tv Money Moves With Deirdre Bolton Bloomberg December 17, 2013 2:00pm-3:01pm EST
that has to get its act together and having an environment that for most business investment and private sector like growth -- sector led growth. that was mohamed el-erian on in the loop this morning with betty liu. we will get the conclusion of the fed's comments tomorrow. "money moves" starts next. ♪ >> welcome to "money moves," where we focus on alternative assets. by jeter bulletin, we show you what investors and entrepreneurs are doing as well as was going on and hedge funds, private equity, real estate and more. today the ceo of the biggest private equity firm by assets joins us. 's steve schwarzman
tells us what he thinks but opportunities in the new year. allowing investors to pool funds to rest -- invest in real estate. plus it is the new "words with pp is at theiza top of the apps category. first up, we're were to put the focus on private equity. we're good to start with a firm getting eager. since the five it -- financial quadrupledkstone has in size. ceo steve schwarzman wanted to get even bigger. he joined erik schatzker earlier. where does he see growth? >> wherever it all where it he is -- already is. it also isn't really slowing down. yes a couple of years ago blackstone was growing at a pace of 29% a year, this year is on
track to grow at about 25% a year. not a really big slowdown if you'd consider the fact that the firm getting much, much bigger. the shorts would have told me the past that they can see like stone being twice its current trillion with half a dollars of assets under management. the question is how it gets there. is blackstone going to run into a warren buffett wobble board is going to have to start hunting elephants in order to move the needle? this is what he said when he asked him. >> are basic businesses are going to continue to grow. we find wide types of areas to go into, whether it is geographically, or with new products. part of the reason that is important is to give our star younger people something to run. this way we can keep growing, and we don't lose people, and we develop areas with high returns for our limited partners.
the world is a big place. globalization has opened a lot of opportunities for firms like we regularly take advantage of those. >> what you get from swordsmen there is the idea that blackstone isn't going to stray too far away from what it already does. yes over the last several years and is added credit for example, it is now runs bank credit investing funds, and has done things like white bread till housing. it is the number one landlord and america, let's see if this not see that as being too different in principle for more blackstone started in real estate and private equity. figure is a pretty impressive forecast. 'sat role do blackstone individual investors play into this plan? >> they are increasing a role in blackstone's future. into the house and 10, blackstone only had 600 million dollars of retail investor money in we're talking about individual investors, not
institutions. they areieves that under located to equity and hedge funds because consistently over time they have been able to deliver excess returns over and above the market average year in and year out. perhaps not in a year like this, but other years, most definitely. the question that retail investors have a scenario like this is quite willing to trade liquidity? with mutual funds you goodbye in sever -- you can buy and sell every day. liquidity is overrated, you paid much too high a premium in his words, for the pleasure of being able to buy and sell whatever you want. that premium over you just get a higher return over time. that is steve schwarzman for you. >> that is the idea is thank you, as always. staying with private equity, the
publicly traded credit business . .pe reporter with me now this is a fund that they decided to take public about why the timing of this deal now? >> what kkr is looking for and some funding to bolster its distribution stream. that iteam of income can pay out as dividends. what it saw here was is $2.9 million portfolio of assets, a lot of which has high yield, current income that it can take in and pay out to its shareholders. basically this vehicle has been public since 2005, as you mentioned about -- >> and has not done that well though. it is down something like 10% what i was doing some of your notes, looking at a lot of investors unhappy with this strategy. >> and had a strategy review --
reboot probably twice. that strategy sort of ended and change the structure into a partnership to this year and has gone through a little bit of a change over, it would over in management. the ceo left and investors said they could not really understand the business, it had these disparate strategies. it needed to streamline a little bit, and take a are stop -- kkr saw an opportunity. with a fund merged before, that is its creation story, right? >> they did. , and it wasd kpe listed on the new york stock exchange, that is how kkr shares
started trading. >> going to $9 billion, so the -- that is theot largest of all asset firms. what is it going to do that cash? bigt has been a very differentiator for the firm. this was the analogy in the past to start new strategies, to start a fund, to use it for strategic m&a. the balance sheet will be $9.3 billion about it is very liquid stuff on that balance sheet, they converted into cash, use it to acquire more platforms like it did with the hedge fund business. cashes that balance sheet the investments greg gould -- the investments, and can go to nlp. an lp.
