Transcripts For BLOOMBERG In The Loop With Betty Liu 20131206

Where politicians are one week away from a budget deadline. Even lawmakers are skeptical any deal could be reached. Are you as skeptical . Its good to alix steel for insight lets get to alix steel for insight on how the markets will trade. Over the last two years, on average, the s p was pretty much flat, averaging a gain of almost. 2 . When the jobs number was stronger than estimated, it was up. 7 . When it was weaker, it was down. 4 . That is what you can expect with the s p. Usually, action is priced in at the open. Performings wind up well on a positive surprise day . This is a day where you want to bet on the financials, which typically has a rally of 1. 2 . Next up is consumer discretionary, also pretty strong, up one percent. 1 . , industrials up you have a riskon trade when the number is better. On a disappointing day, what you need to run away from . 6 . Text, typically down following, down with four following down. 4 . Following, if the number comes in ahead of expectations, it could mean a fed taper earlier rather than later. Thank you, alix steel. Michael mckee, who is skeptical about these numbers, says this time the numbers do matter. Crisis is the most important jobs report since said this is the most important jobs report since september. People think the fed could come into play. There is a meeting they could be influenced. The official forecast is for 185,000 new jobs created by the economy, 180,000 of them private, but the whisper number on the street is stronger over 200,000. The number, we had a big surprise remember, we had a big surprise last month and everyone expected a disaster. The adp payrolls number came in over 200,000, and that surprised people. Factor in revisions, and we could see 50,000 or 60,000 additional jobs added. Bettingld have people on the fed starting to buy what buys in bonds. Cars. Rates on homes and the fed surprises by not tapering after the weak job report in september. Talked back oner the table. Doesnt the fed have a target for the Unemployment Rate . Yes, and no. Ring does notape tightening. Then implement number does not mean as much because it was distorted by the Government Shutdown. It will come down, but it will not be a factor for the fed air it said officials have told me that. Said. Fed officials have told me it will not be dependent. Fourthquarter gdp is tracking much lower, around 1 . They want evidence we will not see a fallback in job creation. We do not have a lot of data before that meeting to prove it. But i want consistency they want consistency. Q i, Michael Mckee, our onomics editor thank you, Michael Mckee, our economics editor. And shaking, Eddie Lampert, its been enough lands chain. M the casual sears bought the company in 2002. Eddie lampert has been selling off assets to raise cash. One analyst estimated sears million 2. 5 billion. For more on the spinoff, i want to bring in julie hyman. Lands end has been well, so how much will this help . You mentioned the 2. 5 billion. This could boost liquidity at sears. 670 1ugust 3, they had million in cash, so this would boost the cash position. In terms of how it is structured, it will be spun off to shareholders. If you are a sears shareholder, you will get a lands end share. Remember, Eddie Lampert recently sold shares to meet the gumption in a redemption in his fund. He and his affiliates will own about 48 of this lands end spinoff, which is expected to trade on the nasdaq under the symbol le. This could bolster the cash position. Other analysts have estimated that the auto care business would be valued at about 660 million, further boosting liquidity. Why does it need this liquidity . For 20 seven quarters straight, 27 quarters straight, the company has seen declining sales at sears and kmart chain. Enhancing a long streak of sale sales decline. Any lamperte said is known as being a savvy investor, and yet he has not been able to turn around the sales numbers. Selling off the other assets is well and good, but a turnaround at the core business is also necessary. Some investors have also complained that if you spin this stuff off, you are left with not very much of a quality investment. That is one of the concerns. That is true, what are you left with then . Thank you, julie hyman. I want to turn to the big news, Nelson Mandela, south africas first black president , who passed away yesterday. Crowds have been gathering paying respect. The government says they will have 10 days of warning, and his funeral will be held on december 15. National leaders are morning. He collaborated a long working relationship with administrations on both sides of the aisle. Obama,sident Barack Mandela was a Strong Political and personal influence. He paid tribute last night. I am joined by the former ambassador to south africa under president george bush who worked with mandela. Also with us is bloomberg political analyst matthew dowd. Rick to have you with us. Ambassador, great to have you with us. Ambassador, let me start with you. Tell us about what your meetings were like with him. The thing that really struck me was his level of graciousness and humility. He was not a big man, but he was larger than life in my eyes, and he struck me as a gentle soul. He offered me a tremendous level of encouragement, and he was very positive in terms of the interactions between me and him, and also felt that we had the opportunity to continue to strengthen the relationship between both south africa and the United States. Matthew dowd, i want to play one part of the president s tribute to Nelson Mandela, where he was really emotional talking about his influence on him. We have lost one of the most influential, courageous, and profoundly good human beings that any of us will spend time with on this earth. He no longer belongs to us. He belongs to the ages. Some would say that mandela represents an era of Political Leadership that we do not have any more. The great thing about Nelson Mandela is maybe even in his death he could highlight the political issues that we face here. He was not a saint, and he fought against this deification of himself when he came out of prison. He could have come out of prison in revenge, but he sought forgiveness. That is what his life was. Absolutely. Ambassador, there were some Nelson Mandelan and president george w. Bush at the time. I know they joined forces in fighting aids, but he was vehemently opposed against the war in iraq. That was true, but the issue was to move the country forward, addressing hiv and aids, and that was the president s Signature Health program for south africa and for the continent. Things we could agree on to serve the needs of a significant number of people, not only in south africa, but around the world. What you think we can take as lessons . There are a couple. First, it is amazing, the power of an individual that can change the nature of entire country. He demonstrated one person can really make a change in a country. Two, the majority of his