china. stocks plunge. i am bruised and battered after visiting chanel. luxury and it's ever higher prices. good morning. we're live on friday, december 20. i am tom keene. joining me are scarlet fu and alix steel. busy markets and a lot to talk about. the last week to shop before christmas. >> did you buy my christmas present you? make sure you do it this weekend. >> you look beautiful. >> overnight, we have data from the u.k.. the bank of japan is maintaining its record easing. that is after the federal reserve decision to taper. we also have the third gdp number. the last look there.

some earnings -- blackberry, remember that company? you used to have it a couple of years ago. they are reporting earnings. >> this is the earnings report. >> it is a losses report. they will not make any money. >> let's go to the data check. we have a lot to talk about. we look at the stocks and bonds -- it to this quickly. it to the emerging markets. the 10 year yield creep up. the euro dollar is weaker. weaker yen. hydrocarbon is up. -- the vix is better. the dow is at a record high. that is one of the shanghai libor rates. it has the attention of the

world. let's go to the chart and tell the story. here is the three-month rate in china. this is good news. it is stability. here is the first blowout. they come in at a higher level to try to stabilize. it has not worked. was taper, with indonesia -- we go again. this links right into coal. >> it does. can the china banks live without help? that obviously does not work. >> you wonder when all of this begins to fold back into the american market. that will be for next week. our theme is to look at the newspaper every morning and give you the front page. >> we have a lead with ray where he left off. there is a jump in bank rates. you mentioned the chinese stocks dropping.

they were the only market yesterday that did not join in on the taper rally. all of the other markets participated. cash is extremely tight in the chinese sector. based on reports that i have read, there are two big interbank obligations. no comment from any banks. this is the kind of speculation. >> go back to 1997. it really began in 1994. things percolate. why do we follow the markets? for those of you that do not hang on every tenet -- they offered rates. this is like canaries in the coal mine. i do not mean to be gloomy, but there it is. little dislocations of the market. >> they had a great article today. what will move the emerging market? is it the fed?

or is it something deeper? >> the dow is at a record high. >> let's move on. we will stay in the emerging markets. there was a gesture from vladimir putin. a few months before the winter olympics, he has pardoned the country's former richest man and his onetime rival. did i say this right? he was arrested in 2003. he has been in jail for more than 10 years. he walked free and a lot of people have been cynical about this. they say it is linked to the winter olympics. >> this is days after they issued a bailout to the ukraine. i was reading that a completely changed the narrative. in one moment, he changed the narrative. >> this is nothing more than -- it was 49 days away? >> go team usa, by the way.

you do not think it has to do the own picks? >> he is showing that he is still in control. >> brewing me with a third front page. >> a discount retailer, they claim it-- is a currency. they told the financial times that this was the political philosophy. they see bitcoin as a refuge from government control. >> they will trade into dollars. there is a disclaimer there. 8 on am going to spend $21.9 a tonka truck. >> they are not on the way to bergdorf's. >> they are not even on your bookmarks. >> it is not fair. >> it is next to product, right?

had bitcoin, maybe he would chop. >> those are the front page stories. in shock, tom. >> common sense in the philosophy on retail. retailers accepting bitcoin? >> not yet. it is an interesting thing that we will see more of. >> it is interesting as a medium of exchange. i wonder about the economics. what is the holes -- pulse? all of the gloom -- we have had our fair share. where were you observing? >> we're seeing that there has been fewer shopping days. it is a truncated season.

it has been tougher and people had to do more earlier. i find that most of these ice -- it hasthe products been a little tougher. >> is this better for online retailers? >> that is a fully right. the weather is gorgeous on the eastern seaboard. retailers always blame whether or the calendar for problems. what is it about the economy and the fact that they will not recognize the customers are struggling. that is really driving the sought units. >> you are really were -- right. as a result, we end up seeing that the luxury guys are booming. weekend?ill i see this where would we go in the

suburbs? nordstrom? this is an exclusive. >> we will go to luxury retailers as we can. >> you'll see some promotions for the luxury brands. not many. >> what are you learning the season about retail? strategically for next year? >> the big thing that will continue happening as technology. it is that of the u.k. right now. it may bring people to products. they will buy that product right then and there. the nature of this is unbelievable. >> i am wondering if it will be the best sales on the 26th. >> i always shop then. >> things are 80% off. >> at this point, most americans

have done their shopping at this point in the year. a lot of people are accelerated. >> not to make everyone feel bad, but i finished mine in july. let me just point that out. >> taipei. >> my husband gives me problems for that. >> she's the only one not stressed. >> i am starting saturday at 3:00. >> i never got the christmas but. you want to fill in the like here. you know you are sick of holiday shopping when -- when you are for new year's, i guess. >> waiting for the fourth of july sale. >> we have a lot of other topics this morning. the market is moving. was a company news. >> we start with ba.

hitting some turbulence in the middle east. the two sides were negotiating a deal for bae's combat jet. this comes weeks after david cameron lobbied on behalf of the company. seniorr microsoft managers charged with insider trading. he passed along information regarding the company's finances to a friend who traded on it. they made almost $400,000 in the scheme over the last year and a half. he managed their finance and investment division. and details on the massive data hacking at target. it occurred when a computer virus infected their credit and debit swiping devices. a chainwide hack is rare. about 40 million debit and credit cards may have been affected in late november through the past weekend. that is company news. you should cancel your credit card. >> that really scares me.

