tv Bloomberg Surveillance Bloomberg October 27, 2015 5:00am-7:01am EDT
♪ jonathan: bp beat expectations. average oil price dropped the lowest since 2009. taking a bite out of apple. iphone maker releases the outlook for the holiday season. a record 2014. the u.k.'s global stress test. can it withstand downtown risk abroad? gdp numbers out in 30 minutes. good morning, this is "bloomberg surveillance." i am jonathan ferro.
alongside me is tom keene in new york. tom keene said it is too early to talk about the phillips curve. i have kit juckes next to me. is disgusting. a lot of to talk about. as slow new cycle but very important trends. jon, will talk about negative interest rate of german yells. and that's a wild statistic. jonathan: it is. i look at the curve, negative 26. we had a conversation about the bond market. the bloomberg first worded news. body bank thank you for -- bonnie: a deal of avoiding a government shutdown. increasing the borrowing authority and racist spending for -- and raises spending for two years. john boehner probably will need
democratic support to pass the bill. hardliners are opposed. in spain the prime minister is in november.ions he said he is still the best. he said his government has turned the economy around and unemployment. death toll is rising from the earthquake, more than 300 people were killed and hundreds more were injured. the quake was 7.5. in a remote mountainous region. south koreans plans to raise defense spending to deter the threat of north korea. that's more than the average for the entire -- signs north korea has been expanding into play -- and improving the range of missiles. a 15-year-old boy in northern ireland arrested in a hack attack.
talktalk telecom was hit by an attack and received a ransom demand from hackers. talktalk said some banking information may be stolen. the first were news. tom: the currency and we do that often on "bloomberg surveillance " on radio and television. equities are negative five and features down at -17 as well. the euro-dollar insurance. very quiet. 47 after the mario draghi bombshell. i've next crude is front us -- de is front and center. a big deal down another 1%. we will get to that in a moment. give me the negative german two-year. two-yearar and the negative 0.3%. further breakdown and something
as well. a lookel right now and at oil. the first snapshot. down we go. up we go. very orderly down to the recent lows of august and september. the stability and optimist pushing against the gloom. vonnie really gets your attention. absolutely, far from the august the low. tom: you wonder what it means for brent crude a it is west texas but the same chart, isn't it? jonathan: it is. shapingil print and expectations of what happens and the oil market. a fundamental debate and what it means for the bond market. first over the airplane from sydney kit juckes kit juckes,, -- sydney kitist
juckes, global strategist. i do not know what you are doing in 1958 at the peace we look at and now we question. do you question the phillips curve? veryuckes: i think it is close to dead and buried at this time. the people still believe it, it is nonlinear. , insecondly, inflation particular wages, the only thing left only react to lower unemployment. those people need wage growth to its sole right in the next 6-9 months. pretty quickly or turn into a paper airplane. jonathan: fundamental debate of the ecb meeting as tom keene reference, the low yields, what are they pricing? are they pricing more qe? what is the move? arejuckes: i think markets
questioning all sorts of things. more than anything else in bond markets, a question of why shouldn't they earn what to risk it is? if interest rates are lower for longer and going up almost never in europe and when they go up in the united states, much, much lower than previously thought. that is the world were in arkets you get one or 2% for german 10 year bond. people come in and buy it. that is what is driving market sentiment. is avoiding me. i am in london and he is in new york was stopped he is in new york and i am in london. we crushed england in rugby. good morning. when i look at the challenges out there, tell me why this october meeting does not a matter for this fed? i just do not buy it. every fed meeting matters. kit juckes: i absolutely agree
it matters. in a position where it will withstand the micro details. raising rates are some of the recent data with be a huge surprise. anything that provides any hint about whether december is on the table for a hike or we need to delay to the next year and a reaction from the markets. as if markerthey reads are saying what they are saying? whether the swiss or german 10 literally orders central banks to stand still, doesn't it? kit juckes: well, i would like to leave central bankers to leave markets of them markets to leave central bankers. this is the error we are in where bankers feel they have to pay on due attention to what is happening in markets. that asked the question they will remain a dovish. jonathan: the market debate has not shifted much.
on the f1 seat has changed. is there divide emerging at the fed? said yellen has cap to the in the same direct -- kept the fed in the same direction? fed.uckes: two cams in the we should not change interest rates until there is change or raise a little bit and normalize when it is safe to do so. the good arguments about cannot talk to each other. different points. jonathan: tom keene, to bring q and the conversation, u.s. versus international, a strong domestic versus downs down -- downturn risk, has it changed? tom: you have the money question unlike the me. macro is well under 2% for the third quarter.
a better statistic for the fourth quarter which has barely started. gdp,goes to low nominal gdp.ou key -- u.k. i am more focused on nominal than a real. what will allow central bankers to act? kit juckes: nominal gdp and we will start with doesn't number gdp growth rate of 3% plus need 0% interest rate? in aaway from that, we are new normal wear you are not -- where you are not going to see a bit animal spirit of companies building factories like they used to. oilite from the falling prices, cheaper gasoline prices and the u.s. have not driven some a big spending splurge by folks who would rather put some away for a rainy day. we have learned our lessons.
