after a secret diplomatic mission freed them from prison in north korea. kenneth bayh and matthew miller had been sentenced to years of hard labor for what north korea called hostile acts. james klepper negotiated their release and a one-day trip to north korea. >> he bears no ill will to them. -- he would not have wished the two years upon himself. nobody does in a labor camp. he looks back and he wants good to come out of all this for everyone involved. >> kenneth bayh is a missionary north korea said matthew miller was trying to exacerbate the human rights situation. >> the united states is trying to figure out if it killed her wonder the leader of the islamic state. meeting.e 30 leaders previously states there was killed in a u.s. airstrike in 2006. new revelations about general motors faulty ignition switches -- gm ordered half a million replacements which is almost two months before telling federal safety investigations that i had a problem. have a problem. it led to a recall of more than 2 million vehicles and have been linked to 30 debts. aboutscotland, how catalonia, spain? the referendum over the independence of catalonia urges the area around barcelona overwhelmingly voted to secede from spain. the majority was stunning. it was a symbolic vote and one that the spanish government called a farce. spain's highest court ruled that the referendum was a legal. catalonia makes up about 20% of spain's economy. there are a number of issues with the spanish government including taxation. those of the top headlines. let's do a dated check. -- a data check. tough economic data in greece and italy. crude oil is on a rebound off the challenging moment last week. there we are at the dow at a record high. stunning equity movements and we will talk on that in a moment. we took the remember you up there in case the president -- we took the -- we put the yuan up there in case the president go shopping. there's a depreciation of the yen. it's a great complex attaining. you never know whether that movement is coming from an actual underlying economic news or marcus are just reacting. >> robert feldman said it's not abinomics being successful. >> is it really the strong driver or the weaker yen that is the driver? >> we have this history of the chinese and japanese leadership meeting. >> this is historic. >> where is the debate there? havee temperatures seem to gone down over the last couple of months but it will be a point of contention. this will be the first meeting for the two prime ministers since they came to power. >> the president is in beijing and he and world leaders are there amid the worry of geopolitics. the reality is that china is a giant but a fragile emerging-market area the disparities with america are great. and this is howardlindesn joshua wright. . let me bring up the number which everybody gets in economy 101. 7000 which used to be 3000. that is china per capita income. americans 53,000. there's is a vast difference between the two countries. >> there is still a wide gap. sometimes people in america get concerned if we are going to have to catch up to china. the reality is that china is in a race to get rich before it gets old. when you look at the fundamentals and demographics, the u.s. still has a good position. linsen get 20,000 alibaba shares? thanks for getting off the airplane. do you trust chinese accounting? -- alliek with alabama babler and baidu, they might -- with ali baba and baidu, they are printing so much cash so it's not a concern. , america isnvestor where i invest most and that's where i can get my best idea so i try to keep it off the radar. >> starting at 7000 per capita for china, where do you stand on the idea of the inevitable regression in china, that this burst of growth will end soon? >> i don't think it will happen just yet. had chinaso pessimists, people concerned about a hard landing in china. whatever you might feel about the private companies, the public numbers look suspect. there have been concerns that china will not be able to maintain this growth rate. so for this year, they have managed to show they will be more graceful than people had worried. >> as the president meets in about how think his bench is on china experts. timothy geithner studied mandarin in college and new people in the communist party versus jack lew who heads up the treasury department who was an in-house policy guy about some with the policy back and forth with china. that will be a huge distinction this time around. >> i don't know what the consistency has been. i feel like the pivot happened when obama as a trip plan and in between i don't know what is going on. scarlet so has live this. >> i am here every day. >> the image of the leadership japanna and j pan -- shaking as a significant. it's extraordinary. >> you are right, this is the one handshake that everyone looked ahead to. when you look at the maritime aggression of china over the last four or five years, they have proven really good at rationing up pressure and then pulling back. it's like controlling smog over beijing. >> climate change is part of this trip as well. remember california when we were growing up? we fixed it. >> they can fix it when they need to buy shutting down the factories and telling the locals to take a week off. tell me about the midterm elections. how does it change the view forward? the president goes over there essentially defeated. >> it weakens his hand to negotiate with partners abroad. the question is whether or not he can get the trade authority. in the room ist whether the u.s. can manage to affect some of the pivot by building its own counterbalance coalition through a trade agreement and closer economic integration in the east. >> you're referring to the tpt? >> but it does not include china but creates a counterbalance on the u.s. side rather than letting china push people around. >> trade is a huge issue for the republicans. they say the way you get it done is give the president authority but give him authority to negotiate. what are the odds that they will do that? it's the tea party republicans versus establishment and business friendly republicans. the establishment has really come back and that's why they did so well in this election. they were able to push aside and sideline the more extreme voices and get candidates that were more moderate and can represent the establishment interests. whether that will carry through to december policy moves, we will see. >> you can say it's a slower news day but percolating is the islamic state and the bombing over there. on a monday, ukraine was not a big deal but friday, those headlines were stunning. putin and see of mr. mr. obama actually made. >> we don't know how to deal with low-level conflicts that are constantly being ratcheted up and down. we do with crises but we don't know how to deal with the intermittent. can we summarize and say nothing will happen in beijing? >> maybe nothing official will be announced. there we are with a first look at china and the president