find new tech. equities grind ever higher. the american depression you did not learn in school. jim grant joins us on his 1921. good morning, this is "bloomberg surveillance." we are live from our world headquarters in new york. it is tuesday, veterans day, november 11. i am tom keene with scarlet fu and brendan greeley. let's get to our top headlines. >> we start with a breakthrough in trade talks between u.s. and china, negotiators meeting at the apec summit have agreed to drop tariffs on another of technology products that may cover up to $120 of trade from computer chips to medical devices. the u.s., europe, and japan have been pressing for an agreement years but china has been reluctant to list -- live the tariffs. the clock is ticking on the nuclear talks with iran and there's no sign a deal is imminent. john kerry has wrapped up two days of discussions with his iranian counterpart in oman.

karen says there has been no progress made. there's a number -- november 24 deadline. iran rejects allegations it is trying to build nuclear weapons. >> internet service providers are dismayed by president obama's call to treat internet access to the common carrier, comcast called the presidents proposal about a gore reversal that would harm investment and innovation. at&t and verizon both indicate they may challenge the plan in court and the industry's chief lobbyist michael powell says "we are stunned." he also used to run the ftc. president wants the fcc to regular internet access with the same rules of does for phone companies. single state in china, single ay on alibaba'tis a result record $5.9 billion worth of merchandise in the first 14 hours of the day. the biggest shopping event in

china. foreign brands are taking part in single brand. among them, and magneto, calvin klein, and costco. eagle, calvin klein, and costco. >> the new york city doctor who came down with the ball is getting out of the hospital today. craig spencer no longer has the virus. he became ill in october 23, six days after returning to new york from guinea. you been treating ebola patients. he was treated with an experiment old drug and also had a blood transfusion from another ebola survivor. that treatment can increase virus fighting antibodies. those are our top headlines today. it would be a boring get a check except for what happened that 2:56 yesterday afternoon, yields do nothing, futures up fractionally, currently markets and commodity markets are stunning. euro, weak or. well, 76 handle. -- oil, 76 handle. 12.67, the doubt.

dow.e yen, weaker. gold tanks, will down to 1140 handle about an hour ago. over oil, which if i was teaching that class, this is a fancy chart off the bloomberg -- these show the continued -- no bit. down we go in oil and we rollover to the depths on west texas intermediate. we're just in search of a bid. talks we keep rewriting the story. we have to rewrite the story again look at a few new points. >> in fact, the united emirates energy ministers came out to say the oil market is oversupplied partly because of u.s. production. >> a little jawboning to say the least. 2:50 6 p.m. yesterday, will moved further south of our play

-- abruptly. gold plunges. -- i0,000 insight exaggerate. we're honored to bring you jim grant today, out the new book. first, jim grant on the many specters of deflation that are out there. what does oil signal to jim grant? >> more sellers and buyers. if you look at the disinflation, the deflation, the shades a price decrease that are out there, does it all folded into gold, oil, and the dollar? >> i think your is a kind of a hypochondriac spectrum rather than substantive. deflation to me as a disarray china of credit of people who can borrow must liquidate something. the selling adduces further summit, which is induces lower prices. to me, that is deflation.

i don't see any generalized deflationary undertone in the world. >> you don't see the sweat yet. >> it seems at a time of material progress and the wonders of digital technology, prices ought to be twin on because as it costs less to make things, it ought to cost less to buy them. central bankers have taken what ought to be a wholesome state of affairs in a pronounced it deflation and are doing their utmost at breaking a sweat, doing everything they can to levitate the assets. >> we got two minutes into the show until jim grant took a shot at mario draghi. >> i want to also mention, happy veterans day, jim. >> i was in the last cell sail powered aircraft carrier. no i wasn't. >> what are the risks of falling

oil prices? >> here is one. there is immense oil producer in brazil called petrobras and it is under the thumb of the socialist brazilian government. prices are controlled. as for politics as much as for-profit. their debt issue is better brought and with the suppression of interest rates worldwide, the debt securities, which ought to yield something to reflect the risks inherent in the oil price and the corporate structure, yield a mere five and 5/8 percent or so. this is a very marginal investment-grade or imminent speculative grade credit. if you're looking for risk and oil, we should look at the levels of yields attached -- >> and that goes into the high-yield market you mentioned before we went on air. >> absolutely right. energy is a significant component of napoli the equity

markets but the high-yield markets. if you look at this widening we saw in october, the entire move for the entire month was due to energy spread widening out. the result of that for me is, yes, risk, but also the opportunities. if we do think oil prices rebound from here, some of the yields, some of the high yield names can be significantly distorted. >> everyone is looking for a bounce in the oil. >> we're all desperate for -- >> know, we are not. >> i think we all looking at the store to figure out when the story hasan end. you say petrobras is under the thumb of the socialist government. do you draw a distinction between the way brazil runs its oil policy and russia runs its oil policy? it seems they are not one and the same. resumes -- regimes tyrannies.

and inte is the doctrine russia, and i draw similarities between the two. if you are a capitalist in brazil, you are feeling tyrannie zed. >> of reported from brazil and russia and i'll was a lot more scared in russia. i think that is probably a good diagnosis of the politics. but if you're looking at a status regime in enterprise, there are more similarities than not. yet a look at violations of the companies concerned. but petra brought yields long 58:, acurity's five and russian oil producer yields rather more with a better ratio of income to fix charges. if you're talking about business and finance rather than politics, you see similarities

between statist regimes and you look for valuations to discern which is the better or the least risky investment. >> anastasia, what do you think? >> the status regimes, you can extrapolate that to the broader emerging markets whether we're talking about brazil or russia or india, all of them in gauge in energy policies. they have subsidies. they control those natural gas prices closely. to me, the differences, which government is lifting those caps, which once is not? >> with the president in china and all the pageantry there and non-stories. jim grant, i need to get your comment on a global gdp and what christine lagarde says is the new mediocre. do you agree with the new mediocre? >> i doubt think -- we should not be fatalistic about accepting, economics. gdp estimates have gone toward jim grant. >> you can't even count gdp, let alone world gdp.

