agreement on capitol hill at least among leaders. sequestration is out. debate and deliberation are possibly in. every home should have one, weighing in at 540 pounds, put the baby grand by the window. we are live from a world headquarters in new york this wednesday, december 11. i'm tom keene. joining me is scalp -- scarlet fu and alix, i need a baby grand, steele. here is the way it works. da da da. this?a chopsticks like >> ok, briefing. overnight we did get earnings from cosco. profit missing estimates. the where hast -- warehouse chain boosting discounts. we will do mortgage applications in the u.s., a 2:00 p.m. budget

statement this day after we had a short-term budget deal. also earnings trickling out this morning. men's wearhouse after the bell. bank. to buy jos. a. iplon, big news of the day, -- supposed to be a record ipo or a lodging company. >> this is not another deal. this is in some way a top of the market deal. terrific research on this. we will have it all day on bloomberg television. i got goosebumps. almost like 2005 all over again. >> and is it a problem? groupl ask a gas from isi and we will talk also to bob nardelli. >> why it markets today. looking at stocks, bonds, currencies, commodities. boring. the euro, 1.3764.

crude, 98.56. our next board, a little bit of foreign exchange. under markets, back 16,000. the dollar gives way. the blended basket of our traditional trading partners. under 80 is a big heal. finally the dollar weakens and gold is a bit of a rally. the last threed days. the morning papers in the web as well. here's scarlet fu. >> it turns out you can cut a bipartisan deal in washington before the clock runs out. a novelty. house and senate budget negotiators, paul ryan and patty murray, reaching an agreement on a budget deal. it would increase military and domestic spending over the next two years and would give lawmakers some breathing room by breaching the cease-fire. even so, of course, neither side could come out in full support. here is what democrat patty

murray had to say. >> i was disappointed we were not able to close even a single corporate tax loophole. i know many republicans had hoped this would be an opportunity to make some of the kinds of changes to medicare and social security they have advocated for. but congressman ryan and i have set aside our differences. >> it is no ban -- grand bargain. baby steps. >> the question is, does this avert a government shutdown come january and what does it mean for the debt ceiling debate? and it still has to get through congress. but they did have some kind of dialogue. >> peter cook is scheduled to join us in the next hour. is the basic idea is that they took away from sequestration and they will spread out the pain? >> they softened sequester cuts -- d tohat they pick and choose raise more money. they will end some programs like the 2005 natural gas resource

research grant. i could bring everything back to commodities. but this is rather than a big, grand bargain. >> nothing on entitlements. also on the front page, general motors tapping product chief mary barra as the neck ceo, who succeed dan ackerson who is retiring. the first woman to run a major global automaker in the 22nd woman running a fortune fortune -- fortune 500 company, this includes meg whitman and virginia rometty from ibm. >> women still unrepresented that's underrepresented. but this is a bb&t at >> it is a big deal. i agree totally. but the migration is underway. you wonder where we will be in five years or 10 years. saying not too late to buy your daughter a truck for christmas. >> tonka toys. a great idea. >> not just for boys.

>> advertisers, are you listening? >> my daughters are in their 20s, just with a one. the big, ugly metal ones. >> that they can get behind the wheel? >> no, just big and ugly. confrontation in kiev overnight. thousands of protesters clashed with police. security forces tore down barriers and tenants in an overnight raid. opposition activists squirted water and smoke bombs at police officers in an attempt earlier to storm city hall. that had been seized by protesters more than 10 days ago. the biggest protest in almost a decade began last month when the ukrainian president snubbed a european integration packs and leaned more toward ties with russia. also financial tension, and the economics in the front page today. we are thrilled to bring you michael spence, new york university.

prizered the 2001 nobel with mr. joseph stiglitz. is focused on the ukraine and the need for economic growth. and he joins us right now. andbackstory of the ukraine so much of your economic work is the mystery of economic growth. will we see it in 2014 question mark will we get back to normal in 2014? >> no, i think normal will be a stretch. but realll see subpar economic growth in america. very little in europe because the countries that need to recover are still out of bounds in terms of productivity. and in china and developing countries i think you will see very substantial real growth. >> you are a man of many geographies. stanford, now at in the -- nyu and you lived in italy and spent a lot of time in new york and are we through with the

financial crisis? are you think about writing about moving on some day to the normal or are we still in the crisis? most definitions, tom, we are out of the crisis. what we are doing is struggling with two things. one is getting growth back to full potential and the second huge problem is employment, lagging growth. >> are those two separate issues or are they inextricably entwined? can we say a fog and all at 6:00 a.m.? -- could you please take it down to the con 101. nal? is orthogo , one means perpendicular thing unrelated to the other. >> is he talking about my bowtie? >> why whether ukrainians want closer ties with the europe when they have seen all the difficulties the european economies have had with

financial stability? >> i think they want to be part of the second-largest market in the world. areeconomies, while they struggling, are democratically governed and modern. and because when you enter the european union, there are many, many steps. a path that accelerates reform and stabilization in your own countries. on balance, they don't want to be in the eurozone at the moment . >> when you take a look at the staggering photos from kiev, as well as what we have seen in the middle east the last two years, what does it speak to about the massive inequality we are seeing around the world and the fiery protests that keep happening and spreading? arey view of that -- there lots of different forces at work, but there are two powerful forces veteran getting rise to a -- that are giving rise to a

suppression of middle skill jobs and elevation of the upper end. one of them is technology. we are stripping routine jobs out of the economy by automation , and then globalization tends to move lower value added jobs to countries in the developing world. when you take those two together, those are pretty powerful. >> 2014 trend. michael spence, what we will bring comments about the volcker rule coming up. >> the new ceo but gm but gm is also in the news saying it will stop production in australia. this is after 69 years of production in the country. gm blames the strong australian dollar and the high cost of production in australia as reasons. ordained already announced plans to exit australia as well -- ford also announced plans. bmw may build engines in north

america for the first time. this is the capitalize on growing demand. bmw is said to be considering the u.s. or mexico as the site for the factory. --ckstone brings up a break brings up a big profit on the hilton investment. it stands to make a paper profit of $8 billion when it prices the initial public offering later today. itslo made $10 billion in investment in a chemical company 10 years ago. >> hilton hotel, the definitive interview. coming up, his price is $18. if it is above $18, run. and hel join us from isi will talk about blackstone's payday. wait a minute as they are not selling a single share. all of that this morning on "bloomberg surveillance." that is next. ♪

