president died?

You can pick on me anytime.

I think the president decided that larry summers was the guy.

People close to the process say that all along, larry summers was the president's top pick and it was a question of whether he would get confirmed or be able to get out of the banking committee and if he did get confirmed, with the battle be of bruising that would not only hurt the next fed chairman but also hurt the administration in the process.

He said it could also hurt the economic recovery.

Thank you for joining us this morning.

The politics interfere.

Julia coronado is a fed watcher and is the chief north american economist for bnp paribas with outstanding research experience.

Cory johnson joins us as well.

We will get to twitter and apple as well.

This is a surprise.

Is the wrong path to go yellen?

Should the white house broaden their view?

I think in the end it will be janet yellin.

She is one of the most qualified candidates.

Why are we talking about larry summers?

Will you go to a dark course candidate now?

The pushback he got was pro- janet yellin.

This is an independent agency.

He doesn't need to have a relationship with them.

The president has learned a lesson.

An independent agency tried to get their independence back.

Is she too nerdy?

I have a great respect for her.

Ben bernanke is pretty nerdy himself.

Is this a president in search of a political chairman or an academic chairman or even someone like tim geithner or who was chairman?

He had his own conservation -- confirmation issues.

He will look for a smooth path to confirmation and the smooth path politically is janet yellin.

He has to concede.

To the markets move this morning singularly because of lawrence summers or other reasons?

I think this is mainly a larry summers move.

We already had the syria tension fade away last week.

We saw a big rally last week and this is mainly larry summers.

We will come back with julia toronado -- coronado.

There is a fed meeting this week.

Oh, yeah, so we will talk about that.

Pimco metta call on the bond market.

They say short-term treasuries will get a boost with larry summers out of the running for a fed chairman.

Bill gross predicts the gap between five and 30 year yields could move as much as 30 basis points.

Mohamed el- erian wrote on this.

China mobile flashed its subsidies on the new iphone.

It cut support by the devices by about 15% are in this it's apple as it tries to reverse a drop in market share in china.

Wireless carriers in the country have been trying to reduce their subsidy cost for it shares of hmm are soaring short to a 21- year five.


Warmer than usual weather may have boosted revenue.

Coming up, we will zoom in on one company, apple, as iphone pricing has been much discussed and investors are paying attention.

How other companies are taking the pricing into their own hands.

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

. ? good morning, everyone.

It is a smart bloomberg television today.

A elizabeth warren with betty liu at 8 a.m. this morning.

You must watch the senator from massachusetts.

I wonder what she'll say about janet yellin.

This is "bloomberg surveillance ." the iphone goes on sale this week and price was the defining characteristic.

We have heard about the new iphone 5c and it looks like rice is a moving target.

It is a little bit of out of apple control.

Retailers like walmart are planning discounts.

It will sell the lower end phone for $79 which is $20 off.

This could be a sign that apple commanding the premium prices is weakening and it hurts the prestige idea of the apple brand.

Why are carriers changing changing their approach now?

They are straying away from the subsidized phone model.

New installment line approaches are being cut to mobile phone pricing.

This lends to the idea that the carriers don't need apple as much as they once needed to.

They are selling more samsung phones and other android devices.

Rip up the script -- as we speak, this is the bloomberg headlines -- nokia 100 eight dollars, $29 -- -- 108 dollars.

The microsoft nokia phone is in a different category.

The idea is that the field is wide open.

In the spring, they said this would enter into a whole new market for microsoft.

It believes there is a world of people that will compute for the first time on these phones.

" bloomberg west" editor at large -- are we beginning a price war in a saturated smartphone business?

I don't think so, i think the smart phone business is going to a lower-cost point.

It is an entirely new battle.

It's over a new kind of consumer.

The high-end consumer remains but a new kind of consumer for a feature phone which has no features.

Those are for developing nations and here and that is a new market these guys will be fighting for.

How to you respond about digital exhaustion?

After you have your 14 the smartphone and the camera is a camera and you are exhausted.

The first phone is the step up leap, a change in your life and your computing and the way you consume things, the camera that you use, all those things.

After that, it is iterations of the same thing.

People talk about lack of innovation and that is too strong but the first phone is the innovation.

The market share can change dramatically.

Nokia in 2454% u.s. market.

You think it will go up?

Rex i think the battle will change.

People are willing to switch quickly.

One of the morse -- most important statistics is how people stay with certain phones.

In the u.s., we saw the rise of the android phones and say they are more willing to switch more than the users of the apple iphones.

Apple leads in the u.s. but that will be interesting going forward is how much you keep the consumer.

That's because microsoft is trying to make that move in on those consumers for a long time if they can get them.

Julia coronado, when you hear about how competitive the mobile phone market has got over the the last year or two, what is the effect on the u.s. economy?

Is this a positive?

I think it reflects something about the consumer.

Consumers are extremely price conscious just about everything.

We see that in the inflation data.

We see it in cars, electronics, education.

More and more, we see price wars across different sectors which makes it tougher for businesses to keep those profit mansions -- margins.