>> you are an expert on this. have you looked at your charge cards? >> no, but that worries me. that is why i do not shop at target. >> i will not say the bank, but i have my cards stolen. they said we know you have never been in minneapolis. the bank covered every penny. >> they look out for you. >> speaking of lost money and better used money. $4900 is the price of chanel's bag. that is up 85%. oh?high can high-end prices tom says no more. ♪

>> good morning. futures are up three. our global strategist will join us this afternoon. that will be live at 3:00. , reallyclarida important interview. with scarlet fu and alix steel, who finished christmas shopping in july. >> i did. tom is starting saturday at 3:00. on my list position now bag. get there early. resident and he shops for a living. i'm hoping you can give me a discount. >> no. >> what does it say.

we're looking at 50% off a target while luxury retailers raise prices. >> the global consumer and the tourist consumer has been discovering these luxury brands. there are lines around the block. there are bouncers to get into the stores. they're trying to elevate the prices because they can. >> i keep hearing about how they are cutting their bonuses and headcounts. when does the music stop your? >> i think we still have some sailing ahead of us. the confidence -- everything points to them being strong. in the jewelry and accessories days, it is doing very well. >> they will keep raising prices, but it will turn people off. when thet raise prices item is already $2000. >> it depends who it is.

chanel and mouton can do that. others have a difficult time. >> i was buying a fancy code for fancy person. two people ahead of me were from ohio. they were asian. the two ahead of them were brazil. they were buying multiple coats. we see this in new york. the luxury energy in new york and washington -- does that translate. >> there is gnosis he like new york city. >> is chanel moving in chicago? >> not the way it is in new york. miami is a significant business. >> the contrast between lower end and middle and stores on the high end. there is a glut of retail space. you see a lot of this everywhere you go.

i am astounded to find that there are 23.8 square feet per percent of shopping space. about four in japan. five in the u.k. why are retailer still reluctant to close stores? >> it is quite hard to close stores. you have obligations. the only other place in the world that has that is to buy. -- dubai. hasmately, the consumer much less choice than they did. so many stores have gone out of business. >> i wonder if it has anything to do with management. you have these retailers run by management that came to age during this age of expansion. they do not streamline or rationalize. they kept opening stores. >> 80% of their profits come

from 20% of their stores. breakeven on the other stores and push them to the internet. >> are they ruining their brands? they have huge popularity. is this brand destruction? >> i do not excel. -- think so. put huge people have amounts of stores in china. if that has any volatility, that will affect the luxury brands. >> tiffany has an apt this christmas. he reveals types of jewelry. what is the difference between much. technology. >> they have been slower to a docked. if you remember back in the day when people started website --

e-commerce did not happen at all. >> interesting. >> this code was so expensive. no discount there. >> how many zeros. >> are you done with christmas? >> done with my shopping or done in general? no, i am a big fan. >> i'm a big fan of fix giving. that was her question. you know you are sick of shopping when -- tweet us. >> i will be sick of it when we have talked about sales for the 20th time. >> go to the ice rink in shop regularly. >> i need kid sized gloves. on the cover of the new business today, we arer

looking at what went right this year. one was the eurozone surviving. you will want to pick that up to find out the other seven and a half items. keep it right here. you are watching bloomberg tv. we are streaming live on your phone, tablet, and bloomberg.com. ♪

>> good morning everyone. i am tom keene. alix steel has our top headlines. >> the final confirmation vote on janet yellen is set for january 6. tune in for that.

they will take up the final vote after a holiday break. the timetable is part of an agreement to avoid a weekend session. a rare veto threat from president obama. the white house says he would veto a bill if the country violates its new agreement. this will only increase the chances that the u.s. would take military action. new york city bans smoking of east cigarettes in bars. this will be prohibited in the places where traditional cigarettes are banned. that will go into effect in four months. >> did they give out smoke? >> just favor. >> that does not do anything. >> there is nicotine in the vapor. >> that would have an very helpful. tools walkingike

down the street. vaping onesee you day. >> the drug delivery is ugly. too intense. let's get off of this topic or it >> let's look at the tapering. a professor at uc berkeley -- there is a theory that it is a taper in a teapot. the decision beats back some criticism. it also signals that it is not prepared to return to a normal policy. >> this carries huge way. it is one of our great economic historians. like chairman bernanke, there is a reach back. my morning must-read is based

on that as well. it has to do with gold. they are writing yesterday that the degree of monetary combinations have not changed very much. old prices should be supported, not weakened by fed action. >> interesting. >> it says that a little bit of tabor was not that much. >> somewhat related, we think. >> we will talk volatility in the markets next. ♪

>> good morning everyone. i am tom keene. with mayor scarlet fu and alix steel. let's do a data check. the market is up three. the dow closed higher.

the euro is weaker. they yen is weaker. nobody is looking at this. they are at turkey and indonesia. they are also looking at china. we will discuss that through the morning. >> there are interbank rates. let's take a look at gainers and losers. i want to highlight t-mobile. there is speculation that they are teaming up with another player. maybe sprint. verizon agreed to exchange airwaves with t-mobile. that is one reason why they jumped almost nine percent. tesla is also very volatile. they had a banner 2013, but that did into yesterday, down five percent. people are still looking at the battery related fires. the visuals are stunning.

people cannot get over it. >> the images that we see this morning in jail or getting out of jail are extraordinary. it is the so sheila picks. maybe it is their get out of jail free card. the president of russia -- the latest of the billionaire. he leaves jail on friday morning. hans nichols joins us from berlin. this is really big news. tell us about the reaction in russia to what the president has done. what does the man on the street in moscow think? >> i have not had a chance to get to moscow. i can hold of papers that are close to moscow. in old east germany. there were other members released. the general consensus in eastern europe is that this is a result

of vladimir putin feeling confident. he has totally consolidated power, so he can release someone who was once more than just a minor annoyance. out, does he come out as an individual or does he come out with a group or party wrapped around him and support? he will have some basis in civil society. the question is how low he wants to stay. he still comes out a wealthy individual. he was able to squirrel a lot of his money in foreign bank accounts. he is still quite wealthy. will he feel confident enough to donate to opposition groups? that got him in trouble in the first place. he was thrown into the slammer. >> you know the floor plan of the white house.

how would you expect that washington will react to this? >> they are clearly trying to acquit it. you see that they are sending to officials. billie jean king is a gay american. there are all of these walls inside of russia that advocates say are discriminatory. my only question is what would bobby riggs think? they would have a great show down. it does show that president obama is playing catch. there are so many back-and- forth's, from snowden and a variety of issues. now he is poking the a.l. vladimir putin. it is almost advantage obama. >> get out of jail free card. it is really amazing. >> this is the first time in 20 years that a president or vice

president has not been going to the olympics. >> this is a big deal. >> they will have to watch on the tv at home. >> it has been the most odd year in the markets. a bull market. great distortion. the outcome dampened spirits and volatility. we are with that -- advisers. he is an expert. what is the distinctive feature of 2013? >> up 27%. nothing to see here. it is the cost of being bearish. that is so high. remember the chuck prince quote. the music is still on, so we're still dancing. to be relevant and manage money, it is very hard not to be. >> this measures the volatility.