>> good morning, everyone. "bloomberg surveillance." buffett, howard buffett, that is, will be "in the loop" with betty liu. me tom keene, and with scarlet fu and alec still. >> big news, hilton will price its initial public offering after the market close, a day closer than expected. it should be a record for a lodging company. >> also a big a day on paper at least for blackstone that took over the company in 2007. already went public once before. how is it exactly going to fare the second time around? we brought in ian weissman, head 's gaming and lodging

research team. is this a well-timed sale? time to takegreat a hotel company public. stocks are up 30% year to date that we are still in the sweet spot. one could argue there is another three or four years of the recovery, limited supply, jobs improving. >> what exactly did blackstone do to make the operator a leaner and more financially viable company? cost in the front office as well as around the globe. they expanded their footprint by about 80%. 100,000 hotel rooms in the pipeline. they are making aggressive moves in china. your research report is fabulous. you talk about an $18 share a fair place to enter the transaction. our institutions under pressure to acquire these shares at the ipo? is it like twitter or facebook or a more traditional deal where the guy is going to call up and

say by hilton, and they will say, no. hype arounda lot of lodging to the question is, do you buy this stock or other names -- marriott. we say fair value is $20 a share. we are a buyer anywhere around 18 or $19. we will not be surprised if it trades really well out-of-the- box because of the interest. but the question is, where is there more value? we say at the higher end, more value at starwood. >> are others overvalued compared to starwood? multiple value 13 of 14 times, pretty high. >> where the want to be positioned? starwood is more levered to gateway cities in china. >> what is a gateway city? >> new york city, los angeles, san francisco, boston. tilton is more like mary.

-- hilton is more like mary. >> is it because blackstone is staying put and not selling any shares? >> they want to hold on for the recovery which at last three years and we should get -- >> does it make more of the lien -- appealing for anybody wants to get on the ipo? , is there more value in starwood or hilton? the rising tide lives all boats but there is better value -- >> is it like a search and evaluation and then it goes flat for five years because you have the overhang of 76% blackstone shares and five percent other? .hat is a huge amount >> definitely a big concern for investors. stake forld onto the many years, according to steve schwarzman -- it could be two years -- >> they will not miss the recovery and not the exit. look for them to exit the next couple of years. >> to the nobel laureate michael spence. you live in hotel rooms, jetting

around. when you look at a hilton hotel, how do you perceive the brand? >> my experience with it has been it is good, but it is not at the top of the heap in terms of service, luxury, and so on. >> a very good. michael spence. is that position right to where they want to be? >> i would align them much more with the marriott been starwood and i think starwood is a much that a brand. >> but what hilton has is a really amazing real estate portfolio, $15 billion, almost triple starwood. if they monetize it is a game changer? >> look for them to monetize the next couple of years. reitr as a spin out as a -- we think they will spin out to a reit the next couple of years. >> are you suggesting this is a real estate and not a lodging transaction? >> as much a real estate transaction as a lodging play. >> what about overseas exposure?

are primarilyies in the united states and all the growth in china is something hilton cannot play into as well as the rival. >> the problems most of these operators face is the u.s. is saturated in brand so although global brands are looking to china for growth. hilton is going to add 40,000 rooms the next couple of years. new york,dorf astoria is that an out transfer hilton or a trophy property? >> that is a big real estate play. 1400 rooms -- >> i cannot imagine what the real estate is worth. >> highest and best use is probably not 1400 rooms. they can condo part of it. they obviously need to put capital in. >> we could live at the waldorf. >> how much money would that cost? >> i have to go into michael porter >>. ♪ it's the top ♪

>> it the eiffel tower. i came from theater. i can match you any time i want. that is the twitter question of the day and why it is so great to have you here. we'll has the best rewards program -- who has the best rewards program? it, you can get airline miles and hilton points. that was my two cents. we've got a lot more coming up on "bloomberg surveillance." in the next hour, on bloomberg television and radio, or nardelli willob talk about gm's new chief executive mary barra. we are streaming on your tablet, your phone, and bloomberg.com. ♪

>> some breaking news concerning home depot. speaking at an analyst conference today, saying the full year 2014 earnings growth will be about 17%, including a buyback. also seeing sales growth of about five percent. positive growth trends for home depot. also adding eight new stores. also raising the margin expansion, operating margin. what you always want to see, sales and margins at the same time. >> and buybacks, $5 billion, repurchasing its own stock. >> robert hurt -- robert nardelli will join us with a perspective on that in the next hour. it is time for morning must- read. margins are expanding. here's scarlet fu. ? a slate columnist talking about the buybacks are a mechanism to boost this bob rice. you should ignore carl icahn and

other activist investors encouraging companies to use their cash to buy back shares. he says -- [laughter] just like the way he put it. the idea of these corporate raiders, carl icahn among others, are pushing companies to abuse their cash to buy back stock to lift the stock price and then they sell out. are forist investors the longer-term, the long ball. >> the question, where are the jobs? ix?t do you have, ale >> looking at where the new next liquidity risk is. he says -- >> the speed of finance, the

speed of transactions across the world. from newpence with us york university. you really thought about this, the affect of china on emerging markets and capitalism. >> china is about the same size c's plushe other bri mexico an intermediate -- and indonesia. i think most likely the outcome is they will have a bit of a slowdown next year, and it will be very scary in markets because they won't know whether it is permanent or temporary. and then i think the new growth engines will pick back in. find a bit of a slowdown in china -- i've got to make some news here this morning -- is it a recession in china? >> by our standards, nothing like it. a slowdown would mean frightening markets and the little worrying for policy markets and china would be 6.5%. >> under seven percent royals

the markets. michael spence, we will talk about the focal rules in a bit rule in aavolcker bit. >> steinway, the iconic brand. for a babyis open grand. >> i want the steinway upright. >> it takes a year to build it. >> if you are asking, in walnut. >> thank you. >> this is "bloomberg surveillance" on bloomberg television and radio. ♪

>> good morning, everyone. "bloomberg surveillance." let's do a data check. i want to get to scarlet fu. this is why we do "bloomberg surveillance." check, but the next section. flat, flat.

