New World Order for Media: Money Moves (07/17)

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July 17 (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)

Advanced anything in terms of us getting more detail.

Some said it was one of the most boring appearances by a fed chairman.

Could be exactly what they wanted at the fed.

There is not a a lot extra.

We will hear from him tomorrow and from of the senate.

We will see if he is on his way out.

We will be back in 30 seconds.

Welcome to "money moves" where we focus on alternative assets.

We will show you what is going on in hedge fund, private equity, real estate and more.

Today, apple and google want to change the way you watch tv.

Mobile rules the world.

How much time we spend on devices is changing the investment landscape.

Internet security, plus incentives for individuals and businesses.

Ben bernanke delivered his semiannual testimony.

Peter cook with me now.

He says that bond buying is not a preset.

In the beige book, what stuck out to you?

Let me walk you through the beige book.

A pretty rosy outlook from this latest survey of the 12 fed restricts.

Overall economic activity continued at a modest to moderate pace.

The beige book says manufacturing increased in most districts.

Most districts noted that overall consumer spending increased and residential real estate and construction activity increased in all reporting districts.

A pretty rosy assessment of the economy.

Now, to the chairman's visit where he was a little bit more apprehensive about the u.s. economy . the stimulus might continue in what would be the semi annual testimony in front of the financial services committee.

Bernanke psyching a more dovish tone.

-- bernanke indicating a more dovish tone.

This is only if economic forecasts hold up.

We will be responding to the data.

If the data is stronger than we expect, we will move more quickly.

If it does not meet expectation that we have about where the economy is going, then we would delay that process or even potentially increase purchases for a time.

He continued to stress that tapering does not mean tightening.

He was pushed by republicans on the panel to defend the monetary policy, to defend the balance sheet he has said that the fed actions have bolstered the u.s. economy.

The overhaul of fannie mae and freddie mac by and large.

Bernanke dodged most of those questions.

There was not a huge focus on monetary policy.

A lot of it had to do with monetary regulation.

Thank you.

Our chief washington correspondent, peter cook.

From macro issues to the quest for cash.

The largest te firm by assets is launching a mutual fund that will invest in hedge funds.

The idea is to attract from individual investors.

We bring in jason kelly thomas our -- jason kelly, our p.e. guru.

Blackstone is not even first to this party on trying to get individual money versus institutional money.

Carlyle did it.

What is going on?

As one manager said, the 800 pound gorilla is in the room.

Blackstone has thought about this for several years.

They are the biggest of this new breed of alternative asset managers.

They are not just private equity anymore.

They are going after the individual investor in a meaningful way.

They have $200 billion in assets.

You can always have more.

Steve schwarzman has said that this will keep growing and growing and growing.

Remember, 401k's have about 3.5 trillion in them.

The individual investors looking for a higher return.

That might be too big of a chunk of change were these firms to want to leave on the sidelines.

What they see is a hunger for this type of new product.

People are saying i'm not sure where my 401(k) and it up.

Hedge funds and private equity has historically outperformed.

This liquid alternative question is a big one.

The idea here is basically as an individual investor, a small investor, we are going to get access to a hedge fund, but in a more liquid way because it is through a mutual fund and also i presume for lower fees.

Yes, for lower fees than you would get an better access than you could get as an individual investor.

This is a mutual fund type vehicle.

You can click on your 401(k) and say, i want to do this.

Blackstone is out there picking managers.

You have cerberus in the lineup.

Chatham, that you know , giving access to individual investors.

Always glad to see you.

Thank you so much.

Our in-house expert, jason kelly.

From pe firms looking for new customers and new cash to the new world order in media, apple and google want to change the way you watch tv.

We are joined now from los angeles with more.

You reported earlier that google is holding discussions with media companies to introduce their own service.

What is the idea?

Google, after dominating smart phones and tablets and web searches looking to break into people's living rooms with a pay-tv service.

They are in talks with major media companies trying to get licenses for contents so that they can get their own tv service.

