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The nook. Crook. Ok with a let me just mention mcdonalds. Potentially third consecutive month. Four states go to the polls today. Vote onork, we get to the Party Nominees for governor. President obama is meeting with congressional leaders on how to deal with islamic state. Lets look at the clarity of the data check. The turn to the equity markets is all about currency this morning. We will address this through all of bloomberg surveillance this morning. On to the next screen. The fix. Vix. A little bit of angst on monday. Sterling continues to get crushed. Gold is doing a turn. Lets get some dollar perspective. This is the plaza in new york. Strong dollar. In this has been the persistent decade trend. Were at a critical junction. These are standard deviations. We dont discuss those in september. No one is talking about the currency war, but we are not ready to proclaim this an era of strong dollar. Everyone is saying we are almost at a critical junction finally. In other words, the long end to the era of dollar weakness. That may be. To ourly, we will listen guests and experts on conversation and foreign exchange. Too many choices today. Here is our front page. Too many choices, but we needed to start with apple. As they is on a roll prepare to roll on new products. Bigger screen iphone, wearable device, mobile Payment System. Is contrast to 12 months ago stark. Shares are up. Samsung is struggling, losing some momentum. M, within your fangirldo would you suggest that we know more about these products today . There isis so huge now no way they can keep under wraps the products that they used to be able to. Insighthave a lot more into what is going to come out today. That does not change the excitement about this mobile wallet and what it means for apple leveraging itunes accounts. Historic cash generation. Staggering. 150 billion. And they returned some of it, too. Since the last iphone debacle , they have generated 109 billion. Billion with a b. Soon we will be talking t. Exactly. A year ago, we would have talked about two new sizes. Whatever. Now we are talking iwallet. That is revolutionary. It is something that changes the system. This moves apple into a new era. Out thatalso point this will require a by and from retailers. You have to put the pointofpurchase device that allows your new iwallet to work. We will be checking in with cory johnson who will join us live from cupertino. We will speak about the financials of apple. Our second frontpage story. General mills is buying organic food maker annies. Premium. Ut a 37 have you ever eaten annies products . Yes, the rabbit macaroni and cheese. Can we have kraft velti that velveeta . [laughter] , my motheras a kid would slice up hot dogs and put them in the kraft macaroni and cheese. If you are good, you would get the plane stuff. Purplewould sneak the annies box. These days, everybody asks for annies. We know the General Mills and the other Food Companies have been looking toward natural product makers to boost growth. To get in on the healthy trend as well. Last frontpage story. This is the biggest ipo of a bank. Goldman sachs went public back in 1999. A u. S. Unit of royal bank of is looking to spin off. It is a vanilla bank out of providence, rhode island. A lot of heritage within new england. Model. Bankerly they are not doing credit default swaps. Oldschool banking. Old school. Citizen spinning off from the royal bank of scotland and scotland spinning off from the u. K. A curious observation. I will go with that. One of the reasons they are thening it off is to make money for helping bailout the u. K. Government. Stillis the only one that is under the u. K. Government. Shock in awe. Strategists of all stripes try to rationalize the use of cash within the bull market. It is a bull market that will not correct. We consider Mario Draghis strong dollar policy. What thek about resurgent dollar means for our american investors. Is this a good thing . It is a very mixed blessing. One thing i want to point out is a strongeroning for dollar has become very consensus. We are a record net longs on the dollar. The record net shorts on the dollar since july of 2012. Everyone was positioned for mario draghi to pronounce more accommodation. We think the dollar will be in an uptrend. You are too young to remember the rubin strong dollar. There it was. Strong dollar policy. This is nothing to do with 1995, is it . A very complicated situation. If the dollar is too strong, the new manufacturing renaissance is not going to be achievable. , we look likeeek a relatively grower Slower Growth period. Isnt that more function of the relationship between the yen and the dollar then the yen and the euro . That is a good point. We are also looking at the trade weighted dollar. Everybody is focusing on the euro, but the yen snuck up. Movementctually had against the dollar against all of the developed market currencies in the future of the dollar against emergingmarket currencies, so it is a little bit less certain. Do you think there is a dangerous level of groupthink here . It is worth thinking about our investment consensus positioning. I say that because coming into 2014 everyone was expecting rates to rise, everyone was positioned toward a weaker fixed income market. The crowding into that market has been unanticipated. The month of enthusiasm for the dollar has been raising flags. Amount of enthusiasm for the dollar has been raising flags. Now, our company news. I think it is applefree. Fully. Hackers did infiltrate the home depot computer systems. They knowledge to the breach yesterday. Systems were compromised, but there is no evidence that the cards were accessed. Debit cards were accessed. Ipl. Choo nears an ipo. Bank of america has been hired to manage the sale. Tivo is set to unveil the ultimate dvr. It can record more than five months of highdefinition shows. Later thisrolled out year. The price tag is 5,000. You have to find the time to watch this. I could think of 5000 other ways to spend my money. That is incredible. There it is. Tivo stealing some of apples thunder. Apples launch. The event is going to be this afternoon. The rumored mobile wallet that may revolutionize the Payment System. It might. Do you trust apple with your wallet . Tweet us. Tune in live to our special coverage on bloomberg west. That will be at 1 00 p. M. It matters. Good morning, everyone. Bloomberg surveillance. An important interview this afternoon. Peter cook sits down with the secretary of treasury and the secretary of transportation. No doubt about it. Tax in version will be front and center. Im tom keene. With me, scarlet fu and adam johnson. Shares are already moving in the premarket for apple. The company is unveiling a new iphone today and included in that unveil will be the mobile wallet Payment System allowing users to buy goods at brickandmortar stores with a click of their phones. Shannon cross has analyzed the transaction economics and she joins us now by phone. What is the significance of that youyments given write that apple views it to be less of a direct revenue opportunity . Mind, they have not announced anything yet. When we think about it, apple tends to look at services as a way to sell hardware devices. One they first launched the itunes store, they ran it to breakeven. Walked before they run, effectively. When you think about what a mobile wallet could do, it will make the iphone much more user friendly and usable. It becomes your wallet eventually. It becomes a device that people need to have. It is basically going to be multiauthentication. Your thumbprint and possibly even a code. From a retailer standpoint, it lessens the chance of fraud, which is a positive for the credit card company. Talk about the contribution of mobile payments to apples bottom line. That