1.3767., talk about the wrong call, the euro will weaken and we will all die. forget about it. it went the other way. scarlet, this is wonderful. golden,hould have added because our next guest that a lot of gold. steinway and sons has a new owner, hedge fund titan john paulson. for just about a half $1 billion. a promise to keep the quality but a lot of people, pianists, worried the cost-cutting will win out. we visited the factory here in new york to see how the pianos are made by hand. at the steinway piano factory in astoria, queens, tradition rules. the american companies pianos are made about the same way they were 100 years ago. the musicality of the instrument is always the very first thing we look at.

in some cases we can implement technology and you can save money, save -- save time and improve the instrument. that happens. but there are other times, technology, no matter how advanced, cannot do the job a craftsperson can, working with the wood. some things machines and robots can do. -- cannot do. handcrafting every piece of the instrument sets it apart from its competitors. it shows up in the price tag. up to $150,000 for a new concert grand. the head of the restoration division, he has worked -- it from the inside in. -- from the outside in. >> five owners and 150 years has not disrupted the loyal following, ranging from famous musicians like billy joel and

wall street titans like john paulson, steinway's newest owner. wally lays the final touches on this piano manually adjusting the density of every key to achieve the sound. >> no cutting corners. everything is handmade. there are no machines, no nothing. you have to put pride into your work. most of the people, you know, that is the way we do. >> those are all highly skilled american jobs. >> amazing. >> fantastic. outstanding. made in astoria, new york, just east of our headquarters. there is a steinway tone that is different. .he touch and feel i'm sorry, there is only a steinway. i needed under my

tree, scarlet. what about the upper right, built since 1903? simplys simply -- will make you cry. we have the ceo of tone at steinway. were delighted john paulson was ultimately an acquirer because he is an owner of three steinway pianos. >> he plays piano? >> he plays a bit but members of his family play quite a bit. so, it is a family affair. >> when he plays chopsticks, he can do better than me. within the steinway magic and brand, how do you find the labor? how are you going to maintain the tradition of the older people we saw? >> it is an extraordinary situation. in our factory in a story we have third and fourth generation workers. so our best recruiters are our current workers and they are also the one to maintain the quality control because workers

who are not committed to the same level of excellence are not invited to stay. both of the recruiting and the quality control is done by our current workforce. >> colberg had put a bid in but john paulson one out. what makes it so attractive to private equity investors? >> a rare 160-year-old company that has rare growth opportunities and the brand is known around the world and the product is clearly the finest of its kind. the combination brought in many potential acquirers. >> when you say organic growth opportunities, do you mean domestically or outside the united states? >> in both. the most obvious is the developing world. we have a very quickly growing business in china, brazil, russia. we also have great growth opportunities in the united states. go outside the united states, the jobs you will need to hide her to make the pianos, will those be in the united states of the countries? the twoe committed to

factories we have, new york city and hamburg, germany. >> is a steinway in china the same as at harrison's at 58th street? >> exactly the same. >> the same in beijing? >> we typically supply our customers with pianos from hamburg, there are minor differences. >> what are the differences? >> cosmetic differences. mainly. york andff arm in new rounded in hamburg. minor differences because since 1880 we have run the two factories in overtime -- >> can i go narrow? 1826, change from bach and was your symbol, and then you figured out the felt. where do you get the felt on your damping keys? michael spence studied this at oxford years ago. the felt comes down on the

string -- >> that's right, the hammer. we do not make our supplier list, the -- public. >> triple top secret, how they make the felt? >> everything is top secret. >> you mention china and perhaps brazil. and they are dealing with higher inflation and slower growth. what is the appetite for a $150,000 grant piano? >> let's choose china as the first example. customers in america have had the opportunity to acquire a steinway. so, many of the people who will own a steinway, already do. that is not true in china. people my age grew up during the cultural revolution in china where music, and particularly western music, was not loved away it is today. today there are 35 million chinese children taking piano lessons. it is an astounding number. and we hope some of them will ultimately on a steinway. >> a driving question -- how do

you get a steinway in a skyscraper? do you really put it up aside? >> in new york city, in particular. in many of the world capital cities cranes are used to bring pianos and from the outside through the window. but more modern buildings have freight elevators that are quite a commentators. -- quite accommodating. michael spence, d c a steinway in every home in shanghai? >> there is an enormous wealth. is a very large group of people. i think a lot of them will want to own a steinway. >> some of the finest guinness in the world are coming out of china. yound the pricing power would have presumably there, the chinese consumer has the mindset if it costs more it must be higher polity. i suppose it translates what you can charge for abb grand -- for abb grand. >> they are recognizing steinway is the finest of its kind.

>> those walnut sound different than the black pianos? >> no. >> ok, scarlet, walnut k52. >> and i would like a yacht and a dupe locks on park avenue. >> you might be surprised to find how many yachts actually have a steinway on them. >> really? sweeney, thank you so much. ceo of steinway. just recently sold to john paulson. we've got much more coming up on "bloomberg surveillance." point $5r, four trillion. u.s. stock market capitalizations of far in 2013 $4.5 trillion. we are streaming on your tablet, your phone, and bloomberg.com. ♪

>> good morning, everyone. "bloomberg surveillance." i'm tom keene. alix steel and scarlet fu are with me. here are the headlines with alix steel. >> in the ukraine rightly stormed independence square to dismantle a camp built by protesters, despite please by

western diplomats for the government to not use force. the demonstrations began almost three weeks ago when the country's president rejected a trade agreement with the eu. to bidfricans have begun farewell to nelson mandela. his body will lie in state the next three days in pretoria. the government expects as many as 2000 people and our will file past his casket. his body will be transported saturday to a village where he spent part of his childhood. mandela's funeral will take place sunday. david ortiz has been named the major league baseball's top designated hitter. not kidding. the boston red sox slugger had a batting average of .309. tom is doing his happy dance. the seventh time he has won the award. >> he is a first baseman, david ortiz. dazzled us in the world series. the yankees did not. let's have a moment.

[laughter] but the basic idea, he is a first baseman. he showed great agility. >> david ortiz and agility do not belong in the same sentence. power, maybe. headou are a yankee meth here. >> jacoby who? ury.lsb talking about how u.s. stock market help fill the government coffers. the white line shows the u.s. , wek market capitalization have seen a monster increase in shareholder wealth. according to dan clifton, it will add about $100 billion of tax revenue. it brings up an interesting question. wealth has been rising but there is no real income growth that we can see. growth, is the tax

though. john taylor from stanford university suggests there is stabilizers -- there are stabilizes in a cyclical covered. michael spence, are we having a cyclic or best cyclical recovery or structural where things will get better? >> we are having both. we thought we had a cyclical recovery after we did not die of a heart attack but it is both a cyclical and structural. the structural part is hard. recovery is al lot more modest than we have seen in the past -- >> and taking longer. structuralons is the one takes longer. deleveraging, because it was a balance sheet recession, takes longer, and the government is under invested. >> are we taking longer because of competition from abroad? a new globalization? i know this is something you really thought about -- the lack of investment and jobs here because the investment is going

to -- >> in a sense. but the problem was, when we came into recession, we were running on a highly leveraged economy that generated excess aggregate demand. and then domestic. and then it dropped. like a stone. so our main problem is we don't have enough aggregate demand. what our economy is doing is restoring some of the domestic amanda slowly and accessing -- domestic demand slowly and accessing external demand because we are becoming more competitive. ,he exchange rate, natural gas and just resources. labor, capital, and stuff moving toward the tradable sector because at the margin -- >> are you willing to say 2014 is an american year? >> no, i wouldn't go that far. compared with europe, yes, but i don't think we will get back until after 2014 and when the

government decides that its portfolio has a bigger investment. >> that is where i wanted to go. can washington assist or do they need to get out of the way? >> sometimes governments to get in the way. so, both sides of this debate are sometimes right and sometimes wrong. the government have a positive complementary role to play. they generate human capital through education. they generate the knowledge and technology. they generate the infrastructure by investing. and if you under invested for too long, you impair your potential growth. >> michael spence, noble laureate, joining us for the hour. he talks about the government having a role to play. taking a, regulators step to dim proprietary trading and prevent a crisis. the volcker rule, we will discuss that next right here on "bloomberg surveillance." ♪