account judgments happened after he was 72 years old when he got out of prison. Or 55y say when i am 65 and retired, i am done, but it is a lesson that the best part of our years are to come. Good for us, or good for me. And, again, the power of humility. Certainly, his legacy is enormous in what he did to fight apartheid in south africa, and his efforts to bring Racial Division bringing the races together, however, there is still Racial Division in south africa. There is still lots of violence and crime in the country, and some would say the influence he had beyond south africa was limited. Are you disappointed, in some ways, that the impact was not bigger . I do not think so. I think he was something the country needed at that time. Apartheid, theof leadership, the moral courage that he demonstrated that diageo point in time, and especially that he demonstrated at that especiallyme, and serving one term and then stepping down. That is very unique to many african leaders. He demonstrated a high level of leadership in terms of taking that step in moving that country forward, the issues of reconciliation, and also being a beacon of hope. How important go ahead. I was going to say, one of the assets and liabilities of the dominant player like Nelson Mandela, he can change the Church Rectory of and trajectory of a country, but once he is gone, you are left with smaller people and petty politics. You will not have another leader like Nelson Mandela, and it is up to south africa to figure out how to figure deal now without that person feeling the landscape. He clearly was a moral compass. For civil rights leaders here, how important was his passing . As president obama said, he was a leader for the world, and around the races world about apartheid and many things. He will be in the annals of Martin Luther king, gandhi, Nelson Mandela. And he was an inspiration to people all over the world in terms of what he stood for, and that is so important, and something that any of us should never forget that none of us should forget. On that note, an appropriate note, thank you, matthew dowd, and also eric bost. We will discuss Nelson Mandelas legacy with someone who knows it quite well. Ceo Mohamed Elerian will weigh in, as well as on the jo report that will be out in 15 minutes. Stay in the loop. We are just Getting Started on this friday. In the loop with betty liu will be right back. As we await the crucial employment report for the month of november, the last jobs to poorly with good this year, were starting to see the jobs report we will get this up a whoppingre 28 this year, making bonds a tough sell. I want to bring in Jeff Rosenberg from blackrock who says this market proves how addicted investors are to bed fed easing measures. You will be frustrated what is going on with what the fed is doing. You call this paranormal activity. What do you mean by that . We have seen this for a while. What paranormal means is nothing in the relationship between the real economy and the stock market is normal. Good news in the economy is bad news for the stock market. Overis because fears better news in the economy, what that means for withdrawal of Monetary Policy accommodation stock markets, Financial Markets globally are addicted to accommodation, so there is a complete disconnect between what happens in the financial market, what happens in the real economy, and that is the paranormal market activity that i am talking about. You wrote in this report nightmares are guaranteed. You cannot ignore the impact on your psyche. What, jeff, are your nightmares . That was a quote form the paranormal movies. It was from the movie poster that i was making an allusion to, paranormal activity should be disconcerting. This is not normal, not necessarily healthy financial , because theor transition we are trying to accomplish is very difficult to for the baton for support valuations from monetary support to real economic activity. That is the hope, you can create the transition. You hope that, that i get back to the question, what is your nightmare scenario . The nightmare scenario, the bad scenario, is that the transition between Monetary Policy support and real economy support does not happen smoothly and he just does not happen with valuations detailing to go up. Market valuations have gotten so far ahead of real economy fundamentals that when you fear the withdrawal of policy accommodation, valuations fall. That is really the risk. And you think it will get even worse under janet yellen when she takes over the fed . No, actually, i think it is the opposite. What janet yellen represents and what they are going to try to communicate is even as they begin the process of trying to pull back from quantitative easing, they will augment that withdrawal of accommodation by accommodations for expectations of lower for longer, longer than zero Interest Rates, trying to convince the markets they will be accommodated, even as they are pulling away from quantitative easing. The tricky part of that is they are moving more towards communication of policy than action, and it seems the markets are having a hard time appreciating what that really means. It is a hard time for anyone in fixed income, so how are you trying to get your returns . But the trick here in fixed income is we really have to think differently the trick here in fixed income is the really have to think differently. If we are in rising Interest Rates, which means falling bond prices, to manage an Interest Rate fixed interest portfolio, you need flexibility. We want to be able to buy bonds and be a longonly investor, but also sell bonds. It is good to be long and short to manage fixed income in todays environment. Thank you, Jeffrey Rosenberg from blackrock. We are about seven minutes away from the november jobs numbers. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Good morning. I am betty liu. It is 26 minutes past the hour, which means Bloomberg Television is on the markets. We are awaiting a jobs report. We are expecting 180,000 jobs created in the jobless rate coming down to 7. 