is the thing. Initially, we dont think there is going to be a significant contribution as a service. But it will drive significant sales of iphones because you will have the touch on their and we assume it will also come to ipads. It becomes much easier for people to buy things online, as well as in the store. It keeps people from walking away from the cash register, which is a positive from retailers and will drive retailers to address adopt the technology. Square is private and is reported to have a 34 gross margin. It also is unprofitable. Why would a company with a 34 gross margin in a business that seems like you collect cost, why would that be unprofitable . They have to expand the install base. The marketing and research and development and all of the things being involved in being a Company Small growth are sucking the profits. There is profitability within the business. You will get there for apple. The interesting thing is that apple is so big. This could be an indication of a place where they can run with no profit for quite a while, where others cannot do it. It becomes aand Significant Competitive advantage. I like the scale idea. Cash generation since the last soiree at 700 per share. It is roughly 100 9 billion of doom and gloom cash flow that they have brought in. Do you extrapolate apple out to our First Trillion Dollar Company . Five years out . Six years out . From a cash flow generation sure, could they do it. Could the double again, it is possible. Tell me where the market is going to be overall. Apple is still only trading for a 150 price target. 115 price target. If you continue to generate cash and you give the multiple expansion, i suppose the valuation could get there. It depends on market conditions, as well. That appleis the gun has pointed at the cell phone carriers heads . We continue to hear more and more about the carriers moving away from subsidization and then it turns around. An iphone user tends to generate more data usage, a higher monthly payment, and the carriers want them. They tend to be higher income as apple has spread to the mass market, that has lessened, but it continues to be a very Attractive Customer for the smartphone carriers to have or the Telecom Carriers to have. Apple continues to have a lot of power within the relationship. So much as been discussed. Where might you be surprised . There has been so much out there. I think that depending on timing , we dont expect the iwatch until next spring. Apple wants to spread out its provost product releases. Has gotten clumped around septemberoctober at this point. We think the watch is coming up in the spring which will help things balance out again. If it comes earlier, there will be an upside. Beyond that, i think if they came out with some sort of mobile payment strategy that drove profitability, that could be a surprise. I think people understand what we all think is their strategy around it. Shannon cross from cross futures. Thank you so much. I think we need to pose our twitter question of the day. You trust apple with your wallet . There have been some in a different data breaches. Tweet us. Does it help or hurt apples efforts . Weing up in the next hour, will be speaking about apple and alibaba. This is bloomberg surveillance. We are on Bloomberg Television, on your tablet, your smart, and bloomberg. Com. Good morning, everyone. Bloomberg surveillance. Im tom keene from our World Headquarters in new york. Scarlet fu, adam johnson. Cory johnson is in cupertino, california. Right now, our top headlines. Warnings from the world health organization. On the Treatment Facilities are now overwhelmed. Seen more than 1000 deaths already. The dutch Team Investigating the saidsia Airlines Flight that multiple highenergy objects from outside the aircraft caused the crash. The disaster over Eastern Ukraine killed all 298 people on board. Ayor and cello which marin cilic makes up for lost nishikori inng kei the u. S. Open final. What kind of shirt is that . Where are the tennis whites . It is fine. It was an unbelievable match. Those are the top headlines. You were in the third row . I was in the 18 throw. It was awesome to be up there. Joining us as well, surveillance tennis expert, kate more. My entire Strategy Team at jpmorgan has been obsessed with the game. Associates of my are obsessed. I was significantly higher than the 18 throw. I had a beautiful view of the sky. [laughter] what blew my mind last night was every time nishikori did something right, huge applause. Did something right, nobody cared. They were so in favor of nishikori. Only at the turned very end of the first match for nishikori. It was a slow progression. That is my tennis conversation for the year. [laughter] kate moore is our tennis expert for the hour. Good morning, everyone. Cooks big day. This is bloomberg surveillance. Im tom keene with scarlet fu and adam johnson. A quick data check. Sterling front and center. Catches a bounce this morning after an incredibly challenging week. Gold, the outs. Ounce. The politicians speak, so do the markets. The sterling tanks as Great Britain considers a lesser United Kingdom. City, and the financial district, what are the ramifications of the significantly weaker pound . We are seeing some of that play out in the markets, arent we, tom . Good to see you. We lost 6 on the pound against the dollar since the july highs. That is something about how seriously the markets are taking this now. They were not taking it seriously when the polls were suggesting that the no to Independence Campaign were going to win. Now the polls are too close to call. It makes people very nervous. In terms of some of the stocks being moved by this, the banking anything anyone feels has significant exposure over the border. Gordon brown and alastair darling usually dont speak to the Prime Minister until september 18. How closely are they attached as they take on the pros colin forces . Proscotland forces . Increasingly, it would seem. We talked to the former prime who is trying to salvage the no campaign, no to independence. We are talking about the possibility of a 307yearold the union between scotland and england and the rest of the u. K. Breaking down. Planhave launched a new for scotland, a new deal for scotland. They are talking about giving further powers to scotland. They have their own parliament in scotland. They are talking about giving them further powers. Give powers of taxation raising to them. Of all these other issues, which is the most significant . Thet the oil rights in north sea . Military . Judicial . Tax collection . Which of these logistical issues are the ones that people are most talking about . All of the Financial Issues dominated the early part of this campaign. We heard a lot about the pound. The yes to independence camp says they want scotland to carry on using the pound after independence. The main parties of westminster say, no, you will not. There will be no deal over the currency. Union,not have fiscal Monetary Union if you do not have fiscal union. Alex hammond says that the westminster politicians are bluffing. He says they will change their tune and will be falling over themselves and get the scots to stay inside the pound currency union. Say they do not think scotland will be able to keep the pound if they vote for independence. Thank you very much, anna. We want to bring in our guest host for the error, kate moore. Does this change the way mark eventuallyues his tightening Monetary Policy . That is a really good question. One of the things we have seen in 2014 is a massive differentiation across the fellow markets in Monetary Policy. Something struck me about that earlier segment which was the statement, we cannot have a disconnect between monetary and fiscal policy. You cannot have separate fiscal and Monetary Policy in this scenario. I dont