what a show we have. former supreme allied commander of nato. we have to start with alibaba. getting more demand than it knows what to do with. increasing the price modestly. that is likely to make this the biggest ipo in history. bloomberg analyst paul sweeney is here with more. they are boosting the range a little bit, about 4.5%. wanted to bema has very conservative. do you think this is a sign he should have been more aggressive? i don't think so. this is over $20 billion they are trying to raise on a global offer, that is a livestock. they are sitting back and saying we need to be cautious. the last thing we want is a facebook-type ipo debacle. where our investors get hurt on day one. they are being conservative, it is still a big deal. still a big multiple. they could go higher. they are trying to ensure that this deal trades well in the aftermarket. why the game of cat and mouse? alibaba new that demand was going to be healthy. $60cially if it priced at to $66. what value does alibaba get out of playing this game while building the book? >> what the underwriters are trying to do is maximize the proceeds to the company enter the selling shareholders while trying to ensure that the stock he ipowell so that shareholders, who are taking a risk with a new company, so they get an immediate return on that investment. it is a cat and mouse game. it is a supply and demand game. >> the former ceo of facebook did not want ipo investors to enjoy a first-day pop. that was part of the reason why shares asd aggressively as they did. should we assume that jack ma could not care less? >> i don't think facebook management did not want its investors to make money on the ipo -- >> they did not want it to be unseemly with a 20% or 40% pop. >> in that instance, in hindsight, the underwriters mismanaged and misperceived the demand. they thought there was more demand of of the ipo price. clearly they was not. that was a failure on the and on the end company. alibaba learned the lesson. on the margin, they will be a little more conservative. >> there's a wrinkle with alibaba that we did not see with facebook. alibaba has a designated stabilization agent in goldman sachs. there's another stabilization agent called the chinese government. shortly the chinese government, with an ipo as high-profile as this, would think about stepping in to support the stock price if to experience a facebook-like flop. >> i would be surprised. alibaba has gotten every single bank on the planet, everybody is on the deal and everybody is on the hook. everybody is a book running manager. all the big investment banks share in the underwriting risk. that means they are going to support the stock the first day of trading. you will see a lot of capital supporting the stock. the key thing is they are trying to ensure that not only can they placed $21 billion worth of stock at whatever price they decide, that they have a lot of aftermarket buying without price sensitivity. they want buyers to say not only am i going to buy at 66 or 68 dollars a share, i will buy it higher. >> at 88 or $89. he is feeling burned, the first time alibaba went public in hong kong, it plummeted. speaking you would like to see a 10% or 15% pop in the stock. that is the underwriting discount rewarding the ipo shareholders for taking the risk of investing in it in a new company. we will have to see how it goes. it is a huge, global deal. we will have to see how much they allocate between institutional and retail investors. that is another indicator of how much demand there is. the more demand, the less available for retail investors. typical it will go 25% to 20% for retail, i suspect it will be lower. >> expecting that thursday. paul sweeney, thank you. >> big shifts brewing. miller, industry, sab whose brands include miller lite, took a run at heineken and was rejected. now, sab miller might be a sitting duck for none other than anheuser-busch and is it conceivable that bud and miller could end up under the same roof? >> certainly. the consolidation we see in the beer industry at the last few years, it looks like it is alive and well. only was a low last year, 5.5 billion dollars or so. looking like this is going to be another year of big deals. they were searching for growth overseas. they are looking for emerging market growth. they are trying to broaden their demographic appeal. reformulating a lot the beverages to be more flavorful in taste. trying to bring more women and minorities into the mix of consumers of beer. mergers and acquisitions are going to play a role in a very slow growth industry. only growing about 1% to 2% and a global perspective. >> what about antitrust customer craft beer is gaining share. between anheuser-busch inbev and sab miller, they dominate the american market. >> they do. a lot of observers here looking at a potential ab-sab hook up here would have to factor in the potential that sab's stake in miller course would have to be sold. you have the regulators step in when anheuser-busch wanted to buy modelo, with a big stick of corona in the u.s.. how consolation got involved. regulators are watching this. the u.s. is an extreme case of consolidation. that is not the case outside the u.s. >> significant disposal if you have to combine the number one and number two players in the global beer industry. what about sab miller? can't, either other acquisition targets? >> there are some. of the largest 10 brewers -- carlsberg is not to the extent that it could lock a deal. it could be attractive to some parties. major said that, all the brewers have a minority interest. even sab miller, 27% owned by altria. altria seems to be in for the long haul. it is inconceivable that they were aware of their intentions to go after heineken. they seem to be giving consent. i suggest that sab might be on the prowl for others. >> what about coors? >> concentrated heavily in the u.s. and canada. markets that are more mature and grow unless than -- and growing less than some markets of southeast asia and africa. role in a their potential asset divestiture, their markets just are not as attractive, in my opinion, as some with a higher degree of exposure to southeast asia. >> do you think we see sab miller gets old? -- get sold? >> hard to say. it is going to have a hard time defending itself if the stock continues to market perform. >> ken, thank you very much. ken shea of bloomberg intelligence. time for the news feed. top business stories. game on for microsoft, the company has agreed to buy the maker of videogame i'm craft -- $2.5 billion. than 54 million copies have been sold. record pre-orders for the new iphone. more than 4 million in the first 24 hours for the iphone 6 and iphone 6 plus. apple will not be up to deliver some phones until next month. three days before the vote, the independence referendum in scotland is too close to call. d economistsrveye and predicted a 45% of voters will approve of splitting off. david cameron is in scotland urging voters to reject independence. supporters say a yes vote would put scotland's future in its own hands. >> even the queen is weighing in. still to come on "market makers." what the u.s. should do in ukraine. we will talk to nato's former supreme allied commander in europe. moree has been calling for than a year for the u.s. and nato to strike syria. >> you just heard about the launch for the new iphone. we will hear from tim cook himself. ♪ >> john kerry among the global