i do not think we will come back to that. jonathan: we could talk about this forever. my producer is telling me we cannot. we have to move it all. we will have an interview with the joe papa and speak with elliott gotkine from the tel aviv stock is change worse meeting with shareholders about a.m..ile takeover at 9:45 do not miss it. this is "bloomberg surveillance ." ♪
track of my watch. i believe we fall back this weekend here across america. right now need to fall back on business. vonnie: that is right. on halloween. tom: i am going as a panda. vonnie: sell shares in an ipo. hopes to recover $24 billion investment. posting the most profitable quarter in five years. the world's largest chemical maker has cut target for the year. by fallingen hurt oil prices and falling demand from china and brazil. has extended a drive-by three years and may also sale assets. third quarter profits plunged and bp, down 30%. the british energy company did better than expected.
euro tumbled in march and bounced and a lot of people inc. we were settling back and looks like a range with a long time. that kind of made sense. as we tumbled at those levels, what we know investors are doing our earnings a carry. and we could grind ever so slowly and lower as oil finds. at one point, everybody assumes that we could mess around and low levels. are not anybody's radar. you need a crystal ball. i want to talk about central-bank. mario draghi and i wonder if a inflation, it is shaped by oil prices? what did you think? shaped by oil price and expectations as well. the expectation part was new? : all struggling with the expectations against the inflation swaps that you can see that show what the market is pricing for future inflation. say, why are the muppets and financial market with expectations spot oil prices or conclude the swap market does not reflect expectations. you have to phrase it, a relationship of some kind. it does not make sense.
maybe five-year outlook is not a function of today's oil price. jenna the bank fx rate, -- jonathan: efforts rate, the fx rate? kit juckes: up to a certain point. he is saying he does not what is rotation's to go down forever. jonathan: kit juckes will stay with us. do not miss that interview. this is "bloomberg surveillance ." good morning. ♪
tom: welcome back. bloomberg from surveillance. take one day off and i cannot remember how to talk to stop vonnie: bloomberg city. tom: surveillance. this is new york. it is gorgeous. ' sunrise. mets will kennedy made me smarter. real inn adjustment, the last time we were here was 1991-1992. going to end. will kennedy just absolutely nailed this below two dollars. the jonathan ferro, a great chart making my day. jonathan: the same story making going to end. will kennedy just absolutely nailedus better. breaching a record. u.s. is the biggest supplier headed into the winter.
a fundamental supply story that keeps on disrupting the market. now -- tom: breaking news. below two oil price dollars and almost back to 1991. jonathan: the must read. the new york times making a comparison between valeant and in run. i remember another company that had eye-popping growth and also secrets which eventually destroyed it. you probably remember that company, is name was enron. tom keene, i want your thoughts on this. short seller.nd a much bigger story we need to be talking about? lastyou noted in your hour, a company that buys revenue and does not make revenue. these are now oil people, pharmaceutical people or steel
people, financial engineers. i do not want to give an opinion either way. everybody has got it and bloomberg has got it. t willree with jonas, some way and ugly. jonathan: i wonder about the m&a picture. business. the m&a is that model fundamental? tom: with all due respect to venture capital, private equity people, you get into more trouble with financial transactions than people really involved and the different industries. i've may bill fossil on that. my radar is up right now. anybody wants to make a comparison between valeant and enron. basically, the company with secrets and that is what happened to enron and the sickest destroyed.