think thats true. Think about the eurozone. We are waiting for greater fiscal unity. We are waiting for greater institutionalization. We have one Monetary Policy and different fiscal institutions that are operating on different time lines, with different degrees of conviction. With different degrees of turmoil, have you changed your view on sterling or sterlingdollar . That is a separate part of jpmorgan. Our expectation is that we will be watching the news flow over the next week or so and the movein sterling has been a bit surprising for many of us, as rapid as it has been over the last trading days. These are brutal moves. Absolutely. They can be swift. I want to bring in my morning mustread. The surprised interestrate cuts from the ecb last week. The force of the measures get lost in translation. There is a lot of uncertainty here with the ecb and what exactly it did. Clive crook makes the argument that it does not have the instrument to effect the change it needed. I think that is a fair assessment. Ofdont know the magnitude this asset purchase program. We wont get that until october 2. There was a lot of question about given the size of the market in europe right now, if the size of the purchase market is not large and cannot move the entire market, is it going to be the same as we have seen by the fed, by the bank of japan, by the bank of england . It does not feel like the same shock and all kind of treatment. Line here is cacophony. Still e, should i sell because of pound sterling . Absolutely not. We continue to think that they will outperform in this environment and like equities over bonds. When were looking at incremental money and putting it to work, these kinds of policy decisions will and affect where our next investments will come. We feel good about where we stand, but given some of the uncertainty be a about the grocery jet to ray, our trajectory, our income is going to go to the u. S. Rather than European Equity fund more likely. Are you talking about oldschool cyclicals or new economy cyclicals like amazon and ebay . That is a great question. Our favorite sectors are tech, financials. We are constructive on health care for separate reasons. We have begun incrementally more positive on energy, as well. We are not necessarily looking at steel companies. Wait a minute. She just mentioned 14 sectors . I mentioned for sectors. Three that are secularly oriented and one that is defensive. Let me throw her a bone. You mentioned energy. As we look at the mention of the bloomberg terminal magic of the bloomberg terminal, earnings gas up. The highest growth. We ought to just be in energy. There is quite a lot of positive momentum in energy. There is the u. S. Energy renaissance that is affecting different sectors. We are starting to see big integrated oils produce at this point. At thisase cap ex point. We think supply around the world is not going to be so explosive as to be met with strong demand. Finally liftsa after all of this hoopla, that is going to suck money out of various sectors. Really . I dont take it means to be a zerosum game. I think there is still a fair month of cash on the sidelines for investors. We have seen this from mutual fund managers. Retail has been skeptical. Up. Ations have moved markets continue to grind higher despite negative headlines and geopolitical risk. Im not sure that some of these big ipos need to take money from other sectors and allocations. There could be incremental money that could go to work there. Hostte moore is our guest for the hour. When we come back, our single best chart shows the voters are increasingly concerned about immigration. We will explain on surveillance. Good morning, everyone. Bloomberg surveillance. Breaking news. Thought, a may become a reality. The donald does not involved. Trump entertainment resorts files for bankruptcy. This has a lot to do with atlantic city. This casino closes, the casino closes. Trump entertainment files for bankruptcy. That was a formal filing across the bloomberg terminal. This is bloomberg surveillance. We need to celebrate the acuity with our single best chart. It is a Midterm Election year. This is from dan clifton. He used this data from a gallup pole. More than 20 of people cited government dysfunction is the biggest concern. The economy has waned as well. Has taken a steep rise up. It has emerged as the top concern in july. It was a bigger deal than the government or the economy. It has come down to the second most pressing issue in august. Republicans were twice as likely to view it as the most important issue in the country than the democrats. I found it incredibly disheartening that president obama is going to delay singlehanded action on immigration. They have to win ohio. Always have to win ohio. I dont think any of this is surprising. Everything is at 15 20 . The economy has come way down. It is no the third most pressing issue behind government dysfunction. That will change. It is disheartening, but no surprise. The primaries today are in new england. Ok. Meanwhile, there is an apple frenzy. You can get an apple what at mcdonalds . It is disgusting. Do they call it an imeal because it is an apple . Cute. The donald is expected to report a third month of lousy sales. Mcdonalds is expected to report a third month of lousy sales. What is the new new . Coffee, theke mcdonalds coffee, they are giving it away. Box they are giving it away. For free. It starts on september 16, for two weeks. Speaks volumes about the troubles at mcdonalds that we have heard about. This whole health, obesity issue. There are things docking mcdonalds. Dogging mcdonalds. People dont dislike eating the food of mcdonalds anymore. Many moreso competitors. So many more varieties. Chipotle is the big one. You look at the stock chart. Mcdonalds was ranked the worst among 21 burger chains. If you could have a shake shack burger, why would you have a Mcdonalds Burger . That is why they ranked number 21. If you look at the share price, you see mcdonalds under don compton only up 5 . Chipotle is up 78 in that same timeframe. If you just bought the s p, you would have been up 50 . Was a chipotle a spin out of mcdonalds . Yes. Mcdonalds had to pull a and andr smaller chipotle other smaller food chains on their watch and they decided to focus on the core burgers. Thank you so much. Is what england has been waiting for and certainly the United Kingdom. The governor of the bank of england speech. Is the s word is not mentioned. There is no mention of scotland by governor carney, but there is a lot of mention about his economy optimism. The pound just jumped a little bit. Kate moore with us. To have nothing to do with scotland. Yes and that is one of the biggest moves in 2014 is this divergence in policy. Frankly, the u. K. Data is pretty good. Ellendovetail on cherry , one of thelen things his wage growth within the United Kingdom. Mark carney was the first central banker in the world to say that the economy is improving, he said, my economy is improving. He has come back and forth a little bit on that. Bit. Uld backtrack a little being an accused of unlovable friend because he flipflops. Would also mentioned mark carney said the bank of england estimates level of slack at about 1 of gdp. We have central bankers using slack. I have no idea what that means. A globaleed to hold central banker conference on the word slack. Regressionrun it in on the bloomberg terminal. Very good. Profits in undervalued corporations. We will get into deep value. This is bloomberg surveillance. We are streaming live on your tablet, your phone, and bloomberg. Com. Good morning. Good morning, everyone. Breaking news from mark carney, the governor of the bank of england. He speaks and he does not mention scotland. He moves poundsterling with commented optimism on the path the United Kingdom is taking. As heredictable