leaders meeting in paris. trying to build support for the fight against the islamic state. he will sit down with his russian counterpart, sergei renewedto talk about fighting in ukraine. against a backdrop that you nato is kicking off exercises in northern ukraine. here with a look on how the u.s. should proceed is admiral james supreme allieder commander of nato and now serves as the dean of tests school of foreign service. give us a sense of what this conversation will sound like between john kerry and sergei lavrov. >> i think he will continue the right note. let's continue to get the ukraine,orces out of then we can discuss everything but that is step one. >> if vladimir putin does not withdraw forces, what are the left?s for the u.s. and for the europeans? >> here we are on bloomberg. number one will be continued economic sanctions. they are starting to bite and we are seeing the ruble fall. those in place until russian soldiers leave ukraine. are seeing today, exercises, advising, working with ukrainians. military assistance. all those things will be on the table. >> the ukrainian prime minister has been vocal about vladimir putin trying to re-create the soviet union. do you agree? >> in a sense, he is. he's trying to control the near abroad. he wants complete nomination -- he wants complete domination over as many nations he can. he has pulled a chunk out of georgia and moldova. he has a piece of the ukraine. >> are we going to be able to prevent him from building the land bridge to crimea? >> i think we will. by sanctions and making the ukrainian armed forces more of a pancake -- less than just a pancake, we can prevent the annexation. >> in the shoes of the russians, they feel the trade by nato. they did not think that the baltic states -- they were told that the baltic states would not become part of nato. history ofok at the were noiod, there explicit promises concerning nations in the post soviet space. whether or not they would join nato. they joined nato freely, no one them. nato has clearly articulated, from the very beginning seven years ago, that any nation who wants to join can apply if it is a democracy in a position to enhance the abilities of nato. that is what happened. >> that raises a question. out of the meeting just held in southern wales, i wonder, to what degree, those abilities have been advanced. it feels as though on many issues, nato's resolve is weak. >> we looked at four things at the wheels summit. on two of them, nato stood strong. they are not getting publicity. ciber and afghanistan. on ukraine and syria an action against the islamic state, i do not think nato has done enough. >> you've been calling for nato to get involved in syria through punitive airstrikes for over a year now. are we late? we can still pull this around but it is going to be harder -- we had taken a more aggressive stance a year ago. >> why did it take so long for the white house and also david cameron and other european governments to recognize the threat that the islamic state post? or to publicly knowledge? >> he was calling it a jv threat. underestimate because intelligence is imperfect. domestic politics and the in many fatigue felt societies in the u.k. in the u.s. and many nato countries, it holds many leaders back. we have to step up to the challenges in front of us. >> are you comfortable with the strategy that president obama has laid out / >> i think it needs to accelerate. i concur with the idea of coalition and arming the iraqi security forces and the peshmerga in the north. if we put a three front war in front of isis, we will see -- >> 10,000 u.s. boots on the ground? >> a reasonable number is something like 10,000. that is what we intended to at the end of our time there. that is the right amount. >> you agree with lindsey graham? >> i have not seen his comments, but i think that is a reasonable number. >> up to 30,000. >> that is where we turn to our commanders in the field and ask for a plan. both sides have expressed concern over the cost of this operation and the risks of cooperating with the syrians. do you share those concerns? >> the number one risk is what -- by somel-funded reports up to $1 billion -- could do against our societies. that is the risk >> i am focused on. >> that is terrifying. training rebels in syria. haven't we learned the lessons of what training extremists does? creating the next-generation threat. we trained osama bin laden, to some extent, to take on the russians. one of the leaders in the islamic state is a former georgia who the u.s. cia trained. are we playing whack a mole? if we look at the history of training local security forces, there are success stories. columbia is one. >> it has not worked in iraq. >> let's give them a chance with mentoring,support, and advising. the plan was to leave 15,000 u.s. troops in iraq. if those troops had been there, we would be seeing different outcomes. just as in afghanistan, if we see the 15,000 nato and u.s. troops there, we will see a different outcome. i could point to other places around the world -- the balkans, colombia -- where training local forces has succeeded. >> what would be a worse unintended consequence than that? we are talking about unintended consequences. that is one, which you seem to think is an acceptable risk. what is unacceptable? thehe truly dark end of spectrum would be weapons of mass destruction falling into the hands of this group. one of the reasons we collectively got rid of the chemical weapons in syria. one of the reasons that we have put so much pressure on iran. we have to watch the dark end of the spectrum, weapons of mass destruction. in the less threatening category, erik, we need to look at the possibility of these jihadis who hold u.s. and eu passports coming back into our society. >> what role could iran play? >> a surprising situation of having an alignment. >> with iran and syria. >> iranian support to the shia themias will find operating alongside. that does not mean we will have an alliance with iran or become the air cover for iranian troops. it means we ought to de-conflict and coordinate and know what each other is doing. we ought to recognize that this is a situation where there is a confluence of interests. to try toend goal train a force that is strong enough to topple the assad regime? are we trying to get to a point where we can for a slot -- where we can force us into a diplomatic resolution? job one is isis. we want to see the syrian people select their only her. thank you stavridis, so much. also dean of the fletcher school of international relations at tufts university. >> when we come back on "market makers," we've been telling you about russian sanctions. we just talked about them with admiral stavridis,. livear what it is like to under them. ceo of the world's biggest potash producer. ♪ >> apple's big product launch as the ces saw it. we hear from tim cook. what is up his sleeve with the apple watch. >> another ceo, the head of a russian company that could be hurt by western sanctions. ♪ >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> good morning on this monday in new york. i am erik schatzker. >> i am olivia sterns, and for stephanie ruhle. >> is tim cook's apple. he put his most visible stamp yet on the company, introducing two new bigger iphones. thethen the new category, apple watch. cook spoke exclusively to charlie rose about that. he told charlie why he thinks the new announcements are a new chapter