So, google is not the only big tech company thinking about this.

Intel is trying to develop the same kind of system, right?

Correct.

Like intel, google has developed a set top rocks that people could buy either online or through a retailer like best buy,, home, hooked it up, and be able to watch tv at home.

Take that programming on the road with them more conveniently.

It would be accessible on cell phones, laptops, tablets.

They can create this whole ecosystem based around that service.

What does this mean for media as we know it, for the networks, for cable?

Well, every time a new entrant comes into this phase, these are deep-pocketed companies with a lot of cash and it shows the content is still king and many ways.

They need this content to develop new products and reach new consumers.

It is a good sign for content producers.

A good sign for content producers.

Thank you very much.

When we come back, you are watching more video, getting other content from your mobile phone.

Find out how this is changing the way that the firm invests.

Also helping small businesses provide the same point-of-sale experience as larger companies do.

We will introduce you to an entrepreneur who is leveling the e-commerce playing field.

An internet security start up company.

She will tell you how she is protecting your company's most sensitive information.

? billionaire john paulson indicating that t-mobile usa is a takeover target.

Sprint is a possible candidate.

This comes from a letter to investors.

He became a 2.3% stakeholder for t-mobile metro.

He specializes in companies undergoing mergers.

We will focus on venture capital investing.

We are living in a mobile world.

7 billion people in the world have mobile for schools -- have mobile subscriptions.

Bob goodman is here now . he says all of this is changing the way he invests.

Very glad to see you.

Thank you for having me.

I know you are on the hunt for those that are looking to solve the mobile data crunch issues.

What are you seeing that is most exciting?

A lot of the stuff that we are dressing are helping the carriers like verizon, t-mobile, at&t provide fast connections.

I don't know if you have made a call and the call is dropped.

Often.

Or you watch a video and it freeze frames.

Often.

The carriers need to invest . they need to increase this.

What have you seen to make the experience less frustrating.

We have one company that invested in, unfortunately, it got sold very quickly.

It was a pretty substantial piece of innovation.

That company made software to enable the networks to in real time make adjustments so that if the site was congested in one area, they created room for you at another site.

This dramatically reduced dropped calls.

This is not in our portfolio anymore.

We invested in a company.

This is back in the back of the infrastructure.

It is really powerful for the carriers.

What a firm does is behind the base stations, when you make a phone call, it connects to a radio.

Behind that radio is a whole bunch of proprietary hardware, complicated boxes made by people like ericsson, nortel.

What this company does is virtualize it and it can run on any kind of hardware.

So, the cloud.

The cloud.

A mobile world which has been supported by proprietary hardware, it is moving to the cloud.

This accounts for 25% of search traffic.

Is there anything in your portfolio companies that address this and the fact that almost everyone says that this is growing?

Again, it is kind of boring from the point of view of the consumer.

We have a company -- well, boring until you're happy that your video is launched.

Your phone is going to download a new software update.

You are getting your e-mail, you are watching the video, you are doing the browsing session.

When you want to browse a website, you want to pop up right away with the information that you need.

If there is software or other people are downloading an update to the software, they are taking the capacity from the network and making is who you cannot watch your browser session.

There is no intelligence available.

It will determine whether the download can wait while you watch her video.

Is that done by algorithm?

This sits in the base station of the network.

You have this tech focus but you also have a lot of application folks.

I'm. what you are seeing in the mobile ad sector.

This should be similar to outside advertising and the evolution that that went through about a decade ago.

It has actually been slow to get off the ground.

Right now, people spend eight percent or nine percent of their time on the phone and it is maybe only a half or one percent of the ads spent.

We are seeing that shift, we are seeing more people, more dollars going into advertising.

The large companies saying, this year i'm going to make a $100 million commitment.

We have seen that in a big way.

I think it is going great.

Do you feel like the trajectory is more clear-cut?

Yes.

We first got involved with this.

In 2006, we were the investors in millennial media.