headlines tries to calm markets. Tries to calm markets. It talks about less synchronized eurozone and u. K. Markets. How the u. K. Markets, job markets, are doing better. Carneys comments and we have pulled back a little bit here. Steps these are delicate as scotland moves to september 18. Good morning, everyone. It is bloomberg surveillance. Lets get to our company news. This is company news from the files of bloomberg west. Facebooks market value has topped 200 billion as investors wager it will capitalize on the future of mobile advertising. Worlds 22ndow the Largest Company behind verizon and ahead of toyota. Plans to invest in startups, building enterprise mobile applications and those working on devices connected to the internet. Will invest in early and late stage startups. Uber enters the russian mass market. Loweromise prices 15 20 than moscow taxis. Todays company news from the files of bloomberg west. It is the surest path to losing money in the market. Try to pitch a falling knife in the dark. Tobias carlyle has hit a home run people over the wall with an incredibly smart, dense, 213 pages on how to not lose money in the market. It is called deep value. Shut up and read it. Congratulations. I want to go right to kitchen knife. Catch a knife. Our intuition for the extrapolation of trends makes the impact of reversion a mystery to most investors. The nuances can make deep value seem like a little inside baseball. Why is carl icahn in inside baseball . He is an investor from way back. When you look at some of the , whenies that he buys they have broken down, when the other investors are prepared to give them a. Forget about deep value. How do you avoid the classic value trap . I do something you can only tell sometimes after the fact. If you are buying deep enough , good things happen to those businesses, good things happen to those companies after a while. They attract upside. Youhe Balance Sheet gives time to give a behavioral courage to right the ship. Here is my question, tobias. Mean reversion. Mean religion. Mean reversion. Define mean reversion. It is the idea that you revert to the mean. What is your measurement tool . Is it a price to earnings . Is it gross . Thatis the actual number you are looking at . The metric i favor is the acquirers multiple. It is a less common name for the enterprise multiple that examines the business cash, adding back in the debt, and looking at operating earnings. Finance in a leveraged buyout. Big firms thator can take things over and manipulate the Balance Sheets to serve themselves and identify something as cheaply as possible. How many people so many people talk about value investing. What is the difference between a war in and Warren Buffett is looking for and activist investors are looking for . Warren buffett looks for Wonderful Companies at a fair price. Activist investors want Fair Companies that it wonderful price. Gotcha. Tom is busy reading. It is superb. Tobias, thank you. It is your autumnsmart read. Moore, thank you so much. For ex is front and center today. That is why we do a forex report. Mark carney is moving sterling higher. There is dx why, making kate moores life an entire different world. Shares of apple moving higher in the premarket. We will discuss apple and alibaba. This is bloomberg surveillance. Apple fan boys rejoice as tim cook wants you to get out your i wallet. Cory johnson is at the battlefront and cupertino. 800 shop at the waldorf astoria for chicken and to listen to the alibaba story. And it is the business of fashion. They shaped the industry to its very foundation. Good morning, everyone. This is bloomberg surveillance. It is tuesday, apple day, september 9. I am tom keene. Joining me, scarlet ipad fu and adam iwallet johnson. Howard lindzon is chairman and founder of stocktwits. He is iHoward Lindzon. In u. K. , Industrial Production rises. 5 . Mr. Carney effectively saying rates will rise in u. K. By mid2015. That is a big deal and why the pound is rallying. Here in the u. S. , 7 30, Small Business optimism expected to increase for the third consecutive month. Earnings, one of notes, barnes noble, 8 30. Mcdonalds, meanwhile, posting its third consecutive two companies both doing great. Amazing. Mcdonalds. Les and four states, delaware, new ,enture, massachusetts and rhode island. Here in new york, voters will nominate potential candidates for governor. For an exchange on the move. The euro gets a bit, up from where it was an hour ago, and sterling again is higher right now. As carneying 1. 6125 to the rescue. Lets get to company news. Buyingral mills is californiabased annies. 46 a investors will get share, 37 more than the closed. Citizens Financial Group was seeking a 3. 5 billion ipo. It would be the biggest bank ipo since Goldman Sachs in 1999. Rbs will offer 140 million shares, 25 of the unit, for 23 to 25 a piece. Products today from apple and ceo tim cook. Apples fortunes have turned around dramatically. The stock has a record high, up 38 from a year ago, 25 up year to date while rival Samsung Struggles to regain momentum. That is the latest this morning. Scarlet, one 18 a. M. , austin, texas, dad, i am so sorry, i dropped my iphone last night at a bar. Could i get the number . Your amex that is. I am just shocked. You should not be shocked because everyone is all abuzz over the latest i products. Getting ready to unveil. , howard will preside lindzon, our guest host for the hour, cofounder, chairman of stocktwits. You have been following these Tech Companies for a long time. What part of this announcement is new, is exciting for investors . What is new is they will see a little more confidence and strut from apple thanks to the as man icon as well icahn well who was buying it at 500 a share. That should change things. I think tim cook was playing defense. It is his opportunity to finally play offense, and it looks like he was genius for waiting this long. I think what is different is that theyre going to continue to fight it out on the high end. It is easy for apple to go into china than for china phones to come into the u. S. They are sticking to the high road. They are bringing in fashion people. Fashion matters, and their Retail Stores, the same thing i talked about in 2006 on our first wallstrip the Retail Stores matter, especially global launches like this. I want to talk to people, i want to get Great Service we are actually honored to have you on today with your perspective on technology. You see, what, 47 product rollouts . Slavesjust victims and to the hype and hysteria, or is there a value to what bloomberg johns to what cory johnson is going to see today . I do not know who this cory johnson is he is hanging out at cupertino. Cori is a smart man, and he is right. When i went to my first macworld in 2005, lets face it, i was not there when he was doing the ipad and itunes software, but it was like oh, my god, we ran to the store to buy this really stupid little it was on a roll, one of the first little rope s on a that you hung around your neck. Yeah, dumb. But we were running to the store. Those things have passed. I call that peaked steve jobs. Now we are heading into the good where he is cook feeling confident that he has got stuff, he is ready to launch province, he has been waiting for the market to come to him. Top of the game, 600 billion company, best chance at a trillion dollar company. Do you say they crush samsung . Again, with samsung, i have never been a samsung user. When we look at the iphone 5 and i look at a samsung, i go toy and i go magical masterpiece. Look at this product. My kids look at this product and i go what would i improve . What really what i improve . Well, he is tried to do with iwallet. L it the he will get the buyin from retailers who are create the thing where you swipe your thing where the iphone works. Is that