visiting. it was gorgeous when he landed there. >> coming up next hour, we will aig you a heads up -- the nonexecutive chairman steve miller is known as the turnaround kid. our twitter question of the day -- how do you fix big box retail? this is "bloomberg surveillance." ♪ >> good monday morning, "bloomberg surveillance." stephen schwarzman donated to the new york public library. atwill be with us today 10:00 on "market makers." this is "bloomberg surveillance." i had a chance to speak recently --cinch andsent tobias left of it. we looked into europe waiting for thanks to heal. >> the euro is an economy more dependent on bank credit and capital markets. that has always been a big problem for europe. now that we are through the stress tests, maybe the banks. shedding assets. to thele give loans nonprofit sector, they have it down on a year-over-year basis for 28 months in a row and have been contracting their balance sheets and in when he to boost them up to get the velocity of money up i get lending activity and growth activity started. i may not have always agreed on alan greenspan, one thing he said that struck me is brilliant. we talk about liquidity and he said it's a difficult thing to measure but it's more about confidence. you can have all this cash sitting around earning a negative return that somebody would like to put into a more productive fashion but it doesn't because they don't have the confidence. >> let me get your attention. since we did that discussion a week ago, the german 10 year yield is down to .803. >> i feel like i keep reading about that europeans rely more on credit and capital markets. i think it's a way to avoid talking about consumer confidence and spending. is extra credit going to fix the problem europe? >> you've got to clean up the banking system. we are fortunate in the u.s. that we have problems and fiscal policy but we cleaned up the banks fairly quickly. we had tarp and credible stress tests in 2009. it took the europeans years to get there. they only just got unified banking regulations. >> we go into next year with an extraordinary interest rate structure that allows howard lindesn and others to borrow money at a low rate. how does an economist adapt your u.s. view given the disinflation and low rates we see in europe? >> the u.s. is actually a relatively closed economy. a lot of it comes back to what is going on in our own house. of our economy is still u.s. consumption which has not changed. >> you talk about cleaning up the banking system so amen, but we are having the same problem there as here. you can push as much as you want on the banks and not get the response you want. >> there is nothing to buy. my son has netflix and as iphone, there's nothing to buy and that's universal. with products, there's not that much interesting stuff to buy anymore for consumers. they can get by on less. they can buy a cappuccino and some food on their iphone wireless. how do you drive an economy like that? >> do you realize how sheltered howard lindzon's life is? >> they are not buying stuff. we might've had more empathy of you said coffee instead of cappuccino. this was discussed by tobias left of us, bearing season showed that companies can bolster their profits and cost cuts but revenue growth remains a challenge. cost cuts have left companies with stronger balance sheets and lots of cash but not necessarily doing much with that. from thek the money fed and given to large companies and they are driving profit by beating up the component company. even qualcomm was down but the other day. the fed is now apple, google, mi. me --xiao theirers are buying phones. i did not need to go out to spend on a new phone. what am i to buy? offs take the cappuccino the table but there's not that much to buy. >> you look at the american economy to next year, and there is a weight of europe to its. aren't we still linked to them? >> not as much as some people are afraid of. consumers are not spending on houses so they can afford these cheaper products because we have incredible product innovation the u.s. but we don't have the income growth that will support buying major assets. >> do you see wage growth? i know you are not in the business of making calls but is the vector of income rising? >> it has started to inch up but it's hard to tell. >> the last jobs report would indicate it's not. the key is that we don't see a trend. it started to pick up in the third quarter but we will have to see two or three months of that sustained before the fed even considers it. we have to wait for the actual numbers to come out. >> our guest hosts for the hour -- our morning must read is coming up as the democrats lose control of the senate but is it because they did not flaunt what they accomplished? that's coming up. ♪ >> good morning, everyone, futures are up to and this is "lumbar surveillance." here is the morning must read. >> we are still sorting through the midterm elections and what it means with republicans regaining control of the senate and the entire congress. this is from clive cook -- i thought this was great because there were a couple of victories that the democrats could have taken that they chose to take up that mantle but they chose to avoid it and therefore had nothing to offer to voters. >> these crowds show up in kentucky for elizabeth warren who turned out to be the best speaker they had. bill clinton was also popular , theyand every candidate did not seize on those. . >> howard, you are canadian. i bring that up because you are able to vote as a u.s. citizen now and you chose not to because none of the candidates from either party spoke to you. >> yeah, they spake but i don't know what they speak of. from the mayor on down, it's been chaos and local government to not understanding republican versus democrat and what they stand for. i found myself not wanting to hurt the country. . >> did they say anything in regards to the economy or the industry of finance and technology? >> california's tough. many people like jerry brown but i cannot convince myself of that. i'm keeping my laws simple. we don't need as many guns and i am pro-women's choices. i cannot find a candidate that says that. >> you live on the left coast but how is the ethos of liberal democrats doing? do the liberal democrats retreat or advance forward after this midterm debacle? >> they need some leadership to move forward. i live on coronado which is a good part of america in the sense that we have the navy seals and the military and parades. we have wars but not warmongering. let's support the troops so it's not about starting another war. is a elizabeth warren going to be the new leader or hillary clinton? >> i feel like you should go with whoever gets people screaming and elizabeth warren seemed to do that. >> so your presidential ticket is chris christie and elizabeth warren? >> it's whoever jet -- gets dragged to the left by elizabeth warren. she's got an education. stands fored -- c something and people respond to that. >> we will