in apple's history. >> the apple launches the most personal device we've ever created. i think it takes us into a different area. team workingent on this for three years. we explored many different things. as the product came to fruition, it became not only the timepiece you would expect, but a device that can do many different things. a whole new way of communicating and connecting with people. it has a health and fitness think could be profound. charlieook also told rose about how apple decides what kind of products to work on and ultimately which ones to release. which led to charley's next question, is an apple tv on the drawing board? >> tv is one we have interest in. i choose my words carefully. is one of those things that if we are really honest, it is stuck back in the 1970's. think about how much her life has changed. and all the things around you that have changed. go in yourn you living room to watch the tv or wherever it might be, it almost feels like you are rewinding the clock. you have entered a time capsule. the interface is terrible. >> bloomberg managing editor tom giles is here to talk about apple and what tim cook told charlie rose. with anerview left me appreciation for how carefully apple thinks about the products it develops. and ultimately the products it sells. he said they worked for years on the watch. they've been working for years on the tv. we have heard about it and it still is not here. decisionsthe hardest they have to make is what not to do and what to prioritize. they have been working on tv for a while. they called it a hobby for a long time. he said in the interview it has gone beyond a hobby stations. it is not quite to the level where they can make a big to-do about it and make a big presentation. what we have heard and what we have been reporting is that it is getting the content. talking to the programmers who are making the shows and getting them out there and getting them on board. they do not want to happen to tv what happened -- >> that is not even about hardware innovation, that is about licensing and content. the first product tim cook has seen from beginning to end. is this a follow-up product? is this catching up with samsung galaxy? is it the most innovative new phone? >> there have been a lot of innovations in the iphone 6. one of the biggest moves with this one was to go to the bigger screen. >> which looks like the samsung. >> where have i seen that before? ,hey are calling a phablet bigger screens. people want to surf the internet. he went to interact with apps more regularly and have it more vivid. >> that is the key. it is not just what the product is what it does. the iphone 6 and the watch, too, and the tv whenever they come out with it, could be revolutionary in a way the ipod was not. >> the ipad was like a bigger phone. not just hardware or software, it is all of them working together. what tim cook would argue is that we are not copying samsung. we are doing it better than they did. we are integrating in a way that they did not. the watch plays a role in that. >> this is the first new product under tim cook, let's listen to the interview. they talk about when steve jobs asked tim cook to replace him in 2011. >> it took me a little by surprise. about beingd to me ceo before. i knew it was his long-term thing. >> but not then. >> not that specific moment. he and i have a discussion back-and-forth. what kind ofid, things do you want to do as chairman? sort of having a good banter with him. adds., for example, do you want me to do the ones that are out right -- are right? myhe said i hope you blast opinion on some things. i thought on that day he would be chairman for a long time. and i would be ceo for a long time. and we would continue to work together. me, thatwhen he chose i was not like him. i am not a carbon copy of him. and so he thought through that deeply. about who he wanted to leave apple. that i have always felt the responsibility of. i wanted desperately to continue his legacy. deeply love. i from the onset, i wanted to pour every ounce that i had and myself into the company. of the everything have never had that objective. i've never had the objective of being like him. the only person i can be is the person i am. i am not an actor. i'd be terrible in hollywood. i have tried to be the best tim cook i can be. trying to be the best tim cook he can be. he's done a few things steve jobs would have never dreamt of doing, such as share buybacks. do you think tim cook is leaving steve jobs' apple? a news taking it in direction. he's done a lot in terms of their relationships with labor. are treated.rs he's done a lot more in terms of openness of the environmental impact of technology. the buybacks, as you mentioned. 's real strength, he is an operations guy. he also knows who to put in more of aive johnny voice at the company. he does not have to be under tim cook's shadow. jonny ive can come to the fore. you have seen angela ahrendts in the retail space. >> former ceo john mack reverie. burberry. ceo of about giles talking to us apple and tim cook. catch the full interview tonight on bloomberg television at 8:00 and 10:00 p.m. eastern. feel then businesses pinch. the impact of sanctions. the ceo of the world's biggest potash producer. ♪ >> you are watching "market makers." i am erik schatzker with olivia sterns. what do western sanctions look like from the front lines of russian industry customer dmitry osipov is ceo of the world's largest potash company. how has the western sanctions against russia affected your company? >> hello. thank you for inviting me. at the moment -- i should say some of our with finest customers, the largest potash producer in the world. our main markets are brazil, india, china. we supply all of -- at the moment there are not many implications. 14% of yourll revenue from europe. 7% in the u.s.. are you seeing no slowdown because of the sanctions. >> no slowdowns. we industry believes that produce and sell close to 59 million pounds. it is a record. it is a fantastic year for the potash industry. >> the u.s. and the eu have demonstrated that there is so tighteningctance to the sanctions. making them tougher on the russian economy. were barredkali from capital markets the way that rosneft and gazprom are? >> right now, sanctions are against oil, energy and gas companies. >> but what if the eu and the u.s. were to take that step? surely sanctions would affect you. >> in the u.s. we have 5% market share. ,000 metric tons out of 12 or 13 million tons. brazil, india, china, russia -- >> you feel relatively immune to the sanctions. in the third round of sanctions, things are tightening. sberbank, the largest private bank in russia, is now subject to these as well. what part of the sanctions do you think is most damaging for the russian economy? there are some problems with the liquidity. some banks reported they have problems with u.s. dollars and euros. concerning uralkali, we sell about 80%. we are in exporting company. we don't have any problems. >> in retaliation, vladimir putin put out some food bans. this is affect your plans to eat out at an italian restaurant? concerned you are not going to have parmesan cheese. are you feeling the impact? >> me personally, no. there are probably some small changes in diet habits and russia. not dramatically. >> from the perspective of a ceo, are these sanctions an acceptable price to pay for president putin's policies and ukraine? >> i