2 , not a big difference from october. We are on the market again in 30 minutes. The top headlines mourners are gathering outside of the home of Nelson Mandela, who died 95. Night at the age of he led the emancipation of south africa and went on to serve as the first black president of the country. We will have 10 days of mourning before the funeral is held on december 15. The Time Warner Cable incoming ceo says hes willing to sell the company at the right price. The current chief operating officer will take the reins amid speculation they will be acquired, and he says he is the perfect guy to manage the mergers and acquisitions component. Deutsche bank is cutting 200, oddity jobs. Europes biggest nash, oddity jobs. Jobs. Modity they have dropped to the lowest level since 2009 is regulations have doubled. We are moments away from the jobs report. We have full coverage. Dianne swamp is with its. Wonk is with us. As we are awaiting these numbers, i know your expectations are a little lower than what most economists surveyed are expecting. Why is that . It does not feel like a 200,000 jobs a month economy. I have 160,000 jobs. That is like. Of ther, last month, 40 jobs gains were lowwage in leisure and hospitality. Those are minimum wage. That is the composition we need to get itself feeding momentum in the u. S. Economy. , looking ahead to 2014, some are saying we are likely to get a minimum wage increase, at least that seems to be the momentum right now. Do you expect that to have a big impact on the jobs market . One of the issues on minimum wage, during the Great Depression we saw a lot of unionization. When people are living below the Poverty Level on minimum wage, they will be upset about it. The unions have linked onto this and are trying to lever that point, but hard point is when you raise the price of labor in lowmargin businesses like fast food, you will lose a number of workers as well. It is a tough issue. Raising the minimum wage sounds great to people that want to increase living standards, but you could also be cutting a lot of people out of the job market. It is a controversial issue right now in washington. Let me bring in Michael Mckee who is standing by with a whisper number right now on the jobs data. Is potentially a volatile day because the whisper number is 200,000, or maybe a little over that. The consensus is 180 5000. If it is much higher or much lower, we could see market whips. We might see that in a few seconds. 180 5000 jobs expected. 7. 2 for the jobless rate. It or cook. Next it or cook eric on peter cook. Unemployment drops to 7. 1 . There is some noise. Nonfarmingd on the payroll, better than our survey number of 185,000. Modest revisions combined september and october changes. Were looking at job gains three out of the last four months better than 200,000 jobs, very stable, very consistent. Toemployment rate drops seven percent, the lowest Unemployment Rate we have seen since november of 2008, when it was six. 8 . The Participation Rate is up. Again, what happened here in terms of the drop, we saw a gain in employed in the Household Survey of 118 thousand, the biggest number we have seen since may, 1984. The unemployed number falling by three under 65,000, including 377,000 of those temporary, laidoff government employees. They are again, once again on the job. They were included in the 118,000. So, again, some noise, but it is clean. They were counted both times, october and november. The longterm unemployed is unchanged. A big improvement in the Household Survey. Big hiring numbers for transportation and warehousing. Manufacturing up 27,000, the best month since march, 2012. Healthcare up 28,000. One area of weakness, financial activity is down 3000. Up average weekly hours are 34. 5. The bottom line, moore improvement, more traction in the labor market. The unemployed rate will get the attention of the Federal Reserve talk. Art paper taper it is getting the attention of the markets. Alix steel, do we see a rally . A little bit of a rally. It looks like investors are taking good news as good news. Typically, you might think of good jobs number, perhaps the fed will taper, and that will be negative. We are not seeing that in the equity market. The treasury yields rising above 2. 9 for the 10year. On currencies, it is all about the stronger dollar. If the economy is getting that dollar will appreciate as you see a rising against the euro, against the ed, and against the pound. And againsthe yen the pound. In michaelo bring mckee. Is there a reason to be excited . A couple of reasons. The whole report is good in terms of direction. Some of the numbers are not up to where they were prior to the Government Shutdown, like the Participation Rate, but we are going in the right direction. You want to look at the revisions. This is not as good as some might have thought. Only 8000 additional jobs were found in the last two months, and october could rerevised again next month, but when you are starting from a higher base, it is good news. So far, we are tracking to have the best year of job creation since 2005. It is hard to believe. It has been a pretty good year. Then, look at the labor force in the labor force rises, but the on employment rate goes down. The number of people hired in the Household Survey is extremely strong it hundred 18,000. You have to wonder if that can continue. Earnings went down, but not enough, and on an annual basis actually down from 2. 22 2 . 2. 2 to 2 . , have weane swonk missed out we want to qualify all of this, but have we missed out a little bit on the recovery here in the jobs market, that perhaps it is better than we are giving it credit for . This number compositionally is in the right direction, and that is important to the Federal Reserve. We are seeing jobs in the manufacturing sector. We saw jobs in construction as well. Remember, with the preconditions for the fed were fiscalring were, one, uncertainty, and it looks we will get a 20month deal on avoiding the sequestration. That takes that off of the table, and we are back to the numbers of 200,000 a month, that they wanted to see to justify tapering. We are easily 50 50 on tapering in december, and maybe a higher percentage than that. It is not the only number out there, but it is a big number, and i think it is important. Does that mean we will see a six percent 6 Unemployment Rate in 2014 . We certainly could, but even if we do, the fed will not take stimulus away anytime soon. The fed, one of the messages they will have, as they give it pivot away, we could 2015,zero term well into and that is something they will communicate as they move away from buying asset purchases. It will have a large Balance Sheet and they are concerned about the Housing Market. The construction jobs they were building, but the private sector was not. The biggest drag has been state and local government, and now they are coming back. That is a plus, but we want to see returns in the private sector, and that is yet to be seen. Us about thel Government Shutdown and the impact it might have had on the numbers. If the Government Shutdown had not happened, it appears right now we would still be at 7 unemployment. What is significant is the velocity of the drop in the Unemployment Rate from 7. 