Fannie and Freddie's Future: Bottom Line (07/23)

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July 23 (Bloomberg) -- On today's "Bottom Line," Mark Crumpton provides insight at the trading day's critical hour, with careful analysis of big events for investors. (Source: Bloomberg)

? from bloomberg rural headquarters in new york, this is bottom line with a main street perspective.

The u.s. congress examines the future of fannie mae and freddie mac.

Apple beats estimates on both the top and bottom line.

A behind-the-scenes look at the robot helping boeing build the 777. to those of you joining us from around the world, welcome.

We have full coverage of the stories making headlines tonight.

We have the story behind the third quarter earnings.

Let's begin in washington where we have the latest on the future of fannie mae and freddie mac.

If investors and potential homeowners needed in a demonstration as the how long the legislative process would take, they might have done the trick.

They started but did not come close to finishing the initial consideration of the republican proposal that would wipe out fannie mae and freddie mac within five years.

Nobody thought this would be quick or easy but five years after they put them into conservatorship, the fault lines are more apparent than ever before.

Democrats proposed amendment after amendment to make changes to the chairman's draft proposal.

Just about all were rejected.

The rest remains an inclusion of a government backstop in the marketplace.

It would replace them with a securitization platform and only guarantee loans by the housing administration . how long is this expected to take and what comes next?

We expect it to go into tomorrow at the next day.

I think that is what the chairman expects.

It is of the leadership to decide if they're going to put this on the floor.

Realtors and housing groups are very wary of a proposal that does not include a government guarantee.

You'll have trouble with some in the republican conference.

It will be a tough decision to make before this is put on the house floor.

It was back in 2008. how much longer before major changes become law?

They are willing to of knowledge we are in the opening stages of this.

There is also a bill in the senate that is more of a bit of a middle ground.

There is a hearing on that today, so i think they feel like there is progress according to last for five years.

This is not going to be a quick one.

The white house is definitely involved.

This is rising to the top of the treasury's to do list.

Now that financial reform is starting to come toward completion, they are wary of getting involved on one side of the other.

They are definitely in the room and the discussions are happening between both parties.

We will have more on the future of fannie mae and freddie mac with a former director now partner at the collin one group.

A senate hearing raised serious questions about the risks and a lack of oversight for big banks that own and trade physical commodities.

One asked if regulators had any idea what is going on.

More questions being asked by lawmakers and the federal reserve this week putting commodity units and morgan stanley in jeopardy because there is new concern about the financial risk continuing with a decade old rule that allows banks to trade and on vast amounts of physical commodities.

A living in transporting oil, refineries, four oil tankers.

Warehouses filled with the precious metals that they trade, they can drive up prices when they control the physical product and the financing.

Today, and a senator questioned if the markets will move against them.

Do we want them to make loans or refine and transport oil?

He says it may call officials from the fed to see if they will testify.

This issue not going away.

I know beverage companies are raising concerns due to the cost of aluminum cans.

Beer company executives were among those testifying before the panel today.

They said unfair rules by j.p. morgan chase and other were house honors have boosted the cost of the late shipping to the tune of $3 billion in the global market last year alone.

They run a group of warehouses, the most in detroit for instance.

They testified that they don't cause problems.

A growing number of economists think the fed chairman ben bernanke will start trimming the bond buying program in september according to a bloomberg survey.

Earlier, the tiger management ceo was on bloomberg surveillance for his take.

What worries me is the quantitative easing and what will stop the quantitative easing.

When they start going up, that will be the end.

The next meeting is set for next week.

Apple out with the latest quarterly earnings.

That is up nearly 20% of last year.

Earnings were down and sales were basically flat compared to a year ago.

Ipad sales fell for the first time.

Cory johnson joins us from san francisco.

It is funny, for a year or so, putting up the best quarter they have ever made and the stock selling off, they have one of the worst in years and the stock rising after hours.

There is a divergence between the stock and the company.

The company saw the sales of only 1% on a year over year basis.

Really anemic growth for a bunch of reasons.

Profits actually fell substantially.