be right back on "bloomberg surveillance." we will discuss the state of the consumer. ♪ >> good morning, everyone. the president is in beijing. let's get terror top headlines -- >> new revelations about faulty general motors ignition switches as gm ordered half a million replacements almost two months ago before telling federal safety investigators about the problem. the faulty switches are linked to 30 debts and have led to the recall of more than 2 million vehicles. asket share in russia profits are in line with estimates. hockey league was sponsored and organized a music festival. carlsberg is feeling the pain from a weakening ruble. baba get set for an onslaught of online shopping as china prepares to mark singles day, november 11, which can be represented by 4 ones. cyber 2.5 bigger than monday in america. it processed 254 million orders worth almost $6 billion and it's aiming for more than $8 billion this year. >> singles day? >> when you celebrate being single and buy things for yourself. what will you get this year? [laughter] from the chinese consumer to the the u.s.- consumer, has added over 200,000 jobs per month. $2.90 perices are gallon the backdrop is encouraging but is it enough to get the consumer to spend this holiday season. josh wright is with us. talk about the u.s. consumer as if it's one entity but it's not. you got the higher income consumer and then everyone else. >> it is a tale of two countries were using more and more products and services being designed precisely for people who've got a lot of income and ability to spend. what is happening at the bottom? those people are not seeing the income growth and don't have the assets that they used to because many of them suffered damage the financial crisis and the housing crisis. >> we have seen this in retail results. you got bloomingdale's and the dollar store and target in the middle. intarget is getting squeezed the other middle-market restaurants as well are getting squeezed. there is just not that support. that's where you get back to the wage question. >> what do you see in temporary employment? an average of 230 thousand jobs per month for the last year but what is the nature of those jobs? what is the quality of the jobs and what are the hours and the wage? that has not been moving. zon is also with this. i think you've got an incredibly rich opinion of bricks and mortar. we hear every stereotype and everybody talking their book at this table on bricks and mortar. what will actually happen? 16i have two kids, 15 and and i am 17. so i have three kids. at apple, we are getting bored. the latest product launch was not enough to go into the store for the first time and by. the incremental changes are high so who wants to go shopping and parking stinks. bricks and mortar is not dead but it will be reimagined. os are talking about bonab that started out selling pants is now has six stores in new york. the pants only fit one leg of mine. the retail will be reimagined because real estate has to be reimagined as well. you'll not just go see a prada store. they can afford the rent but nobody is buying their stuff. they will get tailored to differently on the one percent. box,ther than go to a big will you look at something that has more foot traffic? on fifth to into a gap avenue. major retailer furniture place. i asked them for questions and the answer was no to all four questions. it's all in the internet and the store is a fraud. >> it's not a fraud, it's an experience. [laughter] >> if you want to do your travel for the year or learn to use google or go to the apple store, i want to walk by these stores -- it's not going to be the same as you see it today. pop up,m went to a gap does that announce the end of pop-ups? >> they are just beginning and that's a very new york thing. i invested in virgin mega and they will design stores for celebrities. this is to get people not to stand in line. pop-ups will become a mobile experience in themselves. which means it's back to temporary workers. i like hayes said stores are not frauds but they are going after experiences. do expresses yield as much a stores? >> no, but they take more time. >> they require more people to be hired. >> you can layer all kinds of charges on them. howard out on instagram using a sony camera and eight filters? it looks like kerry grant. .- he looks like cary grant >> that's better than my bar mitzvah picture. >> it's not a fraud, it's an experience. >> it's an experience i pay for. >> it is early november but new york city is already preparing for the holidays. there is a norway spruce at rockefeller center, 85 feet tall. ,t comes from bloomsberg pennsylvania. >> i think that tree lighting will be 12 degrees below. >> you miss that tom was in a pagan line cloth dancing around celebrating the arrival. >> it's always the experience. >> we have all been following the truffle market. it was a very wet season and lots of things have driven troubles down. >> it's like when you and i have a truffle martini, is that the same? only time keen says that. -- only tom keene says that. -- number one photo it's the 25th anniversary of the fall of the berlin wall yesterday were 8000 balloons were released in celebration. many thousands of germans are happy. >> i'm sorry, it's great to see this and it looks like a one direction concert. ofike the somber photos chancellor angela merkel and the little girl at the rest of the wall with a flower. i want to say to our team that friday they did a great job of the seriousness of this 25 years ago. >> it's also a time of joy. it was brutal for 45 years but those moments in germany were moments of joy. when it came down. i think it's nice for -- it is hard for germans to be hard -- to be happy about anything culturally. >> server martin will visit checkpoint charlie in the 1960's. >> coming up, will gold reserve -- retain its luster? underrices will be pressure for some time to come and we will have our single best chart next. . >> can i get truffle coffee? ♪ >> good morning, everyone. on a monday, it's a golden single best chart. >> it is on gold and what it takes to reverse the gold that has slumped to a four-year low. you stole this from two people. >> rosenberg says watch one indicator which is the mental lives of gold futures by speculators which is the white line. is the difference between the number of long and short positions. gold is the yellow line in rosenberg says gold will continue to decline and the under pressure and the capitulation may only happen once. the white line has to go all the way down to zero and the last time that happened was 2002. n is qualifiedzo on this preview have to have a cathartic moment to reverse a trend, do you believe them? >> yes, i don't trade goal right now. -- gold right now. i was blown away by the move last week and i did not buy it. i follow certain smart people to trade. i don't know how long they will stay long gold. i don't like gold. >> what's the correlation of gold to disinflation/inflation? is it 1/3 