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tv   Money Moves With Deirdre Bolton  Bloomberg  December 5, 2013 2:00pm-3:01pm EST

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lex -- >> we perform -- we combined performance and functionality. >> the obvious difference between this and any other ferrari is the space. it is a four seater. two adultsk -- fit in the back. you can put luggage in here. usually, it is a two seater. you cannot bring children or friends. now with a fourth seed, you can give the joy and failing to other members. are back with more on the markets in 30 minutes time. money moves is up next. >> welcome to money moves where
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we focus on alternative assets. what investors and entrepreneurs are doing as well as what is going on and hedge funds, private equity, real estate, and more. guests,big alt asset one big private equity guest and one big hedge fund guest. joseph told us the u.s. stock market is not overvalued if you measure by the prices buyout firms are paying for companies. them and weccess have done five ipos this year. on the multiple basis, the markets are not overvalued. maybe they are fairly valued. it depends on interest rates. the market can't continue to compound 20%. could they compound at eight percent? absolutely. what do you think of the
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argument which is, investors are desperate for yield, so as long as they are willing to pay, it means the stock market is not overvalued? >> they have taken a lot of companies public at a profit for the firm. they have been great for blackstone. have 200 billion dollars in assets. what about smaller places? >> it has broader implications. to the extent that the fed begins to taper or indicate that it will taper, those multiples will see a little bit of a compression. that's what most strategists are anticipating. fundamentals are getting better and investors are so desperate for growth. only in the ipo
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market, but anywhere you see high-growth companies. they will get the most attention. >> he presumed tapering and spoke about the effect it will have on the debt market. >> investors need to be focused on credit stuff. i don't think you are at risk of serious capital loss. investinguity returns behind all that leverage could be effective. if the credit markets were to come off a little bit. this mean for blackstone and future investment? >> it could be good for them, the private equity business has been quiet on that front. that is partly because they are worried about that compression after the fed starts easing.
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analysts think the market is going to go up but not without a bump along the way as the fed adjusts things going forward. >> moving from private equity, a big name there and a big name and hedge funds. banks, saying there is very little return on equity and he is not interested at all in european banks. different story about gm. out think they are almost and there are prohibitions put on management by the u.s. treasury making government motors and it will be general motors again. the back of the treasury's final sale, i think it will release management to be able to put in place plans and
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do something that is shareholder friendly. >> going from government motors to general motors, but he is not the only big-name name guy in this trade right now. you have berkshire hathaway. it is a long list. buybacks and dividends. that is what they want to see. investors want to see the cash flow coming back to them and they will probably get it because you have been talking to reporters that say gm is releasing their biggest product launch in a generation. >> listening to matt miller a little bit too much every time that video comes on. >> when you talk about a company like gm, it comes down to product. it is a pretty compelling story. think you for joining me,
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christina. from private equity to hedge funds, we bring in a tech expert that is one of the most active m&a lawyers in new york. andhe last two years, he his team have closed more than 800 venture and growth deals. of thegetting to the end year, thank you for coming in. you and the senior partners at your firm, you have this really healthy exercise and each give one page of expectations of yourself and of others. you say you have a little bit to learn from keith richards? >> i believe that you pronounce it with an f. we have to get the rolling stones correct. the senior partners in my
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group, we write these expectation pieces. i wrote about this a little bit i feelis nice because like i have to earn their respect and trust. we have the continue to do that with each other. it is healthy, but we calibrate well with one another. >> by the way, we had a whole and now we my head are past it. >> i partner that started the group with me when there were then,of us, every now and he will say that we had a fight i didn't know about. >> even if it is after the fact -- >> i prefer knowing after the fact. >> you did speak about the rolling stones and changes in any team that are necessary. >> he talks about his
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relationship with brian jones who was ousted. as roles change and if someone is not catching up, founders have to talk to each other. seems like a logical time to do it. >> you say it is helpful if you >> whatf-knowledge? happens at the year end, who gets time off. if you have resentment but don't say anything, it is really hard to justify continuing to have that resentment. you haven't communicated putting things down that everyone has to pass around and talk about. >> one rockstar to another, you
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take issue with something that he says about fundraising. and you have implied that he has two democratic a view? >> i would say it is not democratic enough. a legendary investor, early investor in iconic companies, really built an incredible thing. word blog post, he is a brilliant guy and very successful. should either deep pirates i or ignore associates adventure funds as you go into fundraising. i think it is shortsighted and not great advice for founders to follow. >> his point was that if you're not coming in with the senior partner, no one cares.
