Michael Dell's Deal: Money Moves (07/05)

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July 5 (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)

A full 72 hours before other fans can get a hold of the album.

Magna carter, holy grail.

Part of the relationship with the wrapper --rapper.

Owners of galaxy s3, s4 -- they can all claim the album through a freeapp and he gives them the 72 hour head start which is really important if you are a fan of jay-z's music.

Such an interesting new world.

A great deal that speaks to that.

I don't think billboard was sure how to make -- can we count these album sales?

But they are listening to the music now, right?

For many people say this is a huge coup as far as samsung.

It helps to raise its profile and bring in this the younger, hipper demographic that the companies are looking for.

Jon, thanks very much.

We will turn the page and kick off money move -- "money moves." we will start with a focus on dell, michael dell refusing to raise his did to take the pc maker private, along with silverlight.

Carl icahn making a competing bid for the company.

We have been with the story from the beginning.

Michael dell, silverlake , putting a line in the sand.

Why are they not willing to go higher?

They are saying that despite what carl icahn is telling you, the company is not worth more than 1365. carl icon is putting too much of a multiplier on non-pc businesses.

The company's own consultants are overestimating how much costs can be taken out of this business.

In addition, the company is missing the 15% return on new business.

The executives said they were making them about a year ago.

For all of these reasons, michael dell and silverlake to leave they are paying fair price for this company.

We know there is an important shareholder vote coming up.

This is important, strategic timing, that we learn about their unlikely miss to put a higher number on the table.

Essentially, they are signaling to short-term shareholders, if you want to take your money off the table, you better vote in favor of this deal on july 18, because we will not budge on price.

A lot of short-term shareholders were waiting to see what would happen, if the vote would be turned down.

Her halves they would see a bump even after that.

They are removing that uncertainty.

We saw the stock react as a result.

If shareholders say no, what does that mean for carl icon?

It will be difficult for carl icahn to implement his plan.

He is telling shareholders to vote down the deal with michael dell, vote in his board of directors, and he will give a dividend payment.

That will be difficult to implement, because michael dell owns 15% of the company.

He is obviously going to be a barrier to getting that done.

We will have to see how that plays out.

An unusual situation.

From a big pc brand to a big change for numerous hedge funds, the s.e.c. is finally on the verge of approving regulations that will let them start advertising to potential investors.

Some consumer groups say the change may lead to fraud.

Hans nichols, following the story for us.

Does this mean we see the s.e.c. capital tennis tournament?

I suppose only if all the spectators meet the criteria for high net investors.

I think it is over $200,000 to invest.

Really rich tennis fans, it will work.

If this rule is adopted, it will allow hedge funds and other firms to advertise for private placements with sophisticated investors.

This would make it easier for companies looking to do private stock offerings to pitch investors.

Commissioner mary jo white said during her confirmation hearing that clarifying these rules is required by congress.

With this vote scheduled, it it appears she is making good on this promise.

The publicans wanted the ban lifted immediately.

Some democrats disagreed, leading to the delay.

One solution is to add more proposed rules, including one that would prevent felons from pitching rules, meant to satisfy consumer groups.

Lightly regulated investment funds raised $835 billion in 2011. the question is, will there be an explosion like the initial 2120 -2012 job steel wanted?

We will be talking about this next week as well.

The latest on a potential, seems like arriving, change in advertising from hedge funds.

From big changes for hedge funds to big changes in the jobs number.

In june, 195,000 new jobs added to the economy, more than forecast.

Upward revisions in previous months' data as well, and rising average earnings.

It was not just the headline numbers.

Almost all of the numbers told you the economy is getting a lot better.

Hourly earnings was the first thing that caught my eye after the headline.

It comes on a work week that was unchanged, so it does suggest we are making more money and can continue to spend.

Even though the unemployment did not change, the labor force participation rate was positive.

That works out the number of people in the labor force.

When that rises, that is what the fed wants to see.

What does it mean as far as indications of people who have given up looking for a job?

There are not as many people giving up as people coming into the labor force who have not been able to find a job.

Many people did not find full- time work.

Part of that may be due to the sequester.

Federal workers work only part- time, or people hired by restaurants afraid of obama care.

That may work itself out.

The good news is, the number of people voluntarily quitting their jobs rose to a five-year high.

People feel it is a better time, and they can get jobs if they leave.

Certainly an indication of confidence.

The jobs report is part of why stocks are higher right now.

Dominic chu has more.