The 5c is today?

They take orders for the other phone today.

Can i walk into an apple store on friday friday and get a phone or is that a pipe dream?

That's what they say.

Will you get the gold phone?

I don't know.

I don't know if am physically strong enough to carry one.

I will put it in my man back.

G. it was amazing how many men went with that white phone in the end.

Maybe gold will be the next frontier for manhood.

The growth at apple is not just about the success of the phone.

It was about adding countries.

We saw the growth and apple come off when the countries -- there were no more to add.

"bloomberg west," five days per week.

We have a lot to talk about including a strategy at twitter.

Also, with weakness and jobs, retail sales, industrial production -- is this time to scale back on the stimulus?

That's what the fed is considering.

That is next on "bloomberg surveillance." ? this is "bloomberg surveillance." secretary of state john kerry will meet with the french resident to build support for u.s.-russia plans to eliminate chemical arms in syria and plans to meet with ministers of turkey and saudi arabia to discuss the agreement and the united nations may release its report on the chemical weapons attack in syria as early as today.

A major air rescue his plan for parts of colorado after a week of rain destroyed roads and stranded more than 1000 people around boulder.

More than 15 inches of rain have fallen in the last week in parts of the state -- in parts of the state.

Rivers and creeks overflowed in the area.

Salvage crews will try to raise the costa concordeiaia . it has been a complex job involving $800 million.

Eventually, the ship will be to oh to an italian port where it will be scrapped.

It is monday morning.

Let's get started with a morning must-read.

This one concerns the market.

This is the fallout from larry summers withdrawing his name.

The head of global fixed income strategy at jefferies wrote -- it is interesting.

We had the unknown unknown with professor summers.

Julia coronado is with us.

You are the ultimate fed watcher.

What is the distinction between janet yellin and ben bernanke?

There is not a huge amount of difference of opinion between the two.

I think they have been very much working together as a team.

I think they are both about the dual mandate.

They are both about the economy first and making sure that we get to a scaled velocity at some point but they also take the concerns about the financial stability issues seriously.

I think she does richie is not just a blind dove.

That's a headline.

She cares about these issues and takes these seriously.

Our twitter question of the day -- we want to hear from you, this is "bloomberg surveillance." ? the sun as rising over the nation's capital.

11:40 a.m., president obama will address the nation from the rose garden five years after the financial crisis.

It's hard to believe.

This is "bloomberg surveillance ." an extraordinary leadership test for the federal reserve this week.

Larry summers is bowing out and the fed has some top business of its own to get done and will probably lower growth estimates for the third straight time and starting to rain and its extraordinary stimulus.

Julia coronado is with us.

She has been added on about tepid economic growth and flat out does not agree with fed forecasts and joins us now.

Do you expect they will dampen their forecast view and then bernanke was wrong and will ratchet back?

Mechanically, they have to lower their estimate for 2013 given the way the first half came in and given the way the third quarter is tracking.

They will have to mark down that 2013 forecast which is a pattern they have had over the last few years.

They have not been able to achieve the kinds of growth numbers they want.

What does that mean in the minutes?

Will you look for soft taper?

It's a much more agonizing decision then sometimes people and the market understand.

Tapering and the middle of this tepid growth and low inflation, that's a hard sell.

This is not the environment they imagined tapering in.

If they do taper, i think it will be a soft taper, dovish,. with more of an open and.

They have to mail the communication so they can convince people that it will not be a tightening mode and to prevent a jump in rates which was sparked last time around.

In that sense, the larry summers announcement is helpful because they will lean more on there for him -- forward guidance.

That has more credibility.

What does it mean for our viewers and fed policy wonks?

Does that mean increased gdp?

I think it means lower mortgage rates.

We are seeing a bond market reaction this morning to the larry summers uncertainty cloud dissipating.

If we get a janet yellin nomination, that would lower interest rates.

Let's review where we are.

We have been near low interest rates for ever and ever going back to paul volcker.

They got a restricted set of tools.

They do, it's a completely off the map set of tools.

It is a challenge and they have experienced some of the violence in the market from those challenges of navigating these balance sheet issues.

If we think about it, we went through a great depression-like financial shock and yet, we are weathering it pretty well.

Nobody said this was going to be easy.

It has been bumpy.

The u.s. consumer makes up a majority of this economy, more than 70%. walmart, target -- all gave iffy signs as to what is ahead.

Where is the u.s. consumer?

They are cautious and don't have a lot of purchasing power.

The labor market is ok but not great and wage growth is subdued.

It is not a very buoyant backdrop for the u.s. consumer and that's the reality.

Consumers are still deleveraging.

It is an orderly deleveraging but they are paying down balances.

Cory johnson is joining us this week.

You are three feet above silicon valley.

When you look at the world of technology, can expenses be taken out when we look at the boom industries?

If we get a price war on smartphones, is the squishy mess still there in american companies to take out expenses?

That's what companies are faced with now.

We have seen profit rose slow to single digits but it is holding up pretty well.