of the price. >> i think it's more of a sentiment play on banks and currency. >> there is a news item this morning about a referendum planned for november 30 in switzerland where they want to hold 20% of central-bank reserves in gold which is driving the price of the franc up. when citizens ignore economists advice -- i like that it is a sentimental play. >> the nation as a whole is going short on the euro which is what they are doing by buying gold. say simple thing and intuitive for the consumer to grab onto. >> gold adjusted for inflation -- the red circle is roughly neck's and then $35ixon an ounce and then a boom in the 80's and damage no and the next boom now. point, it just gives away. >> i was born shortly before the oil crisis and i'm not completely sure when you say stochastic. >> that means pointy. >> i will have to talk to a mathematician. >> a lot of commodities do that. they are not good for hedging. gold is a dumb asset. >> that's our new quotation of the day. >> what will you do with it? it's a sentiment play. >> an update on bitcoin. where are we there? it 1.5 years said ago. when fred wilson went long and warren buffett said he did not care, we are in the meet zone. visa was up after the earnings announcement and the market cap that they added last week was five times more than the complete value of the bitcoin. as much want to talk about vc moneyit is -- more theetting invested in bitcoin world than the 1995 internet. it is coming. in terms of a currency or in terms of is it real, yes it is real. it is a toy just like the internet was that there is so much to be built on the blocks that i would not ignore it. >> the money is not going into bitcoin as an asset. it's a way of transferring services. >> how do you compare that to other payment systems? the bitcoin value is really as an infrastructure. >> it's in competition with other infrastructures? doala is out of the midwest and stripe is out of the valley. cash is moving away to a cashless economy and there will be stuff in between. >> i have no idea what you're talking about. isstryper, the heavy metal band from the 80's. the full market is showing signs stochastic as tom would say. we will discuss that next with "lumbered surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪ >> who do you want to listen to? how about steve miller at aig? understanding of the fact that is on america's income statements we will talk to him. all that is coming up. how about our twitter question for the day? tiffany says their decorations up. >> is that a big box retail? >> i don't think so. >> that's a different stratum. >> there are bells ringing. they are testing the balloons on the macy's day parade. let's get to most of wall street racing for what will likely be a disappointing bonus season. year-end payouts could fall as ers and 10% for tradin hedge funds. investment bankers and employees at some private equity firms should see bonuses rise 10-15%. john paulson is posting a 40% loss in his has fund in october adding to declines this year. drop let the advantage fund down 20% in 2014 and his $20 billion farm out some of the biggest inclines this year. launching a is digital platform. it has digital versions of all of his albums including his latest. the singer has long refused to let downloads on his music. >> you are a cam follower for years and lived out of the back of the bus and watched the board -- watch garth brooks? >> i do follow him a little bit. he is an amazing performer. i saw him perform at the lincoln memorial before president obama's first inauguration and he blew away every other performer. >> the first night he played at the bloomberg café, 200 people. he was right there. >> country music is informal but he nailed everything. he is mr. tricia yearwood so everyone knows. they have some real talent. this is the year of the pushback on -- >> it's all by musicians who step -- establish themselves before. >> this is important, is copyright important in america? >> of course it is. i share everything. idea of bullish on the platforms allowing me to share. i don't want to sell my stuff. will change it bloomberg gave me an office but i cannot see that happening. you will not get an office. swift, theser people can drive these things because they have so much money. all power to them. that's america. spotify? use >> i use artio which is like the same thing. >> who gets paid? >> nobody gets paid. dream ofy is the fever a bunch of busy executives who got together and they love this idea that came out of sweden. let's look at the markets in general because you have said that you underperform in the markets every year. why should i trust you to help me through this weird time? >> i did not say that. i underperform according to the ideas i have meaning based on my wrist profile if i'm willing to take those risks every year, i would be doing better. my goal is risk return. this year, biotechs, i missed that. i tell other people that the one percent wants to live forever and now has the money to do it and that is probably driving biotech with science and money and the will. it's a global macro perspective. the one percent globally that we hate is underserved and technology. family offices will be the new banks. maybe 1000g for family offices to 10,000 family offices. >> are you an investor in uber. >> i am. 1% phenomenon? , i am aeason it works curmudgeon airbnb fan. i share my neighbors houses with 20 people. i call it8-80. 80-year-olds are using it to get out of their house and eight-year-olds are doing things. i think it is safer. i would prefer to work while i'm driving, not drive and work at the same time. >> what is the path you predict to bring uber public? the ipought it would be of 2014 but it will be the ipo of 2015. it will be a race between them and airbnb. this $1 billion, that's the final step. >> do you have a read on the revenue? >> they keep it pretty secret. public?ey need to go >> that's a good question. >> shareholders in the end need to sell. if they can figure out how to get shareholders like myself out , people stopped caring. >> you say is pressure from the venture capitalists? somebody get josh write a memo that we don't talk about our own affairs and bloomberg. here is a four x report -- rublele bit of a strong today as mr. putin goes to beijing. an entire another hour of bloomberg "surveillance. ♪ >> the president lands in a blue sky beijing, world leaders will meet with a new and ever more complex china. two americans are freed by north the islamic state previous leader was killed in a u.s. airstrike in 2006. numeral regulations about the faulty ignition switches, gm ordered half a million replacements which is a most two ahead of safety investigators telling them they had a problem. they led to the recall of more than 2 million vehicles. controversial referendum over independents. barcelona overwhelmingly voted to secede from spain, a symbolic vote one that the spanish government immediately called a farce. spain's highest government