3 in one single month to 7 . The reason for that was furloughed workers returning to jobs, counted in the Household Survey. That is why we moved so quickly. The bottom line for ben bernanke and those at the fed is we would have been at 7 anyway. It suggests there was other hiring, not just government workers. Everybody wants to know what the fed is going to do, and fed officials have said they not only want to see an improvement in the labor market, but they want to know that it is going to continue, that there is strength in the economy behind it, so, my question, diane swonk, is there enough strength for them to you and consider it at this point . There is not a lot of strength, and you also pointed out 1 on the fourth quarter, that is a problem. Worries about the Housing Market are very high on the list of concerns. There is a sense that the efficacy of these asset purchases is not there, and they will be more effective by extending the time that they eep the zero rate into late 2015, into early2016. They are concerned about the selffeeding momentum in the private sector, there is also a real desire to get away from these asset purchases. We have a deficit that is following falling like a rock, and mortgage origination. The fed is not only a 500 pound gorilla in those markets, they are now the only gorilla in the jungle buying in those markets, and that is something they are concerned about as well. Diane swonk, thank you for joining us. Also, Michael Mckee, peter cook, and alix steel. We will be focused on this big drop we have seen in the jobless rate down to 7 . We will also get reactions to the jobs report from the ceo of pimco, Mohamed Elerian, and the obama administrations reaction from labor secretary tom perez. Well it seems like the whisper numbers were right. We got a huge surprise on the upside for jobs. To jobless rate went down 7 . I want to bring in someone who lives for jobs days. He loves these days because the data tells the story. Tom keene is with us. You talk to bill gross. I want to make clear, this is a sport. Just before the report i put out my last guess, and that was 200 5000. Who is bragging now . It is not my point, it is drew matus at ubs nailing the Unemployment Rate at 7. 0 . I spoke with bill gross, and this is yields going up, which is not good for his total portfolio. He reaffirmed the new normal and he feels janet yellen will work within a subdued gdp, and with that, he said a 50 50 chance of tapering in december, which is why you see gold moving down and yields moving up, bond prices down, and equities have, as well. , give theook political implications of this report, particularly as Congress Tries to get a budget deal. Ogether i think there will be an impact on budget negotiations in the sense that if people think we get a deal, steady progress with only be helped if they create certainty in washington with a spending deal that lasts two years. That has been one of the calling cards from both sides during the course of the negotiations. Lets lift the cloud of uncertainty, even modestly. This will add to that effort, and it makes you think, if we had not had the Government Shutdown, all of the noise in october, with the number be even better . That is an important idea, how the government got in the way and the sequester. Matthew dowd is adamant that government will not have a dampening effect next year that we saw in 2013. Because . A different time, a different moment. Bill gross says the backup in the yield is different than what we saw in june and july. There is a nuance of optimism moving forward versus the gloom we saw. We need that. It has been a beleaguered 2013. It has been. One of my questions, and i take,love to get toms you will hear democrats concerned about Interest Rates moving up to quickly. That will be the new political discussion. Expert dampening their of the Housing Market is very tangible the dampening their of the Housing Market is very tangible, and Michelle Meyer said a double digit 2013 will not repeat itself this year. Yields are up, housing is dampened, but not to any form of crisis, but peter is right, that is always political in washington are at tom keene, thank you. Also, peter cook, peer and well will be back in two minutes on in the loop. Well, it is a talent two mexicos. A tale of two one is about tourism. Hyatt hotels is opening to resorts, and starwood plans to up its luxury portfolio there by 50 , but on the flip side there is the mexico played by drug violence and crime. There are 24 murders for every 100,000 people in mexico. Compare that to just 4. 7 in the United States. That has toryism advocates in mexico fighting toryism advocates in mexico fighting to get the truth out, including the ceo of yucatan holidays. Erica, thank you for joining us. Do you feel there is a disproportionate amount of attention paid to drug violence in mexico, and is that hurting your business . Yes. I feel that happened in the past because the previous federal government and the president had an agenda that had to do with reelected, party talking about crime every day. That got the media attention. However, the truth is that right now there is no particular warning from the u. S. Government toward any areas of mexico, and the only warning that they have is near the border. Is theree impression is a travel warning issued by the state department, generally speaking in mexico, but you are saying that is not true, obviously . Correct. There is no current warning. In the past, it did affect us, but it was more about perception. The new campaign has helped a lot in terms of protection because we see all of the positive things happening in ico, which is job creation for instance, you were talking earlier about jobs. 6 million jobs in the United States depend on toryism in the trade with mexico. So, what toryism and the trade with mexico, and we are very happy about that. Think, of the problem, i is there are so many different numbers that are out about what is actually going on with violet and in mexico violence in mexico. You hear the anecdotal news stories that are horrific to hear, but even the latest numbers are only from 2011. Why are there not more current numbers, crime statistics, to use concerns that crime is on the rise . Rockstar is actually no crime on the rise. I am not an expert on crime, but i do propose promote cancun all over the world, and i can tell you mexico is safe for toursim. Mexico city is one of the top 12 safest in the world. We are currently helping sao paulo, brazil, with the world all because we have cameras over. We are helping sao paulo, and here, they are, having this big sport event, and they were not very many. Cancun has been saved for the last 45 years. Safe for the last 45 years. Isolated oneto four issues, and it is not related to tourism. , we have tocia leave it there. Thank you. The ceo of yucatan holidays. Well be back in two minutes on in the loop. Past the56 minutes hour, which means Bloomberg Television is on the market. Equity futures went higher after the jobs report came in better than expected, over 200,000 jobs created, and the jobless rate coming down to 7 . That was a surprise. Equity futures are building on that rally. Well talk about jobs with the ceo of ensco who will weigh in on everything from the jobs report and co. Who will weigh in on everything from the jobs report to the golf of enough death of Nelson Mandela. 