am a business. >> let me ask you about potash. , throughany, uralkali the industry into chaos by dissolving a partnership with triggering ans and price war. you became the ceo several months after that. was that the wrong decision? >> we should take into account that in the last year, uralkali lost its market share from 22% to 23% to 17%. it was behind that decision. a look atere to take your stock price, for example. price, we would see that the market has not recovered. your stocks took a tumble. potash took a tumble. they have recovered a little bit. uralkali, in u.s. dollar terms, is still down 40%. accounttors take into geopolitical risk. produced six, we leadtimes of -- 6 million tons of potash. we see the price demand recovering. in october, the price for potash in brazil will be 380. in the u.s., about $400 per metric ton. youn the supply side, do think you can reverse what has been done? he flooded the market with potash, prices have come down. you looking to get an interim deal with belarus. do you think you can curb output to get price powerback? forith such a huge demand we will expand our capacity. the market is so huge that we need more and more product. >> you need more product. but it is volume at a lower price. lastupon a time, before summer, there was something akin that oligopoly prioritize price over volume. now, volume matters more. neither volume or price. in the middle. >> globally, major crop prices are falling. which suggests that that might soften demand for potash and fertilizers. show that not give investors cause to think the price of potash will continue to fall? >> they are concerned about the situation here. , it is a very good market. in the u.s., demand is very high. $400 is the most expensive market in the world concerning potash. here, $380ars a ton a ton in brazil. you are about to enter a contract with the chinese. what kind of price do you think you can get? >> we expect that the price will increase. >> to? >> from the current level. 305. >> can you get $400. >> we should increase gradually. needat price does uralkali to justify what you are spending? to break even? >> concerning our own projects, it is only $113 per metric ton. one million tons and million.y $130 we are the lowest cost producer in the world. >> thank you. dmitry osipov, ceo of uralkali, the world's largest producer of stavridis. >> still to come on "market makers." a newmberg interview with ceo of burberry, christopher bailey. >> great britain's largest luxury maker, burberry, is showcasing looks at london fashion week. the first hosted by the company since wrister for bailey stepped up his new role as ceo, replacing angela ahrendts, who has moved on to apple. thejohnson was there at runway show and joins us with more. very jealous that you got to speak to the man behind burberry. give us a chance of what he said. after angela ahrendts was so successful, what is he going to do to take the brand forward? >> i felt very cool to be there. beingshion industry is squeezed right now. china is slowing down, is a tough place to be. what happens next? maybe fashion companies become a little bit less daring. they're less prepared to take risks on the catwalk because they are concerned about what happens at the bottom line -- the hemline. christopher bailey encapsulate this. he's the ceo of this company and the creative director. so which angel on which shoulder gets to shout louder? the seeker to be creative and take risks or be the ceo and watch the bottom line. toberry is trying differentiate itself. it's trying to be a technology company. he talked about angela ahrendts, she spent ages trying to turn burberry into apple. now she's trying to turn apple into burberry. bailey is a fascinating guy. pushing the tech line. maybe this is the way that burberry differentiates itself. is it going to work? we will wait and see. are we in a technology arms race within the fashion companies? that was the question i asked him. >> a company cannot just live in world.d technology is important. as is music, craftsmanship. it is about being curious as an organization. making sure you are a part of things that are happening. making sure that you experiment and you build strong, long-lasting partnerships. that can sometimes be with technology companies are musicians. >> let's face it. the fashion industry is behind when it comes to technology. they have a lot of catching up. it was cool to be there. on a winter -- anna wintour was there, they were all there. i felt out of place. ini think you were perfectly place. disappointed you did not come back with a selfie. pulse"nson of "the from london. >> general motors ignition switch recall scandal. we hear from the man administering those payouts, can find work. ♪ ♪ >> gm pays the price. victims are now getting compensated for those accidents blamed on faulty ignition switches. you will hear from the man overseeing the program, tim feinberg. conrad saysawk kent to ignore the short-term deficit picture, that the real problem is less than two years away. we will talk to the former democratic senator. >> the fcc is swamped by public comments on net neutrality. will rob and provide his be allowed to charge online companies to deliver traffic? did morning, once again. you are watching "market makers -- makers." it turns out the total number of people killed by defective ignition switches is much higher than initial estimates. a new report says that it could be as many as 125 people, 10 times more than the initial estimate by general motors. we just finished the interview with the man who wrote the report, ken feinberg. >> that's right, we just got the first batch of claims information from the general motors ignition switch confirmation program, related to recall.tial just one month into that recall program, administered by ken feinberg, a total of 445 claims have been received. 125 of which are four fatalities. of the claims considered eligible so far, 19 deaths have been confirmed. gm all this time has claimed 13 deaths related to the ignition switch. in a first i sat down with ken feinberg and asked him if gm got it wrong. >> no, gm had applied a different standard. they were looking to its engineers and asking its engineers -- can you ignition switch defect caused the accident? know, isard, as you much more liberal and easier to apply. it's a legal standard. was the defective ignition switch the proximate cause? the substantial likelihood of the cause of the accident? that is one reason there is a discrepancy. also remember that under the program i am administering, passengers are eligible, pedestrians, occupants of other vehicles. gm was only looking at the driver. >> 31 of the claims so far you have determined eligible so far. after all is said and done, how many claims do you expect to come in? >> i don't know. we'll have to see. remember, claimants have until the end of the year to gather the documentation together and file a claim. it remains to be seen how many actually submit a claim. it is also speculated at this time, but we know that there will be more than 19, but how many more in speculation? >> we know that gm has prepared to set aside $400 million to pay these claimants, these victims. some estimates suggest that they need as much as 1.5 ilion. where do you see these numbers falling? >> we will see. we are just now beginning to make the dollar calculations. once we make those calculations we have to then see whether