FOMC Rate Decision: Money Moves (07/31)

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July 31 (Bloomberg) -- "Money Moves" brings insight to investors looking for alternatives Deirdre Bolton talks to the professionals in hedge funds, private equity, venture capital, angel investing and real estate. Find out where they see opportunities. (Source: Bloomberg)

Telling ourselves.

We were supposed to have slow growth that picked up towards the end of the year.

Now it turns out release slow growth, but the second quarter did not fall off as expected.

It does not suggest we will have a major rebound.

We do not know where we are.

Sequester was not as bad as forecast.

Maybe that gives you some confidence.

It would be hard for them to make a decision based on the numbers today.

They have to figure out as well.

We are moments away from the fomc decision, 10 seconds or less.

Peter cook is inside the lock up.

He knows or the fed is going to say.

He is on the phone with us right now with breaking news.

No change in the bond buying program.

No change in the fed's on buying program.

There is new language on the economy and inflation.

The fed will continue to buy bonds at $85 billion a month.

It maintained guidance on future purchases.

No hint of tapering beyond what we have heard before.

The committee is prepared to reduce the pace of purchases to maintain appropriate accommodations if the outlook changes.

The committee will continue to take appropriate account of the cost of such purposes as well as the extent of progress toward the economic objectives.

With regard to the economy, information received since june suggests economic activity expanded at a modest pace during the first half of the year.

The statement goes on to say the committee expects with appropriate policy accommodation, economic growth will pick up and the unemployment rate will decline to levels consistent with the dual mandate.

The committee sees the downside risk as having diminished since the fall.

Additional language with regard to inflation.

The committee recognizes inflation consistently below the objective could pose risks to economic performance but anticipates it will move back to the objective in the medium- term.

Labor market conditions have shown improvement but the unemployment rate remains elevated.

The same language as before.

Household spending and fixed investment and dance.

The housing and sector has been advancing.

Fiscal policy is restoring economic growth.

The vote was not unanimous.

We had one dissenting.

She was concerned the high level of monetary accommodation increased the risk of future imbalances and could cause an increase in long-term inflation expectations.

That is peter cook who is in d.c., coming right out of the lock up at the fed.

More analysis of the decision coming in a second.

I will remind you heading into the latest announcement from the fed, stocks were trading near record highs.

Treasury yields were backing up.

Let's show you the market reaction.

Julie hyman is in the newsroom.

Perhaps we have not much different from where we were before.

We did have a bit of a move upward in the s&p 500. it has come back down.

We are where we were before the statement was out.

Investors are likely going to key in on the idea there is no firm idea of when tapering is going to happen, not mentioned in this statement.

That is all they want to know about, when the taper is going to happen.

Not getting a lot more information but not getting tapering that is imminent would appear to be relatively benign news for the market.

We tend to see stocks react in the following hours of a fed statement.

It does not happen right away as people try and analyze exactly what it means.

Over the past three years, the s&p 500 has averaged a gain of just 0.4 --. 04%. it is not unusual we may not see a move.

Treasuries are important.

The yield is 2.63%. the yield has come down on the 10-year.

The movement has been more dramatic than the stock market.

The yield is not changed on the two-year.

That is where it was before the statement came out.

That is julie hyman.

You have seen the headlines and market reaction.

We're going to take a deeper look at what we learned from the latest fed statement and what it means for investors and business.

Ira is here with me.

Tom keene and mike mckee.

You were looking for three key words in the statement.

"later this year" and you did not get it.

We were looking for an increase or decrease to be changed.

The fact the federal reserve did not change the word means they can asymmetric bias in their language.

That should be good for stocks and bonds.

Stocks are up 50. . we were up 10 before the announcement.

You have a range- bound call.

What does it signal that the 10- year moves a little bit?

The 5 has not taken the idea of a september taper off of the table.

The chairman wants to see more data before the get there.

I think he will get that.

We have two in claim numbers before the next meeting as well as revisions to gdp and other monthly data.

Take the language in this statement against the backdrop of economic data this morning.

Does it suggest tapering in september is more likely, less likely, or as likely as yesterday?

It would have to be as likely.

James bullard got his way.

They got a statement in there about inflation below their target.

Do you believe that is there to placate him?

This reaffirms their dual mandate.

It does.

As long as we see this movement in prices, if we get cip in august below what the fed wants to see, still going down and not up, that would call into question tapering after this statement.

If they start to see it move a different way, it is better.

The fed is expecting inflation to come up and growth to come up in the second half of the year after the sequestration damaged growth in the gdp report.

The thing i think is so important is the language has changed.

They say medium-term.

That is considered almost british economics.