what policymakers say we ought to settle for the new mediocre, what they are saying is our policies have failed. you kindly mentioned my book, tom -- >> only kind this hour. >> thank you. >> shameless plug. go on, jim. >> we have collectively come to say there's no way out of our difficulties except through greater statism, through more and more taxation, more spending, more interest rate suppression, more central bank intervention. it is not always been thus. it seems when we begin to accept the new mediocre, we have to reconsider history. >> the forgotten depression. this is about tuition payments. my kids are through school, so i'm done with that. >> with a lot more coming up on "bloomberg surveillance." we're just getting started. the world's busiest online shopping day is underway in china, completely manufactured,

by the way. tom is celebrated by buying a couple of new bow ties. >> is your necklace from cree winston? >> nice try. j.crew. it was on sale. this is "bloomberg surveillance." we will be right back. ♪

hour,ing up in the next abby joseph cohen will join us from goldman sachs. also, blackrock's looking at with201k, where are you retirement planning? that gets us to our twitter question of the day on retirement --

we need your many answers. how are you preparing for retirement? this is "bloomberg surveillance." i am tom keene with scarlet fu and brendan greeley. >> we go to china because they are shopping right now in china. it is november 11, their singles day. what i find fascinating, it is a completely manufactured shopping day. a couple of students in the 1990's had invented it to celebrate their singlehood. it is because 11/11, when you hold up the numbers, look like bare branches, which is a andrence to spinsters bachelors. yes, tom, i'm looking at you when i say that. what is interesting, alibaba began commercializing -- >> more of a bachelor, dennis -- than a spinster, really. commercializing this five years ago and last year he took in $5.7 billion in

sales. that is more than cyber monday and black friday combined. >> it is like mother's day, right? >> mother's day, valentine's day, everything combined. >> 60% margin. i think that is 3 billion. >> i was in india couple of years ago when you're trying to invent valentine's day there. the stores had recruited ball he would stores to record videos explaining what they did on valentine's day that you could accept it was actually a thing. anastasia amoroso, is this enough -- what has to happen to stimulate to mystic demand? is is a symptom or tried to nudge it along in china? >> it is been happening for that number of years. it is not a five-year plan. we have to boost the average quality of the chinese consumer. but over the last year or so, it has felt like it has been his constant struggle to get it there. nevertheless, since september, i think the chinese government for the central bank, have taken a lot of steps in that right

direction whether it is relaxing mortgage requirements, whether it is relaxing some of the home purchase restrictions, whether it is boosting lending from the banking sector, i think it will see through the economy as a go through the fourth quarter and eight into the first quarter of next year. >> what is interesting, now that alibaba is a publicly traded company, it is looking to make single stay much more than just a chinese event but a global event. yet amazon promising five day shipping for anyone who buy stuff from its website to china. , you fabulous photos in your book. one is of a young harry truman in a store in a different time of consumption in america. what can china take from us to boost their consumption? do they have to lever up as we did? >> they have done that. >> but has the consumer benefited from that leverage up? >> the next major holiday in china to be announced is debt day, which will be much bigger than single stay.

as gdp andce as big growing twice as fast as gdp in charliecording to the shoe. we talk about consumption, but consumption is constrained by an overleveraged society. >> so you did not buy yourself anything for single stay? >> no, i am a happily married father of four. >> speaking of debt in china, it is true the debt levels have accumulated, but it does not necessarily benefit the average chinese consumer. if you look at mortgage debt a percent of gdp, it is not what it is in the united states or canada but there's a lot more catching up to do from that standpoint. the debt burden we see is in the local government sector and local corporate sector. i do agree the rate of growth has been staggering their. >> what are you looking for? due to have a feather landing or a bowling ball landing? >> i'm looking whether the

chinese government wants to achieve the corporate sector or whether they want to be selective as far as which issues are allowed to go, which are not. we have seen the past couple of years, we have seen default and not performing loans go higher, but i think china has been very selective as to which key local governments can or cannot go under. >> the local governments, that is the real scary thing, right? >> but corporate jet as well. if you look at who is to the larger issuer of corporate debt over a number of years, it has not been the u.s. the fastest growth is happening in asia corporate's. >> there are still five more hours of shopping. i wanted to highlight a couple of things, the different chinese websites are selling. things to our production assistant for coming up to this. you of a t-shirt that translate into single forever, bachelor forever. boiler also a double that is been discounted heavily.

also, a house on jd.com. ra is should point out joff our secret weapon. >> she is. every day with the drip of data from china. >> she does a chris christie thing. >> i can see her offset doing it. >> thank you for that. alibaba will tally up the numbers. >> david rubenstein, co-ceo of the carlyle group, today at "market makers." will be contemplating which real estate we're buying for single stay. ♪

morning, good veterans day. this is "bloomberg surveillance." with scarlet fu and brendan greeley. it is time for our morning must-read. it is a neutral must-read. >> this is from the legislative --airs senior be the at at&t vp at at&t. his legendary for making everything bend at his will. everyds cupcakes out to telecoms reporter. his cupcakes.d i just look at them. here's what he wrote yesterday when the president announced to is going for title ii regulation on the internet --

it is such a rich, deliberate obfuscation. it is amazing. if you take nothing for else from this, the regulation is not on the entire web. it is not end to end on the internet. it is regulating the last mile, just the copper that goes to your house, the monopoly. current regulation designed in the 1930's for bell phone monopoly that no longer exist, yes, does, because at&t has re-created it. you agree witho this? are we recapitulating herbert hoover? >> no. >> that is all you have to say? can we get some coffee for mr. grant before we get to his book? >> this is the test pattern time of day. no big insights. >> we have some of the responses. it is been a day since the

president has announced this is what he wants to do. so too did her -- so senator ted cruz says -- you're the expert. can i size this up, is facebook and google versus comcast and at&t? >> that is absolutely what is going on. >> and the president is backing mr. page, mr. schmidt, mr. zuckerberg. >> basically, the fcc regulates at mitigation services and looks at information -- sorry, looks at information services and telecommunications. very different things. >> scarlet fu, will her $400 a month cable bill go up because of what -- >> or will i be buffering? the presidentwith is proposing is at&t and be about to charge netflix so that netflix has to raise rates. so netflix goes up to $10?

>> you'll have to go to another country where there is competition, like socialist france. >> my cable bill is not going down. >> no, but your netflix bill is not going up. the is so huge with president said. if you follow internet regulations, it is like the sox won the series. >> tom is interested. ofcoming up, we have more brendan greeley. stay with us. ♪

>> good morning, this is "surveillance" vortex has mean of you look at a polar vortex a little bit early this year. let's get to the top headlines this tuesday morning. >> that is not actually going to happen until thursday or friday. >> 36 year prison sentence for the captain of a doom south korean ferry. a judge said he could have saved lives had evacuated passengers before he himself a bin and ship. prosecutors's had sought the death penalty. only 172 of the 476 people on board survived. vodafone reports a smaller decline in service revenue than expected making at the latest wireless carrier to show signs of recovery in european markets. the company narrowed its

full-year earnings forecast citing what it called stabilization in commercial performance and operating trends. shares have jumped on the 6% in london. mirsky reports of third quarter profit higher as the world's biggest container lines cut cost and boosted box wine. the company said earnings rose on the 3% to $3.2 billion. it moves almost 1/6 of the world's containers of the world. shares are up 13% this year. those are your top headlines. split,tte the brick india joyce to diesel and kerosene -- russia announced a plan to squeeze ruble speculators, a sign only russia is not a control of the ruble. brazil sits and waits for china. , she believesoso in growth. you wrote us an e-mail yesterday where you said if you believe in growth, you believe in emerging markets growth. why should i believe in growth to begin with? it is a conditional statement. youf you believe in growth,

believe in emerging markets. i believe in growth because what we saw in the first couple of weeks of october, i think it was a growth scare. what we came to realize over this subsequent few weeks, growth in the united states is still very much intact, 3.5 percent gdp growth is above consensus. maype, i think the ecb debate this later on, but ecb is to the right thing to support growth over a two-year time frame and bank of japan stepped up to the plate and boosted growth expectations, boosted inflation expectations. because of that, there is definitely a case to be made for g3 growth. because the of the export link, it tends to be more cyclically expose that even the u.s. market. >> to the ecb and the boj make or what the fed takes away? >> they really do. if you look at the balance sheet expansion for bank of japan, for example, it is actually above and beyond what the fed has done in the united states.