tool the debate will continue. we will follow. -- the debate will continue. on bloomberg -- excuse me. we look at housing. numbers are out. robert shiller will join us. not only told to robert shiller about housing but looking at the little. lori -- lorited at. -11%. the report 5%. from new york and london, "bloomberg surveillance." ♪
vonnie: mariano rajoy has called an election on the 20th. he has been sinking in the polls but he still insists he is the best person for the job. unemployment is at the lowest in almost four years. rescue teams in afghanistan and pakistan are trying to reach wrote areas struck by the killer earthquake. the death toll is likely to rise. a magnitude of 7.5 in a mountainous region. that is the bloomberg first word news. jonathan: it is the third quarter and the advanced reading. 0.5% survey. for you those of you thinking that is low, annually it is 2.3%. intelligence economist
jamie joins me now. it is slightly disappointing, was it in line with what you were expecting? itwe were expecting .6%, 0.5% is close. we are treading water at the moment. the labor market still continues to tighten. weak.s looks slightly .5% is not great, but the unemployment and the labor market look fine. what does the dashboard look like? kit juckes: they are beginning to lose momentum, but let's not call it a slowdown. the peak growth rate is probably behind us and what is interesting about that is that they should have raised rates long ago and our window for rate hikes is in danger of getting shorter ahead of us before we
get them up. that is going to be a challenge. gdp differently in england. viewers, thatan is annualized. a lack of inflation rolling over, this is real gdp plus inflation. how does more corner and react to this? kit juckes: this keeps him on hold for now. he is in much the same place. he will be with anti-wage growth numbers and any signs of inflation. an economy that is growing sluggishly but steadily. tom: jonathan, what do you see there? i see in adjusting economy with some real challenges, like the u.s.. one part is doing well but the other part is not part of the discussion. we just about a strong
domestic economy that has picked up increasing risks abroad. perhaps jamie murray can talk to me about this, but i see a difference in the labor market. why do we have the difference in the u.k. and why are we experiencing something different than the u.s.? is thedifference participation. upe, participation has held pretty significantly before the crisis. in the u.s., it has fallen off. that explains the gap of wage growth between the two countries. the market is not expecting it, does this bills? kit juckes: i think it does build. i think it will come down to wages. there is an important distinguish and which is that we
are in the highest wage earning sector which is googling different than the united states. construction is booming, finance is doing whatever finance is doing -- that is where the far this growth has been. jonathan: going into the end of the year, all of the economists on wall street are looking into their model. what does that mean for the united kingdom? how quickly does this become a problem in the united kingdom? it is not a problem because inflation will remain below target, but we expected to pick up the quickly in the next two months. wekenexa to the public why might be doing that when inflation is picking up. it changes the tone as we going to the new year. the unitedned to me kingdom-london.
what is the rest of the united the sides the streets i navigate when i am over there? >> there has always been a divide between the pay act prices of assets in london versus the rest of england area as far as i can tell, the diversion isn't getting wider over the past year, but it does still persist. tom: this is a huge social problem. is the u.k. tilting with this weaker growth more towards europe like or american like? kit juckes: it remains extremely american like. if you look at the gdp numbers, our annual average since the crisis is 2.1, and yours is 2.2%. growth rates look incredibly similar between the u.k. and the u.s.. incredibly different with the challenges that they face. jonathan: i hear so much about
the u.k. economy. gdp -- you think of the do you see an economy that is rebounding? think this'll be another 2007-2008 shaped economy? consumption has been performing very well and strongly. if you look at household allen's sheets, they are not in the position that they were in 2007. wealth, it at net looks better than it did before. jonathan: do you agree with that? kit juckes: we don't have as much leverage in the economy now. what we have had is a further piece of asset pricing inflation, so without being too scary in terms of what rates go up, what happens if the budget deficit is paid?
we have longer-term challenges along with the shorter term being ok. this starthen does to matter in a fundamental way? thejuckes: it matters if u.k. leaves the european union and has week growth. it will need to attract foreign investment. it goes back to what you said earlier. this could be as good as it gets. it gets?s good as or a beginning the slope rollover? >> i don't think it was ever going to be the same as 2013-2014. we are going to be seeing it growth in the u.k.. jonathan: gentlemen, thank you very much. tom keene is with me in new york. not miss the interview coming
jonathan: good morning, this is "bloomberg surveillance." i'm alongside tom keene in new york. it is the biggest battle and it shifts to israel today. para go ceo joe papa is in israel. elliott gotkine joins us live now with more. i am pleased to say that joe papa is here with me now to talk about attempts to fend off my land -- mylan.
how confident are you? what feedback are you getting that they are likely to support your proposal to reject the bid? i am delighted to be here. this marks our 10 year anniversary of eating on the -- over the last six months we have had a chance to talk with the shareholders. one thing that has come up is that the para go shareholders, it is a bad deal. the shareholders will not tend to mylan. we have a high level of confidence in the fact that our long-term shareholders recognize that this is a bad deal for shareholders. it is delusion for the earnings-per-share. and if reduce the shares stand-alone pe,
it will be depressed if we merge with them. for those reasons, we have believes that this just will not work. i heard you say it was inadequate and insulting. what price would be less insulting? joe papa: we are not against doing deals, we just believe that this deal is a bad deal. i will say that we are particularly thinking that this is a bad deal put forward by my lan. the current deal that is in front of us on the table right now, we believe this deal significantly undervalues the long-term prospects for the pair perrigo company. elliot: the deadline is november 13. there are three scenarios.