Let us talk about the stock market, because it was an up and down session.

We were briefly negative on the s&p 500 and the dow around 10:30 this morning, but we have ratcheted back towards session highs for the major industries.

Bullishness on the back of the better jobs number.

Ten-year yields, up to 2.71%, a very sharp move higher for interest rates.

One other macro factor i want to show you is the gold trade.

Gold down three percent in today's trading.

That gets us to one of our big movers, a bigger gold miner.

Those shares are down about six percent so far today.

Gold miners are following gold prices to the downside.

Home builders are also feeling a bit of pain today, because rising interest rates may make home affordability little less attainable.

They are taking it pretty hard on the downside, down about 5.2%. suntrust banks.

When more people are working, the economy is going higher, some regional banks in the u.s. will outperform, the cause the more people are employed, the more lending they expand.

Watch all the big regional banks in the u.s.. they are seeing positive signs on the heels of the better-than- expected jobs number.

Dominic chu, with the latest on trade from our data center.

Elon musk wants to sell his green electric cars directly to consumers, without dealerships as middlemen.

The problem is , this is a state- by-state and not a federal issue.

We will tell you what it means for the billionaire entrepreneur.

Later, a tequila backed by serious star power, selling in all 50 states in january.

A brand backed by george clooney, and how it is taking on big liquor companies.

? welcome back to "money moves ." elon musk wants to sell his electric cars, tesla, directly to you, bypassing franchise dealerships.

The problem?

Car sales are regulated state- by-state, and his plan is illegal in many.

It is unclear whether the federal government can step in.

I know 100,000 people have signed a petition on the white house website.

That is enough signatures to normally trigger a response from the president.

What happens next?

So far, over 110,000 people as of today signed a petition asking the white house to weigh in on this issue.

The white house, because they got at least 100 thousand signatures, has to give them a response.

They do not have to change the situation.

It is a state-by-state issue.

But it tells us there are people interested in tesla being able to sell directly to consumers.

It is a state-by-state issue , so even if the white house response, what can happen?

The white house has a bully pulpit if they care to use it, which at this point it is not likely they will.

This petition gives the issue attention, something auto dealers probably do not want.

Automobile dealers are the middlemen between automakers and consumers.

They, of course, say this is about competition, and if tesla is allowed to sell to consumers, why couldn't afford or any bigger automaker?

This issue is bigger than tesla.

As far as the dealers and why they care, obviously their whole business model is being challenged.

If ford or any other automaker goes down this road, dealerships do not need to exist anymore.


This would be their entire bread and butter.

Auto dealers have a lot at stake, and tesla is allowed in many states to sell directly to consumers, but in other states, they cannot do that.

They have showrooms, but they cannot close deals or offer test drives.

The automakers want to protect their business and keep it the way it is.

Are there certain states that stick in your mind, that have more strict laws than others?

Texas is a big one.

In the washington area, there is a show room in the district of columbia that does great business because virginia does not allow direct sales to consumers.

People from the northern virginia suburbs, into the district show room to close their deals.

A larger picture -- it seems there are many businesses, many industries, ripe for disruption, and this is the latest example.

Thank you very much.

We have a break to take.

When we come back, thousands of baby boomers are retiring every day.

There are some real estate ways that factor into this movement.

We will bring you a short list of the top 15 retirement spots , and show you what that could mean for real estate values there.

? an estimated 10,000 baby boomers are retiring every day, and many are moving to warmer weather cities.

There are big opportunities for real estate investors, who are snapping up properties in retirement havens.

Realty trac has a top 15 retirement hotspot list.

Darren blomquist is here with us.

He is vice president at realty trac.

We are going to put this map backed up on the screen so viewers can follow along.

It is basically the 15 hotspots.

I am surprised with some of them in oregon, new jersey, new york, and pennsylvania.

How do you explain the not so sunny ones?

We were looking not based on the weather in those areas, but based on where there are a high percentage of retirees.

We limited to market cities where at least 1/3 of the population is 65 or older.

I would suspect when you are looking at east hampton, new york, or florence, oregon, you are talking mostly about retirees who are from that region, from that market.

That is attracting retirees from all over the country, florida.

That is where you see most of the population moving.

What does this mean as far as price appreciation?

What kind of percentages did you track?

One of the criteria was markets that had strong home price appreciation.

Some of these markets, especially florida, is very strong in this count.

Punter gordo, florida, a 59% increase, year-over-year, in home prices.