20 is normal. we are right back there. should we fear the market? down we go to a more complacent time. let's rip up the script and go right to where we are now. turkey and indonesia -- china as well. have you linked that in? >> what they go have extrudes over and over -- people forget. there's so much focus on tapering. stocks are the only game in town. you stop watching the other things. the emerging markets from the summer -- there is still a lot of risk there. >> what is the significance of this? there is that much participation to begin with. >> the consensus tends to build on itself. everybody believes that the

market will go up, so it does. >> self-fulfilling prophecy? >> we should be worried about the strength of the consensus. when it is broken, that is where they get caught off guard. >> where is the volatility? i like commodities. no volatility anywhere except for gold. >> maybe it was a fad. if it is a currency and bitcoin is supposed to be a currency, one is going up and the others going down. i am not sure what is happening. >> does that mean that there is fear in the market? >> money is flowing out of gold. commodities are very stable. >> i thought you told us you could not mentioned bitcoin. >> i could not. i cannot help it. >> is it for real? >> it is follicle.

you cannot have a currency that is moving 15% a day. it has to stabilize. the volatility is higher. it is relatively low. relative to bitcoin, for sure. >> what are you looking at next year? if you were to write on the fear and the emotion, what is it? >> our clients pay us to be skeptical. we're looking at things like emerging markets. i look at the underperformance risk and it is so substantial. everyone ist indexed to the s&p 500. everybody has that as a benchmark. a start.get off to >> they will say i am back --

off we go. brilliant. >> coming up next, our single best chart. we showed you at the tapered it for markets worldwide. what about a previous taper? that is coming up right here on bloomberg television. ♪

>> good morning. good friday morning. we have your friday top headlines. >> the european union uses its aaa credit rating. it was worried about the creditworthiness of the 28 member nations. the downgrade reflects concerns about the contentious negotiations. the member states could apply to leave. the federal reserve will take bond purchases in increments. that is according to economist. they will use the purchases before ending the program one year from now. on the flipside, the bank of japan is maintaining it easing program. they are announcing plans to expand the base by $670 billion annually.

the inflation target is two percent. those are your top headlines. the divergence between central banks. >> let's diverge to a single best chart. this is wonderful. >> it hits on that divergence that alex was just talking about. that the about a taper bank of japan did a couple of years ago. march 2006. they tapered and following that decision, stocks tumbled 24%. that was a policy mistake. there is no tapered tantrum in the united states this week. ben bernanke and the policymakers and acted tapering. stocks rallied. that is a sign of policy success. that is one way of measuring it. england, don something big. we're here with our advisors.

big.hey -- >> i thought the market reaction was the worst case. you want the tapering to create volatility. it did not because they leaned so happily on guidance. if you manage your money and you have zero interest rates, what are you supposed to do? >> is the fed so distorted that you worry about equities? a higher fixed price down the road when we get the taper. >> that is the risk. we do not know if it is live or how real these asset prices are. >> that was an ad campaign. >> is that what that is? not digital. what are you talking about? >> that is the big question, i think.

how much of this is just low rates? how much israel economic growth? >> we have some first look photos making news. largeast night in london, pieces of plaster fell from a theater and injured over 70 audience members. some were injured seriously. that is crazy. can you imagine? >> twitter did a phenomenal and responsible job. they are learning -- >> breaking news and information issued. >> it is a whole process. i thought they had terrific photographs in sequence as this unfolded. >> it is people who are tweeting. >> they are learning to make it a new source. they're getting better. >> do you use it? >> not that often, actually. >> do you feel that retail is

getting twitter and other social media? burberry? >> yes. they are. and ralphurberry lauren are the best. >> i have been following bergdorf. >> oscar diller and was the pioneer. >> let me give you the big picture. antigovernment protesters in ukraine remained steadfast. they're making their presence permanent. they are cooking and sleeping and spending time in kiev in independence square. there talking about the and -- unrest. coming into 2014 and talking about inequality. >> this seems much more

devastating and dyer. we were talking to the occupy wall street people and they were there with ipads. a little different. >> we have the sum of the parts. >> in their cereal. it is a trickle-down. >> do expect this to disappear in january? >> it is a risk factor to watch. it is a social risk. it is in so many different countries. >> thailand, as well. >> can we wax philosophical here? >> perhaps. >> butterflies flapping in 2014. finding world peace? let's see if we can find some inner peace for matt miller. he will be joining us on the

mysterious, competitive process of it quite mining. it has outraged tom. it has other people excited. we will discuss on the 12 days of bitcoin. ♪

>> this is "bloomberg surveillance." let's get some company news now. verizon will start disclosing the price etiquette from law enforcement officials for customer data. reportsthen publish every six months. the information will cover request from police and the fbi. notably, not the nsa. facebook is grabbing the number two spot in ad spending. that is 7.4% of the market. google is number one. all of this is according to a research team. and it uses the google. or. companies offered to settle an antitrust investigation. it was called unacceptable. they said they could not discriminate.

that is today's company news. it feels like google has been embroiled in this year for ever. >> it will not go away. >> the bigger you get, the harder it is. thee are now in day 10 of 12 days of bitcoin. matt miller talks about mining. this is the computerized process behind every bitcoin transaction. it makes everyone very rich. i know that you just went to a christmas party. what was that about? >> it was crazy fun. has a numberuns it of spots around the city. one at 40 broad st, next to the stock exchange. he gathered a bunch of bitcoin enthusiasts together. a lot of minors there. a lot of traders there.

they had a pretty rocking christmas party. was the overstock ceo? i would have noticed him. he is an outspoken guy. >> you get traders. business people to move this forward. what is a minor? >> someone who is mining is setting up computer rigs to go into the internet and do work on these transactions. miner isminutes, one given the right to verify all of those transactions. as a reward, they are given a certain amount of bitcoin. right now, it is written this way so that it is 25 bitcoins. it will be cut in half. eventually, there will be no reward other than the transactional fee.