30 minutes to the opening bell, this is in the loop with betty liu. The countdown begins right now. Welcome back. Heres what we are working on this morning. A surprise in the jobs report. Payroll grew by more than expected. The Unemployment Rate fell to a fiveyear low. Towill talk to the pimco ceo get his take. President barack obama calls Nelson Mandela an example all aspire to. Ould the president will likely attend mandelas funeral. Japans Prime Minister tells bloomberg he would like we have an exclusive interview later this hour. Rate fell. Te i want to bring in the chief washington correspondent peter cook and mike. You have been giving digging into the Household Survey and what that tells us about the market. Yes. Ist is really important here not only the level of the Unemployment Rate but the number of jobs created 818,000. The tin hat folks will love that. Is a lot of job creation in the Household Survey. It is good news. For a look at the numbers the overall jobless rate come out to three digits. This month came in at 7. 023 . Below a six handle. The fed has been talking for 6. 5 threshold. It will start a lot of hope among people out there that the job market is getting better. December they fall to a six percent number. Building on that and what the will it be, how much on ben bernanke do something in december versus letting janet yellen have to start off her term on that part of move. Ben bernanke said it all depends on the Economic Data. Make it ave to consequential decision, beginning to start to taper the bond buying. Is still chairman of the Federal Reserve, or is janet yellen comfortable with that being her responsibility when. He first takes over in march most likely to happen the before these job numbers. Does he feel a personal responsibility to get this moving in a different direction on his watch, just to make life a little easier for janet yellen . Who knows the answer. They will insist publicly it is Economic Data that will drive this. You have to wonder if the personalities and pressure there has some after factor to bear. Lets stay in washington. The jobs report will likely have an impact on this issue. U. S. Negotiators work through on a limited budget deal. Megan, are they close to any deal at all . Negotiators do seem to be getting close. We know a house budget chairman, paul ryan budget leader, expected to be added this weekend. If they can get to a deal, that would avoid another Government Shutdown january 15. It would likely be a small and smaller deal. It could be a small as 35 billion. It would head off another round of automatic such cuts known as the sequester. We have artie got some groups fighting this and that includes airlines and federal employees. It includes raising the fees by airline passengers. It also changes federal thatement programs contribute more. Congressional leaders yesterday stressed a timeline. A selfimposed headline next week. Cave gave us an update on where they were. I am hopeful they will be able to work this out. There is clearly no agreement. On ame is running out budget agreement. We understand negotiations are continuing, but we also understand there is no final deal. House speaker jon banner t present plan to keep thank you. Megan hughes in washington. Moving and shaking this hour, warren buffett, a new study says he is not just a great investor, but is the best. The study was published by the National Bureau of economic research. If it has done better than every u. S. Stock and mutual fund that is been around for more than 30 years. The study says there are several he picks stocks that are low volatility and cheap and highquality. Lessons for all of us in investing. We will talk to the invest co ceo about everything from todays job report to the death of Nelson Mandela and how he to todays world leaders. We will take you inside ebay for a look at how the company went to Online Office right to a global ecommerce giant. Stay in the loop area loop. All day today, Bloomberg Television has your look inside ebay. We look at how ebay has evolved into a tech giant. Surviving and thriving after the. Com bust. Secrets to surviving is the expansion behind its original online marketplace, including selling tickets from broadway to the super bowl to hub. Cory johnson shows us just how ebay stub hub. We are not just about selling tickets. It is about creating the whole Fan Experience and innovation is used across the business. Stub hub takes 25 off the top of ticket sales and the rest goes to the seller. Stub hub is after a lot more. Million back in 2007 and the business has grown dramatically. Is selling one ticket every second. Technology was the enabler for this online secondary ticket marketplace to happen. Class features like interactive seat mass and mobile ticketing and ways to buy a couple of seats and split the bill with a friend. Stub hub is a risk for ebay. The business has much worse mark margins. Fallengross margins have since the stub hub acquisition. Paypal surely furthered the trend. Every april mental dollar of stub hub profits compresses ebays overall margins. Milking big data could be the key to improving it. We are is a new science trying to develop and trying to understand that. Stub hubs chief technology officer. Already. W buyers where we are taking it to the next level is understanding users pick data. It is what they are might be intending to do. For more on the inter innerworkings of ebay, jeff on how the auction site has grown and what problems it will face in his in its expansion. Campushnson is at ebays as we speak. , into anclearly grown online giant. Tell us this scale of ebay right now. It is really big. Hard to conceive. Use ebaye who do not regularly, it is hard to imagine how big the businesses. It is regularly doing over 3 billion in every quarter and still growing quite a bit. One of the more interesting numbers is the growth in users. It continues to see doubledigit growth in almost every important metric. It is an interesting business. At heral, one of its known brands, with an ebay, tell us about the growth of paypal. Growth has been explosive. There have been important acquisitions. The numbers in last years annual port were stunning numbers. This is one, from 4 billion to 14 in a year. There are acquisitions, but youre still seeing regular payment growth of well over 18 from ebay. The growth is slowing down. It is interesting to talk about this in an era where there are a lot of Digital Payments happening and what kind of growth they might expect. We will talk to david who runs the paypal business for ebay. Increasingly, that is becoming a dominant part of the business. Still part of the marketplaces, but you can see the point in time where it might be bigger than the giant marketplaces at ebay. And with those types of growth rates. Just stand by. Just, you say ebay is not as sexy anymore. Not as sexy, but they are doing the right thing. I say in my own book, and this is exactly what theyre doing, adapted. They have moved from a marketplace at an auction house and then more of a retail center, and they are now a platform and that is what they are becoming. I was surprised and i had not looked at the company for a while. I started looking online. 