off, deal extended, deal. they go between 50%-80%. what happens on that morning? joe papa: we believe the most is thatutcome for this the deal will be rejected by the shareholders and it will not get to 50%. 50%-80%, iget to think it will be chaotic. at ylan will still need to run the company but we will have separate directors and ceos. it will be chaotic. we think it will be difficult for them to achieve synergy. therefore, we think the right answer is to reject this. meanwhile, this has been
going on and have you been holding other talks with other parties about the possibility of being bought? set publicly in april that i did receive some inbound calls regarding potential activity, but when i would say is the following. we believe this is a bad deal. just because they have put a bad deal on the table, that does not mean that we have to counter it with another deal. we believe right now that we will do what is right for the shareholders and continue to run the business. --have done for additional done four additional transactions since april. we do think there are opportunities for us to go out and do what we have done in the past, which is 27 transactions in the last nine years. we have continued to grow our business. we have 970% total shareholder
return. elliot: very briefly. plan,lion share buyback part of your strategy to fend off mylan. would you consider increasing that to ensure that they do not win the battle? joe papa: we think the offer they put -- that we put on the table last thursday is the right offer. for saleave shares once the my land deal is behind us. have $1.5 billion over the next 24-36 months starting on january 1, 2016. but we also said that we will look at the share repurchase relative to other things that we may want to do. i think we will look at a lot of different alternatives. but we do believe the important decision for shareholders is to reject this offer and do not
tom: good morning, this is "bloomberg surveillance." royals tonight, american baseball is different. it is october and it is to teams that nobody thought had a chance. are, vonnie quinn is going to pull out the new york newspapers that are all over the mets. let's get to the business flash. vonnie: the emissions test scandal will show up in the
third-quarter results tomorrow. they are casting a vw loss. they have taken a charge against third-quarter earnings to pay for the global recall. it is a thing called uber trucks and it is backed. the company is called convoy. it focuses on short-haul trucking. usually one day trips. jpmorgan is challenging apple pay. they have revealed chase pay. it allows you to collect reward points. jpmorgan will roll that out next year to the 94 million credit card holders. that is the bloomberg business flash. i want to talk to kit he hadabout japan, and his cell phone ring.
he looked at his wrist. he has an apple watch. kit juckes: i needed a watch. you can see who is phoning me without finding the phone and ignoring it if i feel the need to. take it marginally further to say that all of these things that we have where companies are providing us with services that make life easier as opposed to trying to sell us huge numbers of things to stick in our houses, these are american companies. gerard baker in the wall street journal today had a q&a with tim cook from apple. 97% love ons he has the apple watch. my observation -- i want to talk to david kirkpatrick about this -- i don't see anybody using their watches. do you actually use the watch?
kit juckes: it tells time. i can measure my heart rate in front of the tv to make sure i'm still alive. otherwise, you can pick upour e-mails on it. it is more than a watch, but it is not an ipad. jonathan: let's move the conversation back to markets and central banks. world's -- thee -- japan is not expecting to move. kit juckes: yes, the market in japan is much more split on whether something is going to happen. that makes how to work out the reaction on friday much more difficult. jonathan: does the pressure with push them over from last week? kit juckes: i think the focus is
on, should be doing something that she get the equity market going? i can imagine a move where they have a higher equity market, but at this exchange rate, the yen is very cheap. japan is very competitive. and trying to get it even cheaper seems to me like pushing on a string. demandthin that is the of the depreciation. is that the answer? the yen depreciation? kit juckes: if you look at the last 10 years, you have seen an enormous depreciation of the yen. chart is just astonishing. the pressure on the chinese is going to be growing. they have been resisting it and
i think we will see some move for them. ferro, what do you see in the literature? about further depreciation? jonathan: in china, it is more complex than just depreciating the currency. i want to talk about the solicitation of the boj. how politicized the qb has become. be half ofurse to the gdp market. if they move on friday, i would ask the question, what do they do? well, i don't know what they're going to do other than look at the markets. i am still in the camp that we are market vigilantes. year, it german 10
speaks volumes to me about what the markets are saying to all of the central banks. kit juckes: part of the problem with that is what we are saying to markets is that we accept that we can't see inflation and we know that buying government if you are going to buy more government bond the hope that it moves asset prices higher and makes us feel better about economic growth, as we get closer to zero, what are you hoping to achieve other than distorting capital markets? why has this not done more in terms of boosting the animal spirits you are referring to? it is not really working. jonathan: the distortion is there. tom and i talked to a guest about an endgame in japan. kit juckes: they will either
revise expectations to get the economy out of a bind, or the debt burden becomes impossible and that is an economic armageddon with defaults. jonathan: so great to have you with us on the program. "bloomberg surveillance" continues. do not mix -- do not miss the next hour. we will be talking with david kirkpatrick. ♪
in a supply. weak oil signals lower interest rates. 3 is not december 11. in washington shutdown does loom and it is apple and twitter after the bell. welcomeentire hour, david kirkpatrick. he is a genius. good morning everyone, this is "bloomberg surveillance." i am tom keene with jonathan ferro in london. we were made smarter on the decline -- not take a line, a collapse with crude oil. jonathan: it is about two dollars a barrel. -- it is about two dollars. natural gas is back in the
1997.ty of 2000 -- of right now, let's go to 2015 with vonnie quinn. vonnie: the white house and congress strike a deal that could avert a debt crisis next week. to them through march 17. it does raise a spending cap but lowers medicare funding. john mainer will need democratic support to pass the bill. the powerful asian earthquake death toll is more than 300. saveers are trying to people in afghanistan and pakistan. one in to 40 miles down is where the earthquake took place. destroyed inenly an airstrike. a green beret officer told
troops the taliban and held the hospital. doctors without borders says it told the u.s. that there were no insurgents in the clinic. a close encounter for the u.s. navy in the china sea. china criticized a recent move and the u.s. doesn't recognize the mandate islands as a territory. donald trump is publishing a book today called crippled america. -- they willays debate again tomorrow night. those are the top headlines. tom: breaking news. adjustment, a vanilla report. my bowtie is a disaster. come on, vonnie quinn. dupont operational redesign.
