Zillow to Dominate NYC: Money Moves (08/19)

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Aug. 19 (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)

Audi debut in this sort of hybrid car.

You will see cars let this coming out coming out from all the luxury car makers.

We will be back with more on the markets in three minutes.

-- 30 minutes.

"money moves" is next.

? ? welcome to "money moves." we show you what investors and entrepreneurs are doing in hedge funds, private equity, real- estate and more.

Making a big move to new york, cash changing hands, plus blackstone, said to be in talks to buy a stake in goldman sachs, more on that in a minute.

One of europe's biggest hedge funds struggling to retain its traders.

We will tell you what is going on, straight ahead on "money moves." coming up, zillow purchasing street easy, the idea is to expand coverage of the new york market.

With more on what this means, we bring in olivia sterns, with me from the newsroom.

Olivia, why did zillow do this deal?

They are the key to new york.

This gives them a foothold into one of the most lucrative markets in the country at a time when the housing market is rebounding and they are trying to fend off rivals.

Simply put, they have cracked the code in new york and have a local network where every new york broke -- every new york broker is active because of their comprehensive data.

The audience includes more than 1 million unique visits in a month.

$50 million, what are analysts saying.

Some say that sounds like a lot for only 1 million users.

You are exactly right.

James made the exact point, calling it an unproven monetize model for "money moves -- forestry easy.

Also that they would announce a secondary stock offering to help pay for this deal.

And even though they are growing rapidly, shares have tripled this year.

It is still operating in a loss in the second quarter.

What does that mean -- what is it about st.

Easy that lets them take such a lead in new york?

That have effectively disrupted the industry with the tools they have created, the type of information they are posting has a lot of transparency and gives buyers, renters, and the developers more power.

Some of the information you can find includes how much the apartment you are looking for has sold for before, how much others are listed at, and viewers by broker.

You can learn that lloyd blankfein lives at the fabled 15th central park west building in an apartment he purchased for $26 million.

Imagine how much power that adds to the marketplace.

It certainly does.

Let's just say that one of the main obsessions of new yorkers is a real estate, like traffic.

Thank you, a libya.

Moving to the fed, -- thank you olivia, moving to the fed, going above and beyond the regulatory minimum.

For more on what this means, chief washington correspondent peter cook.

Capital planning, safeguarding against future stresses, these are at the heart of the matter, right?

Bracing for the future, it is a warning shot that they need to continue to push to get their act together and get their house in order in case things take a turn for the worse.

The 18 banks that underwent stress tests last year found that they all came up short in one of five critical areas.

The study finds that there is still considerable room for advancement across a number of dimensions.

If anyone failed anything in this study it was more of a status report going forward.

It is not a huge mystery, " we are talking about on this list, but it is more a warning shot, they needed it even better to make the grade in the future.

Where did they fall short, peter?

The study highlighted overall strengths and weaknesses, but some of the problem areas represented how they accounted for risk, there were questions about that and questionable projections as well, including the overall lack of analytical support to back up the forecast.

One common thread, the importance of information systems to decision making, strong information systems were in place while many banking companies had systems that were "integrated" and required substantial integration to reconcile across systems.

Technology is part of the answer, but again a big push from the fed to tell the banks that it was not just the capital they were hitting, it was handling the capital going forward and how they planned for the future and trouble ahead of time, that will matter as well.

Lessons left over from the credit crisis, thank you very much, peter cook, with the latest on the stress test.

Speaking of capital requirements, goldman sachs may sell its london-based insurance business in part because of those requirements.

Blackstone may be the buyer.

Devon, glad to see you.

In a sense goldman is looking to offload certain assets to make their balance sheet looks stronger?

Exactly.

Just like most of the big banks that have european operations.

The business is that insurers take pension plans from big companies, like british airways and identified them as units to sell.

Blackstone is taking a look.

Easing certain that blackstone is interested, what might this be a big fit for them?

If there is one that we have learned it is market insurance over the last 10 months.

They do not need a lot to keep them running.

There are a slew of $1 billion plus deals, with kkr and blackstone picking up on it.

We know that blackstone is one of the biggest firms out there with $200 billion in assets.