the gap, the deflation problem they had, is above and beyond what the fed had to contend with. so i think for the bank of japan, the answer is yes. for the ecb, one interesting thing, everybody expects a trillion dollar or i should say trillion euro expansion for the balance sheet. one interesting thing that is going to happen, if the banks do in fact borrow in the second round of targeted return financing operations, part of that borrowings, significant part, will go to pay the previous ltro borrowing, so you may not see a significant pop in the ecb balance sheet. but i think over the next couple of years, it is a possibility. >> let's take this growth and passive through to the emerging markets. we still cannot treat them all the same. if you look at india and russia and brazil, they are on three different paths. >> what they would look at is earnings momentum and price momentum. if you look at those metrics, you have india here, the highs

price momentum, and i metrically opposed to that is russia and brazil. no earnings moment to him and therefore, no price momentum, either. that divergence may very will persist. what you have with india is and a few to reforms reforms have taken place to suggest it is ongoing. >> let's take this commitment to reforms. jim grant, historian and many other things, you describe sort of a tyranny and brazil. if india has a commitment to perform, what does brazil need yrannize itself? they sell things there. >> at control prices. india is a terrific growth story. i am in favor of growth as well, especially as an investor -- if you don't have to pay for it. one must look, it seems to me, that growth and value together. russia, for example is a limited

case in non-growth. it is hopeless. but let us look at a russian bank which actually has been growing at 20% a year, returns on equity something between 15% to 20%, got through the depression with minimal government support. 80% of book value -- >> but is their survival in jeopardy because the ruble depreciation? >> no, no, it is a well-capitalized bank. anyway, you must look at value as well as growth. >> anastasia amoroso, you're been wonderful in giving us perspective on your russia. we see mr. putin and mr. obama in beijing, they pass in the hallway -- >> they don't make eye contact. >> give us an update about mr. putin, how he is perceived by the adjacent nations.

what does jpmorgan see their? 's first of all, putin perception and home is not changed -- >> has not changed from when you talk to us on crimea. >> it is probably strengthen more so because the perception is, the european policymakers with u.s. policymakers that unfairly subjected russia -- that economic pain is becoming very real. a stand onorgan have more this changes? >> i think one thing that had to change is the central bank of russia had to stop setting those targets for the ruble. >> are they independent? >> they are independent. they have come out this regret last week and said, we're going to interfere without any notice. that is one other step to squeeze out. and jimasia amoroso grant. we will come back and talk about the ecb's plan to expand its

balance sheet and compare to other central banks of the world. personal best chart is next on "bloomberg surveillance." ♪\

>> good morning, it is veterans day. let's get right to our single best chart.

>> it is on the expansion of global central banks balance sheets. rather than show you the value of each central banks assets, we at index the chart to 100 to show the relative increase since january 2007. your four lines. the fed is in white, ecb and blue. we picked this specifically. the fed clearly has been the most aggressive at expanding its balance sheet by 425% since early 2007. the bank of england has kept its purchase program unchanged for more than a year and a half. that is the yellow line. the boj has been steadily ramping it up. and then there is the blue line, the ecb, ready to step it up after steadily shaking it. jim grant, people talk about how it is unwise to spite the fed and that is been the store the last couple of years. it is unwise to fight the boj and ecb? >> scarlet, i think the thing to

take away from these squiggly lines, these ascending squiggly lines is that the cost of production of these currencies is literally nothing. , and a figure of speech, the central banks are raising a sweat by creating all , theyse units of -- no don't have to raise a sweat. they tap on a keyboard. the cost of production is nothing. they go out and buy things, securities, bonds will stop the swiss national bank rates swiss francs at zero cost with those francs they euros and with euros buys dollars and with the dollars it has purchased $27 billion worth of american common stocks. that is a miracle. that is something for nothing. >> i just want to get a baseline for where you're coming from. in your book, you describe the gold standard as the least imperfect system for monetary policy.

is that still where we are? >> yes, that is still the case. >> least imperfect. >> i am packing up my house to move. let me be blunt. all that we just saw on that chart is not an economic textbooks. >> to be sure it is in the textbooks. >> where is it? what we're really doing is an intellectual exercise in debasement. we're seeing it right now on the bloomberg screen. that is where we are. >> these currencies, it is a proverbial rest to the bottom. paradoxically, the gold price in dollars is collapsing because the dollar is the least bad among these currencies. .> there we are you can see it. you can also see an important panel discussion i had a week

ago at oppenheimer's funds studios. also, tobias left of which of citigroup, spoke about the ecb and of urgent monetary policy. andow that rates are down now the ecb is beginning to expand its balance sheet again, remember, the ecb has been tricking its balance sheet for the last 18 months. numbers, a look at the but it has been. expanding the balance sheet, rates are down to very low levels. we're starting to see signs of capital is reversing and flowing out of europe. as you get that capital outflow, that will continue to take the edge off. >> tobias, is that the singe put on u.s. equity markets? you have to find a warm place for it? >> it is part of it. we have the policy between the ecb and the fed and the fed pretty much said something fascinating when they took out the words "significant underutilization" referring to

the labor markets. they have conceded something is getting better that is more sustainable in the u.s. i think that brings the money as well. >> enough said there. -- cymer 17 fed meeting december 17 fed meeting. that was the taper meeting of the year ago december >> was it? >> we have photos as well today. brendan greeley, these are smart photos. >> thank you. number three photo, memorial ceremony is held in amsterdam for the 290 people who died when mh17 was shot down in july over eastern ukraine. 1600 people at the sermon including the prime minister of the netherlands. 298 candles were burning memory of the victims. two thirds of them were dutch. the next photo, that that does not contain what you think it contains. it is oregano. 25 grams of it.