>> who gives him the reward? >> that is the way the code was written. it is written that way if the code. oversees then code. makes bitcoin foundation the reward? >> it is centralized. there is no ben bernanke passing out rewards. they oversee the code. >> does some of it come from you? >> some of it did. every time i make a transaction, there is a fee. >> fair. that goes eventually to miners. basis ismicroeconomic this a circuitous function? it

is a circle revolving around. it is on an entropic basis. i do not see where the foundation is. it is jargon. >> isn't very jargon alert? isit the answer seriously what is the foundation to the transaction? the mining is what verifies the transaction. it wraps and insecurity. unlike the credit card network. urge anyone to use these things. that is why it is safer than cash. everyone to read the mining article on wikipedia. it is superb. >> matt will bring eight bitcoin minor. >> he is coming in this morning.

he works over at bloomberg and develops code. he will bring in his right. >> this is the heart of the bitcoin debate. it is great you're doing this. >> 12 days of bitcoin. happy hunting. >> i bought a new unless night at the christmas party. >> so you have a $100 loss right now. >> i think it is $50. >> we will check in at the end of the 12 days. you sprung for a new coat. we will have to bring in a new guest host. the brand you are looking at is an alternative. which one is it? >> is not a public company. they have fantastic is this. there the counter wave two montclair.

this is a range rover. it is a canadian company. you probably saw kate upton in the swimsuit edition wearing this coat. >> what is different about the brand? >> their growing. they have more marketing dollars. >> who are they? the designer company? >> it is a hometown name. scientistse arctic where it? >> and kate upton. >> get her the deal. thank you for your wisdom on china. the forex report very quickly. for the first time in ages, a really interesting report. a record weakne. the dollar is stronger. >> next hour, we will check in

with bruce, a real estate mogul. coming up next on "surveillance." ♪ . .

>> this is "bloomberg surveillance." >> it is a sensitive vladimir

putin, the president of russia pardons tycoon mikhail khodorkovsky. 49 days before the sochi olympics. it is an unsettled december for china. chinese stocks plunge. go west, young man. rather, the doves are north dakota, texas, and florida. good morning, everyone, it is "bloomberg surveillance." we're live from our bloomberg headquarters in new york. it is friday, december 20. our guest host this hour, love those seats for beyoncé last night at his berkeley center, bruce ratner joins us, chairman .f forest city ratner brief us here, there are five games under 500 -- >> it is lower than 14 street. do you know where it is? >> there is a bridge -- >> there are two options, there

is also a tunnel. you will have to come over to the house, and we will take you around the neighborhood. let's get ready to the morning briefing. overnight, disposal increase -- income increasing. also, bank of japan maintaining its record easing program. here in the u.s., 830 a.m., the final third quarter read on growth in gdp of course, 11:00 a.m., and the city fed manufacturing activity. earnings before the bell. >> these are stunning. >> third-quarter loss, which was anticipated, $.67 a share lost. mapysts were all over the to give you estimates. they ranged from $.24 a share to $.81 a share, so $.67 kind of in the middle will stop blackberry gaining revenue, -- >> revenue down 24%.

>> headlines are coming out so quickly. we are scrupulous at bloomberg about corrections, and we got one with our terrific headline team, and the correction is that loss, scarlet, $8.37. >> i think it is whether you are looking at that loss or a gap loss. we're looking at an adjusted loss of $.67 a share and that is what analysts are comparing it to. like mark -- blackberry is not ready in the premarket, but there's another headline -- blackberry partnering with a five-year partnership with foxconn. >> that is interesting because can blackberry really surprised? also saying -- really survive. >> also bodies moving in, bodies moving out. >> 4.3 million seems to be higher. sold more they

blackberry devices. >> we will have to see how the stock does, but the saga -- i guess it is almost a theater. it continues. >> and we will be checking with robert kaplan of harvard business school on a john chen, the new ceo of blackberry, his challenges. we wanted to other company news. starting with the ae. it hit turbulence in the middle east. the united arab intimates -- eric -- bae and the united arab emirates talks have fallen apart. david cameron personally lobbied on behalf of the company in dubai. jorgensen ofian microsoft allegedly passed on information regarding the company's finances to a friend who then traded on it. the sec claims the men made almost $400,000 over the last year-and-a-half. a coin moves a bit closer to the mainstream -- overstock.com lands to start accepting the

virtual currency next year. the ceo says the decision was driven mainly by his political philosophy. he sees pick one as a refuge from government control. >> the philosophy of tiffany's is to get bodies through the door. >> the philosophy of bitcoin is just to survive right now as it burns up cash. blackberry reporting a wider loss that had been anticipated on an adjusted basis, $.67 a share, analysts were looking for 46 cents a share in losses. revenue coming in a than anticipated in the third quarter -- $1.19 billion. the consensus was $1.6 billion. the numbers do not matter as much as what the company is going to do next. ceo, has, the new about to strengthen the company's strategy. we know he has had to deal with a lot of executives leaving the firm. what does he do now, and also,

he is not the only one who is a lot to do it on his plate your micro soft looking for a new shuffling leaders of the tries to reposition for the new digital era. here to help us make sense is robert kaplan, he looks at best management practices at harvard business school. robert, would we look at blackberry, the numbers not matter if much as what john chen's strategy is, and everybody keeps counting on some kind of gail at the company. what kind of ceo needs to oversee a company that might be broken up. company,ry to sell the and i think we are in the strategic process they even looked at selling pieces. it looks to me he will take a step back. he has brought in a new team, including somebody who has worked heavily on making acquisitions in m&a, so i think he has got to run this company now, they tried the merger process, and i think he will are at the course, which

many, and we will hear the next day or two what he planned to do, but it will be a different strategy that builds on the core strengths. it may not be about the blackberry device maker that they have been. >> utility core strength which are many, what are some of them -- you talked about the core strength, which are many will stop what are some of them? technology and software, the reason they may not have sold a whole company is because people may want pieces but not the whole company because it is bleeding so much cash. what he will have to do is shut down some of their operations. he has got to slow the cash burn. the biggest problem may have against the strength of the blackberry 10 is just not going well. but they have great customer loyalty, particularly in asia, where they have a great following. they have a great corporate relationships and loyalty. >> robert, you mentioned asia,

and blackberry announcing a partnership for five years with foxconn. also diversifying in indonesia. how long does it john chen have to deliver? >> as long as the cache holds out, his big gun to his head is the cash burn, and as the rate of about $100 million every quarter, he does not have long, here,think the turnaround a turnaround here, i think john chen would say this, is probably going to take to did three years. you will not take in the company round and one to three quarters. that will not be possible. i think he needs to slow the cash burn so that he can turn this around in the next two to three years. kaplan, i totally agree. the income statement analysis is also a balance sheet come i think it is called goodwill. i would suggest it is almost bad will now. is there any value on the value sheet away from cash?