immediately ruled it illegal. that is our top headlines. difference between that referendum and the referendum in spain -- not all referendums that are illegal are the same. they did it as an act of civil disobedience with the emphasis on civil. they had the european parliament they are trying to drive spain to allow them to do it. if you compare that to what happened in the ukraine they're using it to validate the things that they have are ready done. equities, bonds, currencies, commodities, not bad. in the last hour the euro under 1.25, you wonder what oil will do this week. it is a quiet screen this morning, though some currency movement as well. the president is in china in response to a new china. heart of the new china is a response on business. china upon see emergent middle class. aignonexecutive chairman of and the john doerr miss insurer, ginormous insurer. people have no idea of the size of aig over everybody else. >> it is huge, it is global. and ana is a fresh market huge market and the world's largest car market. andas been growing rapidly the american producers are there as well as the europeans and the amazing thing about china is at the competition has been opened. it is been a successful place for companies like general motors. outecretary clinton was front -- >> the administration has not been in an aggressive leadership role in many of the hotspots around the world. including what to do about china. china has been growing so done to what they have intoa very poor economy the 21st century -- pernd we looked earlier at capita income, 7000 versus 3000. >> i have to make a full disclosure, my brother is a vp at aig and i will talk to him about arrays after this. after this.aise, how does it translate into action when you look at china's maritime strategy with these various small-scale aggressive moves? >> i don't think there is any reason yet for abrupt military confrontation, that would come later if china tries to take over territories that other countries claim, we would get in the middle of it. we cannot just stand by and let things happen that way. administration has been reluctant to get involved in any of the hotspots around the world and i don't know what they would do other than stand back. >> our administration is signaling what some call this interest in china because our team on china is not very long on experience. they are accustomed to having one person be there go to, and we lack that. our treasury secretary is known for his domestic ability not his ability to look at the world globally. >> we as a country are slowly coming to the realization that this is a global economy. there is so much trade and interdependence in the financial sector that if we do not pay attention in china we will suffer. >> do i correctly understand that on your to do list is trade? >> absolutely, i was has a number of things they have to have a growth agenda to create jobs in the u.s. which we can if we put our minds to it and secondly, we have to pay attention to global trade. the hope for america is that we become a full-fledged global export. johnson and back to the investment tax credit so that guys like you do not to ploy capital abroad and deploy it here to create jobs. next topic of tax and version, we have a tax system that makes it putative for a multinational u.s. company to bring their available funds to the u.s. to create jobs. tois far more sensible invest it again overseas and avoid that tax. we need to change that tax structure. what scares me about the notion is one more time where you're trying to set economic policy i changing your tax code and creating high rates and loopholes. >> washington will get one thing done before the season of the next election begins. what is higher on your list, corporate tax reform or trade? >> you are much more of an optimist, thinking one thing will get done. >> the one thing we have to deal with is immigration and that seems to be the one with the biggest division. america, for the last several hundred years has brought the best and brightest from all over the world and now we have these barriers to not let the men. we need to deal -- to not let them in. we need to deal with immigration. >> we have john boehner and mitch mcconnell, they have a mandate to do something, what can they get done before the silly season begins? the 2016 residential election has already started and therefore i don't think much is going to get done. you saw the headline after the elections for the republican leaders and obama had a meeting and what did they say, we are going to cooperate but are not giving up on our goals. >> and that includes repealing, care. obamacare.ling everything gets repealed and we will have a conversation about the president. what to know from you, are we done cutting costs? is the word layoff the word of 2015? >> i think we are pretty much done, the real problem is that nobody wants to hire. the regulatory burdens the health care cost uncertainty in the fact that other economies are more vibrant and less taxable means that nobody will take on new workers. i think we have seen the worst of the layoffs. >> let's come back and talk about this, steve miller with aig. spirit of corporate america is little make the workers already there do more. >> coming up on "surveillance." the backstory of a jpmorgan whistleblower. >> christmas decorations, holiday decorations in new york city. how do you fix big box retail? our twitter question of the day. no charge for our twitter question. how do you fix the experience. it is a pop up twitter question. everyone, bloomberg "surveillance." scarlet gets us going. shopping season is in full swing. youe miller, the last time are on surveillance you said retail industry is in need of a turnaround. before he get your fix is there anything they are doing right jacob -- right? >> the ones were doing something right i have decided the internet is a part of their business and they better get with it and have an internet alternative for buying goods even if it turns your big box into a showroom, at least you have the retail sales. you cannot stand by and compete with internet and you better be part of it. amazon take your lunch. how does apple pay change retailers? >> that i do not know. we'll have to see the question for your consumers would i rather sit at my computer and order something i cannot touch and see or do i want to go to the big box and buy it there. >> can the big box retailers get it done in time? they are not turning into showrooms thomas they are turning into roller rinks. turningooms, they are into roller rinks. >> something is going on out there and the problem for the retailers is they probably need a lot less space. what you're seeing and shopping malls across a country is a big pressure on the rental rates. >> it sounds like we are over malled and over stored. that, tonsking about of boxes from ups but everyone is going to brick-and-mortar stores to return things they bought online. >> one thing that many internet companies