naive . It is not naive. When everyone is talking about watches and tvs, he went where it really matters payment. When you look at so come valley, everyday they are finding a payment come anywhere it is square or the next next thing to figure out payments, ok. The closest, need to figure out payments so far is uber. We get in our car, every thing is to trusted, we pay our tip with it, etc. Apple is trying to create a onebutton solution for this. They are the ones already attacking the drug, disney, amex , mastercard puck, visa, they are the ones that have to pay this off, and they are the company i will trust with my 1 to payment or whatever it is going to be. While everyone is looking for tv and looking for a watch, which i do not care about, i am going to get payments, and that is interesting to me. But payments as part of an ecosystem. Is payments going to be a significant contributor in terms of revenue and therefore profit s . Im not a payments expert, but i think so. Everybody has got this in their hands at every moment. I think yes. It could be a gigantic product. Sharing that Money Matters as well, and i think it will be in the elegance of how they lay it out and help cool it is. Do i walk in a restaurant with my phone and i get treated differently gekko when foursquare came out in new york, it was oh, i want to be the mayor. With our iphones, we are the mayor, and everyone knows when we walk in who is the important person, so i do not think that will begin today. I think you have other surprises , but mostly round high end and fashion and beats, im excited about accessories. Must like nike. My two favorite stocks. Nike i have owned for a long time. I was talking to Google Ventures and i say i own a life science oo i own nike. Of all the trends tim cook is hitting on, which would have the most residents . Resonance . I would love to see some a romney tv. Im a netflix person. Ive 48 years old, and my wife and i sit down and say what is on netflix. The remote stoxx you like netflix over apple tv . Yes, i netflix user. I think the experience of necklace is winning. I think there is a lot to do as far as interface and however think looks together. I would like to see that fix. My son, who is 15, and tom knows him, says my son will come out to me and say i run out of stuff to watch on the looks. I do not know how that is possible. That is why i was surprised you prefer netflix to apple tv because they have a lot more offerings. This is the howard world. Iphone five. For those of you on bloomberg radio, it is out on instagram, i will throw it out on twitter and facebook as well i did this, while you guys were talking, and 93 seconds. To me, it is all about ecosystem. There is no other way to do this. It is community. If you look at stocktwits, we are growing really fast right now i do not know how we are doing it. I cannot tell you there is any switch we push. Netflix has this way, if you treat them well, to grow with little help. Organically. So, like, instagram with her ecosystem, they introduced hyper labs. You have done some hyper labs, as i have seen, an incredible new addon to instagram. I did them sober. You did them sober, which i cannot wait until you do your first drunk hyper labs. [laughter] were going to give you a chance to answer our twitter question of the day do you trust apple with your wallet . Tweet us bsurveillance. Good question. By the way, tune into our live coverage of apples special event on bloomberg west. Should you be trusting apple with your while he . Coming up on bloomberg thatillance, tactics ceos are using to boost their own pay. Compensation coming up next on bloomberg surveillance on television and radio. Good morning, everyone. Bloomberg surveillance. A little green on the screen. Dow futures up 15. We welcome all of you worldwide. A of apple coverage today. Apple up 70 from saintsaens, they will kill tim cooks bottom. Apple up 70 from samsung. 68 son johnson up higher, from the world coming to an end of obama care. The world was all coming to an end, ok, sounds like able market. Howard lindzon is with us with stocktwits. Just unbelievable. It is more exciting today than the iphone. When they came up with the iphone, everyone would like oh, my god, i have got a blackberry. Today, we are ready to be magicked and we are ready to lean back. Do you extrapolate out there financials . Know, the reason Momentum Works is because nobody can figure it out. Everybody is chasing the numbers. Stocks cannot be valued until they slow down, and nobody really knows at that point. Is the economy that good . 3 gdp. It is a great question. It is good for some and horrible for others. We live in a big world. I try not to think about it that way. I think about Product Center and an opportunity and momentum, and for apple it is good. For netflix it is good. Can i factor in what these numbers are . They are absurd. Were making up metrics again. Where is momentum not good . Excellent. Where it is great nike, under armour, disney, all of these humongous brands. Where it is bad, these smaller Cap Companies that nobody cares about. Ipo ofooking at an hours, to mobile, great company, 500 million come of the bank can price it wherever they want because the company has to take that price. It is also not good on companies that rely on middle income or low income america. They are struggling. Struggling, but stocks still had a great run because of International Growth over the last 10 years, so we have got to define the struggling in a market with alltime highs. It is not an easy market. I am underperforming this year. There is a lot of chops, and it is really hard to be in these stocks and trading the old days of priceline in apple that are trading at these crazy multiples, hard to get your head around. Whatever but he is tried to do, danced to this tune, but really we have a lot of bulls that are acting like bears, meaning they are underinvested. The one common thing about all of the stocks he mention they are all consumer stocks. The big brands it is all that matters. Coming up, folks, we will look small startup company, Howard Lindzon loves it. Bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. With me, scarlet fu adam johnson, Howard Lindzon, ce founder of stocktwits. We go to cupertino, california later in the day. Lets go to top headlines. Ebola warning from the world health organization, the number of patients in liberia increasing accidental increasing at financially. From this1000 deaths latest outbreak. And a new report on the doomed malaysian Airlines Flight 317. The dutch team investigate the disaster say multiple fromenergy objects outside the aircraft likely took it down. And marriage village marin ci lic, were you there . The 25yearold croatian easily defeating japans key Nishikori Kei nishikori. Scarlet, 63, 63, 63 . He missed the 2013 term it due to a doping suspension, but he is back to make up for that lost time. Those are your top headlines. It is not news that chief executive officers struggle to ward off shorttermism. Strategy, leadership, and governance they are all the rage. The focus is the rage from the sale site on that ceos next quarterly conference call. Alex edmonds out of wharton and lbs and out of oxford and mits sloan has looked very carefully at 166,000 News Releases. That is more than i have looked at. That is incredible. What did you learn, alex, about the ceo shall gain. There are months in which the ceo has stock and options, typically when equity is best, the ceo will sell the equity to pump up stock price. What we find is that in both months, the ceo releases significantly more news and more pointed news. I do not think that as a surprise. I would guess we have no net for decades. What is new in your research . Out of nothing we have known for decades. What people typically look at is a level of pay that