but i think it means cost cutting. they are mentioning a number of times in the press release that they reaffirm operational redefine. are they going to operationally redesign surveillance? vonnie: we could operationally redesign that bowtie. tom: it is old like me. futures are at negative one. have negative five of their in the futures. what do you think? vonnie: not really much trading in the early market, but it is -1.25. tom: there it is. is looking pretty good. let's to oil. -- let's do oil.
on brent crude this morning. i'm going to the bloomberg terminal right now and look at oil. here is oil recently. we came down in march, the doom and gloom is over, we had doom and gloom in august, we came up. and once again, we roll over. this is becoming a habit. jonathan: it is. this is the second rollover after spring. way we to rethink the think about the oil market. when oil pushes higher, shale comes back online. that is the new dynamic and it is a different oil market than 10 years ago. clinte mentioned oswald is going long on british petroleum. jonathan: there is something
else happening here. bp,new assumption over at they assume $60 crude, that is the different from q1. the vanishing has to do with a new reality. tom: very good. will get you i through this next hour. this afternoon, we will talk about the apple computer. we will talk with david kirkpatrick. some president is going to be at his next conference. he is the author of the facebook effect. i ame end of the book crying, it is like, i am so emotional. david kirkpatrick was long on facebook when everybody was killing him. they were down to $30 a share. david: there was no share at the
time. when i first started getting excited about them it was 2006. tom: can you get excited about the challenges of the news feed -- can you maintain facebook love? could dislike it a little bit, but the truth is that the upside continues to be enormous. we will talk about china from a number of perspectives during this hour, but the effect that mark zuckerberg went to china ,nd gave a speech in mandarin it is indicative that this is a big opportunity for him. tom: let's get back to apple. walld very carefully the street journal interview, it is a great day for them to stunt the -- to stun the market. it is a company that
continues to execute. i'm amazed that the new phones are as exciting as they are. how can they just continue to cycle through these phones? this is probably one of the most researched companies on the planet on wall street. what is happening with suppliers? do you look at that as a read across into the holiday season? david: i think they're going to have a good holiday. continue to generate enormous excitement about their products which is astonishing. with some exceptions, like the watch. just to come back to that, we have talked about the iphone so much over the last few years. everybody says they need a new product line. i see a company that we can still want -- we can still call
iphone inc.. how long can they be that company? david: the ability to come up with new phones that people want is astonishing. from that few, i don't think we have seen it slow down in any fundamental way. they would be far better off if they had some product lines that had far similar enthusiasm but i don't worry about them at a macro level. tom: david, i look at the tech world and i see you have the conference up in two weeks. what is the theme of the conference? david: i am so glad you asked. tends to be very macro. our scene is really human eyes in society. re-humanizing society. waysed to refocus on the
technology can reaffirm what is most human about people. the opening session is called human values in a tech knowledge eyes aged. marc benioff is going to be one of your speakers. david: salesforce is one of the internet's of things. one of the things he wants to talk about is how to serve customers in the new era. it will be so different as everything around us is measured in feeding data. tout us to ourselves and suppliers. he has a whole new way of thinking about his company. vonnie: how are they going to grow? david: they are trying to make it mean something. they have been using their system to build cash so they can do something different based on it generates.