Barely any more product.

A pretty clear trend in decline there.

The business is performing not as well as it has been in recent years.

What did we learn about the phone business?

Last quarter and only grew 7% and that have been no new country additions.

It was not just the top of the law and fallen, it was the last one for a lot of first-time buyers.

Lower-cost is a problem because 1% revenue increase.

They are selling the cheaper phone.

The average price for each fund went down a lot.

It was a big change for this company as well.

I think that is the most shocking thing.

We are talking about tablets and tablet computing.

They were down year over year.

The pickup that we saw from the ipad mini is not that much.

The combination of the falling sales, that really hurt them this quarter.

Anything else stand out?

Mcintosh's not get a lot of attention.

They put one of the smallest quarters since june of 2010. even though they doubled market share, apple can put up a crowded no.

And still be better than the competition.

We will have more of an apple, the company's earnings out today, how they are trying to take a bite out of the v and how it might affect future performance when we continue in just a moment.

? ? welcome back to bottom line on bloomberg television.

Let's show you how the equity markets finished the session.

The s&p 500 index fell on a streak of four straight games as the way corporate earnings amid speculation on when the federal reserve may spell -- scale back asset purchases.

Down three points today finishing at 1692. the industrial average -- nearly falling 2/3 of 1%. let's look up the latest on tax reform efforts.

The senate finance committee chairman said that his committee will consider revamping the u.s. tax code this year.

They were his clearest signal yet of the timing of committee action on the bill.

But when it comes to tax reform, it would do away with the mortgage interest rate deduction, one of the largest tax breaks estimated to cost $72 billion.

It is also a darling of the real-estate industry and homeowners.

Making use reports from washington.

It would impact far fewer homeowners but it would disproportionately impact members of congress.

If you look at just the members of the congressional tax- writing committees, they are eight times more likely to have a second mortgage.

In terms of income and assets, their perspective when they are looking at this, is different.

The chairman max baucus has his second home.

Worth just under $1 million.

Michael bennett has a similar town house nearby.

For tom reed, is a vacation home and still owes on his family's cottage in upstate new york.

Do the homes color their position.

You may remember, the senator has said he live like to hear all suggestions this friday.

They have said at this point, everything is on the table as they consider the first rewrite of the tax cut since 1986. let's return to one of the stories we're following tonight.

Pressure to push harder into new product categories.

Investment bank media tech partners, he joins me in the studio.

Before we focus on apple tv, the numbers that came out today, analysts have predicted 730 a share.

It is not just a smart phone market anymore, it is basically in mobile media center.

The smart funds they created the market for have lots of competition.

It was a big surprise that they sold that many this quarter.

They are in the process of seeing these.

Maybe they can't afford it.

Nokia is coming out with a very conscious products.

They are able this show a high quality product, but they are starting to eat their lunch.

Apple has not been making headway.

Is taking longer to become a reality than kate middleton's baby boy.

The analysts that think they will come out with that, they are wrong.

It is a connection for your wireless and it is anything on the internet.

They will be fighting to see who is going to sell the most goods whether it is movies, television shows, over the internet.

They are just being out full.

It is all up to critics and the investors.

They ought to be doing a tv product.

When out old tv launch as the hockey puck, what you said -- is in the stores now.

How will they ensure usage?

It is simple and wireless.

They keep improving the wide -- the os.

The cable companies will be going out of existence because you can find the os on your touchscreen.

A battle brewing over reach transmission fees.

Streaming video, how do those fees get jeopardized?

That is easy.

All of those retransmits in -- retransmissions, there are threatening to pull the plug tomorrow.

To be continued.

We will return.

? ? president obama: on hollywood and in less than top stars.

The white house correspondent has more on the start-the roster.

The biggest challenge for the and ministration right now is getting healthy 20-something to sign up for health care once the exchange's open on october 1. he summoned top celebrity artists to help get the word out.

He stopped by to talk with cal penn, michael cera, amy poe hler, mike farah, alicia keys, and more to strike this education campaign.