They have competitors like google and facebook.

We see the company's growing quite well.

Thank you very much for stopping by.

We have a quick break to take, but when we come back, a new business that is helping small ones compete with amazon and walmart.

An american company is being targeted by the information -- influential short seller.

We will keep you updated and give you a market update.

Carson block is the founder of muddy waters research and has made a call on an american company for once.

He says that the stock could fall 40%. his firm says that they have overstated the value of their overseas acquisitions.

We have gone into the field and actually rolled up our sleeves and figured out what is going on in many of these emerging markets.

The reality is different than what the company tells you.

The best case scenario would have been, you have paid some money offshore when you know the sellers are brazilian and trying to of a taxes.

We don't think that that is the case and the sources we have had as that very clear.

In certain situations , there is a lot of potential for abuse.

At a certain point, it becomes a round-trip of money.

As far as i know, there is nothing illegal or improper, but it is very misleading.

Erik schatzker is with me now.

He is a colorful character, he swings for the fences.

He has had some success.

This ceased to be a growing concern.

This put him on the map.

It is for the reasons reasons why people pay attention to carson block.

This is the first time he has gone after an american company because previously it was a chinese company and then he went after a company from singapore . he had some success there as well.

Exposing something about the company that people did not previously realized.

Let me walk you through the casey is making.

That is the ticker that it trades under.

He says that the company over values acquisitions to disguise loans.

It pays an inflated price in order to lend money to the company for whom they are buying the assets and then that company will not just make lease payments, there will be interest and amortization of the loans.

This serves to inflate this international lease revenue.

These are overseas acquisitions.

This is $250 million with brazilian acquisition.

There are some dangerous incentives which drive the ceo and management to do bad things for the company.

They are paid on the basis of how many towers they acquire, not necessarily how much money they earn.

Increasingly, as they pile more and more assets, this is largely a pass through vehicle.

Those profits are tracked overseas.

They are exposed, there is leveraged debt on foreign currencies.

They are effectively a carry trade.

It is american towers as you point out, it is an american company.

He is targeting the more open take nature of doing business overseas.

Collects their stock has tripled since 2008. the company has increasingly gone into international markets to drive growth.

Carson block says that the growth is an imaginary to a degree because of the fact that it is generating revenue for these transactions.

This is always a very interesting theme.

Sometimes it takes short- sellers to expose it.

And be willing to to do the work to expose it.

Erik schatzker joining me there.

It is 26 past the hour, it is time for bloomberg on the markets.

Julie hyman has all you need to know.

We heard from ben bernanke this morning.

Stocks hanging onto the game.

For the s&p 500, just a tent for the dow.

The perception here is that he is willing to keep stimulus going.

Let's look at some of the movers.

Bank of america coming out with profit that beat analyst estimates.

Yahoo rising.

Its forecast fell short of estimates.

Their alibaba investment is paying off.

Mattel going in the opposite direction.

Sales falling 12% in the quarter.

That does it for on the markets this half hour.

We will be back in 30 minutes with much more.

? ? this is "money moves" where we focus on innovative investment.

We want to bring you the headlines this hour.

Adam johnson has them from the newsroom.

Ben bernanke says the central bank stimulus measures are not on a preset course.

He said that asset purchases could be reduced or expanded depending on economic conditions.

He says that the fed is keeping a close eye on inflation and unemployment.

Health insurance is about to become less expensive for new yorkers that don't get coverage through work.

State regulators have approved a plan that would cut rates by more than half starting in october.

Someone who pays $1000 a month could sign up for coverage that costs only $300 a month.

Coming up, nigel shows josh nigel -- coming up, nigel lythgoe will be joining us.

A reminder also, tomorrow, we have and this was it interview with jack lew.

You want to make sure you tune into that.

A lot happening today and tomorrow on "street smart." one last headline to bring you here.

You have legal woes for bernie ecclestone increasing.

He has been charged for his role in a bribery scheme.

