tv Money Moves With Deirdre Bolton Bloomberg December 16, 2013 2:00pm-3:01pm EST
that doesn't for on the market, we will be back -- does it for on the markets. "money moves," starts right now. ♪ ," andcome to "money moves i am deirdre bolton. we let you know what is going on in private equity and more. hedge funds means $300 million just to break even, and that is from the head of a group that will be joining us with more on the business of hedge funds in just a few minutes, and we are going to show you how you can use a virtual currency to save for later, and dumping gold back
at the fastest pace in a decade. more straight ahead on "money and breaking news. this is concerning the nsa surveillance program. we are going to go to washington, d.c. our chief correspondent, peter cook has details. >> a lethal blow for the government surveillance program, including the ball selection of american phone records and phone records overall. judge,as a federal court a bush appointee, who said that plaintiff in a lawsuit against , filed by judicial activists in the washington area, that that case can move forward in the view of this judge and should proceed because the judge concluded that the plaintiffs can properly show that the nsa collection of phone records violates the constitution. he is a u.s. district court
judge and a bush appointee. this is the first significant defeat of the nsa program or any of the surveillance program since edward snowden disclosed the details on these programs, so that is significant here. my understanding is that an appeal will be allowed to move forward also, so the judge allowed it to go forward and then freezing it, and that is the significance, the first real legal setback for the surveillance programs, and it comes at a time when there is an intense debate in congress on these programs and legislative efforts in congress to scale back this all collection program, and the white house also considering its own changes , as well, and the president on friday just received an internal review report done of those surveillance programs by a special panel of experts that the president handled himself. we have not seen the full
results of what they concluded, but the significance here again of this legal defeat. >> an intense debate, and we know the debt ceiling is going to be another one, and intense debate. >> yes, these of the issues congress is dealing with before they leave town, but the strongest one is, of course, the judge and battle, and we have a vote happening as soon as tomorrow on this idea deal that has to pass the house of representatives with both democratic and republican support, and right now, everyone thinks that it will get the 60 votes it needs and that it will be wrapped up in the u.s. senate. it would be suicide if republicans do not go along with this plan, especially because paul ryan and john boehner back to the deal, but we are not sure of the total headcount. some will step forward, and that would normally be enough to get the magic number of 60, 55 who caucus to vote with the
democrats in the senate, but there are three senators on the some are running for reelection in conservative states, including bernie sanders, and he has not made a decision publicly how he will vote, so that makes the mathematics more difficult. the reality is, hard to imagine that the budget deal is not going to pass this week, given the political implications for that, but also, a lot of republicans do not want to vote against it. they want to be seen as depth that hawks, so that is the plan. as you mentioned, it does include a debt ceing hike. that expires in february. that is something to look forward to in the new year, the pricing situation not totally dissipating. >> our chief washington correspondent, peter cook telling us about the prices we
can look forward to in february. an immigration reform. congress is taking small steps. of, this is actually a part the budget, right, this issue of immigration reform? is a shot in the immigration reform battle. this is more important than the fact there is a baby step. there are specific remarks that john boehner has made, and there are republican party arguments, and they are saying that the reason he is doing that is to get some distance with the immigration reform. there is one person knew had worked with mccain, and that is seen as a teen changer, right? >> yes. the job, unless she was being told we need an expert on our
side, so this is a very promising move, and there is good reason for the republicans to do this. one is the true demographics long-term. it is more appealing to hispanics, but this really is part of it. and lowering the budget deficit. admittedly, this is the chart of what the impact is. but you can see when you look at the new taxes that are going to be paid, people who are now legal and can be on the books, the taxes and the gdp impact on we could cbo is saying knock a good six points off the percentage -- >> the argument is if you have immigrant workers, people who are coming to do business this year, they are going to hire
more people, and they will be working and functioning. >> yes, things like not kicking out the students. here,uest students come and then we say, thank you very much, please leave. becomingher people and taxpayers. this is a very strong argument with pure economics about why we want to have this immigration bill passed. >> you mentioned john boehner. what about on the democratic side? is there some sort of reach out there to hire people to help, as well? >> yes, there has been a change in the position in the obama white house, but there have been a couple of big signals. you know what, maybe. and ship is not totally necessary. maybe some legal status just underneath that, but we can make it legal to stay and work here, and also, instead of an undisclosed piece of information, maybe we will let
republicans break it up into smaller pieces, which would allow them to have a much more surgical approach. >> recycling back. job creation and taxation. >> yes. it gives the republican party some hope of not becoming a permanent minority in this country. they are really paying attention to that. this is a priority. they have got to get this right. >> bob, thank you very much pre- of the immigration reform debate and the budget. bob joining us there. when we come back, the global advisory services. what is being seen with the and the of hedge funds, ceo of a precious metals dealer. a guest with me on what this in the new year, and investing in timberland.