the claimant, the victim, or his or her family will accept the money. a little early to be putting dollar signs next eligible claimants. we will know more about that in the next four to six weeks. >> looking forward, beyond the end of the year, this fund is limited to that original february recall of 2.6 million vehicles. people have been writing in, do you get a sense that they might broaden thend or criteria, broaden the eligible vehicles? will they need to hire you back again? >> that is up to gm. we have received a number of inquiries. daughtererg, i lost my in an automobile accident in a gm car. it is ignition switch. vehicle not an eligible clearly listed on the program protocol, no point applying. there are criteria and only those criteria at the current my jurisdiction to award dollars in damages. >> do you expect the number to be substantial enough to suggest to gm that they may need a second month? makes that all, gm determination. just like 9/11 or bp, my jurisdiction to compensate is determined by others. i can only do what i'm asked to do. ultimately gm will have to decide, going or word, whether it is comfortable with this protocol, whether it should be expanded to other vehicles. that is completely their call. >> you mentioned 9/11, you mentioned the p. you have certainly made a name for yourself putting a price on tragedy. what has been the biggest challenge working with gm? unlike your past work, we are talking about a problem that has been 10 years in the making. >> that is the biggest challenge. in bp and 9/11 we were compensating tragedies that had occurred months before the compensation program. here most of these automobile occurred years earlier. the automobiles are long gone. a black box data, usually, unavailable. the challenge here is to work with claimants, to help get the documentation together -- the photos of the accident, the warranty and, the maintenance records, the insurance reports that will provide circumstantial evidence that the defective switch causes the accident. >> there you have it. ken feinberg, a tough task ahead for him. we are still months away from the end of this eligible claims. . period.s >> breaking news this morning on the death toll in the gm recalls related to ignition switches. thank you. >> this is a good time to introduce our guest host for the hour. you might remember him as the policy director for the ann romney presidential campaign in 2012. a fellow at the hoover institution at stanford university, also a bloomberg review columnist, confirmed by the senate as a member of the social security advisory board. >> great to be here. >> we have a fun hour ahead. let's begin with what else? all it takes. the senate in november, i am sure that you channel that optimism. i am here to challenge it. what could go wrong? be concern going to here. we have a couple of states that are competitive. north carolina and iowa, where republicans are looking to be outspent unless we can get more money on line here. fortunately they will be able to uncover some of that disadvantage. but money is one of the issues we're looking at. thet does look like this is republicans's election to lose. if they do take back the senate, what is on the agenda? >> a couple of things. there is going to have to be some activity in the affordable care act. i think that a lot of americans want to see some activity there. the on that we have got to have a budget, hopefully, finally, to get the government-funded. not these continuing resolutions. i think you will see action in the foreign-policy arena as well . >> that's basically all we have to see happen over the next several, extension of temporary funding. are we going to see that or get another shutdown? writes i hope we do. >> hope we do or think we will? let's hope we do. the complicated factor is the president's request for money from overseas. will be is that they potentially breaking that up between a vote on the continuing resolution and something separate to respective foreign ops. but hopefully we will be ready to go for the election in a few. manyu are right, there are republicans champing at the bit over obamacare. a very, that is politically divisive issue and strong legislation is likely to be vetoed by the president. if you were to advise a republican senate on what to do, what would you say? the first-order business? >> to take a vote on repeal. >> should they? >> as long as it doesn't become the fixation for the whole year. that is what the concern is. >> they have made that statement or he or 40 times. senate the republican and house, it is important for them to do that. >> because it is symbolic? >> partially, yes. >> for whose sake? you are familiar with public opinion. obamacare isn't the nation's first concern. jobs is the nation's first concern. >> there are many others. true, but obamacare is related to the jobs picture. important that it is for them to get on with the business of figuring out how to put the president in some positions on this law that will ifp to pave the way for there is a republican president in 2017, how obamacare might overhaul that. >> but more and more it just seems like absurd as theater. how can you possibly blame americans for holding washington in such low regard? does it at all give you pause to be at least on the periphery a part of this absurdist establishment? >> this is what i think -- there is certainly an element of showing the american people that this is what we want to do. even if we know at the end of the day that the president is going to veto that bill, it is taking a stand with unified government in the house and senate and saying -- look, this is important. and then moving on, saying that we have done this. what do we do now? the productive about that time. >> i know that you are going to say that obamacare is broken, you were the policy advisor to mitt romney. >> and health care is one of your areas of specialties. >> but the website is now set -- fixed and even more people than we thought before the website they'll have signed up. 8 million people. premiums ink ahead, many places are still going up. a concern for middle-class families. >> aren't they going up at a slower rate? >> it depends on the state. accelerated,s it's and others it's slowing down. but overall the fact that there are so premiums increasing, that there is still an issue going into 2015 means that something systemically is not quite right. beyond that, access to doctors, plans, that continues to be an issue. those are things we will have to figure out as we go forward, but they will continue to be problems. by the way, that's why the law continues to be unpopular. >> we will return to that over the next couple of hours. kent conrad is warning that the deficit is about to soar. you will hear from him, next. >> pay for play, should online companies be allowed to pay for faster traffic over broadband? makers" onrket bloomberg television. onhave more stories and news bloomberg.com/cv and on your tablet. and of course streaming live on your apple tv and amazon fire. ♪ is settingomplacency in. the deficit appears to be under control and shrinking as republicans are set to set -- set the pass a spending extension in the coming year it appears without a fight. kent conrad is sounding the alarm bells, a former democrat who chaired the senate budget committee and is currently a member of the nonpartisan committee for a responsible federal budget. still with us as our