william the hands of bratton. commissioner bill de blasio announced new york city's start giving out tickets instead of arresting people. it is just a traffic fine. >> tom is celebrating. doobie brothers. >> i can only imagine it is a doobie brothers song? >> "china grove." >> $100 ticket for the first time, $200 for the second. if there's something other than oregano in the bag. baskin robbins celebrates veterans day today with camouflage ice cream. andolate, salted caramel cake comes with a matching camouflage cone. the company is going to donate $.10 for each scoop it sells. i have to give all marines -- they share a birthday, november 10, yesterday was the 239th

marine corps birthday. i forgot to wish my father at a birthday. veteran, is, a u.s. with us as well. offought two wars sort removed from american culture, particularly, the east coast. her removed from what a lot of other american's are doing because the draft when away. we're not all in this together like we were at other times in history, are we? >> by no means. generally toook sue people involved in this wars. if you live on the east coast and are privileged and like enough to live run the precinct of wall street, it is not daughter,people -- my emily, did serve in the marine corps for eight years and her husband matt served many tours in afghanistan, iraq, but they are the exceptions. conscription is a form of

governmental coercion i think is well rid of, but these wars are being waged by a kind of foreign legion. >> after the midterm elections in the political back-and-forth, i go back to "the wall street journal wall street journal" article over your guy that said we need a military back to 1939 or 1940. that idea went away rapidly, didn't it? after what we've seen in 2014 of a foreign policy. >> yes, indeed. >> for me, that is the quote of the day, jim grant said these wars are being waged by kind of foreign legion. it really is removed from american daily life, and i don't think that can be fixed with an ice cream cone. >> there it is. we wish all of you in important veterans day for those who particularly served in iraq and afghanistan. coming up, i'm really looking forward to this. this book is a was exceptional from jim grant, but this is a

special book about 1921. this is a stunning effort. jim grant on the forgotten oppression. we will look at that next. stay with us, from new york city this veterans day, "bloomberg surveillance." ♪

abby josephing, >> cohen could not be better time with goldman sachs. we will speak at 7:00 this morning with gold and oil retreated equity markets ever higher. also, chip castille will join us from black rock and we will look retirementck of planning as well. our twitter question -- we need every answer we can get. reset good morning to you as well with scarlet fu and brendan greeley. -- we say good morning to you as well a scarlet fu and brendan greeley. >> u.s. soldiers are suing half-dozen you're pinned banks saying they helped iran finance terrorist who attacked americans in iraq. dish banks include barclays, credit suisse, standard chartered and rbs.

it is a billion-dollar divorce settlement and the guy who is running the check is probably walking away happy. oklahoma oil billionaire harold hamm has agreed to pay his wife 972 -- he is worth $16 billion. you got to keep the bulk of his 60% stake in continental resources. a lawyer for his wife said he's considering or the lawyer is considering whether to appeal. an apology for jefferies group from christina kelly who perseveres spun allegations of drug use and provided fodder for the tabloids. the move comes as the couple reached a tentative custody agreement. sage kelly when a leave of absence because of this last month. those are your top headlines. >> on about this for the book-of-the-month? they do not agree with jim grant. mr. grant, in a short, sharp,

wonderful new book, suggested the depression of 1921 was short, sharp and market clearing because government got out of the way. three times of economic history flat out disagree. mr. grant joins us now on the depression. you point out at the end of the book, these economists don't all agree with you. what did they get wrong about that short depression? >> there have a critical of the fed for having raised interest rates as prices were falling in 1920, 1921 there was a deflation, commodity prices were down something like 45% year-over-year. plunge in most brutal prices in america up till that time and since, quitting the great depression. , why in fed economists heavens name today raise interest rates in the midst of this?

is that the prescription for 2014? >> some of that is applicable today. circumstances are wholly different, but my point is about the depression and its unmedicated ending is that the price mechanism, far more resilient and constructive force in our present-day policy makers -- >> the point you're making as you can clear a business cycle recession by doing nothing. sayinger to two works the book this time is different, looking at different cycles. they make a click distinction between a credit crash, housing problem, and a regular business

cycle recession. do you make that same distinction? >> there is an important difference between the garden-variety inventory cycle recession and a housing crash. 1920, 1921, seems to be a thorough that affair. credit played a part in it, although, the banking system sailed through it. i would say -- >> but the lesson today is, can you clear a credit crash by folding arms and doing nothing? >> in this massively different an open economy? >> you can do much more constructive things by doing less today, yes. the lesson pertains, with differences, but i think the central point is that we have been six years into these .nprecedented monetary improv's what we have to show for it is a terrific bifurcation of circumstance. wall street and people around it are fabulously well-off, and

other people -- >> i want to get to this chart. you can use it in your next observer. give the royalty check to scarlett. this is the market at 1910. there is the boom of the 20's and the collapse. to 1942.o the green arrow is simply what jim grant is writing about. yes, it went down, but not all that much. you compare that to what happened in -- >> the point is that it came back. the 20's of proverbially roared after the depression ended. in 1921, their work label shortages -- labor shortages in detroit. there was an element of dynamism in the recovery that i think has been leached out of our affairs today through excessive government intervention. the rogoff critique is well think we can take

away the essential lesson of this era, which is that the price mechanism works. >> jim grant of interest rate observer and anastasia amoroso of jp morgan investment management. thank you so much. >> stay with us, abby joseph cohen, next. ♪ . .

>> this is "bloomberg

surveillance." >> obama meets putin in a nonsubstantive exchange. they pass like ships in the night. we call it china diplomacy. oil and gold find new depths and equities grind ever higher. in this hour, a cumbersome nation with mark feels of ford motor company. of ford motor company. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york this veterans day, november 11. i am tom keene, joining a scarlet fu and brendan greeley. >> it is being billed as a breakthrough between u.s. and china. u.s. and chinese negotiators have agreed to drop terrorists on a number of technology products and it may cover up to $1 trillion of trade, everything from computer trips to medical devices. the u.s., europe, and japan have been pressing for an agreement by china has been reluctant to lift the tariffs.

meantime, iran says there has been no progress in talks to limit the country's nuclear programs. secretary of state john kerry has wrapped up two days of talks with his counterpart in oman. the deadline to ease sanctions and curb the program -- negotiations resume a week from today in vienna. drawn overnes being president obama's call for strict open internet rules. comcast calls the president's proposal a radical reversal that would harm investment and innovation. att and verizon indicate they may challenge the plan in court. president obama wants content providers banned from paying extra to get their video delivered faster p he is aligning himself with netflix, yahoo!, and others that argue equal transmission speeds are better for customers. a new sales record for alibaba. record $5.9 billion worth of merchandise in the first 14 hours of singles day -- that is today. the company took what used to be

an abs your holiday in biggest shopping day and china. angle, day -- a american cap incline, and cosco -- american eagle, calvin klein, and cosco. >> six days after returning to new york from africa and guinea, he had been there treating ebola patients, dr. spencer was treated with an experimental drug and had a blood transfusion from another ebola survivor. the treatment can increase virus fighting anybody's. i'm going to work through the data check. equity markets after a big day yesterday. 2036 on the s&p, remarkable. $76 and gold sell as well. >> we need to check in with our phil mattingly in beijing because non-meetings continue there. -- we saw how

shinzo abe reluctantly shook hands yesterday. we know president obama and his counterpart of russia, vladimir putin, have had multiple encounters. what can you tell us about the tone of that meat between barack obama and vladimir putin? >> what i've heard from white house officials is brief, businesslike, and that is about it. they have spoken three times throughout the day today. in total about 15 minutes to 20 minutes. the topics have included iran, syria, and obviously ukraine but in terms of any kind of substance, what the conversations might mean in particularly in the buildup and escalation we've seen in ukraine over the last couple of days, white house officials saying no major progress made. in fact, what we have heard more of from white house officials is the escalating threats on the westside side that new sanctions may be coming if this type of behavior continues.

