SAC Pleads Not Guilty: Bottom Line (07/26)

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July 26 (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 world headquarters in new york, i'm mark crumpton and this is "autumn line." -- "bottom line." pleading not guilty to charges of insider trading.

The political maneuvering over who should replace fed chairman ben bernanke.

We look at the growing political influence of college fraternities.

To our viewers in the united states and those of you joining us from around the world, welcome.

Full coverage of the stocks and stories making headlines tonight.

Olivia sterns looks at how stocks ended the week.

Margaret reports on when the white house might name a new fed chairman.

Let's begin with su keenan who has the latest on sac capital and the indictment for alleged insider trading.

Good evening.

The government's case against sac capital, the billion-dollar hedge fund run by steve cohen, a large number of electronic recordings that include consensual phone calls.

This is the first time we have heard of this.

It was revealed in today's arraignment of the hedge fund represented by a team of five defense lord -- lawyers.

They entered a formal plea today of not guilty to one charge of wire fraud and four charges of securities fraud.

They have accused the $14 billion fund providing a culture where insider trading was "encouraged and rewarded." it clearly demonstrates the strength of the government's case regarding sac.

They are completely cornered.

You have actions going on right now and in the washington, d.c., action the founder fighting for his professional life.

That is something that will be going on.

Click these talking about the 1- 2 punch.

Criminal charges against the firm and last friday, the sec charging their owner, steve c ohen.

Su, adding to pressure, they want to recover hundreds of millions of dollars from his fund.

What's the story there?

The phrase, the money or your life, some are saying they have decided to go after cohen's money.

He was in charge unlike the others who have or are currently changing -- facing charges involving more than 20 companies and dating back to 1999. legal observers say if they can establish the alleged fraud profits for the decade they said there was misconduct, they may have the ability to wipe out the firm's net capital making bankruptcy or receivership a real threat.

Bloomberg's su keenan, thank you.

Let show you how the equity markets finish for friday, july 26th, two thousand 13. stocks rose erasing earlier losses on this friday and investors watching earnings ahead of a central bank meeting next week.

Let's go straight to the numbers for the broad market s&p 500 index, it was up today about three -- up about 1.5 points.

The dow jones industrial on up as well and 15,558 and the nasdaq composite up nearly 0.25% at 3613. let's get you the stories behind the numbers.

My colleague olivia sterns has the details.

Good evening.

U.s. stocks climbing ending the day and the black.

It looks like positive data on consumer sentiment helping offset what really were some disappointing earnings results.

University of michigan survey showed consumer confidence in the u.s. unexpectedly increased to the highest level in six years.

One stock you see that training -- playing out in, starbucks surging nearly 8% topping estimates after the bell yesterday and, no surprise, one thing starbucks credited their strong results with our strong sales year in the new york --in the u.s. i don't know you are at a fan of zynga, but shares dropping after they said they would be announcing abandoning plans to enter the online real money gaming.

Jcpenney getting a pop on news that david einhorn would stop shorting the stock.

He called the position his most profitable short of 2012. jcpenney is still sure going to recover from a nearly $1 billion loss under former ceo ron johnson.

They also said today they sold their longtime holding and microsoft and microsoft shares really did not flinch on that news.

Finally, mark, we have to talk about expedia, the biggest lag or in the s&p 500 slumping nearly 27%, the biggest fall in eight years after expedia missed second-quarter sales and profit estimates.

Expedia is competing with priceline, trip advisor, and orbitz to book travel online.

I don't know if you know much about that, mark, because you have not taken a vacation in quite a long time.

Click so i have been told.

A group of democrats have written to the white house writing in support for janet guillen to follow ben bernanke as chair of the federal reserve.

The letter reads in part, "does you make this important and difficult decision in choosing a successor to chairman ben bernanke, we strongly urge you to nominate janet yellin to replace chairman bernanke.

We believe she is the best person for the job." it pushes her experience quoting the substantial size of the balance sheet combined with the delicate state of the recovery makes her familiarity with the fed process and communication skills that much more important.

For more, we are joined by the white -- from the white house with margaret.

Good evening.

Talk to us about president obama.

Is going to name the next fed chairman.

What are the implications of this letter writing campaign for other potential nominees like larry summers?

Administration officials are now saying they have not made a decision and will not make an announcement until september at the earliest.

They're moving very quickly to shut down this latest wave of speculation for this letter writing campaign.

That's important for a couple of reasons.

It was in august 2009 when president obama interrupted his own vacation on martha's vineyard to announce he would have bernanke for a second term in the white house is trying to signal, slow down.

This won't happen just yet.