guest those for the hour, lanhee chen. senator conrad, are we getting so complacent about the budget that we need a collective wake-up call? [laughter] >> we almost always need a wake-up call when it comes to the budget. you know, it's human nature to kick the can down the road. while we have made enormous progress -- let's give everyone kudos for what happened, the deficit has been cut by two thirds, that is exactly what needed to be done. but the problem is that in 2016 it will start going back up unless additional steps are taken. the steps that have been taken have really not hit the parts of the budget that are really growing the most rapidly, which of course are the entitlement accounts. that is the place the cries out for reform. on the revenue side, we are also going to need tax reform, fundamental tax reform helping us in a lot of different ways. if done right, it will generate more revenue and make our country more competitive. so, this is a big opportunity for the country. as takingnot see this our medicine, we should see this as an opportunity to get the country back on a more sustainable course. it can be done. >> senator, this is lanhee chen. what will it take for us to see action on social security? we all know that it is a solvable problem. the disability trust fund is going bankrupt in 2015. what will it take to get lawmakers to the problem -- to the table to deal with the problem, given that we know the solution? >> i am cochairing the solution for the bipartisan policy center on retirement security. one of the things that you mentioned was tackling the reforms of social security in order to secure the solvency for the next 75 years. ours is a totally bipartisan commission cochaired by jim lockhart, who of course ran social security under george w. bush. we are working with a group that includes the public trustees of social security and we hope to come up in the spring of next year with the bipartisan comprehensive proposal to get social security secured for the next 75 years. you know, it's not that hard to do. >> if it isn't that hard to do, why couldn't bowls simpson or the supercommittee do it? as pointed out, we know all the options. at least some of the choices on the surface appear to be easy ones. >> well, bowls simpson did it. 13 of the 18 commissioners agreed. unfortunately, we had to have a bowlssuper majority on simpson. but 13 out of 18 agreed -- republicans and democrats -- >> senator, it is not whether republicans and democrats can agree, they can, it is the fact of agreeing with recommendations being made and then congress not doing anything about it. political because of deadlock and congress is a reflection of the american people. the american people are deeply split. >> a question for you, but also ,or our guest host, lanhee chen the youngest member of the social security committee currently. if the republicans take back the senate, are we more likely to see a deal or is this just more promise for gridlock? >> it is a prescription for further gridlock. interestingly enough, the one time that we had the best deficit reduction package, the most comprehensive and effective, is when democrats controlled the white house, the house, and the senate. that was 1993. we not only balanced the budget, but what the country on course to pay off the debt. then george w. bush came in and did a massive tax cut that went primarily to the wealthiest among us and it took us into war in iraq. it took us totally off course. the one time that we were really on a good course -- interestingly enough, and maybe it is counterintuitive, democrats controlled the white house, the house, and the senate. >> there was unified control in 2009 and 2010. we got obamacare, dodd-frank, and a host of other things, but not deficit reduction. we got stimulus and spending. >> remember, we inherited what president obama inherited, a country on the brink of depression thanks to what you folks have done when you control everything. senator -- >> what we walked into was an economic collapse. that is what this president inherited and he inherited it from your folks. >> it is interesting, we keep hearing from the obama white house that tax reform and entitlement are priorities, yet we see none of that leadership from this president. what we do here is a lot of blame for a -- place on the previous administration, even in his speech on foreign policy last week he talked about the mess he was left with. it's time to get past that and get to reform. >> but he did offer some entitlement cuts. >> but on the margins. he has not offered a substantial plan to ask social security or medicare. >> he did put something on the table that was turned down. >> he prochain cpi on the table, which i think the senator would agree we have to do. >> in fairness to the president -- let's be fair, he put the bowls simpson commission in place. his representatives on that commission supported those recommendations that would have fixed social security and put us on a much better long-term financial course that would have balanced the budget. republicanshouse who opposed it every step of the way, you have got a lot of work to do on your side of the aisle if we are ever going to reach agreement. we can certainly reach agreement in the senate. there are democrats and republicans in the senate ready to make a responsible, principled compromise. frankly, i don't think that you can say that about most house republicans. >> i am optimistic that in a republican senate next year we will see action on these issues. >> when you are on campaign with mitt romney you went around with a bright green glowing death clock. now that the deficit has been cut by two thirds, does the fact that so much progress has been made mean this is less of an issue and we are less likely to see anything get done? >> there is still a long-term need to fix the tax code. senator conrad has been a great leader on this issue. his group has been a great leader on the importance of deficit reduction going forward. we have got to cut the deficit going forward still. we have work to do on tax reform and entitlements. looking at the drivers of ,ederal spending going forward medicare, medicaid, now obamacare. >> senator conrad, if -- , obamacareust say according to the congressional budget office reduces the debt by over one dollar trillion over 20 years. let's be clear, obamacare did not add to the deficit or the debt. it in fact reduced the deficit and the debt. with respect to the other things that were said, i am in full agreement. our country on a bipartisan basis absolutely has to take on the entitlements. we need to reform them. we need to reform the tax code. if we don't, we are going to face a death threat to that is going to put america behind the eight ball. this is a chance -- we really do need to get together to do something that is critically important for our country. now is the time to act. we should not wait. my friends on the democratic side who say that we can do more for medicare and social security , no, that's really not true. the longer that we wait, the more draconian the solution has to be. >> if the republicans take the senate, they are clearly going to propose legislation that the president will veto, such as repealing obamacare. united toublicans propose legislation on entitlement reform along the lines of what was recommended by the bowls simpson commission, do you believe the president would sign it? >> i don't