30,000 employees looking at the acquisitions theyre making. They have great acquisitions. Becoming more than just a house of brands. That is what im talking about. Theyre not as sexy anymore because they have got all of these Different Companies and do not have an overarching platform. But they are a Platform Company. They will have to try to figure that out but that is a small thing. They do not have one identity anymore . Yes. Ebay, ebay,ypal, with they have a couple of different names of different products. Is confusing when you go to that site and start looking at it and try to figure it out. They are a house of brands. One big name. They have really got to get to that house if they are going to have that leverage to be sexy. Not have to bedo sexy to make a lot of money. That is what cory started to point out. They are really becoming a Platform Company for anyone online or offline in the retail amazon, whichinst is more the walmart darth vader to local business. We talk about amazon and. Acebook there are companies that we toss a much about what ebay does not crop up as much. We always like the new and ebay has been kicking it around for a while. To the point about not being sexy, i am not saying jeff is not sexy. I would not dare to. Ideas of ebay were painted in the. Com era. Two thirds of ebays marketplace businesses are at a fixed price. It is not just an auction business. Changing andbeen evolving quite a bit. Maybe not everyone is paying attention to it. It has continued to grow. It has been changing and evolving to a different kind of business than it was 10 years ago. Amazon, google, and a few of those. They have ebay advertising and a lot of things. It is anyone providing the. Ervices into those retailers they have snuck up and that has been very important. Cory is making a great point about the fixed price. The cool thing theyre doing is adding and pretty soon they will have it all. That is really the stealth strategy. They have snuck up on a lot of people. Later on, i believe you will have an interview with the ceo of ebay. The Big Questions for him as he is leaving this company to the future . There are a lot. We will turn the Business Inside out today. We will talk to john, who runs whowhole company, david, runs the paypal business. Among the Big Questions are a lot about the growth of the business. It is still looking like it will dominant business at ebay a few years out. As to go into the era of is in a lawless and there is more and more of that, it is a great opportunity for paypal, with an enormous infrastructure built around payments already. There is a lot of Growth Opportunities for this business. I think the battle against amazon continues and that has been a battle they have been waging for 15 or 20 years. It is interesting to talk to john about that. My coanchor at bloomberg west will talking to john and i will talk to david marcus and Jon Erlichman will be here as well. All different aspects of ebay all day long. Two different hours of bloomberg west as well. Focusing on ebay. If you did not know everything day, youbefore the will. Some of the key things we have got to take a look like look at there are mobile applications. They seem to help a lot of these do thes debt businesses mobile side. When i hear talking to big marketers and big brands, they are talking about big data. The other thing these guys are bringing is the data and being able to let us know what customers are buying in and how to reach them in those stores. Jeff, great to see you. Also, cory johnson, of our bloomberg west editor at large. Be live inest will san jose all day long, taking us inside ebay, including the sit down with the ceo. We will be back in two minutes right here. Spotify is expanding. The new service just requires a constant internet connection. The coin is gaining traction in ecommerce. Bank of america analysts say the currency has a clear potential for growth due to low transaction costs. Declined more than 80 fold so far this year. Incredible. Theft has teamed up unit is working with the bureau to fight revenue stealing malware that affected more than 2 million computers. The software has cost online advertisers almost 3 million a month. Johng up, a surprise support we got this morning. The jobless rate falling to its lowest level in five years at seven percent. We will talk to tom perez. Also, an exclusive interview with japans Prime Minister, trying to ease tensions over chinas new air defenses on. We will be back as well with the opening bell. Welcome back. It is 26 minutes after the hour. The latest on futures right before the bell today. We are seeing this rally. We are seeing a rally. It could be the end of five days in the s p hundred. Futures one percent. The better than expected november jobs report. 3000 in november. The Unemployment Rate falling to seven percent. We saw prices declining. As high as 2. 93 . Now at 2. 78 . The dollar strengthened versus the yen. Gold is currently down. Fell initially and bounceback up a little bit and is off right now at 12 30. We are on the markets once again in 30 minutes. Thank you. Stock investors poised to respond to this mornings report. I want to bring in mohammed, the chief executive and cocio at pimco, the near 2 trillion fund manager. Also our economics editor, pouring through the report. Mohammed, first off, we have had several guest and commentaries saying this report makes it a 5050 chance the fed moves on this Monetary Policy month. Are you in that same camp . We are. It is an unusually strong report. It is strong in terms of headlines for job creation and the Unemployment Rate. It is strong in terms of how we got there, and the employment growth was broadbased and the Unemployment Rate was down while the Participation Rate went up. That is good news. It is also strong in terms of earnings. Ityou look across the board, is an unusually strong report and it will be welcome by the fed and everybody. It is good for mainstream. Beno you get the sense bernanke wants to move, as long as he is there, in this seat, that he would rather it he him that moves than let janet yellen move . Class i think most people would like to start normalizing Monetary Policy. The are worried about implement the implications of being experimental for too long. At the same time, they do not want to undermine the real economy. Inn you get a strong report terms of the numbers and how broadbased it is, it makes the normalization process easier. I think they will welcome this and i think they talk very seriously as to whether they taper or not. This point. At yes. I was just talking with bill a few moments ago. He said two interesting things. One that the Seattle Seahawks are the best team in the nfl. Also, he clings to the normal growth rate, two percent, roughly. If we get a budget deal, and we have a strong jobs creation. Could 2000 14 break out of the normal cycle . Those are necessary but not in not sufficient. The most important to look at is this is investment. Look for whether ceos have the confidence of using cash not to do shareends and buyback, but whether they have the confidence to translate that in investment and factories and hiring. If they do, then you