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>> make a beeline for the partner is what i got. he is even saying to do you prioritize and they are not really vcs. >> and you say good leaks can come from anywhere? >> i have seen that happen time and again. >> great to see you. quick break to take and when we come back, the chinese are cracking down on bitcoin to cause a big drop in value. we will show you what that means for digital currency. the 26-year-old entrepreneur behind the online community that finances the winning project. and of the world's leading
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online marketplace for vacation rentals, it just acquired the largest vacation rental site in australia and we will ask about growth in that region. ♪
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>> for 30 years, we lost our way. >> what is the fastest-growing car brand in the world? cadillac. >> does this brand have what it takes to get out? >> technology is disrupting all kinds of businesses, vacation rentals included. it comprises almost one million paid listings in 171 countries.
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with me from austin, texas. company,se of your more room to relax, less cost than a traditional hotel. >> we started this business in 2005 and the demand keeps going up. just in the u.s. and europe alone, 21 million families own second homes and vacation outlets. better than it has ever been. see demand up sharply over the year before. >> not that surprisingly, there are a lot of sunny spots where people who have vacation homes want to rent. >> no matter what time of the year, you find that the beach is
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always the most attractive option. tends to comprise 70% of vacations. we see beach at the top of the list, hawaii, various marks and florida always the biggest. mix of skietty big destinations, two. breckenridge, lake tahoe, aspen colorado. >> how do you make your money? companies and people are paying you to list homes. is there any other revenue source? >> the question changing quite a bit has been big news over the last couple quarters. the owner of a home paid an annual fee to be on our side like a classified listing and they took whatever revenue they could.
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about $350 a year and makes $28,000 a year. new product which allows homeowners to come onto the site not for free, but they pay a commission for every booking. we will allow both subscriptions as well as commission-based. it will be good for homeowners that don't know how much money they might make on the site. >> a free trial, never a bad thing. the largest vacation rental company in the asia pac region, $200 million for this company, when is this acquisition going to pay off for you? the market leader in australia.
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the u.s. and europe and south america as well as asia, typically they are already great companies when we buy them. what makes them better is that whenever we buy a company, we take the properties around the globe and add to the site we have acquired. just acquired 33 thousand properties in the asia-pacific that get added to the u.s. and european sites. the good businesses tend to get better. >> it will remain a key part of your strategy? it has been because travel is a global business. a leader, we want to make sure we have options everywhere. there are others where there is already a market leader. bring them tend to
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in as part of our portfolio and apply technology expertise to make even stronger companies. ceo of home away joining us there from austin, texas. china banning banks from getting big point transactions. look at what this means for the future of virtual currency. ♪
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>> in today's edition of allocation nation, we get under the hood of the city of san jose police and fire retirement program. it has allotted 600 million of sean ishedge funds and
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here as a trustee of the fund. great to see you. eight percent is not good enough, but how are you trying to preserve the benefits for the people that need them and basically make changes that are realistic. away from the classic 60-40 allocation and got a much more diversified portfolio. a lot of different asset classes. >> i imagine you had to make that argument, was that like walking on broken glass? >> i worked with a couple different boards, and the fire police board has outside members that are citizens that worked in the hedge fund industry. it has been an easier process to update the allocation.
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>> as far as how you chose which ones, $600 million going into 15 funds, did you pick specialties? the ones we have seen outperform our obvious exceptions, but not global macro? very specific situations? >> we do have some exposure there. we have other funds that have struggled a little bit. we also have funds in that distressed credit space. >> each one is performing better? it just seems it is a better place to be. >> $90 million about two years ago, we are starting to move out with $155rategy million and we think the trade
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is over with a nonagency mortgage trade. things were cheap and they have come back to a more fair market value. we are moving on to direct lending strategies in the u.s.. we are starting to allocate europe. >> those funds are distressed? with the transformation of banking regulations, banks have the put more collateral against loans. the amount of collateral has gone from eight percent to 18%. to lend to thent smaller and midsize companies. ist we have been able to do investors traditionally are
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coming out of commercial banking sectors. credit andhey need we're are there to help provide that. >> we have honestly seemed large pe firms do that as well. basically stepping in and playing the role of banks. oak, we are now starting to really take a look at moving towards europe. those starting to not be diversified off of the balance sheets. and that is the upcoming opportunity for pensions. board trustee of the city of san jose police and fire department plan. check on trade here. it you will see red on your screens. across the board, we will bring you more and another
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30 minutes. ♪
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>> welcome back to money moves where we focus on innovative alternative investments. we want to get you caught up on top headlines right now. all assets are artificially elevated. he explained why on market makers. themnds, stocks, all of are basically mispriced, artificially elevated. i think the fed knows that and wants to diminish the effect to the extent that they can.