>> know, other than what we talked about, there is some interesting technologies in this platform,nd their operating system, elements of their system -- the problem is when it gets down to the consumer to buy their device or a smart phone or an android phone, that would rather today by somebody else's. but they can use those strengths to serve corporate's and user companies, and it got to figure out how they want to do that. it made me -- it may mean withdrawing from a couple of things they'd currently do. >> robert kaplan, thank you, joins us from harvard business school this morning. scarlett, you have one more thing on blackberry? >> it looks like blackberry brand about $600 million in cash and a quarter, if i did my math correctly. >> a lot of moving parts there. there are a lot of moving parts in brooklyn as well, september 21 of last year, that was opening day, to bruce ratner's

berkeley center -- berkeley center -- barclay center. they swooned over a solo mumford and sons concert. bruce ratner is here for a victory lap. if you did it all over again, what would you do differently over the past 14 months? >> i would not do virtually anything because it has been a success beyond anybody's view. it has become known internationally. we were number one in sales of tickets for the last year, and number two in the world. can't argue with that. it has really been wonderful. >> the only question i wear about -- my two bedroom , can the in park slope berkeley center make my apartment worth more in five years? theeverybody is artie said

value has gone up, and it will go up more because we are building a lot of beautiful buildings, it would become -- it is already in a credible neighborhood, it will become even better. you can buy the rest of brooklyn now. like the bridge. have not discussed well, that was a basket by-free conversation with bruce ratner. >> islanders -- do they say on the island, do they go to brooklyn? quite fickle to brooklyn -- no question. to brooklyn, no question. >> more with ruthatner coming up on "bloomberg surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com. ♪

>> good morning, everyone. "bloomberg surveillance." i am tom keene. this matters not sure guest host, bruce ratner, executive chairman of forest city ratner company. they want in on u.s. real estate , and it is a new era, a different era than what we saw 20, 30 years ago. the cliché for money they want to buy golf courses is over. >> that they sure are. it is very different. the amount of money is very large, it is china, heavily, and than developed, rather

buying assets, they want to become developers in the u.s., that has not happened in my real estate life. and foreign companies governments want to buy existing real estate but one super dissipate in development and develop alongside a company is very unusual. >> development is not oil assets. it is real estate. will there be a tipping point where the u.s. has to push back on foreign real estate investment? so. do not think the real estate market is so huge in this country. -- china, for example, the amount of total foreign investment -- >> how do you say no? >> why do i say no? >> how do you say no to these transactions? >> it is not so much a question of saying no, if it is a good deal, it is hard to say no. but there are so many deals going on in this country. the real estate market is so huge, the numbers, i do not think, will ever really be so large that we say oh, my god, we should not do this.

>> does is a bubble? >> in the sense of what? >> price? >> i do not think so. we have such a diverse market and real estate in a so many different areas, so many different types of investors whether it is hedge funds, private equity -- it is really hard to move this needle. sovereigne no region -- the norwegian sovereign wealth fund demand the same rate of return? >> it depends on which sovereign wealth fund. many have been in this country for a long time, they are very experienced come and generally the answer is now yes. they're looking at multiples very often. it is different. >> this is a new york city question, folks, for those of you worldwide. will we end up with a canyon of 90-story buildings? you think of new york in the 1920's, you think of peter o'toole's movie "my favorite year" in a 1950's. will we be buried in office

buildings? >> no. the number of new office building spill in the city in the last 20 years is a small number. why? the office number has changed dramatically. space.use less much less developed. >> brilliant, bruce reitman on global -- bruce ratner on global and new york city real estate. a .5 reason for you to buy "bloomberg businessweek" this week. ♪

>> good morning, everyone. "bloomberg surveillance." it is a friday, so we have a deep philosophical twitter question out @bsurveillance. we know --you know you are sick of holiday shopping when -- >> fill-in the blank. >> there you go. >> i am tom keene with the twitter question of the day. i need help from scarlet fu. alix steel finish her holiday

shopping in july, so she will not be asking the twitter question. bruce ratner is with us, chairman of the new york islanders. >> i'm not chairman of the islanders. wi-fi no, i am getting. when they play in -- >> no, i am kidding. >> we are going to bring our minor league back. >> all right. hockeyguys to talk about for a year. >> we could. >> tavarez. >> very good. >> shopping christmas in july. that sounds good. in final confirmation vote the senate on janet yellen to lead these federal reserve is set for january 6. senators will vote to advance the nomination today and take up their final vote when they return after the holiday break. a rare veto threat from president obama. the white house said he would veto a bill to hit iran with new sanctions if the country violates its nuclear agreement.

the administration says imposing sanctions would only increase the chances the u.s. would have to eventually take military action. former nba star dennis rodman holding tryouts in north korea. rodman think it is time to set between abition to a northba -- between korean team and former nba players will stop saying "do not be afraid, man, it is all love, it is all love here. " >> and should we even give that the credence of covering it? >> i just read it, so i would say yes. >> i do not know. i do not get it. >> he is a big deal in a north korea. he might be able to change kim jong-un's mind. >> i do not know. thank you to the brookings institution for a really good perspective the other day on north korea. i love to seek about the american job economy.