has done is to allow you free returns if you do not like what you have got. that is such a convenience if this doesn't fit or i don't like the color -- are would go to where we last year is everyone got the holiday season wrong and this year it will be surprising. true, we are like one week ahead of last year. >> basically halloween ended and it was, looking to christmas. >> steve miller our guesthouse -- guest host for the hour. >> good morning everyone, bloomberg "surveillance." top headlines on a monday morning. no one is getting paid on wall street. >> wall street had a disappointing bonus season, it could fall as much as 10% at trading desks and hedge funds. the story isn't all gloom and doom, investment bankers and some firms should see bonuses rise 10% to 15%. john paulson posted a loss at his hedge fund reserve in october. the drop left the paulson advantage fund down what if i percent in 2014. the billionaire's firm had its biggest decline in october. a country music icon returns with a new digital platform. ghostbrooks is launching tunes. it will sell digital versions of all his albums including his latest and in addition to housing of other songs by artists. those are your top headlines. face was not good enough, without the outrage of the greatest financial scandal, the attorney general three faced or perhaps four faced, a whistleblower at jpmorgan blowing of the whistle comes down to the insatiable desire to do business in the shortest path. the whistleblower joins us now. of yourthe beginning book, fairness is what justice really is. wall street goes after you because you are focused on fairness. what does wall street get wrong? >> in this particular instance we had a major crime wave of financial fraud that was similar to a different crisis and we had a number of people that were tried and sent to prison and in this one we did not see anyone go to jail. the result one terminal prosecution and that resulted in acquittal. i think the american public is frustrated by that and the story is emblematic of those problems. eyes -- i saw my frozen three times this weekend -- pick it up please. >> i'm looking at the statement of fact agreed upon by the justice department and jpmorgan, , thes it insufficient statement of what everyone agrees on, why is that not enough? andhen you look at the same it is not clear if anything criminal happened at all, what the intention was and what we thought about the loans. i think it was important because without that a looks like it could all be an accident. when you see the actual details in matt's piece you see their work countless warnings. and they were pushed through over the objections of other people there. >> not just countless warnings but warnings from you, you are convinced there was something criminal happening. >> not just me but the manager at reviewing the loan sent out multiple warnings, if you look at the "wall street journal" article summary else noticed warnings and that was not me. >> you sign a confidentiality agreement in 2008, what are the parameters and are you breaking that? it is a standard confidentiality agreement, i made the decision after 2.5 years of working with the government that if i do not come forward regardless of that agreement then these facts will get washed away. >> have a contacted you? >> they were contacted for comment prior to the publication but i have not heard anything. >> to be clear to our viewers have not read matt's most interesting article, you worked for jpmorgan, you got upset and you have decided to go public. let me ask you a pregnant question, what took so long? >> for a long time i did not know the loans had been sold to investors so there is no crime until you sell the bad loans to investors and do not tell them the problems. because of my position and after i raised the complaints i was blocked off from seeing anything. for four years until 2012 i knew nothing until i started talking with the sec and the doj. say this ask you and i with great affection, you have a reputation. why did you go to this guy? >> i needed someone who would tell the story honestly and without pulling punches. i think it is a story that deserves to be told fully. >> by choosing matt and the vampire squid --? >> he does not pull punches, he also on pins grenades and lobs them. >> the implication is that i am not reputable and that might be a question within the financial service -- 160,000 employees and you will have a couple that are outraged and that you took a page deck through this process of being an attorney for jpmorgan -- the you feel you have an obligation -- >> she was never an employee for j.p. morgan chase. >> there is a lot of information in a small place, i was hired as a deal manager. even though i had been a securities lawyer at jpmorgan i was not working as a lawyer. as for obligations, i believe that i witnessed a crime. >> i'm still not clear, did you work for jpmorgan? >> as a jet -- as a deal manager. >> what is a deal manager? when you have places like countrywide making these loans, i was at jpmorgan and we would buy those loans and sell them to investors. i was the person coordinating to make sure those loans were up to quality. >> we will come back. >> we will talk to steve miller, a guest host about his outfit for the retail industry. >> good morning everyone, bloomberg "surveillance." toa moment we will try to go china with our president but right now we are here. a former securities loiter, alain fleischman. the $9 billion witness. i'm trying to figure out what we should walk away from this with, i asked why you went to matt with this and i asked for a reason because he is better than any other finance writer that i know, including myself, he is better at channeling outraged than the rest of us. when we look at pictures of jamie diamond coming out of the justice department, is that what we should feel? industry who the has been reading matt, he does a great job of condensing difficult material in a way that is readable. in terms of outrage, my main concern is people do not know what happened. >> do you agree with matt's conclusions that the justice was bringing more money out of jpmorgan all along or that it was political theater? >> it is difficult because i have the same information as anyone else on that. >> are those the conclusions you drew? >> i don't see any way this was not a cover-up and the complaint went away and facts are not coming out. >> will we see criminal prosecutions? >> that is white alain came forward, she is worried -- that is why alain came forward, she is worried that the statute of limitations will run out. >> how much time do we have left? atin 2005, is start looking 2015. >> no firm is perfect, how many employees at aig? >> 60,000 or 70,000. >> you have a couple that are upset with aig? >> probably. >> where was his tension when a chair in a desk in that led to the outrage, what was the single moment. ? >> it is partly that i was a securities lawyer trained in white-collar crime but also watching