The 59% is the discount you can get on a home in punta gorda, florida.

We are talking from -- the city in the top spot had a 31% increase.

We saw anything from eight percent year-over-year up to the 31% increase in home prices in these markets.

That is one of the strengths.

Home prices have clearly bottomed out and are on their way up.

On top of it , all these markets have a good return on rental homes.

If you are going to buy a home as a rental property, even if you are not retiring this year or next year, but maybe down the road in 10 or 15 years, those rental properties will offer a good return on your investment in the meantime.

When you are interviewing and doing this kind of research, how much is cost of living the equation?

We definitely looked at that as well, the cost of living is a return for retirees.

Some of these markets have a higher cost of living, and that is a consideration if you are going to invest in those markets.

You have to realize you will probably have a more limited pool of buyers or renters as an investor.

If you are looking at seal beach, california, it has one of the higher cost of living.

Naples, florida has a higher cost of living than many of the markets in florida.

East hampton, in new york, has the highest cost of living of any of those markets.

That is a concern if you are an investor.

For a safer play, you probably want to stick to the markets where the cost of living is closer to the national average.

Florence, oregon, surprisingly, was the only market among bees that had a cost-of-living below the national average.

As far as these trends continuing, does it seem like this time next year, the data -- do you expect it to look more or less the same?

I expect it to look similar next year.

Now is a good time to buy in many markets across the country, what specifically markets that are attracting retirees.

They are in very good shape, going forward, because you have that increasing population, the strong foundation for growth over the next 10 or 15 years as the baby boomers retire in greater numbers.

Thank you for joining us from realty trac.

Joining us from irvine, california.

When we come back, the new space race is in focus , mining asteroids for precious metals.

It may sound like science fiction, but there are companies making big bets on a galactic gold rush.

In the meantime, we want to hear your comments, your questions, any you have for us or our guests.

Send them in by e-mail , or you can follow me on twitter and send in questions that way.

? nasa is counting on private investors to protect the planet from stray asteroids.

Many large asteroids have already been found and mapped, but there are still unknown objects in space that can cause problems here on earth.

Matt miller took a look at one company that is trying to make money off asteroids by drilling into them.

It sounds like science fiction.

250 feet to go.

Sending minors into space to drill an asteroid, as to pick it in "armageddon." deep space industries want to turn sci-fi into reality.

Their objective -- to harvest gold, nickel, platinum, and rare earth metals used in electronics, an idea which is not as far-fetched as it sounds.

How do we harness resources on different worlds, and how do we shield astronauts from radiation on longer missions?

Deep space is not the only company trying to find answers.

Planetary resources is backed i larry page and eric schmidt, as well as james cameron.

But deep space things it has the advantage.

We will be the gas station, the oasis for air and water, and the building supply center for the frontier.

According to nasa, more than 9000 asteroids have been identified near earth.

But how do you actually mine one of these big space rocks?

Step one, collect and test rubble from the asteroid.

If it is worthy of mining, a space lasso will take it to an orbiting lab.

It will be harvested for precious metals and gases.

One problem is the price.

Mining for precious metals in space could lower the value of those on planet earth.

These risks are not enough to deter deep space industries, who think this could lead to astronomical profit.

Matt miller with a little bit more on mining in asteroids.

When we come back, we have a quick right, but the companies accepted into the techstars class of this year went through a tough selection process.

? welcome back.

We turn our focus to alternative assets, places investors are putting their money outside of traditional stocks and bonds.

The closely-watched jobs data came in higher than forecast in june, 100 95,000 jobs added to the economy.

The unemployment rate remained steady, at 7.6%. the report suggests the economy is weathering the budget cuts.

Jobs data sent treasury prices down and yields up.

The 10 year note gained 21 basis points, the highest it has been since august 2011. the s&p 500 is up and heading toward its second straight weekly gain.

The national weather service says temperatures.

Above 90 degrees in new york city and the east coast this weekend.

It is even worse on the west coast.

Temperatures in southern california have topped 100 degrees every day since june 27. jobs data is contributing to the game, but we are also about to kick off another earning season.

Dominic chu has more.

Let us talk about what is going to happen next week.

We unofficially kick off earnings season, with alcoa reporting on monday after the closing bell.

During the first week, we talk about the idea that these companies set the tone for what earning season will be like.

Whether or not you believe that, a lot of traders will look to see whether the early reads are positive.

Seven s&p 500 companies will report their earnings through the course of next week, including big names like yum!