Revenue growth is practically nonexistent in technology.

Revenues last quarter were only two percent.

Hewlett-packard, dell -- ibm fell five quarters in a row in revenues.

That's not including the hundreds of acquisitions these companies are doing.

These are companies that are supposed to be the big growers that are shrinking.

Can policy help corey's world?

All it is helping is the stocks.

The stock market is up and to the right.

It involves many companies, you name it.

You sold your house and you are living in a garage?

It does not rain there until november so it's ok.

We dug up a letter that you signed in support of janet yellin.

You say you think she is the woman for the job along with other st and economists.

Just -- other st and economists -- -- other esteemed economists.

For the president, this is a political thing, a relationship issue which is why he leaned ward larry summers print he does not know janet yellin.

Given that he does not have his guy as a possibility, now he probably leans on janet yellin.

What happens to larry summers now?

Does he still have a role to play with the federal reserve or the president?

He has been one of the president goto guys for economic advice.

He certainly still has that confidence with the president.

It does not have a role with the federal reserve and was not really a monetary policy guy anyway.

He will no doubt continue to speak on the speakers circuit and give his views and he is an extremely well-known economist and respected.

We will hear a lot about donald: now.

-- donald: now.


He is a company man.

It was at the fed all of his career and has seen all of the cycles.

He was with greenspan and bernanke and he is a tremendous human being, a great guy.

Does he have a political tinge?

I don't know if he is republican or democrat.

I would assume he is a democrat.

I don't see him as political.

That's good news.

And stanley fischer as well.

Coming up next hour, don't miss our conversation with the founder of lending

The fed could begin to taper and we have seen higher rates and is that having an impact on the consumer?

?. this is "bloomberg surveillance." north and south korea have reopened their jointly run industrial complex today.

The industrial park was shut down five months ago due to tension between the two countries.

It employed tens of thousands of workers and more than 100 companies and has now reopened.

The wharton school takes to the radio.

The university of pennsylvania business school is getting its own channel on sirius-xm radio.

They will field calls from listeners and the station will debut early next year.

The low-budget horror film " insidious, chapter two" took the top spot at the box office.

" the family" came in second place.

Forget about larry summers, i found out that cecily strong will join seth meyers onsnl.

I adore her.

We will forget about larry summers and discuss cecily strong tomorrow.

This is the single best chart.

It's time to focus on cheap -- chief financial officers.

We will focus on that throughout the week.

It is a cfo week.

This is taken from the bank of america merrill lynch survey of cfo's and examines their top financial fears.

At the top of the list is healthcare costs.

It has been rising in importance.

Revenue growth is a distant number two.

At the very bottom is consumer confidence.

Julia coronado is with us on healthcare costs -- we saw at trader joe's last week.

I was stunned at the.

Is healthcare affordability at that top because of affordability?

It has been the number one concern for a long time.

Is it now heightened?

Right now, with the new regulations and the new system coming into play, it definitely is a worry and yet another thing that businesses have to worry about.

Cory johnson is with us.

Technology is worried about revenue growth?

They value that.

When cash flow is third or fourth on that list it rankles me.

The payoff is yet to come so value them on that growth.

Tech investors seem to like that so tech companies respond by trying to deliver revenue road.

-- revenue growth.

As long as they can keep the business is growing, they want to get there and grow in size as long as the market rewards them.

What did not make it into the top of the six concerns?

Availability of qualified workers was not a top six concern.

With all the push toward immigration?

Only 26% of cfo's were concerned and cost of capital was fairly low as well.

A good single best cfo chart.

It is time for some of the photos making news today.

We will art in flood ravaged colorado.

Record-breaking rain continues unabated.

Roads are becoming rivers and homes were demolished, thousands were stranded and they call that a 500-1000 year flood.

With the wins they get in april, the velocity of the water must've been something.

Four people have died another to upper -- presumed dead, over 500 people are not accounted for.

This will have a big effect on economic numbers?

For colorado, but these disasters don't have the big macro economic impacts.

It is horrific for the people in those flood zones but colorado is a relatively small state so i'm not sure that this is something we will see in the data.

We will continue to monitor that and it is hard to tally some of the costs as they try to clean up when the rain is coming down.

In china, an austrian climber scaled the tallest skyscraper in the hunan province on sunday using only his bare hands, no protective measures.

This is a shot of him, 24 years old, and it took him 60 minutes to reach the top or 650 feet all.

It is like the latest installment of " mission impossible." in italy, they are starting to raise the costa concordia and it has been difficult to get out of the water after the shipwreck happened in 2012 and we are now seeing the removal attempt.

This is a live picture, as we speak, in italy of where they are trying to rotate and pull it out of the water.

It is not like it wouldn't ship that will break apart.

This is the most expensive maritime salvage operation in history.

It's an eyesore for the people there.

It will be a difficult operation.

You should take a vacation.

Coming up, we will talk numbers with twitter.

Twitter generated $288 million in revenue by estimates but by 2016, that number could go over $1 billion.