He has been under investigation since he was convicted last year of taking on the legal payment from him worth $44 million.

He said he was the victim of a sophisticated shakedown.

We will keep you update on that story.

We want to talk about the point- of-sale service.

My next guest describes his company as an underdog.

The main product is used by over 4000 stores and more than 100 countries.

We are joined by the cofounder, scott davidson.

First thing to know, a small business has to have a mac.

This is the point-of-sale software for single store retailers.

These are all of the florists and the small shops that need help.

Anytime you can admit admit by going into a customer.

What gave you the idea to start this company?

What the company has an origin and a different flagship product which is the kind of software you were you have 75,000 customers.

As part of developing a business, for over a decade, servicing what is surprisingly and underserved market.

You would think with apple' is that people would be flocking to it, but there are not as many small business solutions for small businesses.

That is where we jumped in.

What does it mean to companies such as mastercard and visa?

I know they have charged the business is quite a bit of money and amex is famous for overcharging and a lot of small businesses cannot afford the fees.

This is a big part of our business.

Once we have a relationship with our customer, it is important , we don't have the leverage or the square scale.

We look at this as an ally, the company square.

They have introduced flat fee, no frills monthly fees going away.

That is what we are able to offer because of square.

As it turns out for many people, that has paid off, as far as being present in 100 countries from a was at a challenge for you, because you're so local and focused on smaller businesses, was it hard to grow your business that way?

It is because of the internet.

If we had to go out and get relationships, it would be impossible.

We have streamlined the distribution because of the intellect.

This would be to localize the product a little bit better, they might have to make a sacrifice you're in there because they don't necessarily respect the compliance laws of mexico, maybe.

As a cofounder, what has been the biggest surprise?

The challenge of any tech business.

We are a little bit more resource limited than other businesses.

We probably have faced some similar challenges.

We have to make the right product and technology decisions.

How much does design fit into that?

You set out to align yourself with apple, that probably means something to you.

That is a guiding principle to check out specifically.

We have been recognized by apple.

We have really set that in the sale market.

The time to implement it has been weeks and months.

You can use it and sell your wares in your store.

What is the future?

Do you have certain metrics that you want to hit?

Whether it is stores you are servicing?

What your goal?

We want to make sure we are making the right decisions as mobile payments.

All of this stuff is important.

Do you think that we will eventually be paying for things with our smartphones?

I think that will happen, the question is, how long it will take.

Thank you for coming in.

We are back in just two minutes with more on "money moves." we will talk about internet security, it is front and center for businesses and individuals.

? welcome back to "money moves" on bloomberg television and streaming all day long on your tablet, your phone, and bloomberg.com.

Now, to a company that helps companies manage their intellectual property.

Insight venture partners investing more than 100 million dollars into this boston-based startup, users are in more than 100 countries.

They are managing $500 billion in intellectual assets.

The cofounder and this ceo is with me to talk about this cash infusion.

What it means about the future.

What are you going to do with the money?

It is very exciting times for us.

We have big plans.

This exists in the u.s. and in western europe and in uk, germany, france, and one of the biggest markets for us is asia, so geographical expansion going into asia, the new product entries, all of the things we want to do.

I know the company was founded in 2004. what gave you the idea that this was something necessary that the market wanted?

Well, there was an absolute void in the marketplace, there were companies that were providing software for the legal side, but nobody was looking at the business side of intellectual property.

With the western world completely outsourcing manufacturing and special services.

We are in an intellectual economy.

In order to help businesses big and small really manage their ideas, all of the product . we help every employee in the company get engaged in the intellectual property process.

We have seen a lot of big fights.

As you point out, there are numerous companies that need to know how to protect their rights, and there is actually a value to them, they're actually funds that trade these rights.

How do you organize it?

Is it a database, is it algorithm driven?

It integrates with with your site.

It brings your employees into it.

They provide your ideas, we manage those ideas and take it to the patent and the trademark.

It helps with portfolio management.