think the republicans will go there. >> they may not. but i'm wondering, would the senate sign that over objections from the house? >> i can't speak for the president, but i do know that he has made clear that if you had a balanced package that included entitlement reform and revenue, that he is prepared to walk the walk. you know, he has proposed some of it in his own budgets. of course, house republicans said absolutely not. not one dime of revenue. >> if a bill that generates revenue for tax reform and reforms entitlements were to be , with the the senate republican party pay a bill like >> we have fundamental disagreements over revenue. i think that republicans feel like they gave him revenue in 2010 and 2011. a tax on tanning salons, etc.. we have given our revenue. >> the rubber hits the road. senator, thank you as always. lanhee chen stays with us for the hour. >> if we could reform the tax code maybe we would not need to raise more revenue. still ahead, the public has had its say. what happens next with the controversial proposal from the fcc on net neutrality? ♪ >> this is "market makers." to thes get straight sec. the comments. is coming to a close here on net neutrality. public commentary is ending with more than 1.5 million people commenting at the commission, the most of its history. from washington, we have someone who runs the d.c. trade group that represents tech companies. michael, thank you for joining us. tolls tove to pay drive on faster roads. why is it wrong for internet service providers to be able to charge for a fast lane? >> that is the fundamental question, should the service providers be able to discriminate, slow down, or block internet traffic? our members say no, they should not be able to. >> why is that? why should it not be treated like utility? >> what makes the internet grade is freedom, openness, low barriers to entry. if you start to block or slow down content, it hurts innovation and those who are paying for the entire internet. not just the internet of the things they're allowed to get. >> between netflix and youtube, they annoyingly had a waiting symbol up there. explain to consumers what would happen if we lost net neutrality. did slow down work? only 1.5 million people commented to the fcc. their website crashed a few times. this is the number one time -- number one level of comments the fcc has ever had in their history. >> why didn't google, for example, participate? i know that youtube did, but the rest of the company did not and google saw fit just to fit -- just to put out a statement on the subject. >> more than just a statement, they have a policy blog with maybe millions of people on there. they sent out a strong statement of support. through our group, representing the entire industry, we have released an interview and a e'en engaging on this. >> i understand, but if you can't get the most important companies in the internet industry -- let's call it that, how effective can it eat? >> i would argue that they have been taking part. google sent out an e-mail to all of its users interested in policy. the companies have been very clear. sites withoutisit slowdown. >> what about the public element? it seems like the internet slowdown has been about using the leverage from public opinion to change the minds of the sec going forward. how impact will is that, ultimately, for a bureaucracy like the fcc? what are you seeing from your organizational active? >> it is certainly different from trying to influence congress issues. and 1.5 million people have commented. we will see the comments in the rules. we will just have to see. >> the fcc has documented only four examples in the last six years of content being blocked. until 2018. why then, now, has this become such a hot button issue? >> there were rules in 2010 originally struck down by the d.c. circuit court. so, right now we are in a limbo between when the rules are struck down and when the fcc will presumably put in new rules for broadband companies that are now very active and mobile to charge for a fast lane on mobile networks that leave land lines open so that there are no differentiated tolls? >> we have been very vocal that the rules should apply to mobile and fixed broadband connections. consumer expectation today is very different from 2010, where you expect the same website on your apps and mobile computer as on your website, so we argue that there should not be a differentiation between the platforms. >> but it is much more expensive to operate the mobile network as opposed to the land-based network? youhere is one internet and should not have a separate rule of the road for mobile banking is you do an your home connection. this would not work out that way. advertising websites now, it would not make sense or be good for innovation or users if they were able to discriminate. >> i agree with all of that. i hope to watch videos as quickly on my smart phone as on they have a huge impact on policymakers taking notes. lanhee chen, sticking with us. >> peter teal is sounding off. he has some candid comments as he often does. the company that he helped to found, paypal, and the future of bitcoin. ♪ >> you are watching "market makers." our guest host for the hour is a newly appointed and confirmed member of the social security advisory board. >> the youngest member. >> that's certainly true. >> your role on the board elevates this conversation about how to eliminate the deficit and put the country on a sound fiscal path for the years to come. in practice? >> democrats are finding it was not the political issue it would be. in large part there are more pressing concerns on our tv screens every day. the reality is that we are -- if we're going to fix the inversion we have the highest rate in the industrialized world for corporations. it's acceptable. >> we are even losing burger king to canada. i was reading through your notes, you thought that too much was made of the tax inversion $20 billion over 10 years, compared to a federal government spends more. turning this into an issue of economic patriotism, the wrong kind of rhetoric. this is about companies responding to incentives. what has to be done fundamentally is getting the tax and none of that work is being done right now. every republican seems willing to close the loopholes of his largest campaign contributor. >> a number of republicans -- rob portman has been very forward on this. they are doing what it takes to get the rate down. a number of people have said for example that loopholes should be on the table. some people have said -- ok, let's look at everything in its entirety. >> what loopholes you find most objectionable? >> on the corporate side the reality is that there is a fair amount of corporate welfare. rather than talking about specific examples it is important for us as a general matter to allow everything on the table and be serious. when people say everything is on the table, they don't mean it. to get to 25%, you have got to close a lot of loopholes. >> you said corporate welfare, the argument that many in your party are making against export import they. >> it is a big debate that has reached a boiling point. it is part of the continuing resolution discussion. >> what is wrong with cheap finance for american companies to export goods? like my personal view is that it is an important part of our trading strategy and economic road strategy, but the concern amongst some on the right is that it