people have or maybe the performance, but what we are looking at is a new dimension of incentives, whether the incentives or resting in the itrt term or the long term, can lead to shortterm behavior. Alex, can you quantify the numbers behind your observations . Maybe it is three or four News Releases or the stock tends to rise 4 , etc. That month ind is which equity is resting, the ceo releases 5 more news items than in the last few months. You might think 5 is not a big deal, but we think the number is plausible. It is something we find us is statistically significant. If the number were too big, then the board of directors would induce. Is released, the stock price goes up about 28 basis point over the next 15 days, and it dies down afterwards, the so this is consistent with the idea of a shortterm attention booze. Alex, the sec cannot with regulation to demand the publicly traded companies, all investors at the same time. If you were to have done this same research before it came about, what do you suspect you would have found . We actually did do the research for a long time here, so it does include both preregulation fd and post regulation fd. This is about disclosure selectively to some shareholders and not others, whereas what we are finding here is sometimes no disclosure at all because the ceo might be delaying news on until the vesting market because that is when he is benefiting the most. Howard lindzon with us of stocktwits and an investor, part of the game the you and i play every day. Are you surprised by any of this . I am really not. I do not think this is news. I think this is lawyers and biting their clients how to work within the system here because what is the alternative if this is the system . The alternative is you have got to test a bunch of things. Not knowfor that, i do if anybody in our realm of power has the will for these types of tests. Alex edmans, over to you, what are the takeaways for members of the board of directors and then for regulators . I think it is a focus on a new dimension of incentives. A lot of it on the level of pace. Should the ceo get paid 100 times the median employee or 200 times . What matters is not the level of pay but the horizons. This builds on a Previous Research i did which shows the years in which the ceo has a lot toprevesting, they tend cut investment by a significant amount. This is an already, capital x manager, and advertising. R d,is is in advertising, and capital expenditure. Horizons failed on wall street and in london, if you go out three years on compensation, a lot of people and wall street go know, i not going to do that. One reason they may now want to do that is because it is selfserving. It might be that they want to be paid according to shortterm performance because that is easier to control. That is true that some managers will want to resist longterm horizons, but that is not in the interest of longterm shareholders. Seconds,have about 30 alex. Very quickly, have government officials come to you with this data at all and suggested they might act on it . This was just released last week, but the paper previously, which looked at investment behavior, that is something which has got a lot of interest from the media, and indeed what we have seen recently in response to the financial crisis to go, alexhave got edmans, thank you, greatly appreciated. We will be back with more on apples launch date going to cupertino next. This is bloomberg surveillance. Im scarlet so here with tom keene and adam johnson. Lets get you company news headlines. It is confirmed hackers did infiltrate home depots computer system. The homeimprovement chain acknowledged that breach yesterday. The Company Admits Payment Systems were compromised but says no evidence that debit card personal identification numbers were access. Jimmy choo is nearing an ipo amid rising demand for luxury footwear. This is according to people with knowledge of the metal. Bank of america has been hired to manage the sale. Tivo is set to unveil but it also be the ultimate dvr, the mega. The mega can record more than five months worth of High Definition shows or holds three years of standard definition programs. The prototype will be rolled out at a tech show later this week in denver, and the price tag 5,000. That is the latest company news. To our guestrs now host, Howard Lindzon, chairman, founder, the guru of stocktwits. He considers a company that makes . 32 on the dollar at the operating income line. He considers a company that generates a 71 million each and every day in free cash flow. Apple, no. Your local drug cartel, no. It is microsoft. Nobody has a microsoft day, do they . Well, they do not necessarily deserve one of the are 2014, but if you are an investor that started buying last year, every day has been microsoft day. I am one of those investors. We have an event every year for stocktwits. Offline meets online called stocktoberfest. Aswas voted with google the number one idea this year by a couple of young guys. It has been a great win. We are in a large cap market. Microsoft made the change at ceo. There are all these funds that are now moving into the stock. You are the perfect guy for this, you and coul paul kedrosky. Consumere this, the product, microsoft future, or is it all about the brute force of enterprise . If i were to wager, i would say it is the brew force of enterprise and the fact that it is not as bad as it used to be. I think ballmer leaving is a good thing for the brand. The fact that these chrome books, etc. Are working, even though it is not a microsoft products, proves that it does not have to be an apple product. And combined with the fact that office is bundled and thinking about the enterprise more. And they do have skype, by the way. Apple has a lot of moving parts, and hedge funds love it. Ibm come a love fest. Im thinking six weeks ago. Does mike recep need more jvs does microsoft need more jvs, joint ventures . Good question. Yahoo has been buying a lot of companies, and that is not added value until recently. We cannot predict the alibaba ipo. Some forces have done that well. They are buying the future, locking down their future by buying future early, and that is a risky proposition when we you are buying companies that may not work out in the early stage. Microphones has not had that spunk to go do that. Microsoftgot to go has not had that spunk to go do that. They have got to find it and encourage it. I have to ask you this question to make your day. Would you acquire shares of alibaba this morning . No. Im not a chinese kind of guy. It feels like they are buying everything from milk companies do you trust the economy . Ive never trusted the economy. Ive always said on your show if i need to buy an international stocks, i will buy an american covenant, which is apple doing business in china. If you have got to go to asia to find your growth, i think you are not working hard enough here in the united states, so that is just a general thesis i have. Twitter doing better recently. Can they recoup the loss . Twitter is doing better, the stock. Twitter the products, i dont get. I use it less and less each day. It is not for me. They decided im not their users i can make their money, so that is a bummer to a person like me who chooses to broadcast. We will have to leave it there. Great update. Howard lindzon, thank you so much, with a stocktwits. We have some movement as we look at different asset classes. Futures are not up a lot, but they are up slightly. What i want to point to you, and scarlet, jump in here. Look at crude, up 1. 19. Mark carney, the bank of england governor, says rates will go up ismid2015 because there growth. The pound strengthened briefly but it is back to where it was before carneys comments. And 2. 