"> welcome back to "money moves on bloomberg television and straining all day long on your tablet and phone and on bloomberg.com. a new survey released on hedge funds, and one of the key findings is that they are caught between rising costs and management fees. the head of citi prime finance's division joins us. landscape, getting crunched on fees, does that mean, does that imply that only the bigger funds will get even bigger, because they are the only ones that can't afford to do business? >> we have seen it did bigger. them increase their
assets almost four times from previously,ere 2008, where a small fund has hardly touched. 63 million dollars post-crisis. >> we have people saying smaller funds and midsize funds, if you look at them and can pick the right ones, they can outperform the big ones by a lot, so what does that mean? >> smaller funds can outperform. it is difficult for them to cover their costs, but most of the big institutional investors coming into the market have a hard time focusing on the small ones, and they really need the scale with the institutional infrastructure. >> i was looking through your research, and it seems like $300 million is the breakeven. if you're going to start a hedge fund and have less than $300 million, just wait. >> if you think about it, five
years ago, it was probably closer to $100 million. that five-year time, it has tripled. >> yes, and it is a tough business. >> it is a tough is this, and we were talking about this as far as detroit goes, as more public pensions get involved, and they invest, they're now has to be more transparency, and all of that is more lawyers and more compliance, and all of that just racks up the fees. >> exactly. >> what about the way you're seeing institutions use hedge funds? >> it has been a terrific year for hedge funds overall. we have also seen the way that institutional investors are placing hedge funds, and more and more, we are seeing not allocations coming from the just theve carveouts,
vanilla long equity or the vanilla -- >> this year, you could be fine just doing the vanilla, but, obviously, you're not going to have every single year like that. >> and part of the reason for the hedge fund is to dampen the volatility in the portfolio. it is a great year for them in terms of returns, but they do not want that volatility in the portfolio either. >> how much feedback are you getting about the fees that hedge funds are charging. their are more public pensions they get involved, and they do not necessarily went to pay, and they are under pressure to make that 8.5% or whenever they owe to be fully funded. do you think they will be more flexible with the fees they are charging? >> yes, and we are already seeing that. goingees are already down, and that downward pressure has come because they are
forcing the hedge funds to put more of the emphasis on being able to perform. >> as far as what you expect to see, we are talking a lot about the research you did that wrapped up in the last few expect theseo you trends to continue in the next year? >> yes, we see a few boomer trends, and the biggest will be the continued rotation into equity -- we see a few boom trends. we see three consecutive quarters of flow into that strategy. a strongue to have income element in the hedge fund industry, and we continue to see money coming in. >> i know you do not track right at equity as closely as you track hedge funds, but what do you see there? obviously, the larger theme is more institutional money going into those assets. >> yes, we are seeing middleground emerging, and some
of the hedge funds that sit between hedge funds and private equity, and the whole goal there is to have the liquidity shock -- so we do not have the contagion that we had in the crisis. they can take advantage of any opportunities. >> well, there is a lot of distressed investors out there who say the next two to three years are going to be great. it is a pleasure to see you. thank you for coming in. the global head of a business advisory services company. when we come back, the ceo of a precious metals dealer will be with me. his outlook for gold in the new year. ♪
♪ >> goal has seen its biggest drop in 32 years. investors are fleeing from gold- backed funds like never before. su keenan is with me. is this the slamdunk sell? gold call was one of the most bullish forecasts, and all of the things pushing gold higher are now in reverse. olga fell into a bear market in april, and it is below the 2011 peak -- gulbis fell into a bear market in april. market.fell into a bear sellinghat kick off the ? >> there are high-profile moves that added to bearish sentiment. since january, we have seen a
31% plunge of the 13 biggest exchange is, and it is favored by some because they are easier to trade -- back exchanges, and it is favored by some because they are easier to trade. >> thank you very much. we are going to stay with gold and bring in scott carter, and he is the ceo of lear capital. see you.eat to the prices lower. are you seeing decreased demand for the physical hard asset? >> actually, no. we have seen an increase in the demand for this ago gold, and it has been that way all year. this is not necessarily pertaining to physical demand. >> who is buying? gold.na is buying india is buying gold. individual investors in those markets are buying gold.