>> that would make for a very uncomfortable a pack meeting. already uncomfortable with them eyeing each other warily. rrifs, it ends and 18-month standoff. >> everybody is thrilled with it. when these talks broke down, it was because china did not agree to certain tariff lines -- beingruelly did included. there was for the most part no movement over the better part of the year on this agreement, so for them to get into a room and hammer this out, get it to a position where the u.s. and china late last night came to a solid agreement, one they will take to geneva, i think it is a big step. if this deal goes through, it will be the first big step to cut tarriffs and could

be done as soon as september. "> i like "the financial times on the bitter gourd face. japan met china on these meetings and there is a name for the face, and he faces that we observe. >> they were not happy. >> bitter, bored face. for those of you, i will mimic that later for you. bitter gourd face. what with the backstory as we saw that moment between those two great leaders? top officialse -- from both countries said everything needs to change. relations were at a low point and have been reaching maybe the lowest point for the better part of two years, so this was the arrangement they made to start the progress forward. top level officials had been meeting in the weeks prior. this was the first kind of main meeting. it did not look good or happy but it was something. bearat faces like when a

meets abby joseph cohen. there is a, choreography to this. neither leader can be seen enjoying the presence of the other. >> no question about it, brendan. this goes to president obama and vladimir putin as well -- they are very cognizant, you hear from officials all the time, very cognizant about what the cameras will pick up. they know facial expressions will be caught and people will judge based on the facial expressions, so you will rarely see a picture of barack obama staring and smiling at vladimir putin. completebe not by conscious design, but at least subconscious. there was no witty leaders were going to shake cans and look any happier than the other. they wanted to match up and set the tone for where they think the relationship is right now. >> all right, phil mattingly, thank you for joining us from beijing. phil is traveling with the president asked he attends the apec summit in beijing.

>> sundry walls of worry where found risings earnings that would fill a punch bowl to the brim. we toast or optimism on the american experiment and also toast maya mcguiness, who has been so right about deficit reduction and yet a few of the worries forward to come a three, fighters out, president of the committee for a responsible federal budget. abby, let me get the money question out of the way. give us your forecast for the next six month and 12 months. >> the view basically is determined by the outlook or the at 3%, s&powing earnings increasing at high signal digits, and the stock market will move accordingly. 12 months from now, s&p 500, 2150, fair value could move higher based upon all of the inflows we are seeing from non-us investors. >> can you have the wind behind you with you and david kostin looking at the optimism you have

had when you look at maya mcguiness' world, which is of a better fiscal deficit and what we saw with the midterm elections? >> clearly the fiscal deficit has improved from a cyclical standpoint we no longer need as much stimulus spending, but also because the economy has gotten so much bigger, profits have increased, income has increased for many families, and taxes are higher, so what we really look at is the deficit as a percentage of gdp. double-digit during the recession. it is now down to 2.5% to 3%. >> maya, what is in your crystal ball for the first six months of next year? can republicans get along with this democratic president? >> there are a lot of tensions we will see play out both in this lame duck, which is the next month, and then the first six month. there will be tension between the president and the ewpublicans, the nu republican majority for sure purity of those that want to

govern, the leaders, boehner and mcconnell have made it very clear that they want to get small ball things done at least, but you have other people who still want to sort of throw some sand in the wheels, who are still talking about potential tough ball tactics, so republicans are going to have to work out a lot of internal issues. they think they need to get on to get the economy to grow are not easy, and we are still talking about some really fiscal challenges looking out. >> that is the conundrum, brendan. you're talking about getting the economy to grow, and abby joseph cohen is at the edge of a raging bull. >> i am looking at a measure that abby joseph cohen has included, the median household income, i will just explain it, you cannot see it on radio, but i threw a trendline in there and all you need to know is it is what >> abby joseph cohen stole my chart of the year. >> you stole it from me. [laughter] >> nice try. >> brendan come if you look at the next page, what you

basically see is that while average median income has actually declined over the last 15 years, adjusted for inflation, there is a wide diversions. most people in this country who have a good education, median income has risen, and for those with not a good education, it has declined, and that is one of the key reasons for this divergence. cohen just to find a plutocracy. [laughter] >> i think what she defined is the biggest challenge, which is how you grow the economy in a way which is more inclusive and can actually be sustainable, which is not be tracked we are on. >> it is going to be a lot of fun this hour. >> coming, are americans ready for retirement? stay tuned. we will discuss on "bloomberg surveillance." ♪

>> good morning, everyone. "bloomberg surveillance." i am tom keene. scarlet fu and brendan greeley. >> as the federal reserve considers raising interest rates, are these bearish bets be getting to maybe pay off? you do not say that is the case yet. >> not at all p or we are entering the faith that many people have forgotten about in able market, which is the one in which the economy has better the unemployment

rate has moved lower and it has helped everyone, we do see that consumers are paying more -- are spending more, capital spending by companies is up. there israel traction in the economy. the fed does not need to be providing as much liquidity as they did previously, and that is good news. >> how much is the fed looking at oil prices? goldman sachs came out and wtiuce the forecast for duby and brent. >> that is what has changed and it is the supply part of the equation. normally the ferret -- normally the federal reserve has little control over the prices. low movement in oil prices driven by supply rather than by demand changes -- there is a very little the fed can do. theccording to barclays, last time the s&p 500 was pricier than today, revenue growth was around 7%. revenue growth in the third quarter, 4%, earnings 9.4%. that suggests maybe a slower period of returns in the coming

months. >> i am not sure with a mean by pricier. we are looking at p/e ratio s priced to book. it captures what is happening right now. if one views an economy that is likely to grow in 2015 and 2016 it is appropriate to look at those dividend if the models and discount to cash flow models that look at the future, and on that basis we think share prices can move higher. let me correct something tom said. >> uh-oh. >> he said i was a raging bull, which is bullish. we are not raging at this moment. >> i will take your point. the fed is trailing 10% year to date. are we wrong in our pessimistic, nominal gdp single digit call on equities? >> i don't think that we are. one of the things we've seen thus far over the last handful

of years is that the starting point was incredible undervaluation. a pe ratio of eight times earnings. basically if you work the numbers backwards, you had to believe that the u.s. was going to stay in the recession for another three years or four years for those prices to have been correct. what is pricing to the market right now with thick is not quite as good at is is going to be. >> therefore she is not be raging bull, abby joseph cohen come our guest host for the hour. we will be right back on "bloomberg surveillance" discussing 401ks. ♪