does smack of corporate welfare. the idea that we are helping some companies but not others, giving them a leg up in certain cases, turk -- tilting the marketplace in their favor, that is the great philosophical question. but i do think we have to try to get the bank renewed because our economy is still in a bad place. so, the flipside to reforming taxes and, perhaps generating some revenue, is entitlement reform. going into the last election we were told that medicare was the biggest problem. now that health care inflation has slowed, to what degree does that put the focus on social security? a hugecare is still problem. the biggest driver of federal spending over the next 30 years is medicare, medicaid, and health care costs. >> we saw hillary clinton in iowa this weekend for the first time since 2008. she said she was there for the state only, but we know that's not true. republicansan the put up anybody that could defeat hillary clinton? >> the key for the republicans is finding someone who can articulate not just an economic message, but a foreign-policy message. this will be critical because of her time as secretary of state. i think a lot of people on the left are frustrated with her. get on with it, if you are going to run, get out there and do it. the reality is that this is probably the least transparent effort i have seen to try and hide her true intentions. think it is i important for republicans to nominate someone who is a full spectrum conservative but able to articulate foreign policy. >> why do you believe that foreign policy will be so important to the white house in 2016? americans on their best days don't seem very concerned with foreign policy. >> well, they are increasingly concerned based on what they see in the world, and someone like hillary clinton standing there saying that she has been to lots of countries and can do all of these things? they've got to make that argument. >> i would argue that her track record is more substantial. some surprising comments about the company that made him rich, paypal, that's next on "market makers." ♪ of paypal inure jeopardy? should it be spun off from ebay? big questions exist for the internet's first big payment company. this happens to be -- emily sat down with peter teal -- peter thiel. what did he tell you? had a lot ofse thoughts. but one of the most interesting he still thought, thinks that paypal was a failure . this he admits in a new book, zero to one. take a listen to what he told me. wes successful as paypal was, as successful as so many members of the paypal mafia have been, given have said that tape out as a failure. why? >> that we did not achieve the original vision of a new currency system for the world. >> does bitcoin get closer to what you imagine? >> i am probably psychologically biased against it. -- >> usings chances of it succeeding are likely? >> for the end of the day. >> not a huge fan of bitcoin, though he said he is biased as he tried so hard to do something similar with paypal. we will hear much more from peter thiel coming up on "bloomberg west." big questions about their future now that they are not integrated. he took out a full-page ad this morning in "the new york times," taking a swipe against apple. you will hear much more coming up on "bloomberg west." i will also be sitting down with the ceo of salesforce, who just made a $6 million donation going to the schools, one million ,ollars going to code.org bringing coding programs into schools across the country. to it, emily.ward you can catch it all at 1 p.m. this afternoon. let's make clear that this is 10:00 a.m.. "market makers" will be back in a moment. ♪ >> we are almost done with our guest host here for the hour, lanhee chen. >> the continuing resolution goes on this week. seven more weeks before the midterm. are we going to get another government shutdown? so. don't think i think the big question will be how they deal with the president's request for funding and for arming the syrian rebels. that will be a big political issue, frankly. >> there is bipartisan support for getting out as quickly as possible in terms of getting out of town. party are trying the boots on the ground. >> it is a controversial issue on that question for sure. >> thanks for being here. >> thanks for having me. asked tomorrow "market makers" at 10 a.m. eastern time. want a new smart phone but don't want to brave the line? just go to task rabbit. our special guest host is here, john or injure. >> first it is 56 minutes past the hour, meaning that bloomberg television is on the markets. julie hyman is standing by with more. >> taking a look at stocks with a mixed nasdaq taking it hard, data showing production unexpectedly declined, the first time it has happened in several months. the only gain was the top estimates for regional manufacturers who were eagerly awaiting decisions from janet yellen. joining me with options insight is kevin kelly, at capital partners. first of all, let's start with the broader market. of course, as i always when you look at the most actively traded options, you are looking at the s&p etf and looking at what is going on there. what is your read through the broader market? is really it important to take a step back and for investors to look at why 2014 has stayed around 13.6 in the vix. that is the average. reasons why is that interest rates are so low. companies right now have greater earnings power. if you look at the balance sheet, the cost of data has gone down for them, meaning that earnings have gone up. he even doubles our average because of that. >> i want to turn to one particular stock where we are seeing a lot of activity today, apple, of course. them talking about what is going on with the new iphones. what are we seeing in terms of options? >> apple is a perfect example of what i just stated. was when the multiple around 16, margins were at 42. now they are at 38. you have seen margins compress, apple has bought accor earnings with volatility. owne is a buyer of their stock. apple is growing. it is important to note that not only are activist shareholders coming in their to buy their own shares, i think the options market is really predicating that apple is going to be not volatile, continued growth and be a great investment in the future. >> interesting. opportunity that is better in ebay? ebay has been a more volatile stock. you have got a lot of different things going on. concerns over apple pay and the competition for paypal, the future of paypal under activist pressure. what is the opportunity for you as an options investor? that applepens is pay has dislocated ebay in the short-term. they should look to take advantage of that. one reason why is paypal accounts for 40% of the revenue. back in april and may you saw carl icahn going to the board and settling with them on this product to fight. he believes in paypal. so does apple, now, if you believe his transactions on higher margins in the future. >> what is your trade? >> purchased the stock right now for paypal and then sell in october for the month 52-50 call, taking 52%. >> hopefully we will see you again. we appreciate your talking to us about ebay. ♪ >> welcome to "money clip." here's the rundown today. uple's ceo tim cook opening about the new iphone. he offers us a little back on how he joined the company in the first lace. some group members of the gm -- grim numbers with the gm ignition switch recall. london fashion week begins with