What part of the company is considering this purchase?

It does it with men and money, institutional investors and separate accounts, as well as blackstone strategies and real-estate what -- real estate credits.

Basically it is like the team of blackstone?

Exactly.

They are looking for quick deals over 3 1/6 years with private equity.

A bit of a shorter turnaround, obviously with that goal a higher than average return?

Less than what the private equity team is shooting for, so this is going to be investors who already have their money out in a bunch of different places.

No one is going to combat -- complain about that return these days, but if they want to put that money into that area, they are looking at 15%. thank you, devon, for joining us there, he wrote the story and blackstone considering buying this part of goldman sachs.

The repo market is also reacting to the guidelines as well, where banks and investors borrowed income securities and shrunk to $4.60 trillion, down 35% since 2008. tighter capital rules could mean higher borrowing costs for companies and consumers.

When we come back, industries and companies that stand to come back from hardtack.

We are going to introduce you to the founder of the company, saying some interesting things.

Plus a cloud software company claiming that they reduced business costs by up to 10% by every dollar spent.

The ceo projects said could help capitol hill by $14 billion.

Hot dollar for the tech community, the heart of recruiting top tech talent, all that ahead on "money moves." ? ? our next guest says that 3-d printers are the next fax machine.

He is the managing director at discern analytics and also a professor at stanford university, joining us from san francisco.

Glad to have you.

I know you have been working in technology for two decades.

Where do you see it now?

I am always surprised, the way that these technologies arrive, even though you can anticipate them, if i drove this down to the point that matters, when it comes to technology you have to ask yourself if you will invest with the crowd.

Investing was three years ago.

There is a way to invest ahead of the crowd, looking at how 3-d printing is going to change the other industries.

How do you see that playing out?

People talked about this 30 years ago, but it was too early, how do you know if early is too early?

There is a rapid takeoff point.

The trick is to fix and there are different ways to do that.

Other technologies are recombining with other technologies, like smart watches coming back.

Saying it quickly with three printing, what does this mean for the ecosystem?

They will actually become institutionalized, every three to five years?

Only geeks' will have them in their homes, but it disrupts the way they make things.

An example, if you purchase the smartphone case from apple, you have a 30% case that it was reprinted, a terribly inefficient way to print an iphone case, it would be cheaper to injection mold them, except the dog for injection molds costs multiple tens of thousands of dollars.

Tastes may change before you advertise the cost of the die.

If you 3-d print your iphone case, it costs you more per unit.

Companies doing that printing think are much more nimble to consumer tastes, they just have to change the code.

The next step beyond that, there may be a cheaper and more flexible way to do it.

You mold off of that.

What this starts to do, it disrupts how we mend things and allows companies to be more nimble and changes supply chains and how we make and distribute spare parts.

I would be looking at what reprinting impacts in other industries.

For example, where is the fred smith example of express?

Saying that reprinting changes the landscape?

That is what you want to look for now.

Basically everything around it.

You mentioned smart watches, are we all going to be wearing these?

Maybe we will not all have 3-d printers, but what about smart watches?

They are all hard at work, 19 of them.

The only people that we're wristwatches anymore are people all the love to have aarp cards.

The 20-something pause and 30- something's look to their smartphone.

These smart watches are going to be so cool it will get a whole new generation interested in wearing something on their wrist.

Again, the bigger play is wearing an electronic gizmo on their wrists, they will develop a taste for expensive mechanical devices.

Much to think about, thank you so much for the time.

When we come back, we'll give you the details on the exodus of credit traders, a gallup letting the sun google, criticizing their business strategy.

And also shopping in russia, not as easy as clicking a button.

E-commerce is only just aren't to take off there for luxury and -- like rams.

Back in just a minute.

? ? welcome back to "money moves " on bloomberg television, streaming all day long.

Russia is the eighth largest market for luxury goods, but e- commerce is just shy of 2% of total sales, not they get all, so by this metric you could say they are about 10 years behind the u.s., the radically creating opportunities for technology companies that can crack the code.

Scott galloway is with me now for our weekly digital segment.

Great to see you, as always.

Why are these luxury brands facing such barriers to entry?