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what they will do in terms of transition, we think, quantitative easing at the end of 2014 and eliminate it if they in and use forward guidance terms of policy rate for a long time. going from mainstream finance to alternatives. theing to fund a startup in peer to peer lending industry called orchard. individuals and institutions making loans or parts of loans to borrowers. fox says the super bowl is a sellout for advertisers. game, theynfl title sold for as much as $4 million for a 32nd spot, up from last season. bitcoin was a hit, virtual currency seen value skyrocket to
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$1000 apiece. critics are warning of a bubble. alan greenspan is one of them. >> you have to really stretch your imagination to infer what the intrinsic value of bitcoin is. it and't been able to do maybe somebody else can. if you ask me if this is a bubble, yeah, it's a bubble. >> china is banning financial institutions from handling bitcoin transactions. there is a lot we could do with that sound boy -- soundbite. do we take the high road? saying if you are a banking institution, you can't have anything to do with it. >> in china, we have a graphic here that will show how rapidly both the price has risen in
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china and how rapidly the share of the bitcoin market has really gotten up there close to 80%. the chinese authorities are saying to hold on and calm down. people can see when they look at the white line, it is all over the shop, but there is a statement saying this is actually a threat to the yuan but it seems really far fetched. >> remember they have a fixed lifespan. only going to be 21 million produced at the end of the run here. the chinese economy can absorb that no matter what value you put on the individual. see here generally is the idea of governments, merchants, crooks, speculators waking up to the general idea that maybe there is something to
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this whole idea of digital currency. >> there are other digital currencies out there. others have been very intelligently designed, this was kind of the thing that made everything go. lots of other systems say to take the basic idea. what is more interesting is not the bitcoin of the world but things like the payment system being developed with over half of the adults in kenya using the system which is digital currency on a cell phone. pretty remarkable. >> this idea of decentralization? maybe the central banks will have a lot less power? china seems worried about this idea of control. a great way of projecting power and policing activity.
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are veryal governments concerned about this. libertarians are thrilled. they love it for the opposite reason. as digital devices grow and people get more comfortable with , there will be more acceptance of these sorts of things. talking about it as the digital currency reminds me of people talking about aol as the internet. it's really just the tip of the iceberg. >> when we come back, the pioneer in the mobile ad space called cargo. ♪
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>> welcome back to money moves on bloomberg television. companies know that they need to capture your time and attention there, so enter the exponential growth of the mobile ad industry. i sat down with the founder and ceo of cargo at the new york headquarters. fortunate andn lucky to have almost every
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single major media company working with us. we had warner brothers and a half of the major magazines working with us. >> and we have a lot of the web companies as well. we see a real value proposition where we can provide technology to them and create advertising integration for mobile and we can build real revenue around that while selling to them and advertisers. we have been able to solve the fundamental problem of how to make money at mobile if you are a premium publisher that does not have enough scale. in and we solve this for traditional publishers. clients want to know that they have a partner that understands what premium means and it is respectful of the brand and how long it has taken to build that
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brand. to get high dollars and assist their sales force to build the business. if you can help them understand the mobile and bring scale dollars that they wouldn't get themselves, there is nothing better. they say we have totally solve their mobile advertising challenges. i know you have a lot of social media integration, it hits a lot of different categories. we have learned that brand themselves, publishing brands gardens,er homes & these great places consumers love to visit.
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how do you build equally great advertising experiences? quack many are creative ? differentnciso is from new york and the valley. i think that new york has some of the best designers and interactive creative people there really stems from the creative advertising industry that has popped up. . is design and creativity the next step? >> there is a bifurcation, right? on the advertising side, how do we replicate the stock exchange where ads are basically commodities to get that distributed throughout the world? >> as far as the number of clients, what kind of growth have you seen in the past three years? >> it has been incredible.
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virtually every fortune 500 company is working with us in some capacity. >> is growth a challenge for you now? is there a right pace? people a adding 10 month and breaking at the seams where we don't have enough space. we have a reception desk here and we realize we could have great collaborative space. engineers. and one person wants a quiet place to sit back. they are coding away. some of them are on vacation, obviously. i am pretty much the only person with an office so it's an open door policy.