a woman with a manicurist and a $117,000 income. in new york the income is 25,000. >> who was responsible for the person lying? >> when we sell it to investors we are putting our stamp on it. >> is that a criminal or civil fault? >> absolutely. if you know there are problems with the loan and you do not tell the investors -- >> can i get a job as a manager? eric holder stepped down as attorney general, was he acting as a politician rather than a lawyer so he could set up a desk job? what are your thoughts in terms of his motivation. necessarily believe it eric holder was in some conspiracy, i believe us is probably what he thought was the best solution -- >> push but we cannot push too hard because they are too big to fail? >> eric holder was a lawyer for 10 years and a defense lawyer by trade and he came up with a solution that where all parties could walk out feeling good except for the public which were not in the room and he forgot to represent the people. >> steve miller you are sitting on top of a very large complex company, things go very wrong, what is a better way for the justice department to handle it? question, broadly speaking, owing to the crash of oa eight -- of 08, is stupidity a crime? a lot of are presented as did things that in retrospect look stupid i am not sure they violated the law. precisely why i am going forward because these things are being put into the public and they are not true. we knew exactly what we were doing and what would happen when we sold those loans. a $170,000 connect manicurists to evil intentions. she lied on the form? >> and they lied as well. >> so the stupidity is a point. stupidity that is knowing the loan will go into default and selling it to investors with that telling them that is what fraud is. >> the story in "the rolling stone." thank you for joining us. >> let's get you a data check. we have futures and not really a whole lot. up slightly and a u.s. 10 year yield. ield.s. tenure y look toan greeley as we china, down futures up 17.25 -- >> president obama begins a three country tour of asia. they are meeting in beijing right now. phil mattingly is traveling with the president and joins us on the phone. i want to get to what the u.s. is looking to achieve but your thoughts first between that meeting and the changing tensions, it is the first meeting since they both took power, give us the feeling of the room. >> what you can see from the photo itself was that it was pretty cold and probably somewhat awkward. >> probably awkward and he was not smiling at all. the two have very stern expressions on their face. getting to the united states and what they hope to achieve, what is the president looking to achieve? if there is one item he can check off? >> for the last two years, the big trade deal, they have been working with 12 countries in the region, is probably the one. the whole point of the trip is to get a sense of what they can accomplish with china over the last two years. i think trade is probably top amongst them but the rebalance or the pit it has been a central tenet of the president's foreign policy. one of our producers, just just noticed that right before leaving the president announced the new agreement of business and tourist resist will be valid for two years is this the all branch on his way over? phil mattingly? >> i think we had trouble there. >> he is calling from beijing. >> i think your point of all of branches is true, in the north korea announcement it was a large all of -- that came out of nowhere as well. as you know the game theory of asia is not just u.s.-china, u.s., korea, u.s.-japan. there is a wonderful mix to it all. how did you work that mix? how do you juggle asia? dojuggling asia is what we at aig where we want to participate in all those emerging economies and we do. >> and you let us and mr. greenberg for decades. lead on that and we did selloff a number of those businesses to pay off the government, but we are act in a property-casualty in all of these countries. >> i want to go back to phil for one must question, you talked about what the u.s. agenda is, what is on beijing's agenda? same actually, they have their own trade track that they are pursuing and it is an interesting moment to watch because they are competing for influence within the region. to beijing, they are very clear that they are a country on the rise and they want the u.s. to recognize that but they also want to make sure the u.s. is in no way trying containment. track, tradee dual agreements going on is the interesting and something we will keep an eye on for the next couple days. how is the air, we heard they took cars off the roads and closed schools, are your breathing ok? hereis is my first time but i've heard from other travelers that this is a dramatic difference. a major impact in the couple of days they took cars off the road. >> just don't go jogging. phil mattingly from beijing, traveling with the president. walked four large city blocks in beijing and the headache took six hours to go away. i sat like this. for those of you on radio it was painful. >> if you blow your nose everything comes out black. is holding his temple like he does after a bad in. >> this is bloomberg "surveillance." brookshire hathaway reported a loss. the reported earnings still that topped analyst estimates thanks to warren buffett's love of the rails. here we get some more context. wales aside, i could not get over what warren buffett has called tesco a huge mistake. >> he has from time to time in his long-standing career admitted to various investment mistakes and this one being by far his biggest. you are mentioning the railroad scarlet, he got a really big train set when he came to burlington and this train set has done really well. he got it for a steel, this is a guy who knows the value of a dollar. this company has not only benefited from the boone -- from the recovery of united states, but the boom in oil. the fracking and the shale oil boom in the u.s. is benefiting burlington. >> i want to move to something slightly less fun than trains. we will get there, i will drive this through if it kills me. hathaway has been saying for years that you watch hedge funds and capital markets get into insurance risks that are a bad place to be. aig has not had the best lapse in several years with property-casualty insurance. is at a business you recommend? great business if you have the internal strength to analyze your risk and price things properly. you do not just chase every deal out there, you make sure that if you think the risks are too great for premium levels -- >> you of 24 guys under you looking at the experience of hurricane sandy, what dealer? -- what do you learn? >> we hope it only happens every 200 years. >> that is what they said about the financial crisis and look with that got us. -- plan andto stand take your risk knowingly. some things will happen. with aig we do this on a global scale, so even though hurricane sandy hit and we took a huge loss it did not interrupt