How does twitter get there?

We are looking toward its ipo.

? president obama will deliver remarks in the rose garden to mark the five-year anniversary of the financial crisis this morning at 11:40 a.m. we will give you live coverage of the president's speech.

This is "bloomberg surveillance ." smartphone maker is slashing its u.s. for -- workforce.

It was necessary to streamline its operations in the u.s.. no specifics given but htc cut 20% of its u.s. workforce.

Online reservations for the new iphones have topped 100,000. the country's number two wireless carrier is not said how much they will sell the phone for.

China telecom stopped the subsidy they are offering on the new model.

Twitter is ahead of facebook and google when it comes to mobile advertisers.

Facebook generated 41% of its ad revenue from mobile ads and google will get less than 1/4 of ads from mobile.

That sets us up nicely with a conversation about twitter.

It needs a strategy to monetize its users and attract new users and get them to spend more time on the site.

It needs to lure advertisers.

Cory johnson spent friday at twitter headquarters in san francisco.

Is twitter trying to become an advertising company?

That's what they are.

We talk about what technology is.

Google and yahoo or amazon are advertising come mays.

They use tech knology -- they use technology.

Is twitter a content company?

They don't make any content.

Their users make content.

It is a platform for that.

They could have about $500 million in annual revenue.

The value could be $14 billion.

The twitter strategy, does it have to be more of a media company?

We will learn a lot about what their plans are and what they've got.

These are smart guys.

They know how this banking game is played.

In their documents, they will have to tell a story not just about what they have done over the last couple of years selling promoted tweets and contextual irrelevant advertising but also where the growth will come from and what rings might be around the corner.

Here is my twitter feed.

You can look for scarlet fu and sara eisen.

Do i want an advertisement in this is twitter stream?

They argued strongly that this is about constituent lysed -- contextualized advertising.

If they can learn enough about you through your tweets and friends, they can put an ad into your feed that will not make you mental.

Face was criticized for waiting far too long to go public.

Where is twitter in its growth cycle?

We don't know yet.

We don't know where the profits are with this company.

Is it profitable?

From what we understand, it was profitable last year but maybe not this year.

They have been spending things like crazy.

It's interesting how they had a confidential filing and made it un confidential.

The day they tell employees, is the day they will announce.

That's what they said.

Anthony noto was a media guy.

He was a dot com analyst.

He was taking investors saying this was the supermarket of retailing.

He left goldman sachs to become the chief financial officer of the nfl.

Then he left the nfl to come back to goldman sachs as their lead banker in san francisco for technology.

He is probably doing the touchdown dance getting the twitter ipo.

What is his mandate versus what morgan stanley did?

It is surely to get these deals.

I saw him last in las vegas at a private event that goldman sachs was having.

It was to coach him on what the future may hold for them.

Goldman sachs was trying to get close and smugly with these companies before they decided which bankers would take them public.

I'm fascinated.

Do they want less disclosure?

The tweet that twitter sent out said they filed for an ipo and it is not an attempt to sell securities what it is.

They are getting a lot of heat for that.

This does not require them to do this publicly on the filing.

This will be a well attended ipo.

Thank you for getting up with no sleep.

More with cory johnson, " bloomberg west." we've got a lot moving with a forex report.

This has to do with larry summers.

Strong euro, weak dollar versus the japanese yen and i threw in the turkish currency which is on the move.

It is jumping the most since october 2011. on the word of a deal with u.s. and russia to peacefully negotiate a solution with syria.

It is a risk on feel across equities, bonds, currencies, and commodities.

It is a strong stock market.

Coming up next hour, the venture partner at greycup joins us.

The benefits of private versus public.

? this is "bloomberg surveillance." lending is critical for america's housing economy.

We speak to a banker who is not too big to fail.

Go public will take it private.

Twitter -hilton, hilton-twitter.

"bloomberg surveillance."good morning, everyone this is, i am tom keene.

This is monday, september 16. joining me as always is sara eisen and scarlet fu.

Founder and ceo of lending is with us.

First, let me kick it off with a morning briefing.

Little in the way of overnight news.

We did see asian stocks and european stocks rally overnight.

We are watching for the ee 30 report.

9:15 a.m.. industrial production.

7:30 a.m. eastern time.

United nations will hold a news conference where they will likely confirm the use of chemical weapons in syria.

President obama will be addressing the nation in the rose garden on the fifth anniversary of the financial collapse.

At 2:30 there will be a news conference.

I can't think of anything more exciting.

Look for it.

There is the morning briefing.

It is a busy week.

We start with chrysler's plans to go public.

The art room market will file documents this week.

The move comes after italy's fiat and another partner could not agree on a market price.

The listing will come before the end of the year.

The price tag of westfield is $1.6 billion.

Westfield has in redeploying.

Pimco makes a call on the bond market.

The financial company says with larry summers out of the running for chairman, he predicts a cap between five and 30 year deals could widen as much as 10 basis points.

Summers exit increases the likelihood of continuity in fed policy.

That is today's company news.