manpowergroup, them in a much better. they are in the $11.42 per our economy. is the chief executive officer of manpowergroup. he knows each american city has its own jobs story, and he hopes to help with the manpowergroup survey for 2014. we are all moving to bismarck, north dakota. jeff, wonderful to speak with you again. what really stuck out in your new survey? what is the distinction for next year? >> the dissension is we look into the first quarter for 2014. we are seeing as companies want of a movement that is more positive for hiring what they are being tethered back by caution. it is clearly more positive, it is a little flat to this quarter, but on a year on year basis, it is more positive. the other thing is it is very lumpy. you talk about bismarck -- we normally in some kind of job recovery, february these tide rises the boats.

some are up 20%, some up 58% or flat. lumpy recovery across the u.s. >> jeff, if i'm looking for a plan b job, where do i need to move to, what skills when you do have. -- skills do i need to have? >> a lot of his location. it is not just where we see a lot of low unemployment in iowa and north dakota, south dakota. clearly the oil sands projects, though sorts of things, engineering side of the business, even the two-year technical school engineering is going to get you a job. even beyond that, there are still great job opportunities across the u.s., but it is very fleeting. so you have got to be in line very quickly, all the time, on the job,looking for a job becauseomething opens up and then it closes again. it is really the right place, right time. >> i do not know, north dakota and engineering for me, that is not for me, apparently.

>> engineering, hey, you were an arts major. >> i was. york forrowth in new 2013, does yours tell you anything about wage growth? >> we have other data on wage growth. what we're seeing with wage growth is it is very muted. we will probably be looking at about 2% coming into next year. it has been for some time. as of the whole notion of bifurcation, which is absolutely existing. the jobs programmer, .net programmer, you can put them on a scale, weigh them, and that becomes the hourly rate, as opposed to somebody in the service industry which is at the same wage as they have that for a long time. >> bruce ratner with us as well from brooklyn. what are you seeing in i have got to get 400 people for this job kind of market? business,construction there are very few jobs left. basically, most workers are back to work. we have a lot of infrastructure,

a lot of rigid -- a lot of residential being built will stop job market is good for skilled labor. if you're timeout unskilled, service jobs, this economy is not great. we saw a high on employment for low-level income people who live in the city. two different markets. >> jeff, what do you see in the major cities of my dan, wafer bismarck? again, away from bismarck? quite the challenge again as you have the real for kaisha jobs as i just spoke about. because skilled electrician, they will find -- >> the challenge again is you have the bifurcation for jobs of adjust book about. the skilled electrician, they will find a job. >> all right, jeff joerres, chief executive officer of manpowergroup. the quality of jobs in question, the wage growth certainly question, and it is really spotty. >> it has been going on for a

long time in this country. the skills issue is the biggest issue. it is really a problem. how do we employee service workers at a ways that make some kind of sense? very hard to do. >> it is a conundrum for the u.s. economy and the fed. we will be back. ♪

>> this is "bloomberg surveillance." i am scarlet fu with tom keene and alix steel. lets the company news, starting with the eu. regulators say google's offer to settle an antitrust investigation designed i'm sexual purity the proposal does not ease concerns that the

company could discriminate offerulators say google's to settle an antitrust easetigation does not concerns that the company could discriminate against other companies. --ormation form for eisen and details on a mass data hacking on target. the security breach occurred when a computer virus targeted credit and debit card devices. about 40 million debit and credit cards may have been affected from late november through the past weekend. >> one of the things we try to do here at "bloomberg surveillance" is get you ahead of market moving stories. this is a sophisticated story front and center. just now making be front pages of the global newspapers. china's money market rate -- they search again. -- surge again. it is a cash crunch or it stocks

a night are down again straight day. significant losing streak going back 19 years. what does it mean? china's federal reserve -- this is a large number -- 300 billion yuan. i calculate that as a near 20% increase in that cash cushion. our chief economics correspondent michael mckee is with us. michael, you and i cover this day by day. translate to our viewers and listeners why this matters. >> the chinese are trying to slow down the growth of their shadow banking system because speculation is driving up prices there. we although the real estate story in china, and they have been using this lending rate as a inch mark for the shadow system. what they are doing is putting money in, as you point out, but not enough, which is they hope going to start some of the shadow banks, bring down the amount of credit creation in his

china. the tight rope they have to walk as they do not starve the banks by doing that. >> within all this in the hope is the millions of loans on their billions of you one. -- of yuan. is any of us about loan quality or balance sheet quality? >> that is what it is all about at this point. too many bad loans in the economy there. they want to ran at him. they did that in june, they went a little bit too far. the banks were starved of credit and a system seized up. this is a bit of a tight rope walk for them. the interesting thing is what they're are doing with the cash injections is giving them to the bank that native and withholding them from the system as a whole. they're not even making official announcement of this. the last cash they put in was announced on their version of twitter. >> get me on webo. the critical question is turkey, indonesia, and now china, does

it fold over to my dow jones industrial average? >> no comments more related to the u.s. central bank, cash is going to flow out of those emerging markets to the u.s. because interest rates are going to rise here. china has had its own financial problems. this is a central bank of china decision. >> bruce ratner, you have experience dealing with the chinese, most notably when you sold a majority stake in the atlantic yards project. you have any dealings with chinese banks? >> we do not. however, we were just there for three or four days. the question is -- why are they investing in the u.s.? part of the reason indicates the chinese market is more difficult, more competitive . the issues brought up about oversupply -- part of the reason is they are seeing there are better markets in other places for the first time. the u.s. and so on, australia, different places around the told are better places

invested in china. >> mike, what is china's biggest problem next year? theontinuing to boost demand in the economy to recall the credit that has been created without touching off inflation. >> that's obligated very scary hike tight right. >> -- that sounds like a very scary hike tight rope. >> it is. they are trying to move from a high command economy to a little bit of a capitalist economy. >> michael mckee, thank you, really brilliant on china. .carlet, blackberry opened the headline is -- under six dollars. .75ill call at 69%, i see $5 on the premarket. -- i will call it 6%. on the premarket third >> john chen has a tough road ahead of him getting management to stay on and to do