>> good morning, everyone. "bloomberg surveillance." across the "surveillance" nation, a beautiful morning in the nation's capital. in the vicinity of the state of o'hare --

chicago, illinois. december, to say the least bit of safe driving to all of you watching and listening to "bloomberg surveillance" in the vicinity of chicago. we have to get to company news. she is warm, safe, and drive. >> google increases spending on its data center in taiwan. it doubled spending to $600 million after it sees surging demand across asia. verizon open to swapping some of the airways it is trying to sell. selling asider certain blocks a game capacity and other areas. t-mobile could be a likely it are for the airways. ibm sees a discouraging economy. for the vp says demand company's tech services depends on the economic climate, and right now the climate is "not very encouraging." is enjoying signs of recovery but north america is uncertain. he made the comment in a

conference in new york yesterday. of course, they also had the big drop-off in sales in china. erianke from mohamed el- and michael spence, the slowdown, it is tangible. >> some wondering how much is company specific ibm. >> because north american weakness here is not something we tend to hear from tech and biz, so it does bring to question ibm. despite snowy weather in d.c. yesterday, a stricter volcker rule was adopted yesterday by five regulatory agencies. wall street faces increase government oversight, like traders cannot be reworded for proprietary trading. -- could not be rewarded for proprietary trading. preamble.s ,850-page 850 pages of false positives. no one has said more about the

idea of be careful what you wish for then nobel laureate michael spence. this 2010 essay on risk him arguably the most important of our financial crisis. he talked about the risk of making regulations, for that matter, on risk. you have talking so much about this -- you have talked so much about this. be careful what you wish for. what is our fear of the volcker rule. >> our fear of a volcker rule -- cost ofker rule the imposing restrictions that we think will limit the potential for systemic risk will be higher than we expect. so the benefit cost analysis, toch is sort of, do too much prevent potential damage in the future and pay those costs now or don't do that and then run these risks. that is the trade-off we have. and the people who don't like the volcker rule, other than those that are self interested, the ones who say those

restrictions are powerful enough to produce cost. within thely analysis, and the sophisticated analysis, title one and type two, what most of our viewers would say is, yes, but we are not in a vacuum of manhattan, we are not in the vacuum of vacuum of, not in the the united states. we are doing it in a complex global system. volcker rule the succeed if not in the united states? on the other hand, if it generally creates an increment to the stability of the financial markets that are so liquid and deep here, it may turn into a competitive advantage, tom. the 1930s,ngton of ben bernanke, our chairman, out of princeton and m.i.t., mr.

bernanke suggest that we did regulation wrong at the end of the depression, is washington back in the mindset of another time? are they fighting the last war with the volcker rule? is an volcker rule attempt to get at the inherent embedded conflict of interest that go with sort of the fully diversified financial entity. it may not turn out to be the right answer. most people think that these things are not once for all the learning processes. we may discover if there are problems with this and have to modify it later on. but i don't think we are going back to that "let's overdo it" mindset. >> if we look at the global financial system, that the eu and the u.s. are going at it differently, what is the instability level of the global financial system? >> by far, the biggest risk -- >> the laureate iphone.

it doesn't turn off. [laughter] >> the biggest risk is the leverage in the european system. very high. much higher than ours. so, mild shocks could cause big problems. >> continually. will we see the u.s. regulators discuss more with the european regulators to try to stem the risk of saving what we are doing at home? yeah, and the banks for international settlements and the central banks are the core and the financial stability board are the core of the economic discussion. america, better financial system, do we return to the enthusiasm and animal spirits of 2005-2006 or will we turn to something different, a new animal spirit, i should say? >> i don't think it will feel like 2005-2006 because most people think we are not going to go back to the bubble element of that.

the parts we didn't want. have on ak we will continuing basis a very dynamic, innovative economy. don't see it isi different. austin, texas, silicon valley in california, new york city -- >> say new york city, please. [laughter] >> these are hotbeds of innovation. >> michael spence, thank you so much for joining us. the day after the anointing -- the acceptance of the volcker rule? >> unveiling. >> the unveiling. forex report right now, dollar index, under 80, a big deal. stronger yen. sterling, a little bit weaker. michael carney returns to london after speaking at the economic club of new york. finallyar and canada catches -- the dollar canada finally catches a bid. >> also waiting for mortgage

applications coming out at the top of the next hour. coming up on "bloomberg surveillance." we will talk about -- will talk to dan hurwitz on shopping centers and retail. ♪

>> this is "bloomberg surveillance." >> protests and confrontation in

kiev as the crane is torn between europe and russia. the majority choose to look west. agreement on capitol hill at least among leaders. sequestration, it is out. debate and deliberation possibly in. i use bitcoin, i use it to buy plane tickets. but bitcoin, is a good for retail? good morning. this is "bloomberg surveillance ." we are live from our world headquarters in new york and wednesday, december 11. i'm tom keene. joining me are scarlet fu and alex dale. our guest host this hour, former chief executive officer at chrysler, robert nardelli. he is now with cerberus. also joining us -- what a pairing -- one of the top rank chief executive officers in the mall world, daniel hurwitz joins us. busy night.en a cosco earnings coming out early this morning. profit missing estimates as the

warehouse chain is boosting its discount. also home depot at an analyst conference this morning sees sales growth next year at five percent. also spending $5 billion buying back shares. 7:00 a.m. right now, mba mortgage applications and at 2:00 p.m. the monthly budget statement on the day after we get a short-term budget deal. also earnings before the bell, lightbal, revenues a bit and men's wearhouse trying to k, and hiltonn trying to price the initial public offering a day earlier than expected. we will be talking about this throughout the morning. >> joy global, i don't know the name. it is mining equipment. >> it is the story. huge exposure to australia. it shows the underlying end-user demand. if people are not buying machinery -- >> you know who joy global is. >> yes, i am a nerd.