The top story of the morning, it is a market, economic and political one.

Larry summers has withdrawn his name as a candidate for the position of fed chair.

Bloombergs white house correspondent julianna goldman is with us.

What does the president and his team do now that i all accounts, larry summers was a front runner for fed chairman.

Do they go back to the drawing board or do we assume janet yellin?

White house officials are all saying that yes, janet yellin is the leading candidate.

There've also vetted john cohen.

Things the white house needs to be careful of and where they learned their lesson, if the president y does end up choosing janetellen, they need to make sure they have a robust defense of her and a campaign to proper up for what is likely to be a confirmation fight.

They also have to make sure that the people who are in the pro janetyellen camp don't run around doing victory laps.

The president i am told associates the anti-larry campaign with people around y janetellen, but not janet herself.

This is always political.

Whose head is going to roll?

We have syria is a mess, sommers is a mess.

Somebody has got to pay the price.

There were two messes that the president got a gift from.

He got a gift from vladimir putin which helped him out of the syria mass.

And i think you got a gift from the larry summers mess because he would be in a bigger mess if the nomination had gone forward.

He would have gotten in a huge fight on the left side of his base on this issue.

I think larry summers gave him a gift.

You have worked for both republicans and democrats over the years.

The scene need to pick a democrat type economist?

Or could you go with a true academic like yellen?

I don't think it matters.

I think it needs to be fast.

He knows he has to get it out there fast.

He also has to get somebody that everyone will say we won't have the controversy of a larry summers but we will have somebody study who knows what they are doing.

I think he could take it from either side but he has to do it fast.

Do you agree we could have an announcement within the next 70 two hours?

What is the likelihood that he will pick janetyellen who by all accounts was not his first choice?

That was before they heard from jon tester who came out as the latest democrat to say that he would be opposing larry summers.

I do think that janetyellen is the leading candidate.

I think the white house will be taking cues from the market reaction.

I would be careful.

There have been so many twists and turns in the white house sock is over the last couple weeks that i would not say for sure yet that it would be janet yellen.

As we discussed ramifications of summers dropping out of the race, you are in the real world.

What is the effect on your business?

What was your first thought when you heard that larry summers would not be the next fed chairman?

I am indifferent as long as he policies don't change very much.

I think one thing that the mortgage industry and the banking industry is looking for is someone of consistency and with a level of rulemaking.

What is the actual policy going to be?

That is a good question and that is why you are seeing some market movement.

Who is the biggest mystery in terms of what their policy would be?

A couple of the candidates would be roger ferguson.

He talked about people who the president could not cap.

One question i have format is, we talk about how unprecedented this political circus was around the fed pick.

Normally you see this around supreme court nominations, cabinet nominations come up but the fed has been insulated from all of this until now.

Even worse for the president is the opposition was from within his own party.

So does the president need to come out now and stand up to democrats?

How does he show that he is not just using the power of the presidency in a very limited way?

To me, we have gone through the last 20 years were every government has in politicized.

It used to be that the supreme court was not politicized.

And in the 80s and 90s it became politicized.

The next thing that is going to happen is that the military is going to become politicized and how we are approaching this because of how polarized we are.

I don't think the president needs to respond to his base or say that yes to make sure he does what is right here.

Your question about who might upset the apple cart, the one most likely was the guy that just dropped out.

He was one most likely to cause disarray in the market and industry.

In the courtesy of washington is the pressure here if the fed nominate somebody, or is there a tradition of being argumentative about this?

What has developed is the president will get his nomination but the question is how much noise will somebody make about it.

Larry summers was on edge.

He probably still would have gotten confirmed, but a big political problem for the president.

I saw one of your ads on television.

And there it was, lending tree.

We are going to talk about this later, but as we go to the fed meeting, interest rates have an effect on your world.


Refinancing is dropped off a cliff but the underlying housing market is still doing well.

The good news for us is that we essentially sell new customers to banks.

When they have a lot of volume they don't really need us.

So it has been helpful for our businesses here, but at the same time you always have worries about interest rates going up too fast.

A breath of the real world as we look at the esoterica of jackson hole.

Doug let done, you are going to be with us through the hour.

-- douglebda.

Julianna goldman, thanks for being with us this morning.

Our white house correspondent on what the president has to do next.

It is our question for twitter of the day.

Who should be the next fed chairman now that larry summers is out of the race?

Who should be the next fed chairman?

This is "bloomberg surveillance."tombola sacred day to check on her way out.

It is a summer celebration.

Euro up at one 3352 -- euro at 1,3352. coming up there is a fed decision this week.

How will that impact the real world?

"bloomberg surveillance."coming up on "bloomberg surveillance." ? good morning, everyone . "bloomberg surveillance."this matters now.

L to douglasebda . he invented fun getting a mortgage.

We talked to him about the housing market right now.

Can i get a mortgage right now?

I get more mail on this and anything else.

It is a bunch of baloney.

Can i get a mortgage?

You actually can.

It is getting easier.