are moving onars a ship from the west to the east? >> it is being melted down. heavy bars are being moved over, and the central banks are picking it up and putting it in their inventory. >> what do you make of this move from west to east? >> 75% of the reserves are in gold, but in china, it is only 10%, so china, like every major currency, once you have their currency -- wants to have their currency backed in gold. >> when you reach out to your community, do they feel the dollar is worth less, and that is why they want gold? >> the dollar is worth less. our buying power is declining. gold has been a historical asset to protect you against debt, and tot is why they are trying preserve their buying power.
?> what about bitcoin >> like any currency, it should be stable, and it is not stable. it is very volatile. >> all right, scott, here we go, asking you about the fed. we know we will have a changeover with ben bernanke stepping out and janet yellen stepping in. what is that going to do to the dollar? >> my view is that the paper talk will continue, but janet yellen is new in position and will not be the one to step new into the job and then hit the strongly. i think we will see this later in 2014 if at all. i think the economy is weaker than we realize, and that could be bullish for gold in 2014. >> no revenue, no production, a bar of gold today is a bar of gold later. >> there is no assets it has not beaten, so for diversification in your portfolio, it is hard to
ignore it. it will be great diversification for some time. >> and then the hard asset versus futures, you have heard about the lowest level in years and years. i have heard you say this is not affecting demand, but at some point, those two things reconcile, right? >> yes, there is a disparity between the paper market and the physical market. eventually, that will be reflected in the prize. it is a great time to get in, in my view. learott carter, the ceo of capital. minutes past the hour, and that is time to let you know what is going on with trade and other assets besides gold. olivia sterns is there. what are you seeing? >> reversing the selloff we saw last week in the dow jones, up nearly one percent right now,
6,000, 15,905, and the nasdaq is up, trading at 4032. and ahead of that fomc meeting, the number of economists that bloomberg has surveyed that say it will start tapering has doubled since we did the survey previously. a chancek we do have of seeing a taper. perhaps, those better than expected numbers on u.s. production shows that u.s. industrial production rose at the highest level in one year, and, in fact, it is now back to pre-recession levels. also, we want to show you what is happening with a couple of commodities. natural gas, lower for a second day, with the weather forecast and the colder than normal winter, it will return to normal next week. natural gas is used to heat
wheres is "money moves," we focus on innovative alternative investments. i am deirdre bolton. stocks are higher. output at u.s. factories rose more than one percent in november after a revised 1/10 of one percent gain in october. the fed begins meeting tomorrow, investors listening to see if it will be reducing its monthly bond buying program. grew,2013 luxury spending
looking at the recent china anticorruption efforts. china also has predicted slow growth next year. fda says some companies have one year to prove antibacterial soaps are infected to remain on shelves. say -- they say there has not to show theyata are effective and that they may be affecting antibiotic resistance. an executive at bank of america private management joins us. investing in timberland. doug, welcome. glad to have you with us. we know for a decade this has been a pretty hot set her. what are you seeing now? how does this year stacked up to years past? what as far as an entry point,
this is an outstanding time to be getting in. the housing price is significant. we are looking at a very bullish. . a veryre looking at bullish period. >> construction and related services wanting timberland. >> yes. we see it also with exports. ?> also, what does that mean this western to eastern move, because that sounds like what you are saying? >> a dominant part of our overall markets. import see a continuing opportunity for both western timber markets as well as eastern timber markets, and the panama canal widening. >> ok, doug, i know we have been talking about that in other , but pulp and paper is
driving this. >> yes, that is an additional what kind of historical returns -- i know you were talking about this is a great entry point, it and can you put some numbers to that data? >> we think eight percent to 10% returns, reasonable expectations. words, that is not property that would be a higher and better use. recommendld you investing directly in timberland? what kind of investor is right for this? cannot handlestor the high minimums that are required for direct investment, there is liquidity. the direct investment gives you superior correlation and low
volatility. >> what is the baseline figure? recommend $5 million as a minimum investment for a direct investment. >> and then you have to be patient for, what, 10 years? >> we recommend a minimum of 10 years. biology drives these returns. it is a very low volatility asset class. >> and what do people have to know? >> when you harvest timber, capital gains. that is a pretty attractive component. >> ok, because you mentioned panama, my head is there. with what youe have access to? >> we believe this remains the best infrastructure in the world. the realities are, there are other parts of the world that are attractive. we think the united states should form the core of most