something with this shell of a company. there is a still value, but the question is what you do without value? do you continue to target high- end customers, move to a low-end customer? >> it seems like indonesia is where they are moving to now. >> with that deal with foxconn. something we will monitor. >> good morning, everybody, we sayerg surveillance," good morning on bloomberg radio worldwide on sirius xm across the nation. i am tom keene, with me scarlet fu analogous deal -- and alix steel. our guest host is the executive chairman of hockey in brooklyn. from --ner joins us bruce ratner joins us from forest city. >> with a cover story -- u.s. housing prices will be most in eight years, but i like the last housing boom, the opportunists this summer institutional investors are not necessarily individual homebuyers because

headphones, pe firms, and others are scooping up these family house, fixing them up, and selling them or renting them for enormous returns. tom shapiro is president of gtis partners with over 2.4 billion dollars in equity. good to have you on "bloomberg surveillance." rents are high, home prices are relatively low and affordable still, and borrowing costs are so low. what is different in terms of risks now that we have been one year, two years into this? >> there's a lot of transference he and market. right after the housing bust, prior to the financial crisis, we are now starting to see a change in the market. we are thankful to all -- it is all about job growth, gdp growth, and credit availability, and those are the points we need for housing recovery. the housing recovery camelot later than any of us -- i ever thought it would take to get

back to recovery. now we are seeing a clear and demonstrable demand in the market. people are coming back in, we are up to a million housing starts. low point,n to a 400,000 starts or so a couple of years ago, which was the lowest since world war ii. we are seeing a sea change. we are adding 200,000 jobs every month, it isn't having a demonstrable effect-- it is having a demonstrable effect. >> take us through the mechanics of how you go about buying the homes and renting them out. negotiating to buy a home, there is a lot of paperwork, lawyers involved. tens ofdoing is thousands of times. >> sure, it is a cop located business and i think it is one it took some time to figure out the right model. it is a big accommodation of how we buy. we buy sometimes pulls from banks, we buy a lot of time on the courthouse steps, sometimes s, just buy any mls, -- step

and sometimes we just buy in the mls. we spent a lot of time on the macro research -- >> is that in brooklyn? >> brooklyn is great, but the yield a very low. >> there are a couple of things the marcus a lot of front current part of that is freddie the marketsmae -- have to confront. part of that is freddie mac, fannie mae. >> we have consumer confidence back, we have jobs now, and i think people will buy. i think interest rates are a major factor in the overall plus of homeownership. it is about affordability. as long as things are affordable, people will buy your . almost 80% of our buyers will buy if they can get the credit. >> there is a distrust here. we have the stereotype american buyer they go out on a sunday open house, find the home of their dreams, they look at you guys, well-educated and fancy shoes, you are buying 40,000

homes or 20,000 homes -- something has got to be wrong here at some point. what is the benefit to what mr. shapiro is doing, bruce ratner? it hasn'tefit is soaked up a lot of extra housing, so we tighten up the market and have a real market. has soaked up a lot of the extra housing. -- had tomese houses not done what he did -- we would have a lot of houses that are in a distrust. a lot of houses getting fixed up healthy neighborhood and the economy. >> do you buy 300,000 houses in detroit, $500 a piece, i assume. >> a little bit more, not much. i think you could buy houses for $30,000, $20,000, $40,000. >> we're not that far. >> is like brooklyn, right. >> $30,000 is a third bathroom.

>> keep in mind what we're doing -- here is what happened -- we had a shrinking of households, and now people need help. >> we will come back, that is meant. >> tom shapiro with gtis partners. we will be back with "bloomberg surveillance." ♪

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

here is a "surveillance" exclusive -- when it fell to will be in the movie "work newts" in a betty liu's book. >> i was chasing after you to try to take a picture with you of the book because you have been such a great the border. why the bruce ratner is in it. great supporter. by the way, bruce ratner is in it. are you going to sell it to hollywood for me? >> i am trying to. about thisalking company called grays, a u.k. company, and they are coming out to the u.s. in january. they are like the netflix of snacks. you pay them a fee, and a city by mail packets of snacks, like you see here, peanuts, popcorn, they are all healthy. every month, they give you these

snacks. it is really cool. >> i am old enough to remember when the pretzel truck drove around the neighborhood. [laughter] >> you have got to have a little excitement. >> and then the pretzel truck a had the biggest house on the block as well. it :00 a.m. with betty liu. 8:00 a.m. with betty liu. wemas schapiro with gtis, wanted to defend buying up all the homes, all of a sudden, the housing market gets better. are you going to force higher prices on america because he bought all the stuff when it was cheap? >> what you have to think about as we are providing shelter to households. under produce households during a recession, people were doubling up, living with mom and dad, they will now come out, it is already happening, we are now back to over one million households being produced. where are those people living?

unfortunately, a lot of them cannot get credit. i will give you -- i was in atlanta recently and there was a police officer that i saw, and he was touring or house, and i asked him -- he said i am on the force 30 years, i cannot qualify. that is why he is going to rent a house, he is going to pay is $1200 a month rent. >> adjust the of the time here, tom shapiro, mid-transaction, what is your time ayako is this a two-year investment, a 20 year investment for fancy guys like you -- what is your timeline? is this a two-year investment, a 20 year investment? >> we wait for the recovery, and it is an important time when people have credit, and sell the houses. >> what are you looking to next in terms of rising prices? >> atlanta, dallas, houston, south florida, and we have been actively buying in vegas as well. >> he have got to make alix steel's day.

say park slope, brooklyn. >> if we can get a higher yield. >> we were doing is creating great money for the other -- people who already have homes. >> right. >> tom shapiro, president of gtis, and bruce ratner come our guest host for the hour. we will be back with "bloomberg surveillance." the cover of new "bloomberg businessweek" is on a .5 things that went right this year. we will be right back. ♪