Over the last year or so banks are starting to land back to fannie and freddie guidelines again where they were much more constricted because of a lot of government regulations.

Fannie and freddie really tightening down and you are starting to see private securitizations happening again.

You're starting to see jumbo loans coming back.

You see jumbo loans, is that $400,000? in new york, washington, london, all the big cities, san francisco.

As all faded away?

It is mostly faded away but it is coming from investors.

In a lot of instances you are competing against people who are bundling up homes from hedge funds and the like who are basically buying homes 100 at a time.

They are mostly the all-cash buyers.

What should i learn from the previous week?

What we are seeing is definitely it is market specific.

You will see some markets where people are multiple buyers and you are seeing other markets where it is still a pretty dead housing market.

The good news is we're definitely seeing guidelines loosening up and it is getting easier.

You're going to see lenders getting more competitive.

The last few weeks, we work with over 300 banks around the country.

That is in interesting question are you a friend ami, enemy?

-- afrenemy?

We can help them get new customers, but at the same time we put them in head-to-head competition.

How many basis points to take off a 30 year fixed mortgage?

We take a fee for every consumer.


Double digit or single digit housing economy forward?

I think it is market specific.

Probably double-digit because we are coming off such a bottom that we still have two balance out before we go normal.

This week, with federal reserve exposure.

Coming up with larry summers out, the running, who should be the next chairman?

This is "bloomberg surveillance." good morning.

President obama will be delivering remarks in the rose garden today to mark the five- year anniversary of the financial crisis.

That is this morning at 11: 30. bloomberg radio will give you complete live coverage of the president 's remarks.

This is "bloomberg surveillance."as always i am here with tom keene and scarlet fu.

Secretary of state john kerry will be meeting with french resident francois hollande to build support for the disarmament in syria.

The united nations may release its report on chemical weapons use in syria as early as today.

A major air rescue is planned for parts of colorado after a week of rain and destroyed roads and stranded more than 1000 people around boulder.

Or than 15 inches of rain have fallen in the last week and part of the state forcing them to close -- to evacuate people in the area.

The movie ringing up $41 million in sales for film distribution.

The monster, and -- the muster, need the family part two with robert de niro took second place.

Is that for oscar consideration?

I doubt it.

But it took in 41 million.

I'm sorry, cecily strong joining seth meyers on snl, that is just killer.

That is going to be an early contender for the oscar.

We are -- we're going to move from movies to the housing market trade they are hovering near two-year highs.

It could quickly change on wednesday when the federal reserve addresses it its bonds purchase program.

Will it critically prevent people from obtaining home runs?

It will be interesting to talk to a banker who gets it.

Chief executive of valley bank core since alexander hamilton in 1989. this is the old passaic park trust company.

We welcome to bloomberg surveillance a real banker.


lipton, you have a train collection like warren buffett?

I do have one.

Has -- in the housing market there is a demand for mortgages because the interest rate train has left the fed.

I am perplexed.

I can remember when mortgage rates were 14 or 15%. if someone got a 12% mortgage they jumped for joy.

Rates fell down to a low of roughly 3.5 and 3.25% for fixed.

Our volume is to the roof.

Rates are up to 4.5 and 4.75 and as you said earlier it fell off a cliff.

Y? mr.

Lipton, what is the -- mr.lipkin, what is the why here?

I think a lot of people got excited when they found they could get a 30 year fixed mortgage that starts with a three.

The minute it moves up to a four they stepped to the sidelines.

I know you want to jump in here.

Are you guys on speaking terms?

Know, everybody is friendly.

He has to take higher mortgage rates in a vacuum.

As the price goes up you have to put more in terms of a down payment.

That seems to be having an effect as well.

It is, but at the same time you're seeing that as people expand guidelines you can get loans with five or 10% down again.

Banks and mortgage companies want willing to do that.

You are also getting the private mortgage insurance coming back again.

You can actually get pmi again, which helps.

What shocks me though is our refinancing business which we were doing 2000 applications a month.

We are a commercial bank.

It is not our number one function.

From a very small volume we went from during 2000 loans per month.

That just fell down by 80%. whether it is refinances, are people applying for shorter duration mortgages now that rates are climbing higher?

Not really.

We are trying to excite people that they can get an adjustable-rate mortgage at a reasonable rate.

It still has them on the sidelines.

I love your webpage.

Sign up for a rising cd at 3.75 e.r.a.. can we finally get a break?

Rates are starting to move up slightly.

Three percent is still relatively low compared to what rates were five or six years ago.

After tax and inflation it is painful.

I know.

I really feel for the senior citizens in this country because the recovery, the stimulus is on their back.

If you have -- if you had a coffee right now with james dimon, what did you tell him.

? i don't think he has anything to do with the residence situation in the rates.

And ben bernanke.

What are we seeing in terms of commercial loans, loans for small businesses?

Because housing was a bright spot to offset some of the weak spots.

It has not really been strong.

I speak mainly of the new york, new jersey, long island market.

We are not all over the country.