our profitability. >> if i may bring this back to buffett, they've gotten into commercial insurance on the back of stealing aig executives. >> he has gone to the biggest and best talent pool in the whole insurance agency which is aig. >> don't we have an icon for applause? >> shameless plug. isin terms of what war and looking to buy next, he has a lot of cash on hand, what have you heard? >> he is about $60 billion but the big lurking demon might be ibm. our twitter question of the day, how do you fix big box retail? ♪ >> if you are a bear, you hate her. once again she is right, abby whatever it said is, we will get a town of mail if she gives us her view of 2015. that is on television and radio tomorrow on bloomberg "surveillance." i am tom keene and with me scarlet fu. >> you think we will get her to take a victory lap around the studio? right around your desk, how about that? revelations about faulty general motors ignition switches. the faulty switches are linked to 30 deaths and have led to the recall of 2 million vehicles. the shares moving higher in caused political turmoil. fundraisingback and mode. they hope to raise a billion dollars for expansion. those are your top headlines this morning. was the fear a decade ago, to lose your job to robots. the real fear, the service section? >> legendary and rightsizing .ncomes, he is now at aig let's talk about general technology. >> one observation about technology, if we were sitting here 100 years ago when 90% of americans worked on the farm, we would be worried about the mechanization of farming. >> where are those workers going to go? the answer is we found jobs for them. >> thank you henry ford. >> the same is true today we will free people up for him to do the more difficult work but we need a much better education system so people can perform the tasks that the future will require because high technology brings high-tech jobs and we don't yet have enough high-tech people. key to that education rests on science, technology, engineering and math. >> we need far more engineers things and so on. the'm not talking about brainy types but the general population needs to be much more familiar. we cannot hang onto the old ways of employment. >> do we need high-tech college degrees? >> high-tech trade apprenticeships. that is where the mess of jobs will come from. every other country is doing a much better job of training the engineers. >> what do you do on the apprenticeships and within this conversation knowing the success of germany, how do you jumpstart junior high and high school education, not to get in the top 250 colleges question mark -- colleges? >> even our young people's aspirations tend to be more toward being a sports star or a rockstar, the notion of going into a valuable technical apprentice type job is not high on their list. >> had you convince companies to make that investment? that gets to the subject earlier, our whole tax and regulatory and health care inhibits designed to companies from taking on workers. are with the franchise of knowing how much meat is on the income statement, or we controlling the income save in some us there is no more meat to take off the bone? >> i think companies are running a lot leaner today and what we need now is the investment opportunities that can only be created by favorable, legal regulatory environment. 200,000 people at jpmorgan, you wonder how many will be out 12 months on? >> most of them are now in compliance for the reasons we were talking. fredare now governed i the -- by the fed. we have fed regulators all over aig making things go along like they did before. >> roger cohen hired mr. scalia's son. need to answer our twitter question and get steve's take. how do you fix big box retail? this is an industry in need of a turnaround. hero the answers. >> it is all about the experience, it is only about this quarter's money and not people service. >> big-box retail has to diversify to survive. that is the playbook. how about this one, pay raise for the working class. >> do you glean a difference between a service wage and a producing wage? service sector, employment is subpar or part-time? opinion.bpar is the question, is it appropriate to the value that the person brings to the job. the service sector tends to be far less unionized than the goods producing sector and that has some impact. >> what is your fix for retail than? is there anything they could do? >> there is nothing they can do in that short of a time. the long-term fix is to get the size of the box appropriate to the business they do, like the office supply companies that have huge boxes and now they are much smaller. they need to resize the box. there is no particular magic to this. in my family we go to shop at costco a lot. big box, butimate if you bought something that is not working or you decide you don't want it, no questions back -- no questions asked a we'll take it back. it is the customer friendly part of the experience. >> let's get to our agenda right now. tom you get us started. >> the president is running to beijing, something you always do if you get crushed in elections. world leaders in beijing, you wonder what will come out of this. for those on the radio i cannot convey the tension in the faces of the leaders of japan and china. it was truly, real -- >> fisher can't put there was no hint of a smile on their face endocyte finally even talked. sign that they even talk. >> and important trip for our president. president and i will take over from here. my agenda is mcdonald's sales. they're calling for the next straight month. people are just not eating hammers and french fries, or at least not for mcdonald's. >> and a cup of cappuccino and wi-fi or they lose from the details. my agenda item is ebola, is under 14 is out of quarantined. the nurse who was under quarantine is out of quarantine. most of the policies are already in place when something like ebola hits it is a big concern of ours and we are glad the thing seems to be moderating rather than going off like a some of thelike other infectious diseases have in the past. people are really hang attention to it and really care and i am hopeful that this will be contained. >> steve miller, our guest host this morning. >> good morning. it is monday, november 10. we are alive on "in the loop." into warren buffett's hit and misses in the may bearter and why ibm upcoming pothole in his portfolio. also, are you an 80's kid? you remember video killed the radio star. the first of mtv. maybe digital video is killing the music starts off. two pioneers are joining us in a moment. and, obamacare. people get a sneak peak today with an early healthcare.gov rollout. i will tell you the details. first, here is a look at top stories. a trade agreement. the president is in beijing for the asia-pacific cooperation form. the trade deal includes china but is still the biggest ever negotiated by the u.s. congress last year still speaking points to canada.

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