>> a good way to get a gauge on how caterpillar is doing as well. >> if china is not buying, the big miners are not buying them in the trickle-down happens. >> joy global is litmus paper for the mining economy. let's talk about bmw. it is considering building engines in north america for the first time. it would allow the automaker to capitalize on growing demand in this region, at least according to people familiar with the matter. bmw is said to consider the u.s. or mexico for the site. general motors names of mary barra as the ceo. the longtime gm executive is the first woman to run a major automaker. she joins about 20 women running companies in the s&p 500. -- running fortune 500 companies. papertone said to make a

profit of $8 billion millon begins trading. it will be the second-largest pe profit ever. apollo made $10 billion of it -- and its investment -- >> open worldwide, china or hilton worldwide, ginormous deal. robert nardelli has seen the ballet before. the chief executive officer of cerberus and home depot in his past -- chrysler and home depot in his past and now it is cerberus. of many arwitz, ceo mall real estate investment trust as well. have beendelli, we there before. enthusiasm, animal spirits. how do you have a fair idea of? i think blackstone has done a

fabulous job with those properties. i am a big customer of theirs. they've got some really prized properties. certainly the waldorf right here in new york. >> it is where you stay. x occasionally -- >> occasionally i do. but steve does not give me special rates. >> when you look at the ipo, doesn't scream top of the market or is this just a normal process to come out with such a rich evaluation? if it is normal. the second-largest ipo coming out. value is there. they have done a fabulous job. if you look at the remodeling going on and what they have done with customer satisfaction and the aspirational desire to stay at those facilities, they have done a great job. >> dan hurwitz, you are in the real estate game. is this nothing more than a real estate transaction masquerading as a hotel company? >> no, it is not. --y have done a good job in

>> they are operators of a hotel. >> they are operators of a chain. a good management team. metrics are strong. they are the smart money in the air right now and it is good to put your money side-by-side with the smart money. >> you own and manage shopping centers. i am thinking of the conrad hotel, an anchor tenant. >> not really. if you can sell your air rights to them and you can make money and expand yield. but you don't get a lot of business out of it. they don't hold enough people to generate enough business that is going to change the numbers within your shopping center. hilton has ass, huge real estate portfolio. as a real estate guy, is it in their interest to monetize that and what would it look like? >> i don't think so. i think it is their interest to control it. when you start to monetize and

separate the real estate from the operating company, there are a lot of examples where it does not work. their operations -- again, i am fairly familiar running hotel operations -- if you look at their adr, occupancy rate, customer satisfaction, amenities -- >> 100 something or room -- >> against the industry, tom, is my point. they can command a very high price but they deliver. they deliver on consistency of expectations of the customer base. >> what does it say for 2014? cristina alesci, our mergers and at position correspondent made very clear the animal spirit was not there this year. what you see at cerberus and the celebration of a hilton deal, does it bode well for next year? >> i am optimistic that that will continue. i know in my own personal business we bought seven companies already this year.

i think the momentum and optimistic outlook for next year should continue. familiarou are really with the public-private, go public again scenario. what other risks hilton might have to watch out for in doing that? >> i think number one, going private -- my experience at cerberus, we were able to do things you otherwise would not be able to do in the public sector. we were able to monetize about a billion dollars in what i call non-earning assets. we were focused more on cash than the book value. if you were public, the analyst would give you a whacked because it was below book value. but you have to make sure that retain then or operational focus and focus on excellence and continuous improvement in those operations. >> lets rip up the script. 7:00 a.m. on a wednesday morning. robert nardelli, we talk about theress dimon and

volcker rule, what about nardelli and the effect? >> we have been talking about it for a year -- >> does it change cerberus operations? dearspoke to some of my friends at ernst & young -- >> exclusive. nardelli has friends in the accounting business. >> you always have friends in the accounting business, right? personally and professionally. has been studying this for some time and there are ins and out with a 900 pages, the devil is in the details but it is some of the rules, with 17 unique metrics, down to seven. one of the big concerns is the ceo's they have to attest to these things. it is like sarbanes-oxley. tremendouss complexity. i think it is going to slow the process down because there is this fear in this analysis that

will have to go one within the banks. >> this is a critical point, the idea that nardelli will have to lean over the desk and put his signature on something facing potential civil or criminal wrongdoing's -- >> but at the same time he is not personal responsible, which is what a lot of critics push back on. notet me just say, you may be legally, but i will tell you, there is the spirit in the letter -- spirit and the letter. ien i was signing at 404, felt totally responsible as the custodian for our investors. >> we will see how this plays out certainly. hurwitz, ceo-- dan of a real estate investment trust, what kind of impact does the volcker rule have on your industry? >> we have to see what happens to the real estate industry in general. in lending criteria and how it works. but i think overall the impact will be somewhat minimal.

i think for the public companies it will be minimal, because that is not how we access capital, through the hedge funds or private equity. there are a lot in the private , but i thinkoes the impact will be somewhat minimal. >> a good hour here with dan hurwitz and robert nardelli giving perspective on so much in business, economics, finance, and investment. >> and number coming up later this hour, 14%. how much deliveries of cars and light trucks increased for general motors in the month of november. they've got a new ceo, mary barra. can she sustain this level of growth? "his is "bloomberg surveillance on bloomberg television and radio. ♪

>> good morning, everyone. "bloomberg surveillance." wednesday morning. thou futures, -10. this matters now to our guest host -- we dragged him out of the mall, daniel hurwitz, he owns 431 shopping malls that you can drop your kids off at. his shares, surprise, nicely outperform amazon. him and off the bottom of february of 2009, ddr doing

better than good. how much of a threat is amazon to your world? >> i think not a threat at all. they rationalized some of the business. they are more of a distribution channel than anything else. retailers made rethink how they distribute their goods to their customers. they have made everyone sharper, everyone better. >> that i still got to go to the store and look at the item -- >> and 94% of the business is still being done on bricks -- at bricks and mortar. traffic, x teenagers? >> traffic is better without the majors teenagers has been pretty tough. >> teenagers hang out in the .allways looking up the wi-fi dan, when you look at how retailers are doing, operable store sales still the best metric to gauge the health of the retail industry. >> i actually think that is the worst number. comp store sales are interesting but very controllable. you can always raise come store sales, just lower your price.

we look at margins. we talked to retailers. comp store sales to understand whether they will make money or not. they pay their rent with a margin. >> i tried forever at home depot to get them off the analog measurement of same-store sales to digital. we were growing 20% a year and they were still fixated on same- store sales. dan is exactly right. it is an archaic measurement. it is an easy measurement but not the right one. >> so, who is doing well on the margin measurement? retailer selling branded goods off price. you look at ross, tj maxx, s, nordstrom rack. value, not sheep. >> down the line, will those players get margin versus revenue? >> i think that will get margins. one reason is they are taking

advantage of the dislocation in the department store business where department stores have to cancel orders already in the country. they are buying the goods and marking them down and moving them in the store. >> i have about 18 more questions. today, a six hour "surveillance." congressional negotiators managed to compromise. can they sell it to their colleagues? republicans versus democrats are making progress here. this is "bloomberg surveillance" on bloomberg television, radio, on your tablet and phone and bloomberg.com. ♪