This is potentially causing some problems for a potential summers nomination.

If there are enough senate democrats who are either critical of him or who are pushing for the first female leader of the fed, yellin may have some problems herself.

It's really early to say.

We don't know if either one of these is president obama's first choice.

Is that the marine one coming in or leaving?

Click the president is on his way back from camp david meeting with cabinet members all day.

We don't know if whether they gave his super plan for taking on the republicans or not.

The delay on a fed nomination also may signal the president does not want to have this fight ahead of a budget battle.

How likely does a government shutdown appeared to be at this point?

Eking of take -- speaking of taking on republicans, the date could change pushing to november or december, but this whole question of a sequester is very much at the heart of how tough the president should be in terms of his negotiations with republicans.

There are a lot of lawmakers on capitol hill who would like to see him really push this to the brink and risque shutdown in down in order to change the fundamental pattern that the sequester is going to force through 2014. as you know, it has never been the president style to go big on confrontations and blow the whole thing up.

With the economy so much a part of whatever his legacy will be, a government shutdown is really not what he wants either.

It's early to say at this point how much of this is rhetoric and how much really signals strategy.

Today was the deadline for the senate to weigh in on recommendations for the finance committee.

Chairman baucus is attempting to put together a bipartisan plan to rewrite the tax code.

What ideas did he get?

When should be expected see that land?

The committee has decided not to make the recommendations public.

It is going to be a slow drag of finding out exactly what the suggestions are, but we are looking at democrats talking about perhaps $1 trillion in new revenue and they say that's a dealbreaker he has until 2014. margaret talev from the white house, thank you.

Nancy pelosi says she's happy the president is giving renewed focus to the economy reminding the country of what's at stake with the looming budget showdown.

In an interview with bloomberg washington executive editor al hunt, pelosi talked about the other they government shutdown and the prospect of ignoring the debt ceiling.

Both of them would be very harmful to the economy.

The cost of sequestration was 760,000 jobs, scheduled to do that again.

The ryan budget is even worse than sequestration, and terms of being a job killer.

We have to remember that these are terms of art in washington dc, that shutdown of government, but they are job killers.

You can see the entire interview with minority leader nancy pelosi tonight on "political capital" with al hunt only on bloomberg television.

For more, i'm joined by david walker, founder and ceo of the comeback america initiative.

Welcome back to "bottom line." always good to have you on.

You just heard the highlights of al hunt's interview with nancy pelosi.

She believes the potential shutdown of the government would be harmful to the economy.

What's your reaction to her comments?

No question that it would be.

What is the plan for the way forward?

We need to have more investment to try to stimulate the economy and generate more jobs in the short term, but it needs to be coupled with a clear, credible, concrete plan to deal with the structural deficit.

It means comprehensive tax reform that will generate more revenue, social insurance, and other reforms that will significantly reduce projected costs.

You have to do both.

Until you do that, we are going nowhere fast.

Fiscal challenges and the legislative agenda, comprehensive tax reform, those when we come back with former u.s. comptroller general david walker after the break.

You are watching "bottom line" on bloomberg television.

? welcome back.

This is "bottom line" on bloomberg television, streaming on your tablet, and on bloomberg.com.

We are back with david walker, ceo of the comeback america initiative.

You do not believe lawmakers are telling the truth about the nation's fiscal challenges.

Why not?

What, in your opinion, are those challenges?

It's the way that they keep score.

The furthest they look out is 10 years.

The real challenges that we face are a country are beyond that 10 year time due to known demographic trends and rising healthcare costs.

When you look at what is on and off the balance sheet, the challenge is about $73 trillion and growing about $7 million per minute.

We are mortgaging our future which is as fickle -- unethical and immoral.

Is that what a generational accounting analysis is?

Doesn't give a more accurate picture of what's coming down the road?

Yes.

It says, don't just look at one year or 10 years, look long- term.

Understand that the implications of our present path and what it would be on tax burdens for younger people and future generations and/or dramatic amtrak tony and reductions in the social insurance safety net going forward.

It is designed to try to help present the truth, the whole truth, nothing but the truth and try to accelerate action so that we can get the power of compounding working for us rather than against us.

You have come out in support of the inform act, the intergenerational obligations and form act that would increase transparency and accountability in the federal budget system.

How would it change the way the budget process is conducted?

It would require the office of management and budget and the congressional budget office to look at the longer-term implications of the current audit path and to translate those into what the effect of tax burden would be or the effected significant reduction in government spending and the social safety net programs over time.

You would be able to translate each huge trillions of dollars of numbers in the something that is more realistic for people to be able to understand.