82.7 million young people and rolled to balance the cost of sick patients and elderly patients because that is what will help keep premiums low.

Convincing them to pay for health insurance is a real marketing challenge.

It is a prime time to be able to target young people.

They hope to raise awareness.

This includes cosmopolitan magazine.

Rescue efforts underway after a deadly earthquake hits try out.

-- china.

? ? welcome back to the second half-hour of bottom-line.

Thanks for staying with us.

The exchequer the markets finished the session on 2013. all of the news reporting third quarter profit sales that beat analysts' estimates.

The broad market s&p 500 index was down just over three points.

The dow jones industrial average rising today.

Falling at 3579. let's check with the top stories we're following for you this evening.

The ntsb has launched a formal investigation into monday's last -- crash landing at new york's laguardia airport.

The front landing gear collapsed as the plane touched down and eight people suffered minor injuries and air traffic was delayed for a few hours.

A michigan appeals court has heard three lawsuits trying to stop the detroit bankruptcy filing.

A judge ruled the filing violated the state constitution by diminishing public pension benefits.

The next hearing is set for wednesday.

Prince william and kate have shown their baby boy to the world.

The left in london and a day after the duchess gave birth to the 8 pound sacks -- 6 ounce boy that is third in line for the throne.

It is time for the commodities report.

I am also going to want to ask you to ask me why putting iran not it has a whole new meaning.

First, the oil rally, has run out of gas?

Orange juice futures tumbled the most in four weeks.

Check out the chart, futures hitting 109 on friday.

It faltered since then.

The market is now concerned about the fed's next move.

Investors are selling the lock in profits.

Gold fell from a one-month high as india's largest buyer added new restrictions on imports.

One strategist called it a further blow to demand.

Investors are wary.

I'm not surprised given all the assets.

There is a lot of technical damage.

We are not really chasing any of those items for sure.

Not chasing any names.

He did not stay -- say anything about edf.

That brings us to the ring.

What is the story there?

Part of a group of gold mining stocks and edf hitting a rebound.

The best one-day gain in more than one year.

Shares gained more than 9% in the past two days alone.

The big gold miners make up about 28% of the fund.

Both of those stocks are seeing close to double-digit games after -- gains after taking a tumble.

A quick look ahead, analysts expect supplies to fall to a six-month low.

Let's look at the top stories in asia, stocks rising in china today after the government made a statement about economic growth.

David, good day.

Investors are asking what they are prepared to tolerate.

The chinese premier was meeting with an economist where he mentioned 7%. the same statement coming from the premier himself.

They will not let growth and employment fall below.

We did see a good pop across chinese markets yesterday.

The prospect that they will step with additional support measures if need be and have a clear indication of what the growth ray range is at this point.

Relief and rescue efforts underway, what is the latest?

The latest that we do know is that the government has dispatched to helicopters.

6000 rescue workers towards that region.

In the northwest part of china, helping supplements earmarked at this point.

89 people have been killed.

The death toll has increased further.

Five people have been missing and we will continue to follow this.

David, thank you.

Taking the elbow grease out of building airplanes.

We'll show you how in just a moment.

? welcome back, this is bottom line on bloomberg television.

The boeing 777 is one of the most popular airplanes in the world.

They are decrease in -- increasing the rate to 100 planes a year.

How are they handling this increase?

Rachel gets at the automation behind this.

? really a fundamental shift in the way that we are starting to produce our airplane.

It moves the production forward where we needed to be.

Boeing is taking some of the elbow grease out of finishing an airplane and is turning to robots.

They have invented an automated system that does everything from priming to cling to painting the wings.

Let's turn them on.

Leary fire?

They will do the finish much faster and much more consistent the most of the painters collectively.

It is very difficult to achieve if you are there for four and a half hours.

They can work in the dark as well.

Of the robotic system has consolidated than three-one and the room has high-tech upgrades.

How they will always be working as much as possible.

There is another on the other side.

It is filled with the tracks on the other side.

The real gain in the saving.

80 pounds over 20 years, what is that?

The push toward automation includes several robotic machines.