>> good morning, everyone. "bloomberg surveillance." nardelli and i are talking about chrysler engines. so manly. then hurwitz with us as well, from ddr. but first, helping us with a delicate topic is alix steel. >> we will start in the ukraine because the testers have reclaimed independence square in kiev after a night of battles with police -- protesters have

reclaimed independence square. demonstrations began almost three weeks ago when the country's president rejected a trade agreement with the eu. to bidfricans have begun farewell to nelson mandela. the late leader's body will lie in state for the next three days in pretoria. the government expects as many as 2000 people an hour will file past his casket. his body will be transported saturday to a village where he spent part of his childhood, and a funeral will take place sunday. david ortiz has been named the major league baseball top designated hitter. garlic is crying and tom is smiling. he has a batting average of.3 9 ,309, and this is the seventh time in his career he has won this award. >> complete american league construct.

>> you are just saying that because the yankees are not on the list. >> the yankees do have an entire though.dh's, strategy.way from the >> that was very delicate. now we have to talk about a manly topic. topic becausey general motors just may mary barra as a new ceo. she was that into a much different gm than five years ago. a clean slate. u.s. government just sold it last shares of gm earlier this week. auto sales strongest since 2007. growth.s what does mary barra need to do to sustain the momentum? livedng someone who has through it. bob nardelli, the ceo of chrysler during the top years, 2007-2009 and the ceo of home depot before that. when you went to home depot, you did not have retail experience and when you want to chrysler you did not have car experience.

what is the benefit of getting a ceo from outside the company? >> i take exception. i was a consumer -- >> and you probably owned a car -- drove a car. >> and tom and i worked on cars growing up. there is a definite advantage coming in from the outside because you are not associated and you don't have a lot of the best the relationship with a lot of the legacy issues. mary havingk about five priorities, worried about competition and making sure the brand are able to differentiate themselves and getting rid of the fiefdoms. that one is going to be tough. she has been there 33 years -- >> and responsible for a lot of the products so it is difficult to say if she can let some of her babies go. >> so much bondage wear design engineers relate to these platforms like children. the toughest thing i think for mary will be after 33 years, to

turn her hat and bring an outside perspective to continue the change that dan has put in place. could be a better time for the transition. if you look at where general motors is, they are now outside government control. the very bestife with her health situation, of course. what he has done a great job. pat russo, the lead director, she has done a great job. goodis stepping in, the news, at the top, and the challenge will be to continue that momentum and the sales and so forth. for us the importance as she goes to the new chattering general motors institute. general motors institute. she is an engineer on the stanford, she has the magic of the degree from the general motors institute. what does it mean? >> it means a lot. she really understands the inner

workings, the granularity of what it takes to run a company like this. the good news is she probably has tremendous support across the organization, having sat in many of these chairs. she has good support, good working knowledge, operational focus. the challenge will be the competition, to continue to enhance the platform to differentiate the brand. she's got some globality issues l over there. she will have to separators up a little bit and bring the outside in perspective to change what she has put in place. that is the toughest thing a ceo has to do. >> dan hurwitz also joining us, the ceo of ddr. margins versus sales. what is it like in the car market? is it about products or operating margins? >> at think it is both. i think you have to have both. if your product is exceptional you have a better chance of driving margin because demand goes up. it is important you understand

your product and where you can go with margins. and it is important how you price the product. where you bring it in. you bring it in at the hive, below, do you market down, maintain price? a lot of games that get played with pricing. at the end of the day, the margin cuts through all of that. >> from where you sit looking a parking lot in malls, a lot of cars out there? cars out there? >> a lot of new cars on a regular basis. and you see it in new car sales. >> what supplies are really high. will we see more discounting to offset the massive supply? >> a very important point. i think what happens is enthusiasm grows and you tend to not get closer to the cliff but over the cliff. inventory wewe had had to discount because the dealers were drowning as the prior management was forcing cars onto the dealerships. >> bob nardelli, dan hurwitz

with us. >> tonight is when hilton prices its ipo. arts would've weston -- who has the best rewards program? else? honors, something ♪

>> good morning, everyone. "bloomberg surveillance." sun ever brighter -- although there is ice on the stairs of the capital. they may shut down the federal government because there is a the garfieldnear statue on the west side of the capital. be careful. it is icy out there.

>> i'm scarlet fu here with tom keene and alix steel. the gauche eaters on capitol hill actually came up with a budget compromise -- negotiators on capitol hill actually came up with a budget compromise. and it will still cut the budget deficit. -- protests from both sides the question is, can they sell it to the rest of congress? we head over to chief washington correspondent peter cook. a tough sell. >> i braved the ice to get in here. members of congress have braved the conditions here in washington to cut this modest mini deal between patty murray and paul ryan. at the end of the day, i think they will be able to sell it to their respective caucuses. will have opponents among house republicans and senate republicans, to be sure, but because paul ryan's name is attached they will get enough republicans to get a pass. there will be democrats as well who are unhappy because it does

not include increase in taxes, particularly the corporate tax loopholes they talk about all the time and it does not include expense -- extension of emergency unemployment benefits. but at the end of the day they have enough of the democrats didn't really matter, like steny hoyer and chris van hollen. although there will be some drama. know paul ryan, very familiar from the presidential campaign -- >> i think we know paul ryan from the presidential campaign. where does patty murray from washington state fit in this? does she have support? >> she has a lot of credibility within the senate democratic caucus. she was handpicked by harry reid to run the budget committee. she is a veteran of the supercommittee negotiations. she has dealt with paul ryan for several months. i think it is pretty clear democrats believe that she did hold her own. she did not get what she wanted. paul ryan did not get what he wanted as well. this is a standoff, a truce. i think both sides have something to show their respective parties, but they have a lot of work ahead of

them. i don't think anyone on the democratic side faults patty murray. >> bob nardelli from cerberus. a question. breakingistened to the news last night and congressman ryan was talking about no increase in taxes, i breathed a sigh a relief in the first thing i read this morning is airline passenger rates will go up. the devil is always in the details. what is going on? can you explain it? >> when you go to the house budget committee website there is a lengthy for gormley asked questions list explaining why in paul ryan's review the increase in the aviation fees is not a tax increase. i can tell you it is a tough sell to some of the republicans in the house. he makes the case that these user fees -- and that is what they are calling, the grab bag of revenue raisers in this package -- that those are not tax increases. one person's tax increase is another person's user fees.