We do not say that in canada, they do not say that either.

What is the medium term?

It means different things to different people.

Short term to the federal reserve is a year.

We think of them say medium- term to be one to three years.

Long term is beyond three years.

They do not want to react to the markets on a day-to-day basis.

They are doing as little damage as possible.

The fed does not want to react to data on a day-to-day basis.

Can they help it?

I think they can do it.

They have got to go on a day-to- day basis.

They do not have a choice.

It is the bond vigilantes' and the twitter vigilante's. i have been looking for one.

Where is he?

They have all but said changes to the current asset program is dependent on current data as well as the forecast.

Current data informs the forecast.

It is important each number that comes out.

Let's come back to this.

We have a lot more to talk about.

She does not agree with the optimists.

A much more cautious view on the bond market.

Ira and mory harris will join us coming up.

? the latest decision from the federal reserve, you might call it a non-decision.

Rates unchanged.

What did change slightly is the language in the statement.

That may or may not provide clues as to what the central bank will do about quantitative easing.

Here with me, tom keene and ira jersey.

We welcome maury harris and priya misra.

Tom, i will give this one to you.

This is wonderful.

We have two sharply different views.


harris is exceptionally optimistic about recovery, reaffirming 3% gdp today.

Bank of america and maryland has a different view.

Priya, let me start with you.

I see a lot of optimism on the gdp report and off of the fed meeting.

Is your team still going to affirm a cautious view on economic growth?

Yes, we are.

We are saying the fed is still data dependent.

We need to see substantially stronger growth in the second half of the year.

Our call for taping remains december, not september.

It does not matter whether it is september or december.

We're still bearish on bonds.

Despite the gdp revision, there is a disconnect between growth and the labor market.

The labor market is stronger than growth would imply.

We need 3.6% growth in the second half.

You do not look for 3.6% growth.

You do see easing, inflation, worries about consumption.

How do you get to such optimism given the language we saw in today's statement?

The language is a function of what they already saw.

What they will do it the september meeting is a function of what they will see.

We think the numbers will look better.

Today the gdp numbers reminded us the worst of the fiscal drag is probably behind us.

Monetary policy works with long lags.

Even if the fed start tapering in the fourth quarter, the banks have liquidity.

I expect them to continue to ease lending standards.

We're not hurt as much on exports as much as you might have expected given the slowdown in europe and asia.

That is because europe is stabilizing.

They are kind of saying the same thing.

Does it matter if the fed starts to bring in september or december?

It does not matter much to the market.

The treasury market is likely to modestly sell off either way.

The fed has to knowledge they will do this in advance.

In their statement, they have this metric bias of increase or decrease.

You have to think the market expectation will be pushed out later than september.

Ed says he looks for taping to go away.

One of the common features is the great housing market.

Chairman bernanke has talked about that a lot.

Priya, i think ubs and credit suisse have the same tone.

The housing market looks good.

How does the fed's statement and no worries about inflation, can you call for a continued housing boom even as rates come up?

What was interesting is the fed did bring up mortgage rates.

It is one fixed-income asset class.

Why would they bring that up?

I would agree we think the housing market is doing great.

The increase in mortgage rates is not a threat yet.

The fed is telling you if it affects housing market, they are data dependent.

If they were to start before the end of the year, the market will focus on the end of taping.

That depends on financial conditions more than the housing market.

The fed brought in to tell us we're watching the mortgage market and housing conditions.

We have mostly priced in tapir anyway regardless of whether it is in september or december.

You are going to see a taping.

The treasury market is telling you that.

The question now is the guidance and whether it is credible.

Is it possible saying we will not hike it until 2015 is credible to the market?

Maury harris, one thing we know for sure, you are old enough to remember when it was pike.

Now we're back to a dual mandate.

With this announcement today, did we go from jobs back to a more balanced analysis of jobs and price change?

Yes, you went a step in that direction.

You mentioned arthur burns.

In those days, they were worried about too much inflation.

Now they're worried about too little inflation.

Although they said inflation posed a risk, they also said they thought core inflation was going to pick up.

Somewhat concerned.

We lost maury harris.

That was the evil doom and gloom crew sending the signal to crush the optimists.

Let's go to priya.

Did bank of america and merrill lynch cause that?

This is a friendly environment.

It is.

Whether there was more concern over inflation and prices reflected in this statement, the tone overwhelmingly the past several weeks and months has been around job creation and the unemployment rate.

Given your bearish view, how many months of 200,000 plus job creation would it take to change your expectations for the economy and what they think is going on inside the committee?

A good question.

It is not just the 200,000 per month.