One of the neat things that is happened as banks have moved out of landing, you are to see a lot of internet companies move in with private investor money , particularly with the jobs act, there are more avenues to financing now than there ever have been before.

Wonderful, jerrylipkin.

We will continue with mr.lebda as well.

We will talk to bo peabody of venture capital.

The pros and cons of being a public company versus a private company.

That is coming up on "bloomberg surveillance." on your television and radio.

First, bloomberg.

This is "bloomberg surveillance." i'm sara eisen joined as always by tom keene and scarlet fu.

Scarlet is here with some other company news.

K p.r. is in the running to buy a stake in the saudi arabia and fast food chain who do.

-- kudu.

The chain was founded 25 years ago and cells burger, chicken and fries.

China telecom splashing its subsidies on the new iphone.

The nation's third-largest carrier drops a prices by about 15%. wireless carriers in the country have been trying to reduce their subsidy costs.

Shares of age and answering to a 20 year high.

European trading this morning, price climbed 14% in august versus the 12% gain that and -- that analysts were predicting.

Warmer weather may have boosted sales.

Top story, larry summers withdrawing his name for the fed after democratic senators campaigned against him.

Is that the real story?

Michael, a lot of people don't know this about you, but you covered larry summers as treasury secretary, travel to all corners of the earth with him.

What is the back story here about why he backed out?

He has a lot of baggage and he was told last week that the numbers were moving against him.

Of course we sell reports late friday that three senators had come out on the banking committee and saying they weren't going to support him.

They added elizabeth warren as a possible fourth.

Would have been very difficult, the president would've had to expend a lot of political capital, so larry got the message.

He is a phd economist.

That's taken back to the economist of wayne's world.

Is it abouty war and, is it about janetellen or the soft tapered?

I think what everyone is missing is a little bit of syria.

Last week we were all going to die because of the syrian situation and then they come up with a deal to avoid worse.

There is a feeling that with summers out of the way, yellen is going to get the job and that means less taper and it also means that the fed keeps rates lower longer.

Perhaps -- doug lebdais with us today as ceo of lending tree.

People believe, they know what she's going to do.

There is a feeling that larry would be stricter even though he hadn't talked about it a lot.

People put that trade in.

Now they are unwinding that and there is a feeling they know what janet is going to do.

The president has to ratify that great what about her ability to work with other central bankers.

If got the bank of england and bank of japan as well.

She has been the fed's representative at the banks.

She knows bankers around the world and can work with them quite well.

She is probably going to be very easy to confirm which is another political calculation for the president.

To think this will be bipartisan now?

Will republicans and democrats vote to support her?

Or will this be a partyline?

It will probably be much more but artists and -- will be much more bipartisan than for ben bernanke.

There is really no reason for people to dislike her at this point.

Maybe the republicans who think that the fed should be more hawkish and -- we forget that bernanke was nominated by president bush.

If you throughout other names, you have to ask about their political affiliations.

Who do think bernanke would want to succeed him?

Obviously he has a good working relationship with janetyellen, but he also had a good relationship with doncoh.

I think of a supreme court judge.

Does the fed chairman that we think we know, do they surprise one or two or three years into the term?

That is an interesting question.

No, they generally don't. what you end up having his economic developments that surprise them, so they have to take positions that they didn't think of our hadn't talked about.


Michael mckee our chief economics correspondent.

A fed week.

To not get lost in all of that, big important fed meeting that starts on tuesday.

A decision and announcement on wednesday at 2:00 p.m.. tom and i will be here for a special on bloomberg.

Not only the economic forecast but the news conference which comes at 2:30 p.m.. it is a wednesday nerd fest.

Ahead of that meeting an announcement, we are taking a look at futures right now.

Almost 18 points.

The s&p 500 futures trading at 699. -- that 1699. "bloomberg surveillance." this is on bloomberg television and bloomberg radio.

Fresh, for your download availability on the ipad, bloomberg radio plus as well.

Good morning.

Public versus private, tom.

That is the theme of the moment.

Twitter going public.

There are benefits to each.

There are drawbacks, scarlet.

Plenty of high-profile examples.

We need to start with facebook.

When they finally went five it -- when the family went public last year, it was difficult.

Stock finally recovered, trading above $44 above its ipo price.

Michael dell winning that bruising battle to take the pc maker private.

He says he needs to get away from the short term is in that defines publicly traded companies.

He needs his space and time to remake the company which is why executives at black area are also looking to take the smartphone maker private as well.

The value of these private deals has jumped to about $80 billion so far this year compared with $14 billion for others.

Bo peabody is here.

He has years of experience working with both private and public companies and the transition from public to private.

What does twitter need to do and can it do as a public company?

I think it is exactly what it is about.

It is part of the financial process they have been going through.

It is the only next step to go to the need to do?

They need to stay innovative.

That is the hardest thing.

When we see private companies ramp up to go public we see the innovation start to chip away.

It is difficult to get ready to make those numbers.

If twitter can stay innovative and stay not so focused on the numbers are at least not as focused on innovation as they would be on the numbers are recorder, they should be fine.