>> good veterans day, everyone. "bloomberg surveillance" from new york. i tom keene pure it with me scarlet fu and brendan greeley. here is scarlet appeared >> it is a 36-year prison sentence for a doom south korean ferry. lee jung sook could have saved sank.before the ferry only 172 of the 476 on board

survived. smallerone reports a decline, showing signs of recovery in european markets pared vodafone sites what it calls some signs of stabilization in commercial performance and operating trends. and merits group posts a higher profit after it cut costs and boosted volume steered the copenhagen-based company said it rose almost 3%. k moves on most 1/6 of the world's containers. those are your top headlines kurt beck's ok, everybody, wake up and pay attention here and we could do two hours of retirement, chip castille is at black rock. rock. black abby joseph cohen knows the difference between a 9% return

and what will not get it done. chip, we are not putting enough money aside, are we? typically are not. we released a study earlier this month where we looked at 55-year-olds year-over-year and looked at their saving account balances through contributions and investment returns and surprisingly 455-year-olds -- for 55-year-olds, they are up 16%, but here's the problem is that the cost of their retirement led by th liability s up 18%, so -- >> you open up your 401(k) statement and think you are --ng great, i uam up 16% >> when actually lost money. >> we have a twitter weston, how

are you preparing for retirement, one by smoking, trinket, and partaking in high-fat, nutritious foods. >> you do not have a retirement program, you have a mortality problem. if you live to 65, you are expected to live to about 85. >> 45% of investors according to your report have not even begun saving for retirement. are they assuming the money that gets put aside for social security is their retirement plan? >> what we have noticed is there is a really fundamental disconnect between people save and they look at account balances and don't really understand how that lump sum gets turned into retirement income. lifetime income. use 4% day after day, if i get $1 million come i get $40,000 a year? >> we use a more sophisticated calculation and we use the same

techniques, actuarial components, we look at interest rates and it is the same kind of techniques used by corporate pension plans. >> what is the number you are working with? >> today for a 55-year-old, it is about $15. you need $15 today for every dollar of co-adjusted life contingent income but you want to begin receiving at age 65. >> i will quote again, to the 4% of americans say social security will be critical to their ability to support themselves in retirement. % of americans say social security will be critical to their ability to support themselves in retirement. this really important topic of retirement savings, we have not done enough to adjust our policies as we have been living longer. we need fundamentally different policies in this country, perhaps even default of saving or mandated saving third on social security, we have got to start making changes to a system that we know cannot pay what is

promised and if we don't make changes, we will have automatic, across the board cuts of 22% for all beneficiaries, which is inconceivable. the long-term challenges that we do not get a good job of doing ahead of her >> most investors do not understand that the larger side among your personal balance sheet is your interment liability. furthermore, it moves around a lot. the value moves around on a monthly basis. >> abby, to your expertise, one of the great things wield for retirement signing is cash. we are still out of the trauma of two financial crisis. we have the matters of fact going, don't we? >> we certainly do, and many individuals hold much less in equities than they do in fixed income, especially compared to what a professionally-managed pension system. fromry about this not just the structural standpoint but from a cyclical standpoint. if in fact we are near the

bottom of interest rates, a lot of those intermediate and long-term bonds might in fact lose value. now, if an individual's holding to maturity, they will not lose their principal if they can hold to maturity, but they may have significant opportunity costs. you know, the things they could be investing in in the meantime. >> this is depressing. >> chip, is there a segment of the population that perhaps has the ability to save but does not take enough risk? >> one thing we're seeing is the millennials, because they have come into the workforce during a time when it is frankly quite depressing to be in the workforce, are starting not to save as much as they had in the past, so we see that -- we would hate to see that trend continue because i think the system is set up quite nicely for the millennial's if they do their part. >> we have learned. castille, thank you so much.

>> how are you preparing for tire meant? tweet us @bsurveillance. >> i will take everything out of my 3401(k)'s and put in a box and forget about it. >> and we have maya mcguiness next on "surveillance." ♪

>> this is "bloomberg surveillance." i am scarlet fu here with brendan greeley and tom keene purity a record single stay for alibaba as sales topped 5.9 billion dollars in the first 14 hours alone, beating last year's record. fromonline sales thanksgiving through cyber monday in 2013 -- $5.3 billion. singles day, the chinese twist on valentine's day, was invented by students in the 1990's. here in new york, the doctor who contracted ebola treating patients in west africa is ready to head home. craig spencer will be released today from bellevue hospital. he served as a volunteer with doctors without borders are his fiancée remains under orenstein at home. and pop quiz -- what gave the lowsay season offers the offers and online discounts? black friday or cyber

monday, it is thanksgiving, government when he seventh this year. acquaint to adobe's 2014 digital fort past, the average discount that day excited to hit rock bottom at 24% off. those are your top headlines this morning are t. >> abby joseph cohen, at goldman sachs, underrated bull market and it will continue that as share buybacks, as america's big business uses its cash. much of it will continue to be returned to cash on cash. shareholders, they want their cash back, don't they? >> may be shareholders do, but what we are seeing is many portfolio managers are now flipping their interest. they are looking at the top line, the companies that could grow revenue, and to do that, companies have to expand. they need to spend the money on, capital spending, and in some cases expand through m&a activity. excitationcall for

or is it here right now? >> we are beginning to see it in some industries, fortunately. servicebased upon a we've seen, we think the capex number picks up 1% or two percentage points. they are growing 6% or 7% overall, much better than it was a year or two ago. >> corporations doing so well as labor is somewhat flat on its back. the we need a government as well? do you support government stimulus? nationade a mistake as a in terms of not using fiscal policy more aggressively for infrastructure spending during the recession. interest rates were low, we had many unemployed construction workers, and heaven knows we need to enhance the infrastructure. >> you are so good at bringing over mathematics to an actual corporate board room. isn't there an inordinate pressure it within the board to do a new religion, the consultants a do it, raise the

dividend, do the share buybacks, and then look at investment? is that a permanent gospel now? >> it is something that has hung on for quite a while, and i think that the focus that some managers do have on revenue growth but also things like return on invested capital, return on equity, you know, whatever we measure is what we ifage, and i think that performing managers, shareholders say we are really looking for those companies that are growing, we're going to see a shift in that cash flow. >> can those portfolio managers, the people who hang on your every word, can they get along with the carl icahns of the world? interesting question, but we see a pickup and strategic m&a. some people doing the financial engineering, we are seeing actually much more in m&a,way of strategic in th

where a company acquires the assets because they see good opportunities are cracked have you talked to carl icahn recently? opportunities are. >> have you talked to carl icahn recently? >> i have not. >> i was tried to make news there. 15% on the s&p 500. that is a remarkable return here as we look forward to not a raging bull of next year but certainly a continued elevation in prices. >> let's get you a data check. it is wednesday. if there is not a lot of economic data. optimismall business at 96.1, higher than the previous month. it did not have a much effect on markets. futures highest of the day so far come up by four points, 10-year yield unchanged at 2.3 6%. the ruble dropping for the first time in three days.