David, how does comprehensive tax reform factor into all of this?

Market, there is no question we need comprehensive tax reform to make the system simpler, fairer, and generate more revenues.

There's lots of ways to do it.

We need more people paying something under a more progressive tax system.

We need to recognize the united states is not an island.

It's part of a global economy.

We need to be more competitive in that regard.

It recognizes that 90% of individuals ought to be able to prepare their own tax return or else it's not simple enough.

In order to get more revenues out of tax reform, you're going to have to couple it with social insurance, and another round of healthcare, and other spending reforms because otherwise you will never get agreement and the congress.

David, speaking of congress, with the partisan splits that continue to go on, do you have any hope that this will come to pass?

Some agreement can be reached?

The most we can hope for is part of either a budget deal or the debt ceiling deal that they would agree on a target for getting debt to gdp down to a certain level, let's say 60% within 15 years and they might agree on a revenue target, a spending reduction target to get there.

They would give instructions to the committee to try to hit that over the next year or so.

I would like to see that.

I don't think it will happen.

Therefore, we're probably going to to have to focus on process reforms like no budget, no pay, and a government transformation commission which i'm happy to go into, if you want.

Hopefully we can have you back to talk about it because we are out of time.

David walker, the founder and ceo of the comeback america initiative joining us from stamford, connecticut.

As always, we will have you back on.

Thank you, so much.

When " online" continues, factory jobs moving overseas and now see the potential for a manufacturing renaissance in the u.s. that story is next.

? welcome back.

This is "bottom line" on bloomberg television, streaming on your ipad, and on bloomberg.com manufacturing jobs have been leaving the u.s. for years, but i could be starting to turn around.

Bloomberg lp senior economist joe burris way less joins us now with that story.

The backlog in the mystic civilian airline industry has affected the man particularly for boeing and airbus.

This chart really give this a good one term view for the prospect of recovery not only in u.s. manufacturing but the overall economy.

You have an eight year backlog, eight years of orders they need to fill.

This is one of the most optimistic views for any sector out there despite the problems with the 787. this will trickle down through the entire domestic manufacturing industry.

This will push growth here for the remainder of the business cycle and well into the next.

He recently interviewed joe adams from the lab three -- gala dry.

What was his take?

Middle-market manufacturers are the one that represent 43 million people employed.

This portion of the economy are really going to see really accelerate to push this.

They are very optimistic based on their middle-market survey.

63% of survey participants were hiring this year domestically as opposed to 50% overseas.

Is really thinking long-term.

We are going to see this renaissance.

It's going to be aging -- a game changer.

Let's look at what joe said about this.

I think there is a renaissance.

There is much more of a priority am trying -- a priority of trying to build them here.

As more complex products are developed, if we can develop the skilled laborers to develop those products.

Right now, that's a big challenge.

A very big challenge and eight.

The sustained recovery in the housing sector -- a very big challenge indeed.

How will the support what we are seeing in manufacturing right now?

We are trickling everything through the housing sector comes back.

32% of the respondents show that business is thriving.

This is what we want to see.

It's not only housing but auto and overall industry and.

Joe burris way less -- bursuelas joining us.

Getting completely wired taking on a new meaning.

Gadgets that could literally become a part of your body.

That story and more when "bottom line" on bloomberg television continues in just a moment.

? welcome to the second half- hour of "bottom line" on bloomberg television.

July 26, 2013. the market slumped in early trading climbing steadily the rest of the day.

And did with little change.

The broad market s&p 500 up nearly 0.1% at 1691. the dow jones rising just over three points at 15,500 it the eight.

The nasdaq composite up nearly 0.25% at 3613. or the week, the numbers show a mixed picture but the nasdaq and the dow up but the s&p down fractionally.

Let's look at some of the top stories we are following.

Here again is olivia sterns.

The house ethics committee is extending its review into congresswoman michele bachmann involving the use of campaign runs -- campaign funds wringer brief run for the presidential nomination.

They will announce any further further action by september 11. at least 39 people killed after bombs tore through crowds of shoppers in a busy market in northern pakistan.

It did late in the tribal areas bordering pakistan and afghanistan.

Former international monetary fund chief dominique strauss kahn facing charges of "aggravated pimping" in france and the nature of the parties that he attended.

This is putting the 64-year-old back in the spotlight after his infamous arrest in new york back in 2011. those are the top stories in the news this hour.

Su keenan is in the newsroom with some insight on today's session and a look ahead to next week.

A lot of volatility this week.

Oil ending the week below $105 posting its first weekly jump in a month and gold boom facing a retreat.

For the third time in four days, check it out.