It is only being implemented with the triple 7, will that be implemented in the future?

Even extensions into certain applications, you will see some of these technologies get applied.

What are you seeing right now using the automated method?

We are seeing several depending on the technology.

Will live like an airplane that is made completely by robots?

The answer is yes.

Next, the house financial services committee goes head-to- head on housing.

Lilliput the impact of the germans fight to get rid of fannie and reddie.-- freddi.

? welcome back to bottom line on bloomberg television streaming on year tablet, phone, and bloomberg.com.

The house committee chairman was to wind down fannie mae and freddie mac and revamp the u.s. housing finance system.

The committee voted on the bill to end the program.

For a look at what this would mean for taxpayers, let's bring in the former senior director now partner at the group who joins us from washington.

Always a pleasure to have you on.

It is called protecting american taxpayers and homeowners that calls for an almost entirely private housing financing system that would prohibit the creation of future government sponsored entities.

What are your thoughts on the viability of that act?

Is a diversion from the senate bill, they both have the ambition of winding down the agency's. the difference is that the senate bill has explicit government guarantee for some time following that.

It wipes out any backstop that you might have for the mortgage market other than the fha.

It will have a hard time getting traction outside of the house.

You mentioned it will create a new agency similar to the fdic that will cover losses suffered by private mortgage insurers and is creating another government agency the answer?

I think it is more palatable.

If the objective is to get something through and we are seeing the inflection point where legislators are looking at housing reform, it is most likely to get approved, for sure.

There are myths and misconceptions, but i think you'll be hard-pressed to look back at the government back stock as somehow responsible for the housing crisis.

I think it is a reasonable alternative.

If the housing finance system is made private, how would it affect the mortgage rate?

Is a challenge, because nobody really knows.

We don't know, but we think the private market is there.

Does the passed act, in your opinion, do enough to address the housing crisis?

Is a misnomer that the crisis was the causality of the crisis that had to do with the government housing system.

In terms of the inequality of income, health, they are ultimately creating what we are seeing as a larger population of what we can consider risky mortgages.

Why were they profitable last year?

Does the windfall make it easier or harder to get rid of them?

They were profitable because they have been increasing the guaranty fees and lowering the loan-loss reserves.

You're talking about $5 trillion.

When you ratchet up fees by 25 basis points, it has a substantial impact.

I don't think anyone anticipated them, but the guarantee fees that are 50 or greater, you will be earning those things for a long time to come.

Those will be around for a long time and will have a lot of earnings strength for years to come.

Should the federal government have any role in the mortgage market?

The federal government's role was for two reasons.

He won the subsidize the cost of housing in the lower the rates.

Ensure that mortgage programs existed for the most needy.

Those most in need of a helping hand to give them the last legitimate opportunity for wealth creation.

You want to normalize what will be an otherwise volatile auto credit cycle.

A lot of good arguments for housing for sure.

0 was a pleasure to have you to get some perspective.

Pakistan gets a super hero, find out what her mission in is after the break.

? ? this is a bottom line on bloomberg television and streaming live, you're tablet, fun, and any windows phone.

We bring u.s. market check at 26 and 56 after each hour of the trading day.

Let us give you the bottom line on what is happening tomorrow.

President obama kicks off his push to restart the conversation about the economy.

He will travel to missouri where he will be speaking about increased infrastructure spending and a universal pre-pay programs.

The labor committee votes on the nominee's following their testimonies the day before the committee.

And the senate judiciary battle will hold a hearing on closing guantanamo bay.

To of the biggest names to report our boeing and ford.

General motors reporting on thursday.

Coach, pepsi, delta, and more reporting.

After the bell and includes baidu, etrade, and visa.

Student loan interest rates have doubled and i will be covering the first day of testimony, the former goldman trader.

Time for a look at some of the most compelling images of the day.

In barcelona, the top swimmers gathered reheat world championship.

The competition takes place in some of the most amazing natural bodies of water.

The liverpool born greek athlete who defended his title, putting clear water between him and the rest of the pack.

This text has been automatically generated. It may not be 100% accurate.

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