bloomberg.com. a veteran that served to her is in iraq and afghanistan, he thought his troop needed an energy drink to energize but without caffeine. he created a vitamin/dietary supplement, bringing in millions next year expected, and he is , and heder of ruckpack brought some bottles in case i get a little sleepy. so how do you create this while you were in the field? there is a tight group of guys. every single day, we have something to talk about. this just kept pushing in the same direction. >> that seems pretty quick to come up with a winning formula, and $7 million in sales for one year is pretty strong. >> we have been pushing at this have while, and we
expanded our sales and our program. really, it was a whole new business model. >> ok, somebody who is a isfeine addict, and that just the way it is, how do you know that it did not belong in this product? >> our snipers wanted energy, but they had to be entered -- caffeine free. >> shaking. >> exactly. so we based the product on that. we tried and tested until we came up with it. as -- feedback for those who did not see it? >> we had two investors come in, and they invested in the company, and that was a year ago. we just had an update a couple of days ago. everything has been great, and that poured fuel on the fire. >> how much advertising have you
had to do, and how much has been done by social media? >> we have done a lot with social military. we are based everywhere because there are a lot of guys out there. getting somebody like walgreens, who will be carrying the product next year, and do not worry, we have marketing in place. but we want to bootstrap as much as possible before that. >> and how receptive was the investment community? you went on "shark tank." aboutou talk bootstrapping or even family and friends, your idea -- first,have to prove it and once we started to get one- off hits, it started building, and everybody started jumping in. are saying, here, just take it, and they are, no, i want to pay you for this.
military, with just and then it became the people who care about what they put in their bodies, and the athletes jumped on. to get yourlaying kids off on time. >> rob, thanks for coming in. very nice to meet you. ckpack.nder of ru and the tech community, matt miller is with me now. bitcoin. go to break, and this is worth sticking around for, because some people are using bitcoin to save for retirement? how does that work? it caught people's attention when fidelity said it would allow retirement accounts to be done in bitcoin, and they reversed the decision. it came from an investment
trust, a man who has raised about $70 million. it could be the kind of thing that some time morphs into an exchange fund, which your viewers are familiar with, and -- you actually invest cannot invest. they are only accepting investors you associate -- understand the risk associated with this asset. it is obviously a very risky asset. you either end up with nothing at the end of this, or you end up with incredibly meaningful couple, but there are a of financial institutions that allow you to indirectly invest in this fund, and if you have at least $25,000, you can get involved in bitcoin that way. you because weg heard from a tech editor who
and thatne was there, bitcoin is supposed to be mysterious. people were at the meet up that i went to on thursday. there are so many different meet ups in new york. the interesting thing about the bitcoin movement is it is growing so quickly, just as quickly as the price chart is, so a lot of people, for example, accepting bitcoin, merchants, they were not open. maybe they were not as popular in boston or m.i.t. as they are now. up in new york on monday, and there is a different meet up on tuesday, and then out in brooklyn, there is a different meet up on wednesday. i went to a meet up where they were accepting a bitcoin from a pertaining to a
nail salon. there is an incredibly steep curve with bitcoin, and the meet up was pretty great, actually. >> people have been sending you fractions of bitcoin. .he community is in support >> they are all sending them back and forth to each other, because they are excited you can now transport value over the internet instantaneously and for free. previously, it was not possible. >> all right, matt miller, thank you very much. is 12x of matt miller days of bitcoin, and keep in mind, you were hearing about the bitcoin investment trust. we have a guest on "street smart silbert, and we are back in a few minutes with more "money moves." ♪
ng -- thosehose"sei festivus,riends, bringing the holiday back with a twist. what is the connection between this and the other? >> well, we wanted to find a way to be able to celebrate the holiday, and we wanted to find a and give backte to the community, so they got together, and we were thinking, how can we use our own communications platform to do that, and they came up with the and as youtivus, said, it is the holiday for the rest of us. >> it is an infrastructure company, a web service, and you can integrate items.