50 on the 10year. This is bloomberg surveillance. On Bloomberg Television, streaming on your tablet, your smartphone, and bloomberg. Com. With tomlet fu here keene and adam johnson. Our guest host this hour is Howard Lindzon, chairman and cofounder of stocktwits. Adam has your top headlines this morning. A state of emergency in arizona. Governor jan brewer made the declaration after heavy rains flooded major roads and triggered power outages. A woman in her 50s died when her car was swept away by Rushing Water in tucson. The mayor of phoenix declared a local state of emergency. An ugly video putting the football career of ray rice in jeopardy. The running backs contract terminated by the baltimore ravens. The video shows rice punching his wife in an altercation. And princeton leads the pack, mater, inl mlma top spot. Tom keene, listen up, hard research, not just a hard partying. Fellow ivy League Member dartmouth dropped out of the top 10. That is because of controversy. I never got the beauty contest. With dortmund out of the top 10, i dont get. Princeton, harvard, gail and a top three. Where is princeton . Number one. Jersey. Just over the bridge. Good morning, john mcphee, if you are watching. Jersey, new new there i york. Were going to cupertino, california. I know we will talk above us all day, but we have to. Apple introducing two new iphones. Yes, they will be larger. There is also the iwallet. Our very own bloomberg west editor cory johnson up early and cupertino. We have been talking all morning about iwallet. What have you been hearing about the possibility of the iwallet . The announcement of new services is kind of an annual event for apple, and this is a important one because of what has happened in the marketplace. We see tremendous growth going into this from the apple business mind, but this sort of rejuvenation of products come a completely new set of iphones as service introduction, a payment, wallet service. The announcement, not the aipping of a walch or watch or wearable device, it is typical. This announcement is a little different, too. The theme here is very odd. They have taken this courtyard at the end of the college and built this giant, white box. People are calling it a cube or a square. It is more of an odd object. Dal type god knows what is inside of this thing. It is typical of apple to go in with a lot of bombast. Cori, of course you go to all of these bombastic events. And contrast your soiree of 10 days ago with samsung with observe will absorb today. What is the backstory or body language between samsung and apple . First of all, these are product announcements. These are companies trying to get us all to Pay Attention through theatrics. Apple does it in the typically apple way with sort of the very few announcements. Samsung if feels to me is more pathetically reaching out with all kinds of events, whether it is europe with the tap dancing kid. Last week they had prize they were not ready to announce sitting on a show room floor for journalists to guess and paw at. A lot are really following in the way theyre going back to the steve jobs air of apple where the products announcement had a theatricality to them and a lot of suspense to them, and there was originality to the product then that certainly be samsung products have not had, and even the apple products have been sort of iteration of things not completely new. That could be different today particularly with this wearable discussion and what we will see theire. Johnson,ght, cory thank you so much for giving us the layout of what we can expect this afternoon. 1 00 p. M. Is the announcement for apple in cupertino. Cory johnson will be coming in all day. And our twitter question of the day do you trust apple with your wallet . We want to hear from you. Tweet us bsurveillance. Howard lindzon, you mentioned apple comes into this event with more swagger. Carl icahn has been a piece. What are the creek saying about apple these days . Oh. The critics are going to say i like my google now, i like all of the services that come on my samsung phone. You are never going to appease everybody. I like that. We will be right back with Howard Lindzon. Good morning, everyone. Bloomberg surveillance. It is an apple day. Particularly bloomberg west at 1 00 p. M. U2 is rumored to play. Maybe the mormon tabernacle choir are you making that up . I dont know. Corey west will be there to measure the reign of cool in cupertino 1 00 p. M. On Bloomberg Television worldwide. Time now for our photos do sure. We have got some amazing photos. I want to start with what is happening in israel where police are throwing grenades after the funeral of a palestinian teacher, 16yearold mohammed wanted from israeli gunfire who died september 8. These clashes were in east jerusalem. And the ceasefire continues . About 3 50dlines this morning. Officially it is a ceasefire and people are still dying. It is upsetting. Number two, this one here, new york city is that a sad elmo . I am not sure what to make about thing, but custom workers are taking photos in times square. They would require licensing if you show up in time square in a costume, and i suspect this goes back to, you know, naked cowboy, the dude who plays the guitar basically naked in time square, even in the middle of january. The government wants to license you. In midtown manhattan, the dalai lama crew had disappeared. The dalai lama crew . The people who give out buddhist wisdom and if you do not give them money, they swing at you. There is one guy who was making antisomatic remarks i personally experienced it. What did elmo say to you . Elma when after one of the kids and i was like go away. You are in favor of registering these people. Just go away. You do not want them there . I am with you. The last topic is a video, a roller coaster that was once the worlds tallest that went up in flames. The colossus right at six Magic Mountain caught fire. Workers were actually dismantling it. No one was on this thing a 2is is why oculus is billion company. Good point. I want to say for the new news media, you mention twitter and howard, you have an investment in twitter Howard Lindzon with us of stocktwits. Yesterday, on twitter, very responsible. There is like a new way that twitter breaks news, trying to be more responsible, and i saw it yesterday with this story. Interesting. Flames. Nt up in i would argue, and tom, thank you for pointing this out it is a most like wikipedia. It is self edited. There are no editors on twitter, so you take it on yourself to act as possibly, put stuff out that is real. Police yourself. This is out in the geography, howard, have you been to be six flags roller coaster . Not do roller coasters. They make me sick. Piure at the end with my daughter, and that is how i will look on my deathbed. He never buys the picture. I buy the picture and i burn them. Our twitter question of the day do you trust apple with your wallet . Coming up tomorrow on bloomberg surveillance a partner at Spark Capital will join us as guest host the day after apples new product line. We will get mo koyfman tomorrow on bloomberg surveillance. This is bloomberg surveillance. Our guesthouse is our is Howard Lindzon, chairman and cofounder of stocktwits. First, lets get you coming is from the files of bloomberg west. A milestone for facebook and mark zuckerberg. Wagerillion as investors on the future of mobile advertising. That valuation is according to data compiled by bloomberg. Facebook is now one of the Largest Companies of behind verizon and ahead of Toyota Motors japan. Plans to invest in startups building enterprise of mobile applications as well as those working on devices connected to the internet. One fund will invest in early and late stage startups. Entersr interns a a russian mass market. The cupboard had previously offered only Premium Services in russia. That is todays cabanas from the files of bloomberg west. Tom