that is why some conservative groups will not back the deal and some conservative house republicans will walk the other way. that is the risk for paul ryan here, he takes -- take off enough of the conservatives for the first time ever the break with him. i want to keep a headcount on how many abandon him. >> "bloomberg surveillance" transparency, that nardelli has flown on a gulfstream nonstop for eight years, has not been on a commercial flight -- [laughter] >> that is not true. i do about 200 nights a year on the road and when i saw the airline passenger fees going up, that is a tax to me. one thing paul ryan will make the case of is that the fee was set after 9/11, and the argument they are going to make is the fee was set to cover the additional security costs put in place after 9/11 and over time the fee is not large enough to cover those costs. >> peter, very quickly. what is the sense -- what does

the sense of compromise mean for the debt ceiling debate? >> all the chips will be on the debt ceiling fight. it will be extended because of the extraordinary measures probably later in the summer. that will be the one leverage pump between now and the midterm election. no threat of a government shutdown until after the midterms. the debt ceiling will be the one area where we could still have a flashpoint. >> peter cook. watch the ice. then herbert -- dan hurwitz is with us. once again, the government intrudes. will they slow the economy down again? >> i don't think they will but that is what i worry about the most. i lived this many times. when you have sequestration, it hurts retail sales. when you shut down the government, it hurts retail sales. never underestimate the government's ability to put it back in recession. if left alone, i think we are fine but unfortunately the people in washington don't leave us alone. >> we will have much more.

>> tripping over their feet. let's do a data check. european stocks are modestly higher. not doing a whole lot for u.s. futures. s&p futures up by less than half a point. >> "bloomberg surveillance." we are on bloomberg television and radio. it look for us out of the brand spanking new bloomberg.com. i really like it. really smart new review of bloomberg.com. all of our interviews are out there. i'm tom keene. with me are scarlet fu and alex pettyfer guest post this hour, robert nardelli from cerberus capital management and dan hurwitz is with us, chief executive officer of your local mall, he is that ddr, with over 400 miles. , a topic that demand attention every single day. you either hate it and you see it as a fraud or you believe it is the future. the chinese government banned it

to use. arehe other side, companies accepting it and happy to cash in on the appreciation. online travel agency cheapair.com also takes bitcoin. the ceo and founder joins us. why did you decide to accept payment in bitcoin? >> i have always been fascinated with bitcoin ever since i first heard about it but i never put two and two together until a customer of ours asked one of our travel advisors if they can pay in bitcoin. i got wind of it and i thought, hey, how cool would it be if we could provide a way for people to buy flights with bitcoin? i did some research and i found it to be technically feasible, economically feasible, and we got it done. >> technically and economically feasible but also very volatile. how do you protect yourself from the wild swings? >> to be honest, we don't have to. i have been getting all of this undeserved credit from

customers, it is wonderful, you are taking the risk here that i have to be honest, the second bitcoins come in -- we have to pay airlines in dollars and so we are exchanging them immediately. so we are not taking currency risk at all. >> what new customers are you hoping to capture by accepting bitcoin? >> we are definitely reaching a different market. $34,000r day we sold a pair of first class tickets to australia with bitcoins. , we are notair.com selling many of those tickets. without a doubt, we are appealing to a type of customer we would have never appealed to before. >> let me ask you the uncomfortable question. $34,000ust assume a pair of tickets, to be polite, and underworld transaction? bob nardelli from cerberus did not call up to make the transaction, did they? think that is fair.

there are plenty of criminals to buy tickets in dollars. there are a lot of people who got into the bitcoin craze early on, and so a $20 bitcoin is now 2000, so they made their money that would. i spoke to a lot of bitcoin customers, and these people are well-l ugly -- heroically intentioned. trying to get big banking and big government out of the currency market. and they believe they are making the economy more democratic, with a small tree. >> i would point out that mr. u.s.is transferring into dollars immediately to avoid the volatility. bob nardelli, a question. >> let's stay with the $34,000 ticket. the margin on that ticket, is it better or worse than the

inflation scarlet was talking about on bitcoin? a better margin as a result of trading goes out then you are on the actual product? >> no, we don't make or lose anything on trading it out. out.- trading it i don't know what you know about the airline business, but there is very little margin. we make the same amount selling a $200 ticket to vegas or $34,000 to australia. it does not really help us to sell those kind of tickets, but we still get excited about it. >> one final question for you. what level of scrutiny or regulation has accepting payment in bitcoin attracted? >> none so far. everyone talking about the government may get involved, but regulation. isn't

>> so far, the government has paid out of the way and has not looked into anything. the ceo and founder of cheapair.com more after this. ♪

>> good morning, everyone.

i'm tom keene. scarlet fu and alix steel with us. anchor betty liu, and she knows the distance from the galley -- kigali to omaha. hereward buffett was promoting his new book. tours gone on a huge book and it has become a new york times best some -- casella. he will be back in new york, joining us in the studio, along with the president of rwanda. they were together at an event honoring howard buffett -- >> you can do a thing with your hair this morning? >> use a lot of hairspray. thanks for pointing it out. >> very cool. >> trying to talk about something serious and you are looking at my hair. [laughter] it's very cool. mr. buffett with the president of rwanda. wonderful. "in the loop" with betty liu

this morning at 8:00 a.m. us targeted >> home depot updating its 2014 and 2015 guidance. the stock relatively flat. it was up earlier. the company expects to meet 2015 profitability goal a year earlier. have donedelli would it in six months. >> it will also boost revenue growth by about five percent next year, it will spend about $5 billion buying macs -- buying back shares. it is hard to find somebody saying something bad about the company. even if analysts are worried about valuation, it is difficult to find a negative fundamental. >> the perfect are sent to william in -- to weigh in, former ceo of home depot, bob nardelli. when you hear the numbers, what does the company have most to worry about as we head to another year of decent growth but certainly not blockbuster? >> look, i think they are doing

a fabulous job. i think they have a dominant and each of the merchant departments. i think their stores are very attractive. they are well kept. they provide a lot of aspiration. they've got a ton of private brands out there that certainly, and dan was talking about, product innovation. i think they are really buttoned down at the operational level. foot, margins.e i think dan is projecting 4.5% to five percent, right in line with home depot's projection so i think they will do a fabulous job. >> is home depot or lowe's a better tenant? >> i love them both. [laughter] them both and one sometimes is more appropriate in a given market than the other. they are both doing well. the point on home depot, it is a terrific company. they have done a great job and continued -- will continue to do

better. >> the housing and the renovation market. they get them both there. >> if you look at multiple expansion this year, they have really done a great job. >> home depot shares are moving higher in the premarket right now and we will continue to watch it as we move forward. coming up on "bloomberg surveillance," do you have points with hilton hotels? they may not be worth what they used to. "surveillance." ♪

>> good morning, everyone. "bloomberg surveillance." a great way to look at 2014. stein,schlos evercore. good morning, everyone. i'm tom keene. colorful and alix steel is with us -- scarlet fu and alex deal is with me. dan hurwitz, owner of many malls, and robert nardelli with cerberus capital management. bob inman news -- bob in the news, the freedom group, you were the chairman of the operation.