i don't completely understand it either. david kirkpatrick, we will suck facebook and twitter and apple again. bloomberglater on radio, we will talk to robert shiller. we will talk to him on the state of belief in a haven euro economics and the microeconomics that makes it go. we will talk to him. stay with us from london and new york, this is "bloomberg surveillance." ♪
here is vonnie quinn. ambo willb. and launch an official public offering as close as this quarter. they hope to recover the $24 billion investment. they just have the most profitable car -- quarter in years. bp profits plunged in the third quarter. but they did offset that with earnings from refining. they plan to keep cutting costs to stay low. today in the cost of natural gas, it is trading under two dollars. -- warm weather is softening demand. that is the business flash. tom: very good. let's go to the charts. the idea of inflation adjusted natural gas back 30 years, we
are back to where we were in 1992. we are, two dollars. $1.95. it is stunning. with us is david kirkpatrick. we are looking at technology. well,are other stories as alibaba and twitter, we will touch on that right now. i saw the hero worship six or seven months ago. stocks rebounded recently but is this just a china play? it is a china consumption play. this is the strongest part of the chinese economy, the fact that the consumers there are still spending. that is what the government most wants. no matter what happens to the chinese economy overall, the big challenge they have is switching towards a consumptive society,
and alibaba is the fedex-ups combined. you see what it is doing with tax fees and buying movie companies. their ambition is unfounded. ok, is a -- as a non-accountant, do you trust the accounting? i trusted more at alibaba than any other chinese company. i think jack ma is a true visionary leader and true technology creators -- creator. he has an american view. i think the company has to be watched with some concern. tom: i want to go to twitter. i have noticed on the site a lot of changes. facebookll them
changes. is that a sign of desperation? a sign of it is reality setting in. i think jack dorsey is recognizing and acting on some of the things that were seriously wrong with the twitter product. he is recognizing that they will not make it into a consumer product unless they make it easy to use and more controllable in terms of the information you get. vonnie: he is getting the credit for changes that were going to happen anyway though, right? david: yes, but he has been pushing for this. now he's doing this at a faster pace. it is still early but i am very bullish on twitter. i have feltll how about them historically. i feel a lot different right now than i ever have. let's get jonathan ferro on here. good morning. jonathan: good morning.
we have talked about apple, facebook, alibaba, 20 years ago, these companies would have been japanese. conversation,s why aren't these companies japanese anymore? david: why aren't they japanese? that's funny, one of the first stories i ever wrote was that the japanese were coming and the u.s. was totally freaking out. the title was be where the rising sun. you haven't seen the freedom of entrepreneurship and innovation that we have seen in silicon valley. there is a cultural difference that is much more suited to the face of change we are in the midst of. notanies like sony are doing the same creative work that they were. there are many reasons but you
will never see japan being the leading tech country again. i will bring you in here because there is a big article today about how europe needs more unicorns. david: europe is doing better than japan by a long shot. as a continent, is recognizing the cultural disadvantages they have as a company format and employment policy. i think there is a lot more energy there. there is a unicorn that was created in chicago. david kirkpatrick use the word unicorn. david: i am just using a word that she used. tom: where did it come up? david: i think fortune has done a lot to push it.
it is a dumb word because these companies are not really worth $1 million. tom: is uber a stupid valuation? david: probably less than any other enterprise. very good. david kirkpatrick, we have much more to talk about later. john leisure from t-mobile, look for him at noon. he probably will wear a coat with his t-shirt. could you see me doing that? i don't think so. this is "bloomberg surveillance." ♪
jonathan: good morning, this is i ammberg surveillance," jonathan ferro from a very cloudy city of london. tom keene, though skies were blue for you. they are great now. tom: let's go to the morning must-read. president jimmy carter is writing in the new york times, he is 91 years old. he touches back to a time of assad mccarter. it says that he will not win the war by accepting and sessions imposed by the west but is likely to do so if urged by his allies. the needed concessions are not from the combatants in syria but from the proud nations that
claim to want up you refused to cooperate with one another. it is short, sweet and vintage jimmy carter. he basically says that we need iran and saudi arabia and turkey to cooperate on something. tom: it is telling that we hear from jimmy carter at 91 years old and kissinger as 92 years old. in the united kingdom, the response of cameron with regards to syria. jonathan: it is very difficult to. the other side is a refugee crisis and that is very difficult. it is not so much a foreign crisis but a refugee crisis. that is the fundamental debate at the forefront of u.k. politics right now. as we go into the autumn, i atnk of joseph nine writing
harvard and this idea of the strategic discussion that doesn't happen and how could it happen as we get closer to caucuses on primaries? vonnie: that is part of it. but foreign policy carries on its own schedule. you have so many strategic goals. tom: that is where i wanted to go. beingsly, a schedule is established right now by putin. jonathan: it is. the line that sticks out is the most persistent characteristic was stubbornness. what does that tell you about the endgame? putin istells me that the catalyst for a debate. a debate that we are struggling with. i think it is something folks, and it is october, to see 183
i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. tom: good morning everybody. mckee is tying the fed meeting to the national capital.
washington capitals playing better than good hockey. right now let's get to the first word news. vonnie: congressional leaders and the white house make a deal on spending and the debt ceiling. the plan will keep the government from defaulting and will extend the governments borrowing authority until march of 20 17 -- 2017. -- to pass the bill. hardline republicans are opposed. crews are trying to reach survivors of the powerful earthquake. the death toll has break-in -- has reached over 300. china's is challenging territorial claims in the south china seas. --ble ship sailed between
within 12 miles of islands built by china. china and the philippines have competing claims in the island chain. spain's prime minister is calling a general election in late december. he says he will step aside if his party does not win a parliamentary majority. those are the top headlines. up 5%, alibaba pops up. the language of it is -- there is no balance to it as we are doing this, loving this, and there is some conversion issues, what you need to know is that 5.2% is the lightly traded premarket, in the vicinity of $79 per share. we talked to david kirkpatrick about this. what is the metric of alibaba that matters? >> you would say that.