What's most have a tendency, with respect to digital, to move over there western efforts.

Even though the language there is cyrillic, they are taking in the websites and just kind of transferring them over.

They have not optimize their contacts, and even -- not google, one of the points we are making?

Internationally and has gained shares.

Typically they are just not mobilizing for the market, they are trying to shove a square peg into a round hole.

Is it more than just the alphabet?

The way that people tend to find these is research.

Most are not typing in anything.

They just have not done the proper tagging.

What other attitudes are slowing the system down?

One time i've read about watching consumer behavior, that they are not as credit card hoped as a nation as the u.s.. a good point.

A lot of the assets in russia are held in the could securities and stash.

Involving credit cards, a lot of people want to pay cash on delivery.

What about the absence?

Developers there are not necessarily going to pitch ideas to luxury companies?

I think if you are a luxury brand, it was never a bad meeting.

Just say china over and over, but russia had no.

2 and no.

3 in terms of tax receipts second to china.

This was an influential markets, it has been a bed of an afterthought.

What is primarily needed is the focus and recognition of unique consumers with unique needs and different platforms.

Even on phones.

The majority of apps are developed for ios.

Brands so far have been tone deaf.

The pastor be one in st.

Petersburg.

Is this the next level down?

Luxury brands that do not have a huge infrastructure that these companies have?

Infrastructure is the right word.

Many of these luxury brands, they ought -- model to a local player and on certain sides they have agreements that trigger buyback provisions.

We are more at the point where they move from burberry to vertical buyback.

Finally they have the capital incentive to make large infrastructure investments across technology and you will see the digital iq of these brands bubbling up to their western counterparts.

I like what you said about finishing a marketing meeting with china, china, more china.

Where does russia fit?

The u.s.'s no.

1, i have to assume, but then which, but -- country?

The u.s., china, and i believe that russia is around seventh or eighth.

Double the size of brazil, though, so it is a real market.

It is worth considering, if you are a e-commerce company that can write code in cyrillic.

Scott galloway, joining us there, thank you.

The founder of the l2 think- tank.

26 minutes past the hour, time for bloomberg on the markets.

Olivia sterns has all the action you need to know about.

We would get you caught up on where the markets are trading at this hour, the nasdaq continues to climb, the s&p 500 and dow jones continued to climb after their worst month since june.

The heaviest selling has been in banks, first of we were just talking about, the real estate giant, buying up -- zillow buying up -- the home builder outperforming today, better positioning competitors to higher mortgage rates.

Back with more in 30 minutes.

? ? this is [laughter] cut -- this is "money moves ," where we focus on alternative investments.

Howard asset management, two more traders have left, the firm has been scaling back since june, when their first biggest hedge fund was that the biggest monthly loss since 2008. for more top headlines we bring you out to the newsroom with adam johnson, anchor of "trees mark." egyptian debt yields jumping today, is happening as more violence occurs between the military-backed government and its islamist opponents.

More than 900 people have died in the turmoil that has gripped egypt over the last week.

The government is trying to crush the protesters, even today.

Regional allies, like saudi arabia and turkey, backing of pesticides, the sec is investigating whether they hired children in their business, according to "the new york times." companies connected to the new hires, jpmorgan has not been accused of wrongdoing.

He criticized the company in an interview with charlie rose.

We are having trouble finding something that really works and something we can stick with.

That hot pot and it is i get, then they sold it, so it was constant chaos over there and if you are winning, usually it is calling the waters.

In the website lets consumers review multiple businesses.

On the interview with charlie rose, it is tonight at 8:00 p.m. coming up in about 30 minutes, linkedin and its new pages profiled universities.

It is no longer the japan go there just for a job, but maybe to find the right college, we will speak with the executive behind this strategy.

Thank you very much, adam johnson.

Hedge fund gainers have record bets.

What do you think?

Wildcard, the first governing record crop, prices fall, thinking it rained even today.

Fund managers, goldman bank analysts are forecasting record crops.

For the past three months they have been cutting back their original forecast, the biggest harvest ever.

They are still forecast to a lot over friday.

In seven key farming states, their own crop estimate comes out friday.