>> the morning, everyone. "bloomberg surveillance." coming up, monday, chief strategy officer, burson marsteller, thomas gets nsemer. >> his take on all the shenanigans. >> where we are, where we are, where we're going, all of that coming up monday on "surveillance." alix steelt fu with and tom keene. our guest host is bruce ratner. we need to start with earnings that broke earlier this hour. library find a -- blackberry

signed a five-year deal with foxconn. they will work with the chinese electronics parts maker to create devices in indonesia and mexico. library reported a loss of $.67 reported-- blackberry a loss of $.67 a share. facebook on track to take in $3.1 billion in digital ad spending. that isn't 7.4% of the market. google is far and away the number one. 40% market share. this is according to research sub --marketer for eve are good or -- e marketer. the european commission will decide where the end of today on whether to open an in-depth investigation. that is today's company news from the files of "bloomberg west. west."omberg >> companies here intended to

diversify. we have been talking about it all morning, my husband and i moved to brooklyn a year ago, two-bedroom apartment. if we waited until next year, we could actually live in a lego building up i am calling it. first prefabricated apartment yards -- apartment homes are falling into place. where and built askeelse trucked on site. why kitchen would be brand-new, too, so not too bad. our guess roses ruth writer of -- our guest host is bruce ratner of forest city ratner company. >> the rental market is great, the quality is good or better than what would be built conventionally, and they will be well laid out, great location. i am not worried about renting at all. it will be done in a kind of efficient way in terms of sustainability, let's trucks delivering materials. you're right -- legos, block after block. 900 lego lox will make 300 50 apartments.

>> that sound like my son's fantasy. there are a lot more people living with her parents and grandparents than there used to be in the past. the changing demographics -- how flexible are these prefabricated homes for these multigenerational families? thewo aspects -- 50% of first building is middle-income affordable. apartments-bedroom primarily. the rest of the market in new york city for new residential buildings are basically people between the age 25 and 35, single or just married. that is the new part of the market. the older part of the market, mostly the homes that are in brooklyn, that is where you get the kind of people who live with their parents and so on. and offer new builders. >> it is all about free childcare. >> it is true. i know you have a lot of units for affordable housing, but still on the outskirts, there will be those who cannot even afford that. does this push them out even further? >> i do not think so because it is not like we are buying existing residential buildings.

new.e are all brand- if anything, it creates more affordable housing, 2200 units in total over the whole project. the general idea of "gentrification" is definitely changing neighborhoods in a dramatic way, and pushing low- income, low middle income workers, people out. >> especially in brooklyn they can get pretty ugly. what is your qualification when you bring some of these projects in? how did you pick the atlantic yards? >> in the case of the atlantic yards, my offices in brooklyn, you know brooklyn very well and you want to be in the best location. atlantic yards -- reservation for rental housing is the number one issue. residential requires subways, so i want to be where a subway station is if i'm going to build here. the number one issue is really transportation. >> bruce, you told "bloomberg businessweek" that one of your mottos for life is if you do not have luck, you have got to be able to change a deal with chaos.

what do you think will be the biggest change coming up that everybody has to adapt to? >> we have a new at administration in new york city. we will have a very good mayor. i think people in the business community will be very pleasantly surprised, number one. adjusted to a change, a philosophy of change of viewpoint. in terms of the u.s., we have a president who have a lot of issues going on, and we will have an election in a few years that will be in front of us before we even know it. he biggest change will be what will happen in the next election a year from now. quite the midterm election? -- >> the midterm election? >> yes. >> let's take some time out for our agenda. >> i have been touting. >> what is going on with you? >> she saw beyoncé, i did not. one s. ruhle, ask

bruce ratner if beyoncé is the best performer? mrs. carter killed it last night. you got steph tickets and not me? >> i do not -- she is smart enough to buy them, tom. >> what is a like for a hitter like you do have beyoncé walk into your arena? --it is fantastic for sof it is fantastic. she is the best entertainer i have seen. she entertains, she sings, she dances, she is fantastic. she is completely involved in what she is doing. you get into it, whether you are familiar with her music or not. she is probably today's madonna in a lot of ways. twice what was your first meeting on the barclays center were somebody said you are an idiot. 10 years ago? >> when i talk about moving a team to brooklyn, people thought i was crazy. they did not say the word idiot -- >> excuse me --

>> people have called the idiot. >> ok. >> when i talked about moving a team to brooklyn and building an arena, people thought i was crazy. 10 years ago, brooklyn was not where it is that. what are you talking about, brooklyn, a team? >> i wonder people will say that about bitcoin. you are a skeptic. >> i am. that miller is doing 12 days of bitcoin. thank you for your many e-mails and tweets pro and con. this is from a terrific essay on wikipedia on this mining. this is from a paragraph >> i fell off my chair when i saw that.

scarlet, this speaks at the london school of economics, on the reconstitution, rethinking of karl marx's theory, and some of the bitcoin core theories, i'm sorry, it borders back to the 19th century. exertion. library -- is what blackberry's ceo john chen has to deal with. iking a dealtr with foxconn. >> i looking at retail, i finished my holiday shopping in july. >> you are gloating. >> i am gloating a bit. this is the holiday retail where you see all the discounts from target, walmart, we also talk about luxury and how they are holding up and in some cases even raising prices. the bifurcation of retail and will some retailers sacrifice units for margins or margins for units? it seems to be all about units right now. on that note, time to answer our

twitter question of the day. it is a fill-in the blank. you know you are sick of holiday shopping when -- you know you are sick of christmas shopping when the cashier asks -- will that be cash, check, credit, or bitcoin? >> karen, that was amazing, thank you. this is my personal favorite from my husband, when your wife gives you grief about it on tv. that is my personal favorite. >> thank you so much. >> i husband wrote that in. that is mr. pospisil to you. >> will the new york islanders wear black jerseys at the barclays center? >> we are trying to get a third jersey. >> you will have to come back with it. >> bring blitz with you when you

get some ice there at the barclays center. on"bloomberg surveillance" radio continues. tom, you will be talking but economic data, china of course, searching. "in the loop" with betty liu is next. ♪

>> good morning. it is friday, december 20th. the holiday chaos begins. probably continuing all along. >> in the thick of it.

oliva from bloomberg world headquarters, and betty liu. >> i'm cory johnson. >> we have two hours ahead of us. our producer-director gave us a little eggnog quick whack at eggnog.r -- a little >> at this hour? will vote to advance janet yellen's nomination today and then take a holiday break and will vote on the final confirmation january 6. blackstone turned to stress into success. the largest private equity group has created a rental home empire by biting 41,000 houses across the u.s., many of them distressed in this clip -- foreclosed are pretty. blackberry still struggling. the canadian smartphone maker posted a third-quarter loss that was bigger. it also announced a five-year deal