Brands and jpmorgan and wells fargo.

Financial companies, the big banks and insurance companies, will report over the course of the next three weeks.

Very early in the season, we will get a read on how the banks and insurance companies are doing from an earnings perspective.

Over the past year, s&p 500 financial stocks have been the leaders of this market.

You can see they are up almost 36% over the past year, handily beating the s&p 500, and beating the worst performing utility stocks.

This chart shows you a ratio of the number of negative earnings pre-announcements by companies to every positive.

The number you see on the positive is 6.8. that means there are about seven negative earnings pre- announcements for every positive earnings pre-announcements among s&p 500 companies.

That is the highest rate of negative pre-announcements we have seen since around the time of the financial crisis.

We are perhaps looking for an earnings season that may not be as robust as it has been in the past.

You mentioned alcoa.

What are traders expecting?

It may not have the same economic bellwether effect we have seen in the past.

Alcoa may not even set the tone.

But it is going to be one to watch.

Over the past 10 earnings reports, this stock has fallen on seven of the last 10. options traders are currently looking for a move of plus or minus four percent of this stock after this report comes out.

We are looking for about six cents of earnings on around 5.8 alien dollars of sales.

This is a stock that underperformed the overall market over the last year, mainly because of things like slumping alumina him prices and the global demand and economic picture.

What you want to key on for the early going is how alcoa reports may not have as much of a ripple effect on the market as it used to have, but financials, including j.p. morgan and wells fargo, will be key, because they will set the tone for the big bank earnings numbers.

Dominic chu, joining us from the newsroom.

When we come back, we are going to introduce you to some of the hottest startup companies in new york.

They won spots in the techstars accelerator this year.

Statistically, it is harder to get into that harvard.

? welcome back.

Techstars is a famous local accelerator, part of what is powering the driving new york city startup scene.

Mentors, seed investors, and venture capitalists are paired with promising new companies.

Here are some of the standout members of this year have class.

We are the cofounders of plated.

You come to our website.

Each week, we have a different menu.

It changes every monday.

There are five options you can choose from.

Meals range from chicken cacciatore to panseared tuna.

You choose what you want, and we send you everything you need, in exactly the right proportion.

We make as many people cook as possible in the context of a busy modern life, by delivering all the ingredients and making it fun and easy to be part of the cooking, the social, sharing part, and eating the good food.

Taking out the difficulty and the hassle of the shopping and recipe selection, and the excess food you have left over.

We met at harvard business school in 2008. we through disk -- through dinner parties together, cooked a time, and enjoy the process of playing adult and putting good food into our bodies.

We went our separate ways.

When we got back to new york, we had the same dilemma.

It is hard to cook.

The process here is broken.

We see this as the opportunity of a generation to impact the way americans eat, to make it possible to cook more, to add that really human part of life back into a busy modern lifestyle.

We see a multi-hundred billion dollar market opportunity here.

My name is andrew.

I am the cofounder of a mobile application to help people understand what is happening in their city, with a heavy emphasis on the social angle, which friends you might go out with.

We entered three months ago with a concert out.

Through the program, we were pushed to figure out what makes us different and unique.

It is where we circled in on the social discovery aspect.

Concerts are inherently social.

People go with friends.

Nobody is tackling the part of finding the right people to go with, making it easy to contact them and get them engaged.

It turned our focus to building something that solves a serious problem people have today.

We have already landed a partnership with live nation to help do some of the promotion around their advance and sell tickets.

We are hoping to work with them as we expand across the country.

We are the founders of face street, a website that allows people to find a great church near them, to engage with that community, to donate to that community.

So far, about 12,000 churches across america use the website, all 50 states, everything from catholic churches, presbyterian churches, small churches, big churches.

There is a real sense on the part of church leaders that they need to be doing things online.

More than half of the churches in the country have they spoke pages.

There is a lot of work being done to try to use technology.

There are not companies helping to do it well.

My mom was the secretary of our church.

My dad was the carpenter.

I know the space from the inside.

When you think of the faith company, you are going to think of face street.

-- faith street.

We are the cofounders of trigger mail.

We are a service that helps e- commerce companies send something called it triggered e- mail to customers.

If you look at the majority of e-mail sent out by retailers, they are impersonal.

This taylor's e-mails based on what you are interested in.

They generate revenue for these companies.

We started at the same school.

I wanted to get the full american college experience.

I moved to iowa state will stop i lived in minneapolis for a wild, then moved to boston in 2006, and found out through mutual friends that he was also in boston.