Focusing on a big name, we found out that john paulson was finally selling some of his stake, but they have been rising?

Pretty much.

Lower on the day, in the last few weeks what is interesting is that traders have gone bearish on gold, capping positions last week, bullish.

Joining us there from the newsroom with the latest on agricultural commodities and gold, of course.

To the business of technology, land legs, adidas, just three companies, they are icloud based company with a stated mission of managing costs for clients, basically anything that involves purchasing, repositioning, organizing employee expenses -- it is a long list pyrrhic -- long list.

The ceo is with us now.

Robert, glad to have you with us.

I know you have seen great growth since the company was founded in 2007. there was something like 17 straight quarters of gross margin expenses.

What did your companies want most from you?

The companies that we worked with want to get creative profitability, is just that simple.

But we have enabled these employees to search, browse, and rightfully look for the goods and services needed to run their day.

Preferred suppliers, 10 cents on every dollar, that is the impact we are seeing with customers, 350 customers around the world.

I know that you made a suggestion for capitol hill with that metric?

That is right, if you look at the way the camera process works, billions of dollars on that kind of paper, what is required to build roads and bridges, the safety house from those individuals, there was a huge opportunity for the government.

I know that when this company was founded, online that basically hated the systems that they were working on, how did you bridge that gap?

Just to ease the interface?

That is exactly right, most of them began with back-office technology slated for a few users and they hated it.

Our paradigm was 180% different, beginning with the end user, hidden from complexity, the shopping experience with similar to online.

They would rather use this than any other way than getting the goods and services they need.

You should see what they are grabbing, billions of dollars every month.

We mentioned that oracle and sap are two of your largest competitors.

What is your plan to defend your position?

We are building out this market opportunity that has been left nascent for a decade and a half.

Any organization regardless of size, you ask folks, how do you get what is needed to do your job?

We will get a dozen different answers.

All of that was spent under management, really leaving this category, as i mentioned, 100% growth year over year, all of my colleagues had 100% renewal rates, meaning the customers get real, represented quantifiable value.

We will continue the conversation in just a minute, stay with us, we will have more with robert bernstein in just a moment.

We will be talking about immigration reform, is subject very important to business heads as they search to retain top talent.

? ? we are back as we promised with robert bernstein.

We just spoke about the cloud company you are running, but we want to talk as well about immigration reform.

Here is mark zuckerberg speaking at an event in san francisco earlier this month.

People often talk about the issue of tech companies with full comprehensive immigration reform, these are two separate issues, but anyone who knows a dreamer knows that they are not.

For instance, the students that no where they were born coming into this country are going to be tomorrow's entrepreneurs creating jobs in this country.

We wanted to discuss this with you because first of all as a business head, obviously recruiting in keeping top talent has to be a primary concern.

To what extent do you think about that every day?

Where is it in the hierarchy of concern?

I think about it in the company that is growing in the united states, a specific situation to deal with in this country, america is a melting pot.

We have 11 million people trying to get a path to citizenship and we need to track, as mark just talked about, the best and brightest, most passionate people coming to this country to pursue their dreams.

This very moment in august this is very surprising to me.

I hope the house gets back in session in this gets resolved because it is so critical to the competitive dynamics of this country.

Rob, we even have some baby pictures of you, we will try not to call your mom, but you personally came here from russia, your career is very much testament to the fact that you were able to stay here, work in the technology community, and build a few businesses.

That is exactly right.

I came to this country, to york, to pursue my dreams.

This is an amazing environment to cultivate your passion and pursue each day and every moment to the full extent that you possibly can.

Our ability to cultivate that type of passion and energy is so important to our competitive makeup.

What you said about being disheartened over what is going on in washington, d.c., there are many technology leaders, like mark zuckerberg and steve case, they are really making a strong argument to extend these visas so that people can come to school here and actually stay here and build businesses if they want to.

I can tell you that it needs to be made easier and easier to remain competitive in this country.

To do that need to attract the best and brightest and make it easier for them to come here, minimize the cost to go through the process of gaining citizenship, and you have to attract these people so that they want to stay here, not just come and go back, but commit to using our economy, of which is one of the most exciting opportunities the president has been pursuing in his second term.