keene, we are headed to you in the newsroom with Olivia Sterns and a special guest. This is a lot of fun. Talk about disruption, this is disruption in space. Aw is it that an upstart and handful of 13 friends working in cramped offices in london could bury fashion media, and they did in a matter of months. The business of fashion is my instant mustread on the industry. They generate stories on the very fabric of fashion. And of course Olivia Sterns is more knowledgeable on this than i of. Diane von furstenberg, she is firing on all cylinders. Legend, and she is legendary status in the fashion industry. She has been through so many ups and downs, but what she has managed to do in creating that iconic wrap dress everyone can buy into that brand, and i think that is what makes it exciting. She is also keeping herself relevance, partnering with google glass and google glasses. Yeah, the fashion industry is very interested in technology right now. A few years ago, everybody was afraid of it, they were allergic to it, but more and more we are seeing a sperm its and partnerships between Fashion Companies and Technology Companies seeingd more we are experiments and partnerships between Fashion Companies and Technology Companies. Everybody has a front row fashion show, and the bloggers are just as influential as the editors. Is an a want or is anna wintour losing relevance . I dont think so. I think what happened with the rise of Digital Media companies is there are just new voices come and because there is so much interest in fashion, there is a lot more of an audience. Greatt you do is so is you mentioned the financial part. The jimmy chu offering is today. You is capitalism amongst worrying about what to wear. Who are you worryin wearing tod . Gbs, and by the way, yellow thanks to tom brown is the color of the season. Lemon yellow. I do not really believe in colors of the season. I think there is so much diversity in fashion now and as such a vast and diverse industry there is something for everybody. What about this Jimmy Choo Ipo . They said they will sell it with a valuation of up to 1 billion. Is the market for 2000 sandals really that strong . Clearly there is a market for it. Jimmy chu has been one of the few Success Stories and the fashion industry that have come through several private equity transactions, a valuation of 1 billion would be even higher than it was valued at in its last round of funding and acquisition. The way you aggregate on the business of fashion, i think all listeners and viewers who are less sophisticated about the snow that some of the stocks have just a stressrelated have just extrapolated straight up, they are like moon shots. Do you think that except alicia and will continue for ralph lauren, michael kors and the rest of them . They are doing very well. She can pronounce them as well. I dont go in there. It is too expensive. Appetite fore luxury goods has continued to grow. I think there are some challenges on the horizon. We are seeing flattening growth in china, and difficulties in brands anduitous just distributing them everywhere. I think consumers are looking for differentiation, more specializations. What is the number one best practice you have learned as you lunch business of fashion and got it up and running in the Digital Space . I think most of all it is about being very connected to our community. It was something that grew from my so for, but it grew because the Community Shared the content. Without that community to spread things around and share things, it would not have grown. I get the final question. The breaklking in about st. Laurent. They dropped the yves. They increase their prices. For so long, that has worked. Does that still work, just raising your prices creates more exclusivity . Appearst. Laurent, it to be working. Sales have shot up significantly. That product is extremely desirable. The price points are very, very high, and it is one of the major engines for the group that owns a st. Laurent. That approach will not work for everyone. Amed, thank you, with the business of fashion. I urge you to check it out and i urge you to look at our agenda as we look forward to the stories shaping the state. I will get started. How about the strong dollar . You saw mark carney come out and move pound sterling in our first hour of surveillance this morning. It has come back a little bit. Really the strong dollar the Tipping Point whether it is liz and saunders or Charles Schwab jpmorgan. Rore i would suggest, scarlet, we are not there yet, but that is what i am looking at today. You had a really great chart that showed that it is still a very weak dollar structurally but maybe this is a little bit of a consolidation off that bottom. Tom keene, you have got to head over to the radio studio where bloomberg surveillance continues. I will take over and bring you my agenda item, which is citizens. The biggest ideal of a bank in the u. S. Since Goldman Sachs went public in 1999. Citizens Financial Group looking to raise up to 3. 5 billion adding its u. S. Unit of rbs, and it is looking to price at the high end of the trading ring. There is a poetic symmetry, the fact that a u. S. Entity is splitting away from a Scottish Bank as scotland is putting away from the u. K. I dont know if we can read too much into it, but i find it fascinating. What are you looking at for your agenda . I hate to say this because we have been talking about it only all morning, but that is apple. I know there are two new iphones coming out and they will be bigger. I know that is exciting. What i am focused on is the iwallet. This is a big deal because it is the next leg of growth. Earnings for apple down last year 10 . Howard lindzon of stocktwits, this year up 10 . This is a big deal, isnt it, iwallet . Im excited. I lose my wallet all the time. You dont lose your phone. I call it slippage. I am looking for my slippage to drop with the apple wallet. See what the twittera lets see what the twitterati have to say. We asked do you trust apple with your wallet . I trust apple much more than others. I am 57 and most likely a future apple wallet user. That is interesting. Baby boomers. There is no way to hack a fingerprint. And my wife being almost 50, the women do go to the stores, men, too. That is where they will be pitched apple wallet. It is a person to person interaction. This will not just be a viral thing. Let me explain how we can make your life easier. Not everyone is convinced because someone else says no, not after so many celebrities icloud accounts got hacked. That is what you need the biometric device, the fingerprint thing. Finally not sure, but then we did trust Goldman Sachs and aig with our 401 k s. That is skeptical. Howard, as we look forward to 1 00 p. M. , fashion bloggers were invited to this event. It is a big deal not just for the tech crowd. It was to do with the accessories, the wearables, recent hires. And also really important with just the brand itself. All right, Howard Lindzon, and chairman and cofounder of stocktwits. That he lewis coming up next. Good morning. We are live from bloomberg World Headquarters. We have a Great Program ahead. It is apple day. They are expected to unveil the next generation of products. Watch and walk you through everything we know ahead of the announcement. Former aig chairman, harvey golub, is in the loop. We will get his take. Companies moving overseas to avoid u. S. Taxes are they being unpatriotic. Mcdonalds out with its october sales figures. Off three point 7 globally. That is the worst estimate. We will talk about the issues ailing the burger chain giant and its ceo, don thompson, who just celebrated his two Year Anniversary as ceo. Here is a look at the top headlines. Home depot confirms hackers broke into the computer system

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