you channeling the energy of this community to do something nice for the holiday? is our communications platform. what we are able to do is to text the color red, blue, or green, and this will automatically change the color, and it is lovely here. it is allowing people for a real-time feed to see what is going on, and for every text that comes in, we donate one tolar, and then coming back using our own platform, we also sent a thank you message back to whoever has donated by texting, so our platform allows developers to bring in the text messaging capabilities, and so we build an app for the holiday. >> so the san francisco food bank is the direct recipient of this drive at this time of year,
but in general, there are a lot of police departments and fire departments that use your service. >> that is right. are helping to support people who want to use communications. is peoplere finding were already actively leveraging our platform for good things, so we wanted to help things go faster. so the philadelphia phillies, they use us. thatso have a foundation is actively trying to help with the human trafficking situation. this is for all of the developers out there to get access to the communications. go,inda, before we let you what is next in the new year for twilio?
but it of great things, is what is going on with the pupils who leverage the platform. we have amazing people out there who are doing things for good and doing things for business, so we will be seeing what they billed for us in the coming year . >> all right, linda smith joining us from san francisco. by the way, if you missed any of the interviews on bloomberg television, you can watch them with bloomberg on apple tv, featuring live streaming and on- demand videos, just so you know. when we come back, a full update on the markets. we are back in a few minutes with more on trade. ♪
," tomorrow on "money moves find out where a guest sees the new stage of the media and how it is affecting his investment. he will be joining us tomorrow. in the meantime, it is 56 minutes after the hour, and that means bloomberg television is on the markets, and julie hyman joins us. >> markets are bouncing back today, and we are trying to figure out if we will get tapering or anything, any indication, although it looks like people are looking at the glass is half-full, and we are seeing markets rally across the board. was raised toge
per share, at $77 and shares of expedia, their ande target was raised, they say expedia has one of the best profiles in the u.s. internet spectrum, and we are watching shares of a luxury maker. olivia sterns has more on the rise of moncler. a billionaire thanks to this ipo hugey are we seeing such a reception for this ipo? >> it is a lot of money for puffy coats. one man has become a billionaire a hugemoncler, so reception for this ipo, and it was over 20 times
oversubscribed, and this is really about how he transforms a brand. he was always very stylish, and the coats were always expensive, but it was sort of a lesser- known alpine brand, and what he did was take it from the swiss out and bring it across the world and even in new york. 35% in 2012. i was at the flagship in soho yesterday, and they literally had a line out of the door just to get inside, and they sell so many. these?much are >> they start at about $1200, and they run up to $3000, and the ones that have for -- fur are even more. >> i do not why you would spend so much for a puffy coat. it is like a sleeping bag no matter how you slice it. >> yes. again, this is the biggest ipo debut in europe this year, so that suggest that the climate is
rife, but this falls in the steps of two other big ipo, and ferragamo, and you remember the ipo for vince, and those shares are up 50% since they went public, and that was the first since the michael kors in 2011. they believe there is a ton of pent-up demand for luxury. >> but it cannot all be wine and roses for these guys. what are some of their challenges? >> well, their challenge is that niche,e a me each --a coats, and he says one of the things he is considering is buying a manufacturer and pushing out into knitwear.
a $1200 sweater to go with your $1200 puffy coat. "street smart" is next. ♪ >> stocks are coming off their worst week since the month of august. a big rally here as the fed decision is 48 hours away. welcome to the most important hour of the session. 59 minutes until the closing bell and we are scouring every market. it turns out factories are operating in this country at the highest rate, 79%, highest rate since 2008. that is good news. let's take a look at the market. there it is. we shot up early this morning. we have been up all day. same story in europe. up 145 points on the dow.