We have gone over some statistics that say that even with unemployment at current employment levels, at least in the favor of the technology community.

It is where they need to be tracking the best and brightest.

Contributing to the growth of america for prosperity.

To what extent has this issue ever held back from hiring someone you want to hire?

It has not because we have committed to spending the money.

That does not mean it is -- that we are tracking these people.

They may not know that we're willing to spend the money required to bring them on.

For those who are qualified, we spend the money to do so to reach growth in the quarters in years to come.

Ron, thank you so much for the time.

Glad to have you.

Shout out to your family for the baby pictures.

We have a break to take up when we come back, expanding your investment vocabulary with bob, the buzzword of the delight -- buzz word of the day.

There is the possibility of tapering.

Back in a few minutes.

? ? welcome back to "money moves ." bob rights this year from tangent capital partners, macro prudential, this has a lot to do with the conversation we are all having about the fed, quantitative easing, when they all wind down.

It is a blunt instrument, it does not address the specific problems, macro prudential policy, that is that you could marry a specific set of regulations in capital requirements to specific sectors of the economy when a bubble is forming without driving overall interest rates up.

A classical one is the housing bubble.

In south korea, for example, there was a setting housing bubble up there.

For that area you will need a higher down payment of higher interest rates and other areas where they have tried it as well.

What about here?

Have we seen this successful in the u.s.? we have seen it once successfully in the 1980's, the fed got involved and said that with banks that make specific credit-card loans that will be higher reserve requirements to shut down the flow of credit sufficiently to bring down inflation.

It was not a totally successful experiment overall, 29 was the first major attempt to duet, they said banks would increase the reserve rates in that market.

This was one of the problems, other sectors came in through loans.

Obviously there are always political considerations.

Exactly.

We have heard that a lot over the years.

You also have the basic realities of that sub sector of the realities being targeted.

There on capitol hill every time.

What is the take away?

All lot of big economists want to do this more precisely.

It is safe to say that there are practical impairment in those kinds of solutions.

Within one area of the economy?

We will see what happens.

Bob rice, joining us there.

As soon as we have a suggestion for a buzz word, you can tweak it to less.

Remember a few weeks ago we brought you three in a row sponsored by viewers.

Of course that is the invitation to write in.

We will take a very quick break back in a few minutes.

? / ? tomorrow on "money moves," we will focus on mobile security and the ceo of a virtual private network will be with us.

The card is called [indiscernible] every will introduce you to a company that is bridging the gap between the old economy and the digital economy with a corporate place that blends commerce and social media.

In the meantime, though, it is 56 minutes past the hour, meaning it is time for on the markets.

The selling has picked up in the past half-hour.

The nasdaq is still holding on to gains.

The dow jones is down 40 -- down 40 points and the s&p is off by one-third of 1%, underperforming the broader markets.

, the bulletin is royal and dutch shell, both companies getting hit by a stunning flowed down.

A series of writedowns of shale and oil gas plunging prices with disappointing as well.

Causing the problems of the natural-gas industry, jessica , why is this such a big problem?

Let's let's go back to the root of the problem, of what is basically happening as gas prices drop as they pull up gas.

Some companies have already unforced to write down 1/3 or so of the value of these large values over the past few years and the result is they may soon see a slowdown.

We hope they might be able to in drilling this year, production may drop a bit.

Hold on, we want to get back to breaking news.

This is coming across year, blackstone group, the biggest hit p e firm, $200 billion in assets under management, selling a 50% stake in the broad gate complex.

The sovereign wealth fund is under contract, letting you know all the latest headlines, the ones that matter.

Blackstone agreed to sell a 60% stake . in the meantime, back to you in the newsroom.

Thank you for that, and as he said, i am here with the editor of our oil buyers guide.

We were talking about them white -- major oil producers, they were talking about $2 billion last quarter.

What does this mean for the development of u.s. shale?

That have taken these enormous writedowns, the result is that may not be able to sell assets at the rate they had hoped and that others had hoped.

It also means that companies are going to be discouraged from buying these assets, we think.

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

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