You take those assets and you decide which will help you generate more wealth for your business and which ones won't. you have equally high profile clients on board.

This is a pretty long list.

They have over 370 five clients and growing.

And software companies as well.

Pharmaceutical clients, automobile clients.

Land rover.

What has been along the way from 2004. what is the biggest surprise.

Getting to a point where you are visually recognized by the venture community.

This has been hugely gratifying.

They have had 50% year over year growth.

There is a small team trying to do everything.

It is great.

You can get here.

What has surprised you the most, if anything, about building the company?

I think that the team hanging together and climbing mountains and when we were in the 2008-2009 economy, pulling through all of that.

Feeling strong at the end of that.

Well, congratulations.

Good luck with the expansion.

You have a in your sites.

We are joined by the ceo and cofounder of in aqua.

Demand for wine may actually be slipping.

A case of 2006 rothschild is selling for only 5800 $75,000. -- $580,750. when we come back, expanding your investment vocabulary.

Today , it is glass-steagall.

We are back in two minutes.

? welcome back to "money moves." time for our elite buzz word.

We are going to focus on glass- steagall.

Glass-steagall was enacted in 1933. the other one is that people forget about it.

The conflation is one of those things that cause the great crash.

This created the fdic and deposit insurance for people.

That rationale was, if you want to make those guarantees, we want the banking business to be less risky.

Elizabeth warren, love her or hate her, there is a bill.

Remind us quickly.

It is new again.

John mccain has joined senator warned.

We cited having these crises.

There was this big argument that somehow if he go back to the way it was, it is not fair to depositors.

The depositors are supposed to benefit from some very bad arguments that the banks like to make.

The flipside of the argument is something important to pay attention attention to.

Forgetting deposits, that is too big to fail.

If you take a look at what is happening, this is a topic that is on people's minds.

This is the pie chart of all of the top banks.

You can see that this is a fairly small percentage of total deposits.

Right after glass-steagall, you will see what happens there, it was a much bigger percentage.

The total percentage is up around 20% something like that.

Jump ahead to 2009 and you can see the percentage by those top five banks and he keeps getting larger and larger.

The reality is with institutions that are this vital, the fear is that they will be compelled to bail them out.

What other solutions are out there?

Lots of people are looking at two different ideas.

The vocal role did pass.

It caused jpmorgan to spin off its private equity group this week.

Things are happening by the old frank bill.

In addition, they are going to the solutions that we are talking about earlier where it is imposing simple leverage ratios on these banks.

The reaction will be that the banks will actually start to skinny down.

We shall see.

Thank you, as always.

Bob rice joining us from tangent capital partners.

Since names make news, we are focusing on the famed short seller jim chay no spin his connection to the american league.

-- the famed short seller jim chanos.

He was that the game and he was almost hit by a flying bat.

Mccarrick -- miguel cabrera hit a double.

Tomorrow on "money moves", one of the leading vc's will join us.

We will talk about where he sees opportunity in gaming and in tech.

Developing a 21st century workforce and some of the toughest neighborhoods.

We will show you the challenges and how they are being met.

It is time to check in on the markets.

Julie hyman has the latest.

Let's start with stocks that remain higher after ben bernanke's testimony.

Stimulus is indeed continuing.

We are seeing bond yields lower.

The dollar has been higher as well.

Gold remains lower.

We also saw a reduction in oil inventories last week.

That has been pushing the price is higher today.

We are in the middle of earnings season.

We have seen a lot of bank earnings.

What we can expect this season, the trends we have seen.

Today alone, bank of new york mellon, pnc, bank of america.

We have heard from a lot already.

Are there a lot of trends we have seen emerging?

We have seen a lot of upside to estimates.

Some of it is coming from reserve releases.

That is generally seen as a poor source of earnings.

Credit does continue to improve and that is good for earnings.

To sort of tie the fed back into it, as we have seen rates go higher among for the banks that are more trending focused like goldman sachs.

They saw the fixed income

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

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