can transition to the higher growth. The key issue will be Business Investment at this point. Right. Business investment. I do not think it will get much better. Markets have been willing to look through all of the dysfunction and pull a relation. I do not think it will get much better. We will not get the sort of action that we need in congress. We need to unleash the potential of this economy. It is considerable. You mentioned the jobs report. Whatis your biggest worry . Is a big concern for you here with jobs . The big concern is that we are starting from a situation where the structural components are bad. That speaks to the Participation Rate and youth unemployment. That speaks to the education and payment cap. It will take time and persistent effort to improve the labor situation. Hope forhopeful is that the report that we got today is repeated over and over. If that happens, maybe we will be happy. Wall street will be happy because the fed will normalize. That is a question. We saw a big pop in 10 year yields. Managed its Communications Better . Yes. We got an email from our desk. The explanation is that this is technical. A lot of people were short. Muchtreet does not have appetite for taking risk one way or the other. What you get a short covering. Me just follow that if i could. Where do we go then . Do we see yields rising . That is always the risk. That is why the fed looks at the Financial Condition index is a very important metric grid it is not easy. Trying to do it and they have an eye on the Financial Conditions. If they tighten too much, as they did in may and june, they will community communicate. Go, what we let you will tell you that this is not just a temporary glitch that the job market will continue to improve and accelerate from here . We need to see the characteristics that i described earlier repeated. Based and it broad has to come with higher earnings. If you get that, that is good news. We need that for many months . Yes, we do. You need many months of that to get to what has been termed escape velocity. Stay with me for a moment. We will talk more about Nelson Mandelas legacy. Alsoy touching and insightful tribute to the South African leader. We will be back. We will also stay with the jobs report. We will talk with tom perez and get the white house take on the jobs recovery. Sitsapans Prime Minister down for an exclusive interview. What will japan do about chinas new air defenses own . We asked him and got his answer. Stay in the loop. The jobs right now stand at a fiveyear low. Seven percent. Markets are moving higher on this number. Lets get to washington on their take. I am joined by labor secretary tom per is. Thank you for joining us. Is big question everyone has this looks like a good report. It is good news for mainstream. How long will this last . Is there momentum behind this . This is a solid report that shows steady, broadbased growth. Sector jobivate growth. Over 8 million jobs created. The Unemployment Rate is at the lowest level in five years. You look at manufacturing and there is another solid month they are. You look at the last three years or so and more jobs have been created. But, theres is still a lot of unfinished business. Two examples you look at the isgterm unemployed, it still unacceptably high. Some of the highest rates that we have seen since the post world war ii era. It is not going down fast enough. One of the most important things the Congress Needs to do is to pass the extension in Unemployment Insurance benefits for the longterm unemployed. Do you think that will get done . I am hopeful that well get done. There is a long, rich, bipartisan history. When unemployment is at this level, we should help the long term unemployed. On december 28, 1. 3 Million People will have a lump of coal in their stocking if we do not do it. 2014, 100 28,000 Unemployed People in ohio alone will be affected if benefits are not extended. When you have rates this high, it is virtually unprecedented for congress to do nothing. That is why it is so important. Some people say that the numbers look good, but when you dig down, there are troubling trends. We have seen this over the last couple of quarters where you have more and more old workers participating in the workforce. Between 30ve those and 44 not participating. Some of them are frustrated. They are unable to find jobs. What can the government do to help alleviate those trends . If you look at the report, we broadest. That is the measure of unemployment. It measures discouraged workers and marginally attached workers. Unemployment, the used six. Call it the that declined more last month than any month since that figure was measured. That is good news. Labor force participation was back up. There are a number of very solid science that we continue to move in the right directions. We need to pick up the pace. That is why we are talking about Immigration Reform all of these things that can expand the economy further. Imagine what we could do if we made the commonsense investments in infrastructure. We could move even faster. And what jobs would be created on that. You mentioned extending unemployment benefits. Could this report and subsequent good reports create an argument that we do not need these kinds of emergency benefits anymore . The thing to recognize is better,the economy gets there is a mechanism in place that makes them go away on their own. This is not a benefit that extends indefinitely. Improves, the way emergency unemployment works, people are less eligible. At the moment, we have so many people who are longterm unemployed. The average duration of unemployment is Something Like 36 months. That is unacceptably high. It has a selfcorrecting mechanism. If we continue to grow at this pace, there will be fewer and fewer people availing themselves of the benefits. That is the genius of this work. It helps people to keep those benefits. By the way, if you take away these benefits and into the proposed,s some have you will cost jobs. You will have less money in your pockets and spend less. You will violate the doctrine of hold. Thank you so much. We will leave it there. The world is mourning the death of Nelson Mandela. Coming up next, we will look at his legacy. He had an operation on his tear duct. The island in on the phone lines, the salt burned out his tour duct. This man, this figure that will be remembered, not just in south africa or africa, but from china thea and every land man who could move so many people to tears, himself could not cry. Of the many insights from Nelson Mandela, the South African leader. He is now the subject of 10 days of mourning in south africa. He passed away last night at the age of 95. The country will be in morning. They are also celebrating his legacy and the Lessons Learned from his long and fruitful career. He five for peace and justice in south africa. The funeral for Nelson Mandela will be held on december 15. Many leaders around the world have been waiting in and giving their tribute to the South African