with alibaba have is that they are trying to do so many things. merger that the chinese video streaming company and would negotiate the merger of these two taxi companies. alibaba and 10 are working together on certain deals, but the thing that worries me about alibaba is that they do seem to want to do everything and they have a lot of cash and they're using it very freely. the fact is, their business is still a difficult one in the long run. it is dependent on chinese being focusedmers on buying as they have been. tom: alibaba out with a nice pop at 5.4%. how convenient, the most exciting thing in washington tomorrow is the pittsburgh
penguins playing the washington cap word -- capitals. michael mckee joins us. i think i can say this, penguins capitals is more exciting than the fed meeting. >> it certainly will be and nobody expect anything from the fed. we have not gotten enough data since the last fed meeting. we have had not -- we're not had hadher -- we have not another job report since september. tom: the history of the fed is always surprised the markets when they least expect it. >> that was the history up until greek span. they gradually of all to leave the markets and let them anticipate where you are going and that is not happening. the markets aren't dissipating a rate cut, which is not in the cards yet. jonathan: all we have tomorrow is a statement. there is always a communication objective for the fed.
what is the objective and how do they communicate it? >> they don't want anybody to think there is anything, one way or the other, coming from the fed. keep december as a live option but don't let people believe the certainty that they will raise rates or beyond hold. what will be more interesting is the speech as we get and the coming weeks as officials try to explain their position and move the markets to where they want them to be. that will start to happen after we see the october jobs report in the first week of november. jonathan: is that the fed chairs job -- chair's job? december is not live if you look at the fed funds future. how do they shape the markets again? >> i would throw out fed funds future, it is kind of a useless exercise.
much is not necessarily as division as we think because we had people make speeches who of never really made speeches. we'll know what they were thinking beforehand and their tradition has been that those that governors don't dissent from the chair. david kirkpatrick, i look at uber as a textbook case of low interest rates just racing the machine -- greasing the machine. it's at no cost whether it's a public interest rate or a private transaction. david: i don't know why it's connected to germany, but i could not agree more. uber is spending it really intelligently. i think we have a great business model and they are expanding deliberately all over the world. they are having an impact. the car -- their product is high-quality and they are a rare
example of -- tom: i see this every day. your worlddea, does the public markets anymore? would facebook go public now? it is still used as a marker of success and i think the investors in facebook would have demanded it matter when it happened. tom: idle me to interrupt, but i think this is critical. think about literature destroying the financial process? debate,is the big whether it is happening or leading to mal investment. uber has fundamentally changed parts of the -- how parts of the economy work. there are other investments in other tech companies that are just kind of a waste of time. what we have seen is this in norma's explosion in tech and no change of productivity -- is this enormous explosion intact
and no change of productivity. david: there's an interview in the journal that says companies you to focus more on going public because that gives discipline that they currently lack. is, this lose capital really does give people a very undisciplined approach toward company formation and that's what he is trying to come back. vonnie: before we get up at topic, tomorrow statement, there is this idea that janet yellen needs to say something about cohesiveness. >> the fed generally rejects the markets arguments in terms of what they should or should not say. deviatebably will not because if they do significantly and the market misinterprets it, they will have the opportunity to explain at a press conference. decision,n is no markets will react as they react. tom: we will be this to death over the next 48 hours.
60% -- of a good 6%. -- up a good 6%. speaking of strength, facebook is -- has nailed it the last number of months. let's get right to it. facebook.ok at thegreen box down there is face of kirkpatrick -- the fate of kirkpatrick -- the faith of kirkpatrick. david: the newsfeed -- tom: what is the wide that they are bringing in revenue? is it number of eyeballs are what they are doing? david: it's a combination of things, but they have a focus on their advertising business with incredible discipline. sandberg is an extraordinary ad
syncer.- adsd they come up with ways to get into the consumers and deal with the advertisers themselves and that has been a great combination. tom: is the -- is a good for them to be so international to they wish they were more anglo-saxon? david: facebook is only one day, and that is mark zuckerberg and he's totally global and not really interested in anything but a global future. tom: that is the distinctive feature. david: there is not a lot of ads in the markets he wants to expand and. -- expand in. vonnie: people of a certain age are going off of facebook and people are using snapchat or did not log on to facebook. is that happening, is that coming to be true? thed: maybe a little bit in
united states and some develop economies but there are so many products getting the attention of them people today that facebook is not the central position it once was but it's usage is incredibly consistent and if they use a tiny amount, they are gaining so many new users or the ad markets may be small but they are growing in the long-term opportunity is again to. that's why i think it's easy to remain so super optimistic. i was optimistic before -- tom: ira member doing a thing with you when they went ipo and you were the most persistent facebook. bull on better,is it getting our ad agencies able to take on the challenges? david: it's not so much an issue for facebook, but it is the future of advertising on that on is ads that don't
look like they are ads that look like they are part of the editorial content. native advertising is growing because it an ad hiding as editorials. tom: would you explain instagram to me. is it a revenue raiser for facebook? david: is becoming a revenue business, it is growing. i don't think the numbers are out there, but i think it will be a big revenue business. going back to vonnie's question going on to,are it's their primary next place, facebook captures them regardless because facebook owns instagram. tom: david kirkpatrick loaded the boat at 32. i don't buy the stock myself. i'm not sure what disclosure was made there, but let's look at the top stories making news.