Moving lower on today's confidence data.

For the week, gold posting its first straight weekly gain.

A drop in oil futures have a lot to do a speculation with china's plans to cut excess capacity to reduce fuel consumption.

Copper futures, check out the decline there falling the most in three weeks.

That has them up-to-date with the chinese data raising concerns about forward demand for industrial metals.

Corn extended its slump after touching a 33 month low while wheat and soybeans rose on the day and copy posting a decline on the week continuing the slump and it is filled with a silver lining boosting profit per copy retailers and they are buying more coffee as costs decline.

What can you tell us about next week?

What's on tap?

We saw a bit of a rebound, but gold traders are becoming the least bullish as jewelry purchases rose.

Gold is set to rise next week and they are expecting lower prices and many are expecting prices to stay right where they are.

Su keenan with the commodities report, thank you.

Computer chips are getting a whole lot more personal.

Now diving inside your body.

Rachel crane takes a look at the emerging world of indigestible electronics.

-- ingestable.

Google glass and job own are the hottest gadgets in the tech world.

-- google glass and jawbone.

They are and that gathering valuable health data that can be shared wirelessly with your doctor and smartphone.

He for you gulp down that computer chip, let's look at what the senators are monitoring.

Core temp is a thermometer pill that when consumed wirelessly translates core body temperature.

It was originally developed for nasa in the 1980's and as a result more than 150,000 core temp pills have been swallowed by people who are regularly surrounded by high heat.

It is one pill lance armstrong willingly acknowledged taking video blogging the entire experience.

I'm going to swallow some thermometers.

The average price?

$41, three times the cost of a conventional thermometer.

It is reusable.

They have developed an fda approved smart pill that contains a computer chip the size of a grain of sand.

This is how it works.

You take the proteu s pill that transmits data to your smart phone.

Your grandmother is in florida and you want to make sure she is following doctor's orders, taking her meds, getting exercise.

With this, you know it from the updates.

Instead of maintaining a battery, it uses stomach acid to generate electricity.

It is literally powered by you.

They have raised $62 million in venture capital.

Just because they are digetsable does not mean that the idea of them is easy to swallow.

Bloomberg's rain reporting.

Coming up, looking at the campaign coffers of cory booker and why he has an advantage when it comes to fundraising.

"bottom line" on bloomberg television continues in just a moment.

? fraternities are making a comeback.

Membership is up 25% in the past five years.

Their interest in politics is growing with it.

One quarter of the house belonged to a fraternity or sorority.

Now the greek letters are translating into american dollars.

In some cases, the alumni are lending support for frat- backed legislation.

Toga, toga, toga!

This may be what comes to mind, rowdy guests, cheap booze, a sticky living room dance floor.

My advice to you -- start drinking heavily.

Washington has its own you'll -- annual frat party and dinner is more expensive, $500 per plate going to the fraternity and sorority political action committee.

Nicknamed the frat p ack, it was started by patton boggs and they have contributed 818,000 dollars to political campaigns, largely republicans including just under $30,000 for the chairman of the house budget committee, paul ryan.

He was a brother in delta tau delta.

Representative pete sessions was a pike at southwestern.

His brothers in congress include texas congressman nicholas lamson and jon kyl.

Pi kappa alpha is a pike.

They are also sponsoring the legislation that would allow fraternities and sororities to use charitable donations to renovate houses.

This congressman, a delta epsilon, has signed on.

-- delta upsilon.

They don't have access to the funds that the very university uses.

It's a great way to make sure that our college students have great housing opportunities.

I think we stand a good chance ? of passing it the session.

The push started after a 1996 fire that killed students at the university of north carolina house.

Lately they have had to defend themselves as the toll from binge drinking has been rising and they are calling for a law denying financial aid to students involved in hazing.

They argue the federal government should stay out of it.

When the department of education tells colleges to lower the bar for evidence required in investigating campus assaults, fraternity leaders say it would threaten student rights.

That is according to an industry memo of and by bloomberg.

Again here's, bloomberg, washington.

-- meghan hughes.

Cory booker is considered to be a shoe in for the special election to replace frank lautenberg's see.

Hans nichols has more on that story.

It is quadruple dipping.

He is accepting $10,000 contributions sec to replace the late frank lautenberg in the u.s. senate.

This is giving him a huge cash advantage for the august 13 primary.

Booker is raising money for four different contests.

He is able to multiply his contributions by four.

The federal limit per election is $2600. in a special election, there are two races.

The primary and a special election for the vacant seat.

You also have the previously scheduled general election in 2014 with a primary and then the actual general election.