22,ather has a treasured rifle, remington, marlin arms and then the other issues wrapped around newtown. an update on what a company is doing to extricate yourself from the dilemma? >> i think what was reported in the paper, public information, is there is a private investor who has taken a minority interest in the freedom group that would allow those investors that are uncomfortable being in that particular company, it will allow them to exit. i think steve has done a very admirable job. they tried to market it. been a lot of concern over that particular business, so i think he is making a very positive move forward to respond to investors. gnettee us a big yet -- vi

of the debate in the boardroom. is it a question of you being pressured or a feeling that you had control of the process and you are doing the right thing? verythink steve stood up quickly and we had to do something. concerns raised by the he was right out in front and is a cheap rate trade and doing a marvelous job. >> thank you, bob, very much. i thought it would be appropriate for you to comment associationh your with the roman catholic church. "-- was named person of the year, pope francis. he made a lot of headlines when he slammed the idea of a trickle-down economics. putting into question the value

of capitalism and people just didn't the capitalist system to -- shying away from the social aspects we most equally with the pope. anti-same-sex marriage or unions, abortions, not really mentioning that. sort of shying away. >> with us this morning, robert nardelli growing up in western illinois and part of the italian heritage of the middle of the 20th century,. i grew up in the shadow of fulton j sheen. tell us your thoughts on pope francis. >> i think, first of all, tremendous recognition of what is being called "e-book. he is trying to connect in a meaningful way and really trying to listen, learn, and then leave. i think that is a tremendous attribute and certainly one that i think the catholic dioceses around the world are certainly supporting.

outgoing, forward-looking. >> and the church has been galvanized after what we have seen. >> i think given some of the prior issues he has done a fabulous job in the short-term to galvanize and bring together some of the issues. >> bob nardelli -- he is the person of the year. >> to give you the idea, he beat out president barack obama -- >> miley cyrus -- no, david ortiz. get you some company news from the files of bloomberg west. google increases spending on its data center in taiwan. doubling the spending to $600 million. in demandfter a surge for gmail and user services across asia. verizon is into -- open to swapping some of the airways try to sell. it would consider trading a certain block to gain capacity and other areas. t-mobile could be a likely bidder. ibm sees a discouraging economy.

a senior vp at ibm said the man for the tech services depends on the economic climate. right now he says the climate is not very encouraging. signss europe is showing of recovery but north america is more uncertain. that is today's company news from the files of bloomberg west. really pushing against the conventional wisdom right now. >> a huge bellwether. the day,ory of helping's ipl and times are changing for the loyalty programs. honors points are being devalued. what does it mean? more pointst 90% tuesday at the conrad maldives for the night. .e have brian kelly on the eve of the ipl, what are the points worth and what is the point of playing the game? increasinghotels are the points. you mentioned conrad maldives.

in general, the loyalty programs are huge moneymaker for the hotels and airlines. in preparation for the ipo hilton devalued, because they need to pay less money to each individual hotel as eugene points. up to 90% increase in points needed, which sounds crazy. >> i know you know everything one needs to know about airline points. some say the hotel points of more valuable. is that the case? starwoodends bidder points are extremely valuable because you can transfer to airlines at a really valuable ratio. you have options for hotels and airlines. points are devaluing but they could still be extremely valuable if you know how to use them. >> what about credit cards? i barred a 40 inch tv on amazon because of the -- i bought a 40 inch tv on amazon because of it. >> it is all about credit hards -- credit card these days. frequent spender programs.

at just getting one point for dollar. every time you use a credit card, have a posted note -- post it note. >> what are we giving up enrolling in these frequent- flier plans, especially credit cards? >> you need to compare it to cash back. is your free ticket more -- worth more than the tv? some don't want to travel more once they are at home. if you do cash back, generally two percent. >> we love having you on because all of us have been taken to the cleaners. what is your to do list for january of 2014? i am having a vacation. taking 12 hours off. what can i do as i get ready for next year? an interesting year because delta and united are putting revenue requirements -- not only do you need to fly but

you need to spend huge amounts of money. top-tier with united, $10,000 a year on united. it if you fly lufthansa and is a lufthansa ticket it does not count. >> good more bob nardelli but maybe not the rest of us. do people actually redeem all of their points or is a waste of money? >> people redeem all the time by huge amount of quarters. people need to stop hoarding their points. but don't liquidate them for really bad redemptions. that tv might be amazing but if you could have had business class to europe, what would you have rather had? >> $72 -- dubai, new york, emirates first-class, 90,000 miles, $90. "time" man of the year. >> we asked everyone who has the best rewards for graham -- an airline, hotel?

>> he is head of pr for the gap. >> how about this? -- finally then idea of being able to get a hotel point and frequent-flier point as well. i hear that men like to hoard their points more than women. women like to redeem them. >> a lot of men get elite status from flying and whenever you redeem points you don't get the elite status. it is always a trade-off. >> brian kelly, thank you so much. , and bob nardelli, particularly your comments -- >> always a pleasure. "time magazine" man of the year. >> and beating out miley cyrus -- >> and david ortiz. >> he's already gotten his award

for the year. a lot more coming up on bloomberg television. "bloomberg surveillance" on radio continues. "in the loop" with betty liu is up next. have a great morning, everyone. ♪

>> good morning. it is wednesday, december 11, and&we are live from bloomberg world headquarters. you're "in the loop" and i'm betty liu. >> i'm cory johnson, enjoying

the lovely warm weather here in notch >> i know, we dug ourselves out of the snow yesterday. we have a lot of great stories, cory, for our viewers this morning. first off, it's done. a budget, congressional negotiators have come up with a budget deal. now they have to sell it to congress. some tea party republicans are critical, as you can imagine, saying the agreement trades off automatic spending cuts for the future promises. and the world's largest hotel chain sells shares in an i.p.o. after the bell. hilton worldwide is looking to raise as much as $2.4 billion. the company is owned by the private equity firm blackstone group. i know cory has some back story for you on hilton. and shares of smith & wes son are up almost 6% in after-hours trade. the gun maker says gun sales are up 27% over a year ago. guns, by the way, something i know we're going to be focusing on in this program, because we've seen, despite all the violence in the united states, gun violence i'm talking about, that gun