archaeologists in the ancient city of greece discovered remains of a bronze age warrior. the grave continued the bones of a man with a bone sword, rings and other artifacts made in crete. tom: very cool. vonnie: many people hope it will shed light on the mice and men civilization. -- -- vidson john another artifact, it is a cracker, a 103-year-old cracker from the titanic sold for $23,000. there is money in greece, the auction house called it the world's most valuable biscuit.
it was part of a survival cake -- survival kit from a titanic lifeboat. fromre talking about evaluations in the biscuit market -- you are talking about frothy volume nations in the biscuit market. tom: i don't know where to go with that. microsoft opened its first flagship store. laptops, tablets, xbox is in video games. games.es and video tom: i was outside this building twice, yesterday. god -- dud. there was a nice crowd but it was so forced. they are so far behind. david: they are behind, but you
have to give them credit for at least coming a little bit up from behind with some of their new physical products. they are doing well with surface but nobody expected that they would. of thestrong supporter direction of microsoft. i don't believe that microsoft stores are a big part of the future they have -- the way they have been with apple. tom: other the products part of their future versus the terrific quarter generated off of cloud? david: i think we have to continue doing both and i think they will. microsoft has always been a consumer and a commerce company. with both,o continue or they will retain their gravitas in the industry which is clearly undermined already. i think they will and they will do well. the cloud strategy is working for them. tom: microsoft with an opening six blocks below apples big store. american pfizer out.
dollar, pretty much stable but what is in the backdrop, and this is dollar-denominated oil and that -- $43.46. -- heard -- third-quarter earnings that beat estimates. the giant is now under new leadership after the -- after the retirement of its ceo last weekend. alibaba's revenues are better than forecasted. -- second-quarter sales rose it stepped up advertising to ward off the slowdown. jpmorgan is challenging apple pay offering a mobile payment app that allows users to collect award points will cutting some transaction fees for retailers. tom: glassworks out with
earnings. when you look at glassworks corning of l myra in new york, you see a company that has been asleep for 20 years. -- we one form of a share buyback as well. elevator business and i know from experience it is a cutthroat bidding business whether it's for the world trade center or a small condominium in boston. we are pleased to welcome chief executive officer from germany. two americans everywhere, we fixate on safety -- two americans -- to americans everywhere, we fixate on safety. our elevators safety event -- safer than four years ago? >> elevators are a very safe method of transportation. iyer -- i would not say they are
safer than clock for years ago, they are much safer than 40 years ago and little improvements have been made. tom: you had a relationship with microsoft you are announcing. horizontally,g vertically and diagonally, where can we enjoy this experience? >> we will unfurl the first one in spain in one week and you can see and touch it. vonnie: he can't try it yet. about theo ask you stocklevators, do up on steel when prices are this low and do you buy from china or somewhere else? >> we buy locally because elevators are a very local business. we buy a lot of local stealth -- stuff all over the world. tom: the new apple offices or
new facebook offices, do you want to be in them or are they such pains that you say no? >> we are dissipating with them as well. but it isemanding fascinating technology, as well. tom: what about emerging markets? new mediocreut the and challenges, what can you tell us about what use he with emerging market economies? normally mention china and china's market is cooling a little bit but nevertheless, sony people are moving to cities they have to construct and they have to build and they are two thirds of the world market of elevators so they cool down a little bit, that's not too bad. vonnie: what happens when still prices are this low? -- when steel prices are low? >> it is part of that, it's a lot of solution building,
construction, and a lot of work. still prices are not a major -- steel prices are not a major -- organic growing is between 3% and 5%. tom: wonderful to have you here on short notice. thank you so much. futures flat, negative futures 11, jon ferro, thank you so much. truly the collapse that we saw yesterday. bloomberg 's next, we continue with surveillance on radio, good morning. ♪
and hockey teams. a tale of two companies, will apple keep up the momentum and will twitter get on the right track? we find a later today -- we find out later today. ♪ welcome the bloomberg , i am david westin -- >> we have a slew of earnings this morning, alibaba and .omcast are reporting helping to us -- helping us to kick it off this morning tells us he is a cofounder of the investment firm and also the chairman of -- and the owner of the nba -- >>