For democratic diehards who are electrified by the mayors who rescued a neighbor from a fire and lived on food stamps for one week, writing a check for $10,400. booker raised another $2 million has some bold names backing him up, christy walton, mark zuckerberg, ben affleck all exceeding the $2600 limit.

He is taking advantage of the calendar chris christie set leading to four elections in two years, but he will have some competition along the way.

Frank malone started with $3.5 million in the bank.

Rush hope is an and booker is leading in most of the polls, 52% in a quinnipiac survey.

If booker does manage to lose the first election, the primary, he will have to refund at least $2600. back to you.

Coming up next, we will be joined once again by bloomberg lp senior economist joe brusue las with his weekly look ahead.

We'll be right back.

? welcome back.

This is "bottom line" on bloomberg television, streaming on your ipad, and on bloomberg.com.

It's time for our friday feature, the week ahead.

We preview the economic data and analysis for the upcoming week with bloomberg lp senior economist joe brusuelas.

The july jobs report is out on friday.

What do you expect?

A slightly slower pace of job growth.

We had a really soft earth cap of growth so i'm expecting to see the lagged impact.

We should not expect anything too major.

We are in a nice spot, 150,000- 200,000 jobs per month.

I'm still really worried about the composition of growth and the wages that they pay.

For the most part, the private sector continues to add jobs.

Weekly jobless claims are trending lower.

Americans are more secure and consumer confidence is rising.

Overall, baby steps in the right direction.

What do you like about this chart?

Look at the 12, 3, and a six- month converges.

That's a stable job market at least for now.

Even if we have some very long- term structural challenges to address.

The gdp number is out on wednesday.

The number economists are forecasting 1.1%. there is the ever present -- only every five years, the revision of national accounts data.

The 1.1%, that's probably a little optimistic.

We're probably looking at something like 0.6%. we are going to get something massive that will go back to 1929 and they will incorporate new definition dan new concept energy how gdp is measured.

-- new definitions and new concepts into how gdp is measured.

This may bolster the second quarter growth just a little bit.

But investors are going to be looking at is how the economy has behaved since the recovery began.

Is it really that lackluster?

Are we really of growing up that rate?

-- are we really outgrowing it at that rate?

Will be fed resides -- revise up?

And the consensus is 1.1%. click the cyclical averages the important part erie it2.2% is not acceptable -- 9 the cyclical averages the important part here.

They will be keeping a close watch on the upcoming fomc meeting.

The economic data from may and june, how will that affect the tone of the meeting?

It will largely be a status quo affair.

When i'm interested is in the growth outlook.

If you look at the bloomberg economic surprise index, the numbers have turned over.

Week numbers in may and june.

For the most part they have spilled over into july, so i'll be interested to see if mr.

Bernanke tweaks the growth outlook a little bit to set up the big september meeting where most have formed a consensus that the fed will announce that they're going to slow the pace of the asset purchase program.

Joe, i sm out on wednesday.

A mixed picture from new york, philadelphia, and richmond this month.

What will this month look like?

Another month of slow growth?

Is that the national theme right now?

The industrial sector, like the overall economy, is bifurcated.

In the transportation sector it is really strong.

As we saw in the durable goods report, it is just flat.

This month, philadelphia and new york were up a bit in the pmi.

But the richmond fed survey, a bigger portion of the economy, actually contracted.

We will see slower growth, not what we want to see, but let's be blunt.

We talked about it earlier in the show.

Industrial production outlook is key to the second half growth story.

We are going to get personal income and spending numbers.

There was a modest increase in average hourly and weekly earnings.

What does that mean for inflation-adjusted spending?

We are going to see a nice little increase in the nominal, but if we take a step back and we look at on a real per capita basis, year-over-year we are seeing a zero point four percent increase in contrast with the 1.6% 20-year average.

It is moving along right at the 1.6% clip.

Household expect wages to go up.

We need to begin to see that, more jobs at it if not, households will be pulling back spending and that's not what we want to see.

Bloomberg lp senior economist joe brusuelas.

For those looking to spice up what's left of summer, we have some suggestions.

That's next.

? there is a look at the futures market.

We bring you a market check at 26 and 56 at every hour.

This is "anna martin" on bloomberg television, streaming on your ipad, and on bloomberg.com.

Summer is halfway done.

-- this is "autumn line." you might consider going to camp.

Retaken look at some of the most extreme summer camps around.

Yeah.

? it's friday so we bring you encore, a look back at them the most notable newsmakers from this past week on "bottom line." with fiscal restraint firmly in place, i argue that as long as the republicans keep the house, and that's likely for the next two or three years, we will see more fiscal restraint.

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

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