japanese prime minister shinzo abe may call a snap election if he scraps a plan for a tax increase. shanghai trading surged to a record, too. those are your top financial markets on this tuesday morning. >> this is "bloomberg surveillance." iam brendan greeley heard have not planned for retirement here to scarlet fu have a balanced portfolio, tom keene is counting on what he keeps in the closet. we have been asking this since last week -- >> how did you know? [laughter] >> we have been asking this since 2010 -- when will congress pass a piece of legislation that means something? maya macguineas is the president of the committee for a responsible federal budget. please tell me you know something i don't know and we are in a midst of a bright summer of meaningful legislation. >> it is not time to count on it yet because they have a lot of challenges in terms of policy.

any of the real, meaningful legislation that would get done is not easy. we talk about how the deficits have come down but the truth is that the problem on the fiscal front is that the debt is on an unsustainable, up to decorate. that means when we talk about policy, we need to offset the cost or pay for it, helped grow the economy, those are not the kind of giveaways congress likes. there are a number of things that have to get done in the coming months and we can start with this lame duck where we have to get a budget in place. we have to figure out how we are going to fund the government for the rest of the year. we have a number of expired tax breaks. we will have to figure out what to do about those. looking forward, we have a depleted highway trust find. have disability insurance that on the horizon is going to run out. there is an they call the doc fix. so many moments where we could make good policy choices or replace things that are not going to happen with real cost savers, ways to change these things, or we could bust the

budget over and over again. it all ends with another debt ceiling question this summer, fall. let's hope we handle this more responsibly. >> each of these waypoints in the last several years, the debt ceiling, the extension of the continuing resolution, the doc to throwave used it tantrums. >> and in the end, we tend to rely on budget gimmicks to get around these things. are doc fix, we say we going to cut doctors payments every year in and we don't do it -- you could replace that with meaningful, gradual savings to our health care system, which we need to make because health care costs have come down recently but are growing faster than the economy. let's make real policy choices. you need both parties at the table working together and that is something we do not see much of. >> we are talking policies of something that matters, but both parties have a game theory problem. is there any sense that will change? run aannot think you can company with a board of

directors divided into two sides and told to beat each other up at the same time that they run the company, and the country is not that different right now. the 10th nation to go for partisan, cheap shots and sort of planning for the next election seems to trump policy time and time again. i think real political reforms are going to happen in this country and till we get our act together and put smart policies which really need good governing. >> is there any institution in government that has the ability to plan for 10, 20 years? >> we do not do long-term planning in this country. a lot of other countries do. you can look at all strut you where they really look at the long-term and they put out strategic plans and objectives. we not only don't govern for the long-term, we have policies put in place month by month. >> institutionally, there is no solution there? >> the problem for the institution as they do not know how they're going to be funded. if you do not know the budget is going to become a you cannot have a five-year or a 10-year plan. you want that security, defense.

>> maya, i thought sequestration was an old story. you say baloney, it kicks in two years from now. >> we did not get rid of it heard we give ourselves breathing room with paul ryan and senator murray. but those caps are still pushing down on both domestic discretionary and defense spending and are a lot of things going on in the world, a lot of pressure for more spending and security and public investments, which we have been squeezing out. could we trade out some sequestration for savings elsewhere in the budget? entitlement reform is something we have to talk about pure to >> money forl example, bio defense was squeezed during sequestration, among any other examples. >> public investment is the first thing to go, and they are the wrong thing to go. you have to be making investment in your country if you want the long-term growth to be there. we spent so much on consumption

-- that is one of our problems but >> maya macguineas, our guest host for the hour. when we come back, we go live to dearborn, michigan because four is introducing its new f150 pickup. for ceo mark shields will speak with us. ♪

>> this is "bloomberg surveillance."

i am scarlet fu here with tom keene and brendan greeley. i want to get to my morning must-read on washington and a failure to a dress something with immigration, specifically h1b visas. >> is a party agnostic, maya macguineas? >> this should be something that all parties agree to. the problem with the reform effort is it is what else you include with that. if that is the engine that brings along other pieces, what do you do with the rest of the preferences, looking at low skill, how to treat people with -- ndle it?annot unbu

>> there are those that worry that some of the things they it want to add on would be lost by the wayside. >> could it be possible to do corporate tax reform without personal? >> i do think so pure it so much of business is taxed at the individual level. if you look at where the base is, 90% is in the individual tax code we lose $1 trillion a year in tax rakes we could be using to broaden the base of both and bring down the rate, helped grow the economy, simplify the tax code appeared i would prefer to do them together. gete is an argue you can business tax code done on its own but it makes tricky issues. >> steve miller with us yesterday from aig, and abby, you and i are members of the cfa institute. it has boomed in asia. it is just amazing, this insatiable foreign desire to be more educated than we are commanded we say no, no, stay out.

it is the oddest thing. >> it is not just asia, tom. we see a in a number of smaller economies including europe where there is a conscious public policy towards increasing education. right,es, bulgarian -- bulgarian quantitative timely. >> we focus on getting people through the k-12 system and into universities. we used to beat up or one in the world in terms of percentage of young adult population with college degrees. we are not anymore. >> we have been overtaken certainly cared i want to get your thoughts on the washington parlor game of who is going to run in 2015. democrats we hear about bernieth warren, sanders, that name has come up a little bit. >> the outcome of the senator from vermont may be jumping in to her at a lot of people on the want a different message than senator clinton would use, talking less about some of the more pragmatic

policies and focusing more on the anger out there about income inequality, wage stagnation, anger at the business community, and you would see a big divide i think between a clinton and a warren/sanders kind of race. >> is the more populist than elizabeth warren? mannerism, but the message is similar. >> coming up next, we answer our twitter question of the day -- how are you preparing for a retirement? tweet us @bsurveillance. this is "bloomberg surveillance." ♪