I kept trying to get him to leave big companies and do a startup.

We built a social game together, and that was the genesis.

There are a surprising number of non-tech people here, so that was surprising.

Just in time for a summer weekend, we will tell you about a new premium brand tequila with sirius star backing.

George clooney has created a luxury liquor that is taking on big conglomerates.

Jose cuervo is the best- selling tequila in the world, but arguably not the tastiest.

A new brand has serious star power behind it.

George clooney and randy gerber are the backers.

I went to malibu and spoke with randy.

He told me how they came up with the idea.

I was spending a lot of time in mexico with my friend george, and we were drinking a lot of tequila.

At the time, we were just about to start building homes for ourselves.

Are these on adjoining lots?

One piece of property, we built two homes.

We thought, how great would it he if we had our own house tequila?

We would go to different restaurants, different hotels and bars.

Different bartenders would turn us on to their favorite tequila.

Some were very good, but there was nothing perfect for us, so we decided to come up with our own.

We did our research, met with different distilleries in mexico, and chose one and said, this is the profile we want.

Can you do it?

How did the name come about?

It is the name of our homes in combo.

-- cabo.

It was our house tequila.

What changed your mind, if it was originally for private consumption for friends and family?

What made you decide to make it available to the public?

We had been drinking it for four or five years, just for ourselves and our friends to enjoy.

The distillery called us one day and said, either you are drinking way too much, or you are selling it.

If you are selling it, you need to get licensed and do it the right way.

We said we are drinking it and our friends are drinking it.

We were giving it to friends.

To continue producing our own tequila, we had to get licensed.

We said, let's launch it to the public, and then everyone can enjoy it all stop there was a video you produced with george clooney.

It is his production crew.

It basically went viral on youtube, and it is really funny.

What's going on?

? ? did you guys come up with this idea together?

We actually did, but it was based partly on a true story.

George and i were here and had a bottle of our reposadl.

-- reposado.

George said, i am not going to take my motorcycle tonight.

I will state that yours.

He decided to stay at the main house, in the guest room.

About 2:00 in the morning, my wife woke up, thinking that i am either not home or am in one of the other rooms.

She goes into the guest room and gets into bed, and sees what she thinks is me, with my clothes on, face down.

She is like, get undressed.

With that, george says, i am so sorry.

He thought he had stumbled into our room.

The next morning, we laughed about it.

It was very funny.

It was kind of the campaign.

Wake up with cindy or george.

Anytime you can do any kind of marketing, where it surprises people a little bit, and also makes people laugh, that is a home run.

Do you think, as far as social media goes -- this thing went viral.

Is that more powerful than traditional marketing, had you gone in your suit and sat and talked with advertisers about the best way to get the word out about the product?

For us, everything about this is real.

There is nothing made up.

The design of the bottle -- our signatures are on it.

Every batch, we will sign, to make sure it is what it is supposed to be.

And you taste it first.

They are numbered, and we sign them.


This was not for the public.

It was for us.

The bottle design was what the distillery was sending our samples in four years.

We were in plastic.

We have made it glass, but it is the same design.

We do not have to make anything.

We know we have a great product we love and drink.

We do not need marketing guys to come up with a campaign for us.

It takes one taste, and people have been drinking it.

That was my interview with restauranteur randy gruber.

? welcome back to "money moves turco time for our daily buzzword.

Bob rice is here.

He is also the author of the alternative answer.

There flatten her is our -- flattener is our term.

How is this term linked to the significant moves we have seen in the bond market?

There -- bear flattener relates to the yield curve, and typically it has a nice upward slope.

It involves a flattening of the yield curve, and the bear part indicates that generally people are not happy about the way it is flattening.

Essentially there is a before and after vision.

Right, the shorter-term rate starts to go up.

If they rise.

The longer-term rates are flattening.

Rising short-term rates are usually not great for stocks or the stock rocket, and not great for businesses.

It makes borrowing more expensive.

Precisely right.

That is why we call this a bear flattener.

There is a bowl -- bull flattener because long-term rates fall.

That would also flatten the curve in a way that has positive implications because obviously interest rates are lower overall.

Of seven-year yields are higher, what does this all in?

Pre-k's this is happening -- what does this all mean quest -- what does this all mean?

The bond market moves were dramatic.

The five-year yield was way up, more than the seven-year among the seven-year was up more than the 10-year, and the 10 more than the 30-year.

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


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