When we first went public in 2000, i made a point to tell everybody to ignore the stock rice.

Don't focus on the stock price.

The market always has it wrong.

Sometimes a think you're too valuable, sometimes -- how did your employees ignore the stock prices?

[laughter] how much of this is just about valuation as long as m be a strategies -- as long as the price is low you go private and if the price is elevated you go public?

Is not the first order condition?

We have the situation where for certain sect there's there is actually -- for certain sectors.

Is this very odd set of incentives depending on what sector you're in.

For twitter, it makes total sense.

They are the consumer darling to go public.

There is a lot of individual investors that are going to buy the stock trade for other less known companies in less hot sect is being private can be better.

I wonder if some managers would rather manage a public than a private company.

We think are the differences?

There definitely is some other pressure that comes along with being a public company ceo, which i have to do.

You spend a lot of your time, it is almost a sales job.

He spent a lot of time with your investors teaching them the story, telling them about your company.

Twitter will be easier because it is very large.

It would be hard if you are a small-cap company.

I opted out.

This is back in the mid 90s, but i had this choice of wrapping up to go public and i was running tripod and i decided to sell the company because i didn't believe i could make the transition.

I didn't think i could make the transition to being a public company.

Is twitter ready?

We are not exactly what the numbers are but my guess is they are ready and i think this is a logical step.

You are very qualified for the story.

This jobs act, this veil of opaqueness.

Is it a good or a bad thing?

I think it is a good thing.

It allows these companies to tory with it a little and see if it is going to be right for them.

I am very happy that we have this private market exuberance and public market sobriety.

What we need is bankers to be adults.

Thank you so much.

I'm looking for them to be adults.

Oh pass city?


"bloomberg surveillance."? ? she is said to have opposed larry summers.

Larry summers withdrawing his name for the candidacy of fed chair.

Senator elizabeth warren of massachusetts will be joining in the loop at 8:00 a.m. eastern time.

Good morning everyone, "bloomberg surveillance."i am joined by sara eisen and scarlet fu.

Allan meltzer is the carnegie mellon university pittsburgh, he is without question the fed historian of our life and times.

No one is more qualified to know the past and best practices of selecting the most powerful central banker in the world.

Professor meltzer joins us by telephone from pittsburgh this morning.

Professor, good morning.

How independent is this fed right now?

How critical is it for the new chairman to set the fed on a path back to independence?

Back to independence, that is certainly what it needs to do.

One of the things it needs to do desperately is to come up with a strategy for dealing with its long-term problems.

None of the candidates that we have been talking about, especially summers, was likely to do that.

Within this, when you see janetyellen perceived as some sort of dove, within your two- volume history, how dovish is she?

She is pretty dovish.

She will repeat the mistake the fed has made many times.

That is delaying concern about inflation until inflation rises.

The cheap way to get rid of inflation is to do it before it begins to rise, before it begins to get embedded in people's expectations.

She won't do that.

While the president needs to go back to the drawing board and consider his pack for fed chairman, professor meltzer, who do you think is qualified to take the fed into your next check 30? the person i would choose if i would choose would be john taylor.

But of course he is certainly not on the list.

Of the people who have been mentioned on the list, roger ferguson would be my first choice.

Why is that?

Why is the former vice chairman of the fed, he was on the watch at 9/11, why is he uniquely qualified?

He is the most qualified because he is the one who has come with a long-term strategy.

He understands that to solve the problem of the fed, which is get rid of trillions of dollars worth of excess reserves, that is not going to happen in a week or month, that is going to happen over it.

Of years.

You need to have a strategy which is adjustable, adaptable to the environment as it occurs, what you have to steadily approach that solution.

The other people on the list unfortunately are not likely to do that.

Very quickly, as we head into this historic week where we could see the fed begin to taper some of its easing, what is the biggest mistake you could make in the process?

Being too slow to do it.

Let us leave it there.

Allan meltzer, wonderful to speak to him with his perspective.

I am as guilty of this as anyone.

You buy the books and you don't read them.

They are very long.

The two together are, that's it.

He is worried about inflation.

That is going to be a big issue for the president.

Coming up where we will speak with simon johnson.

? this is "bloomberg surveillance."i am sara eisen.

Our guest host for the hour doug lebda . scarlett has some company news with us.

Htc is slashing its workforce.

They say it was necessary to streamline its operations.

No specifics given by htc, but the company cut 20% of its staff in the u.s.. china unicom says that reservations for its iphone have topped 100,000. the country's number two carrier has not said how much it will cell phones for when it goes on sale this friday.

It's competitor china telecom is cutting its prices as well.

Twitter is ahead of facebook and google when it comes to mobile advertising.

It will make up more than half of their revenue this year according to research firm.

Google will get less than one quarter of ad sales from mobile according to earmark it is.

That is the company news from the files of bloomberg west.

Garlan and tom, it is time for the agenda.

We will look at the major stores that are shaping the day.

On my agend

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


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