The participation rate stays here or does not increase, 200,000 will get you to 6.5% by the end of the year and next year.

That is why i agree with the point earlier.

The 6.5% threshold is tricky without bond buying.

The markets should be pricing it in.

If participation starts to rise, our view is it will a little bit, you need many more months of 200,000 plus to get to the 6.5%. the number of people looking for jobs is rising.

Let's go to the s&p. we have markets on the move.

The market is digesting the material as well.

You can see the s&p moving down 21 points.

That is a 70-point swing from the peak.

You see it in yields moving down.

Is that because of the new worry about disinflation?

It has got to be.

It may be.

You do not have wage growth.

We could have 200,000 job growth, but what if those are jobs in low income sectors where people are taking jobs because they have to and are not additive to the gross?

You are an optimist.

Even in your report, you have got inflation moving down.

Does chairman bernanke have to start looking at this inflation -- disinflation and inflation?

Topline inflation should be moving down after this month.

The core inflation, we think that will start digging up slightly.

The second half of the year may be running 1.75% at an annual rate.

Keep an eye on ranges.

There are several developments.

Average earnings were up in the month of june.

It is just a one- month change.

When you look at the employment cost index in the private sector in the second quarter, it was up 0.6% on the quarter.

There are some tentative stirrings the wages are starting to pick up some.

I want to continue on a point about wages.

Ira, you were saying it is not just about a number of jobs created because of the quality.

How long does it take for the quality of jobs to show a in prices?

It does take a while.

The combination we look at for labor income is the number of jobs created times the number -- the wages per hour and a number of hours worked.

If those three things are going up, in a perfect world, you will see in come to look quickly.

We are americans.

We like to spend.

We're spending 95% of our income.

For every $1 of wages, you have 95 cents more in spending.

That ultimately helps gdp a lot.

This is great to see the debate between maury harris, ira, an priya misra.

There are a difference of opinions.

Terrific insights helping us to understand what the committee have to say and what it will mean for quantitative easing.

I am more confused than before we started.

I am probably in the same camp.

I would like to thank our guests and my co-pilot, tom keene . when we return, we'll take a closer look at how markets are responding to the fed statement today.

The former goldman sachs vice president accused of fraud in connection with the multi- billion dollar investment loss.

His fate is hanging in the balance.

Have you heard about television e-commerce?

Remote-controlled shopping.

We will meet a company at the forefront of the new technology.

That is all ahead on "money moves." ? you are watching "money moves." i am erik schatzker.

Time to get you caught up on the markets.

Let's take you to olivia sterns in the newsroom.

Let's look at how markets are trading.

Stocks opened higher this morning.

Helped by better than expected gdp numbers showing the u.s. economy grew at 1.7% annualized rate look at what happened during the fed meeting, after the policy announcement.

The fed saying it does see the economy picking up from the current rate.

It does see inflation going back to the 2% target rate.

A sharp uptick on the s&p on those comments.

When stock we all have our eyes on is facebook.

It hit the ipo level earlier.

It has fallen.

More in a bit.

? this is "money moves." we focus on innovative alternative investments.

I am erik schatzker intra- deirdre bolton.

The federal court in downtown manhattan, the jury is deliberating in the trial of the former goldman sachs vice president.

Jurors are considering whether to find him liable for fraud in his role in the security because billions in losses for clients.

At closing arguments, his lawyer said he did nothing wrong and asked the jury to restore his reputation.

For the top headlines, let's take you to adam johnson in the newsroom.

The federal reserve will maintain the $85 billion of monthly bond purchases.

The fed says inflation persistently below the 2% goal could pose a risk to economic growth.

The latest reading of gdp earlier today shows growth came in at 1.7% in the second quarter.

That was well above the 1% gain.

The revised down the previous by the same amount.

This one be in numbers.

0.7%. pershing has taken nearly 10% stake to set the mood for a potential clash.

He says he will push for changes at the industrial gas producer.

According to a person familiar with the matter, the buyout group led by michael dell and silver lake is unlikely to pursue their sweetened bid of $13.50 a share after the computer maker's board refused to change the rules making it easier for them to win shareholder support.

Be sure you tune into "street smart" today.

We have a lot coming up on the show.

Spike lee on his latest venture.

Dan aykroyd on the 30th anniversary of "trading places." we look forward to seeing all of you.

I cannot wait for dan aykroyd.

Adam johnson will be back with "street smart." another headline we're falling, president obama , this appointment would make her the highest-ranking woman in the history of the treasury department.

The president plans to make the announcement in the coming weeks.

She was maryland's top financial regulator and a managing director at promontory financial group.