leader. We have also had many Business Leaders talking about the Lessons Learned from his leadership. Elerian is one of them. I want to highlight one part of what he wrote. He said that many will fret about south africas future now that the country has lost its moral compass. Some will associate his passing with the more generalized malaise about Political Leadership around the world. Many haves again and said this morning that his passing really highlighted the vacuum that we have here around the world. With what true leadership is really about. He was in incredible man. I came across them in university. He was protesting against apartheid. We were invested in south africa. I listened to his vision for the country. Come not often that you across leaders to contend it. He was a Freedom Fighter and he pivoted to being an amazing leader. He understood the notion of forgiving, but not forgetting. He understood the importance of truth and reconciliation. We owe this to him. It is not often that you see leaders adapt to the changing hand that is dealt them. He did an incredible job and he is an inspiration to everybody. You penned a piece as well about Nelson Mandela. You talked about what companies what kind of lessons they could learn. Some of them were about bringing together different groups of people within their own company. Trying to unite factions within corporations. Absolutely. If you see what he did, it was amazing. He comes out of 27 years in prison. He would expect him to be vindictive, he is not. He understood that he could help to build a new south africa. He also understood that he needed a buyin from all segments of society. It also means training people to do things differently. He got down to work and he said look at how other countries are struggling. When it comes to pivoting and dismantling the past. The whole world owes a lot to him because he is an example as to what needs to be done. Governments and companies are able to navigate this global paradox. Certainly, we need leadership in washington. We need to learn in washington how to bring together two opposing sides. Absolutely. Imagine if he could bring together the blacks that were repressed for so long and the whites that were so scared about their future. He could bring them together to work for a better south africa. You would hope that our congress could come together to work for this and the next generation of americans. You would hope. I want to switch gears for a moment. I want to say oversees another issue. We talk about the vision. Dayse seen in the last few this rising tension between china and japan. There is always simmering tension. It has increased even more with the recent development. In tokyo yesterday, our editor inchief sat down with the Prime Minister. This is what he said about calling for a summit with china. Because there are issues, all the more, i think there is the need to have a meeting between the heads of state. I always keep my door open for a dialogue and i hope that china will adopt the same stance. That is my hope. Ratchetingxpect some down here or should be worried that these tensions will only escalate between the two . Term, we should expect tensions to come down. There is the bigger issue. History is not very optimistic on this one for it there is always a conflict between an powerncy an emerging and established powers. What youre saying play out is this tension regionally. That we can reconcile the two issues. It has not been easy. What we will see is a series of tensions that are then de escalated as people realize how much is at stake. It is no surprise that we have seen these tensions frequent a more with more frequency. As you say, this emerging power is growing faster and faster. You have the established power of japan that is struggling right now. Absolutely. Economics leads to a deep appreciation of the yen. Lets not forget that that has been occurring. It tends to create a headwind for other countries in the region. Until japanese consumption goes up, there is the risk that japans growth from other countries in the region. With thehat this is involvement of the u. N. And it can be the escalated. Thank you so much for joining us. Pimcos ceo, thank you so much. We will be back in just a few minutes. That does it for us today. The congressman from virginia will weigh in on the deadline and the final three week to read to deal. Ceo of siemens will also be in the loop. C that is all week long. It is 56 past the hour, which means we are on the market. Scarlet fu has more. We are 30 minutes into trading and stock are making a big comeback. We are up by 9 10 of one percent. All 10 Industry Groups are on the rise. We are led by financials and raw materials. There was an immediate pop in the 10 year yield. That has used. It is down to 2. 87 . The dollar is gaining against the yen. 102. 85 is the current trade. Oil futures are Holding Steady after todays surprising jobs report. It is a mixed picture. Whont to bring in jeffrey, joins us from the nymex. Lets start with the jobs report. What do they need for Energy Prices . It is a matter of perception. The economy seems to be doing well. The stockmarket is strong. You will see a higher price in oil. It is on a sympathetic basis. I do not know how long that will hold. I go back to the old fundamentals of supply and demand. Is that we feeling are on the upside. There is an optimism. In that chart, it shows a big swing. Futures traded within a 99 range. Why such a muted range after this report . We were trading on different criteria here. We are still trading on reports that came out a few days ago. That is what were basing it on. We had a nice strong in crude oil. Showede and heating oil a little weakness in comparison. Today, we are rebounding a little bit and the market is holding. Crude oil is up as high as you can imagine in the technical range. We are trading up to 90. That is exceeding what i had predicted. That you are watching a couple of spreads. Isl me which one you think most important in determining the direction of crude. Months,he last six gasoline is still a main indicator. Were keeping an imm. It gives us an idea of the tone of the consumption across the board. We should be switching to heating oil. Importantbe what is as we going to heating oil season. What i always do is look at the spread. ,f the front reaffirms the move that usually affirms the up move. Showingt month are not the great straight, so it is holding down the upside that took place yesterday. Thank you for your insight. We are on the markets once again in 30 minutes. Market makers is up next. Time warner cable means its price. Will charter or comcast or both by the Premium Package . Fries with that . Minimum wages on the menu for fast food workers. But will this mean fewer jobs at restaurants . Back to the future brand. These Companies Got their start in the postwar american boom. Does their staying power result in sales in 21st Century America . Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. Welcome to market makers