>> tomorrow, a sharp and heated debate with david stockman third we will be informed about a caution on our fed and our fiscal policy. david stockman, former omb director, look for that in the 6:00 hour tomorrow on "bloomberg surveillance." we say good morning this veterans day. it is "bloomberg surveillance." i am tom keene, with me scarlet fu and brendan greeley. >> on this veterans day, u.s. soldiers are suing a half-dozen european banks saying they helped iran financed terrorists who attacked americans in iraq. years ago, standard chartered had agreed to pay more than $600 million to settle claims that it hit the identity of iranian clients using wire

transfers. it is a one million-dollar divorce settlement and the guy writing the check is probably writing away -- probably walking away happy. harold hamm had to play his wife but he gets to keep the bulk of continentale in resources be her to a lawyer says an appeal is possible. and it is a seemingly innocent gesture -- vladimir putin on a chilly night to raise a coat over the shoulders of the wife of china's president. were scrubbed by state censors after attracting attention online after some commentators saying china's first lady had won over the russian president. >> it was censored, cut out? >> yeah, scrubbed. >> everybody is trying so hard not to accidentally do the wrong thing. >> but they have to be human. >> with that can take over the entire code of conduct, if you

accidentally smile at a person. >> that is why the family photo is always awkward. dearborn,ead to michigan, when in doubt, roll out a pickup truck. they roll out their new f-150's. bloomberg's matt miller is in in manly field and is dearborn, michigan with one mark fields, the chief executive officer of ford motor. matthew miller, good morning. >> can grant you, tom keene purity outcome of very manly truck behind us. it is lighter and more powerful. the manly ceo mark fields next to me. long slog,en a changing this plant over to build the new f-150 theater people have been concerned about eatingt, the expense into margins. why is it so difficult to change around production? >> this is a big day for our company because it is the production launch of the f-150, and when you look at this

vehicle, obviously it is a big piece of our company and our sales and profitability, but when you change over a plant, we are changing over the dearborn truck here and subsequently the kansas city smb plant, and they are big expenditures, but at the same time when you look at this vehicle and the capability, it is the toughest, smartest, most capable f-150 we have ever produced. we're really looking forward to getting in the marketplace, getting it to our customers and drawling our share. >> is it a little bit of the iphone effect -- i do not want the 5 when the 6 is coming out? $6 billioncome down from almost $9 billion last year. do you expect a big bounce back next year? >> when you look at the initial demand on his truck just last month alone, we had over 250,000 people want on tour website and configure a truck. that is the most interest we have seen in a month on one product ever in the history of the company. as we have said, this year, 2014 is a critical building block to

allowing us to get the next stage of growth is so next year as we said and our guidance, we expect our operating costs to improve come our all pretty margins and our revenue to grow and a big piece of it will be our f-150 right here. >> do low gas prices help you or hurt you in this sense because i can keep my older truck, i do not mind paying a little bit more, i do not mind putting more gas in a deed of i pay less at the pump, or do you go out and get more trucks because guess prices are low? >> it helps for a number of reasons. first, when you look at pickup truck customers, they want capability, more payload, more towing, and this vehicle is going to be best in class in all of those. when you go back even 20 years, the number one on met need for pickup buyers is better fuel economy, so we are going to give them that better capability and we are to do it more fuel-efficient. when you combine it and look at the age of trucks in the marketplace, 50% of the trucks

in the u.s. are 10 years or 15er, and 25% of them are years old or older. those are looking for more marketability and better fuel economy. even at three dollars a gallon, customers will want a better fuel economy and this truck will get them there. as ae you using takata supplier for any of these parts? they have severely damaged their reputation with the shenanigans down in japan. what do you think about that? >> we have not seen any issues at ford. we did see there was one issue with we are investigating. they requested us to notify customers to bring their vehicles back in. it is about 85,000, which we are doing, to help replace the insulators, but our commitment on this truck is to makes her we deliver -- and every one of our vehicles -- we are absolutely committed to giving the highest level of quality to our customers. >> we are testing some airbags, found some issues, and buried that evidence.

can you trust a company like that? >> we have a very good process in working with our suppliers to make sure they have the quality control systems to be able to give us parts that are high quality. i think we are very comfortable with the process in our company that when we see issues, whether it is supply or otherwise, we look at the data and then we act accordingly and quickly. >> all right, mark fields, thank you so much. you in newt back to york. >> very good, matt miller, thank you so much with mr. fields of dearborn. time marches on. alan mulally -- >> and mark fields has taken the baton and is doing well. ford did have to cut its full-year profit forecast. >> the truck is better and lighter, the truck, the truck, the truck! the manly truck. >> let's get to our twitter question of the day. our question was -- how are you preparing for a retirement?

these are the answers -- i am not sure this generation will have retirement. expect it to work until 80. it is as if i tweeted it. >> it is a patriots fan, by the way, i just looked at the icon. >> first, i need a job before i can consider retirement. >> cash flow before saving spirit >> and finally -- a lottery ticket. >> eli fields says a dollar cost advertising -- >> unfortunately that is not funny. that is where a huge part of america is a >> abby joseph cohen, you point out medical costs is a huge issue because medicare is not pre-funded and medical expenses are going to go higher. >> right. it is a big problem for government forecasts as to what the budget deficit will look like her when the baby boomers really start hitting age 65, in just a few years, that is when the problem becomes more significant. one of the things many people are looking at is the fact that medical care inflation has moved

notably lower over the last two or three years. generic drugs,, obamacare could be a contributing factor because when people finally get into medicare, they are not using the system as aggressively because they were insured before. >> they are watching their health. >> when you are uninsured and you enter medicare, that is when you get the hip replacement the first month. >> i am not there yet. maya macguineas with us as well. there have been articles of the first -- do you buy it? >> the of formal care act is here to stay but there will be changes to her to we will make improvement spirit you cannot pass something that big without needing improvements. i think exchanges will prove to have more staying power. the question is how much we subsidize them but as a mechanism that allows people to be insured and stay healthier, i think that is going to be proof to be effective. it is going to be changed. i do not think it will be repealed. >> do the two of you anytime we

have got left, we have come on the end of the year, and just to the strength of the american experiment, you are worried about the washington worries, you are worried about able market that keeps going, where are we going to be in 12 months, abby joseph cohen? timedo not spend most my thinking about the market spirit i think about the economy, and i am feeling much better at the end of 2014 than i did 2013. the on a planet rate is down to five point percent, we see consumer spending does have staying power -- the unemployment rate is down to 5.9%, we see consumer spending which bodes well for the holiday spending, and we are seeing consumer confidence and business confidence numbers have moved higher. >> that links to the animal spirit of the market. >> tom, you have got to go to the radio studio where "bloomberg surveillance" continues. maya macguineas, final thoughts as we head into 2015, are you feeling more or less optimistic about the state of our capital? >> i do not think a lot will

change. i think the real question is 2016 present joy elections -- can we have an adult conversation about what we need to do in this country? fory macguineas, thank you joining us, abby joseph cohen as welcome our guest hosts for the hour. "in the loop" is next. ♪

it is tuesday, november 11.

we have a packed show for you. with the alibaba executive joe tsai. a ceo joining us on why he is spending millions. futurelibaba ba competitor? plus, president obama may have made waves on net neutrality yesterday. americans to roll in healthcare.gov online. why one company wants to completely up and the health insurance industry with a little help from priceline. for an exclusive interview on the new announcement today. he will only see that on "in the loop here: there has been a breakthrough in