Now they need you on the investment world, the portfolio manager for the alternative investment fund that focuses on exploration deals with emerging managers.

He spoke with scarlet fu yesterday.

He plans opportunities with passionate people and ask him which is harder to find.

It is easier to find both.

It is easy to find a passionate people.

It is great to find opportunity.

What is hard is the execution.

Sometimes you find people good at equities.

They see opportunity in housing.

Sometimes you have to match the skill set with the passion and opportunity.

I think that is the challenge, getting the right balance of all the components.

How do you find those people when you are not in new york or connecticut?

There is a conception you have to be in the middle of it to jump on the opportunity.

I am in texas, probably one of the few.

You have to talk to folks.

You will find opportunities you may be missing some opportunities.

My opinion is there are a lot of people you are looking at deals.

It is saturated.

In texas, you can find opportunities.

There are less people looking for these opportunities.

You have to keep your eyes up and years on the ground.

You will find them.

Because you are outside the capital's of new york city or greenwich, conn., you must have a different perspective.

Tell us about that.

When you are not in the middle of it, you can find a signal in the noise.

That is from my engineering background.

You can get attuned to it easier.

In texas, we are in greater touch with energy.

A lot of people understand energy better from being there.

In texas, there is a misconception money only resides here.

You see what has happened throughout the state of texas.

I think there is lots of opportunity and very talented people.

Another thing we're starting to see is a lot of hedge fund managers moving there to open businesses because of the income tax situation.

No state income tax.

You could make more money working in front of your computer there.

What strategies do you see that may not have made it six months ago?

That is a great question.

I am starting to see more big data strategies.

I think it is very interesting.

We have not made investments in that space.

I have seen quite a few managers focused on and getting data from twitter -- aggregating data from twitter.

You are starting to see complex algorithms.

That is an interesting space.

I cannot say we have made any investments.

I am still learning about it.

You avoid the vc approach to making the right investments.

What do you not do?

Part of it is related to how we run the fund.

There are a lot of acceleration deals with hedge fund managers.

We tried to take a look at the people and the opportunity and make sure we think this team can build a sustainable business and generate returns and the positive forces in the world of finance.

When we do these acceleration is, we are focused on making every deal is the right deal and a great opportunity for our stockholders.

If we were to use a baseball metaphor, you take yourfewer bats?

We would swing west.

We have the greatest asset in the financial world, which is patience.

It is one of the least exercised assets.

We can be patient and wait for the right opportunities.

We can knock it out of the part.

That was darsh singh.

Will focus on the future of the television industry.

Later, the ceo and founder of the delivery agent.

Get your remote controls ready.

We will be back in a couple of minutes.

Stay with "money moves." ? for the first time since it went public last may, shares climbed above the initial offering price of $38. i am talking about may of 2012. the stock has dipped back below $38. it did hit a 52-week high.

All this comes as a report from nielsen shows facebook is attracting more 18 to 24-year- olds during prime time viewing than any of the major networks.

Bloomberg has learned the social media companies and plans to sell advertising.

This shook things up yesterday.

Not everybody is familiar with your reporting.

Tell us more about what you understand facebook has in mind.

Facebook is not talking about it.

They are not talking publicly.

They are planning to try to sell 15-second commercial advertising.

The fact they will try to do that shows they want to go after tv advertising dollars.

Tv still commands the biggest advertising budgets.

The internet is second to that.

Facebook is a small part.

Tv advertising has been resilience.

They control the most ad dollars.

They will spend about $2 on tv for every $1 on the internet.

All of the silicon valley's want to get more of its.

Facebook 's mission is to put up advertising.

We can run them on our news feed.

We will not inundate our users, but you will get a lot of value.

I am one of many people who have questions about what the user experience is going to be like.

Now that he had broken the story and had a chance to talk to people, what are they telling you about the facebook prospects in the advertising market and the delicate balancing act between maintaining the user experience and the destruction television ads might cause?

You have reactions from one extreme to the other.

People are worried about the experience.

That could turn people away.

On the other end, marketers are excited.

They cannot wait to spend the dollars to move some tv ad budget over to facebook.

If that is when to happen, it will hurt companies like comcast.

Cbs reported earnings after the bell.

In directly hurting companies like time warner cable, reporting tomorrow morning.

Tell me about the traditional television landscape right now.

It seems like everybody is doing well.

Everyone seems to be doing well.

Tv is getting more fees from cable and satellite providers.

They are doing all right.

They are also getting advertising.

Advertising goes up and down.

It is cyclical.

Facebook could hurt them.

Right now, tv still has the biggest years in the shortest time.

Until that changes, they will still be fine.