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the office,t of they use my desk for telephone calls. this is the chalkboard room. it is like a fun kitchen. that blackboard concept keeps coming back. that is our website. that is the code for cargo website. artist thattattoo came out of brooklyn. this is our last supper table. it is very collaborative and communal. it symbolizes the kind of creative environment that we try to bring to the office and the
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work environment. founder.o and the founder of a startup that takes your ideas and takes you onto shelves of major retailers. ♪
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>> quirky turns and ventures ideas, ideas submitted online and fine tuned by the community with products showing up on shelves all the time. then is the founder and ceo of quirky. an example of collaborative product development, i know you brought some pretty cool ones here. your background is pretty crazy. you asked your parents to take a second mortgage out on their home and you developed this
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great battery pack for the iphone? >> i was trying to figure out a way to not listen to my teacher. was aght all i needed little bit of money so i convinced my parents to remortgage their house and flew to china, realizing i needed more than money. that was a company platform for invention. you say you need more than money, what else do people need? it, you is one part of do design and manufacturing. deals with retailers, marketing, packaging. all that is fine. if we came together as a community, we could push so many great ideas out to the world. >> this smart tray lets you know when you are at the store if you need more eggs.
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>> the first internet-enabled egg tray. we formed a great partnership where we work together with global community to get great ideas out to the world. >> it says you have four eggs left? >> it tells you how many and it promotes the led here which tells you which eggs are the oldest. >> you have these 3-d printing results? ge started the first 3-d and lots of people with designs and products. ge 3-d printed them and set them out as gifts.
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there are nine other people that themned gifts and ge sent 3-d printed gifts for the holidays. >> who are the biggest retailers? i imagine on the distribution side, they ask what the school company is going to come out with that we can sell? >> we are partners with home depot, best buy, target, container store. >> you have raised something like $150 million in fundi? >> go with that. we're doing our best to make invention more accessible. we started with a simple mission statement to make sure that the best product ideas in the world ship. we started out doing relatively simple things like management products. we partner with ge and leverage
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a lot of their skills i do compelling products. they don't have to reinvent the wheel. the pair that with people at home that can figure out how to use these technologies for consumer goods is absolutely amazing. bring us mored things. it ben kaufman, founder and ceo of quirky. when we come back, a full isding update. part of what coming back on "money moves." ♪
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>> founder of an ally startup that provides real-time market analysis for advertisers. the company is called shift and is quickly becoming a leader in social advertising, functioning and in the, meantime, it is almost 56 minutes past the hour. time for on the market.
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me now, she has everything you need to know. have this decline in stocks and they are deepening as a get into the afternoon. fors the fifth down session the index here. better than estimated economic data this morning with investors trying to figure out when tapering is coming. report,s time for the tickerder financial trading lower. the volker rule is ready for prime time. federal regulators are barring banks from proprietary trading. and how much latitude will wall street get. peter cook is on capitol hill with the answer. it will be tougher than wall street thought? >> that is the message we are getting today.
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pretty much from federal regulators, they say that from beentart, the banks have fighting this idea of the volcker role. and also because of the other rules where they act as market and sellinging securities with their own customers. that was not the intended goal of the volcker rule. so you have regulators that have lobbied aggressively trying to discern exactly how to write this language and protect those businesses without undoing the goal of the original rule which was to prevent against more risk in the system. been leading the push to write the toughest language possible notable because he is the former goldman sachs executive. on final rule up for vote tuesday.
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banks to showe that they are hedging a specific risk. not their entire portfolio. the speech on regulation here in washington signaling. risky proprietary trading while protecting economically essential activities like market making. the rule prohibits risky trading that like the london whale with mitigating hedges. it puts in place strong compliance requirements in charge of financial institutions to make sure that the tone at the top sends the right signal to the whole firm. >> the reference to the london whale significant because it was trying a portfolio hedge. the bottom line is that it will not be allowed. for theconsolation bank, at least they get a final rule of more than three years with some degree of certainty. >> what about material effect?
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they need to see the final language here. you have the top five banks in the country, 44% of the revenue. $44 billion came from principal trading and market trading functions. part of the rule goes after hedge fund and private equity. the stakes are very high. cook our chief washington correspondent talking about the potential effect on financials. we will be on the markets once again in 30 minutes time. street smart is next. ♪
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>> the world'stwo most important phone companies are on the verge of an unprecedented deal. world's two most important phone companies. .hen, checking into cape town the ceo of marriott international on the deal that made him onef


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