When we see the numbers from cbs this afternoon, to what degree will they or not help the company in its effort to stick it to time warner cable and get the dollars it is hunting for and potentially live up to its threat of blacking out viewers on friday?

They will report earnings.

They will want to say what is great.

They do not want to say the fees are so great because they are in the middle of their fight with time warner cable.

You just older investors you are getting a lot in transmission fees.

They will say is good but could be better.

Advertising might be down.

We do not know.

Cbs is the most watched network.

If time warner cable numbers tomorrow are crummy, -- will they be under investor pressure to hold out?

Investors will look at thought.

Good to see you.

Edmond lee with us on "money moves." when we come back, we will stay on the topic of disruption in the television industry.

We will talk about a new purchasing app for your smart tv.

We will be back in a couple.

? i am erik schatzker.

You are watching "money moves." this app allows you to buy what you see on tv shows and as.

Point your remote control at the product on the screen.

No need to get off the couch or go to

The ceo is our guest today on "money moves." am i over-selling this?

I do not think so.

The one thing you may be overdone selling is it is the brainchild of mine.

We have an office full of people behind it.

If i have my tv enabled, all i have to do is point more remote at what i see and i can buy it?

. is correct.

We recently rolled out a service with samsung on their smart televisions that enable them.

You use your remote control to complete a transaction for a product you see.

If i am a health care professional, i should be televised -- terrified.

This spells obesity.

We sell workout products.

We can hook you up with a lot.

Let's talk about the business.

You have shop tv.

The delivery agent has been in the business since 2005. we have heard about the fits and starts the industry has gone through in the last decade.

Since 2005, we've been enabling consumers to buy products seen on tv and now from the remote control.

The remote control in your opinion is the holy grail?

Eventually all i will have to do is point at it with my finger.

That is a great question.

Mobile app makes over 20% of our revenue.

Consumers are using terrapins and smartphones while watching.

That is a huge thing for us.

Is it in the living room?

18-25-year olds do not watch appointment television.

Will still focus on people watching television five hours a day.

We hear the pundits say it is going.

We do think the remote control takes for action out of the process.

That is the key.

Who are your partners on the e-commerce side?

Who is making sure it gets to my front door?

We have partner with over 250 shippers who are retailers and mergers -- merchants.

Why not make a one-stop shop and work with amazon?

I have got to watch the answer.

I think we would pitch in sweetheart -- would potentially talk with amazon.

Most of our partners prefer to do it differently.

They have figured out the fulfillment in better than anyone else.

You can sign up for amazon prime.

I can click all day long.

That is a good point.

Most of the rest of the brands in the world have to develop in terms of their own logistics and will take a vintage of the platforms.

What kinds of shows can i watch and buy from?

We enable 55 networks and 500 shows.

"duck dynasty" we have a chair from "game of thrones " that you can buy.

We felt commerce would change.

If we were well-positioned as the technologies converge, we would be in a prime spot to turn this into a big business.

You are still a young company.

Eight years old.

We have 170 people.

We will do overwintered million in revenue this year.

-- we will do over $100 million in revenue this year.

. most of it is coming from webb, mobile, and television.

We enable transactions from twitter and facebook.

We anticipate full-year profitability in 2015. we wish you luck.

The ceo of delivery agents.

A remarkable revolutionary product.

Next, stocks moving ahead of the closing bell.

We will check the markets after the break here on "money moves." ? tomorrow we will continue the conversation about monetizing new media.

We will hear from the co-founder of the company power in communications platforms and the alternative investments seeing popularity soar.

Commercial real estate, we will go hunting for opportunities.

He will want to see it here on "money moves." time to go on the markets.

Here is olivia sterns.

Let's take a look it home markets are trading.

U.s. equities are rising across the board.

They were rising after we got the better than expected gdp figures.

Take a look.

The moves on the s&p after the fed meeting.

Investors clearly liking what they heard of the fed saying economic growth in the u.s. will pick up from its current pace.

A couple of stocks are want to point out.

This is the biggest leader on the s&p today.

The company topping estimates.

It was raised to outperform.

The judge ruled against a cap on debit card transaction fees.

It is time for today's sector report.

Podcast producers are under heavy pressure after they said they would end production restrictions.

What impact will this have on the $20 billion market?

Joining us to discuss this is the global industries chemistries analyst.

Explain to us what happened.

The world's biggest pot-producer yesterday seeming to break ranks saying prices could fall 25%? that is right.

It is part of the group that has controlled about 30% of global potash supply.

They said they would prioritize volume over price.

It was a major shock to an industry that has tightly controlled the supply.

The other major group that controls a similar amount is part of canada.

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


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