they need to show shareholders they are going to use all of these assets into cash very wisely. investors are waiting to see that kkr can prove that it really can put these assets to use in higher yield investments. >> thank you. we just brought you the latest on two big ivan equity firms, take a are and blackstone. as usual investors have been involved in private equity for decades. the jobs act allows individual investors to have access to the same strategies. rick lake is here now, he is a he says weanager, are heading into a golden age for liquid. great to see you. >> we were just hearing from erik schatzker who sat down with steve schwarzman, just how important individual investors are to blackstone but even
though blackstone already has $250 billion in assets under management. does that surprise you at all? a firm that size are willing to get bigger? not surprise me, it is about diversification, and all investors need to never survive -- need to diverse affiant. ify. we are delighted to see great practitioners in the alts area. few different catalysts, the jobs act which makes it easier to reach out to nonaccredited investors, those have the million dollars. had a lot year's docs of volatility, and so investors looking for-year-old -- for the yield. access to alts is easier than
ever before. >> of those products, where are you seeing the most success? >> by sheer bulk, it is the most till fund world -- mutual fund world. some prognosticators said we are heading toward 2 trillion. there are a wide variety of strategies we could include. >> where do you think, and how do you think the average -- what percentage of the portfolio should this be? >> about 25%. with individuals in his left 5%. five -- les s than borrowing from stocks, barring -- borrowing from
cash, and diversifying their portfolio. >> you basically have a mutual and legal structure, wrapping strategy into that. strategies are liquid, they can be long and short stock, and it is very easy to put those types of strategies individual fund format. >> great to see you. thank you for stopping by. quick rake, when we quizup is the fifth most downloaded game on the itunes app. we will be speaking with one of the backers next. this ceo and founder of real t- mobile will join us. at online market place where you can pull investment money -- pool investment money. if you get locked out of your to hearou may want
>> welcome back to money moves, live on bbg television and streaming on your phone, tablet, and at bloomberg.com. it is one of the hottest apps out there right now, it is the modern version of your little pursuit, and it is top at the -- top of the apples apps can category. i am sad i do not have my phone cannot do a face-off with you. about 100,000 new users are signing up a day. partly it is because underneath
the possibly engaging quiz challenge game, is a social network where your friends start challenging it and inviting you to visit. there is a real kind of network effect. >> all your competitive order nine alloying fans -- borderline annoying friends have a new toy. >> because it is trivia, and it appeals broadly. new categories get added every day by the company and users. >> how do you know which ideas to back each year? hard atve looked really the mobile space, the gaming specter in -- sector in particular. this was driven by the team in particular, and then off-line
really active, and taking that a movie online, and the social fabric that we built might really feel like it has. >> as a venture capitalist, honey make money on this kind of app? >> the most important thing for any game is to make the game itself compelling so that people want to invite their friends, i want to challenge it, we start playing. to activeement leads usage. once you have that high level of a -- engagement about what kind of monetization models can you lay on it? crushthings like candy fors higher purchasing better models. you could run the anchorman trivia challenge cap or segment. >> borderline getting into this
area of sponsored content that is going to be big over the next year. >> people interact so much with their mobile phones, and the factor of that device is really changed how brands have to reach consumers. so trying to have a compelling set of content that you can fit into a small screen and make it organic that -- organic ment.e trying to fill this void of helping that market. >> i saw that on letterman seeing -- talking about anchorman two. . string aside 40% lift in sales because of him. >> ron burgundy can sell cars. talk more about media and sponsored content in the new year. they give for the -- thank you for the fun.
people should pool their money together to invest in real estate. what gave you the idea? manager atalth heart, so i came out of the wealth management industry, and tried to work with on nonprofits, and our wealthiest clients were real estate investors. money has been made in the real estate in the u.s., and it made sense to bring that online. but asre not in new york far as some of other spots in the country, where is a mosys consult -- where is that most successful? the largest tenant we have done so far is a shopping mall. large anchor stores, a really large property that an individual as dutch investor could not get access to. we've done other things like apartment building, pools of single-family homes, and we grab some of the first self storage
facilities in the nation. >> how many investors got on ord that?at -- board for >> win32 investors who invested in the project for us and it was $32,000. we saw all varieties. there were investors that it $25,000, some who did $50,000. really up to the individual investors how much they were interested in contributing. as far as you could straight -- screening investors, how does that work? $20,000,o on and give but if you found what i was lying, how do you keep that element out of this? soeverything is done online, they are signing their legal documentation online, and their funding directly online. we will know immediately if they do not have the funds, and the funds do not clear. the worst thing possible is to get an investor who is a master investor.- nasty
>> what about conflict of interest? how do you take care of that? calling our investors, making sure they understand the risk of the investment by making sure that they are the type of investors that should be in this type of transaction. we are also running the three software to do the equivalent of kyc, or know your customer. crossed 10 million online at real t-mobile.com -- realty mobile.com. >> how many people are you working with now? >> but there are 10 of us. building this out with just nine other people. it is really all about the team. i would not have been able to do this without these wonderful people. >> congratulations. --e to protect yourself from
>> we're trying to be the zap those of the commercial mail ppos of thestry -- za commercial real estate industry. >> it is 26 minutes past the hour but that is time -- that means it is time for on the markets. picture see that mixed there, all eyes and ears awaiting the feds decision to borrow. in the meantime, u.s. stocks down, commodities as well. we'll bring you all -- more on the markets in 30 minutes. more of "money moves," up next. ♪
them gois "money moves where we focus on innovative alternative as dutch investments. israel is a hot tech sought in tel aviv stock these changes motivated. the ceo of the exchange is stepping down. herpoke with her about tenure and the advice that she is giving to her successor. >> one of the things that i'm really proud of is that we became a market. it is not something that you , it is something that
we should use to our drainage, fuly tell do is success the story of israel over and over again. >> speak to many technology company, many who offer audios in the u.s., or of ipos in the u.s. recently. if they do not think about listing here because the natural home for an israeli tech company is the nasdaq. how can your successor chains advised that to get israeli secondaries to list here in tel aviv? >> that is my second regret. not being able to convince the regulators to ease up. they overregulated the market, and that is why comedies decided they should leave israel and have an ipo somewhere else. >> what other measures would help it more investors into the
tel aviv stock exchange? increased values overall? >> we started with something trading,xtending our and turned out to be much better than we expected rate more from the traders to have trading. that is part of the reason why believes are picking up. new production change in the absence off -- options market. go signobably going to an agreement with the leading exchange. fortress --sue the the futures of tel aviv, so we to those thatible have their act axis to the very
big level exchange. >> that is another level of consolidation in this area. soon,you foresee the day in a few years time, when the tel aviv stock stage would --ome hard of a larger group part of a larger group? >> we have an alliance, maybe we can see trends and get everything we can out of the alliance. but not be swallowed. position to turn down, but i believe it should have its own home market, and it aelild be good for isre market. there should be a combination,
sometimes of life between the stock exchange in the foreign exchange. >> we wish you the best of luck in the future. thank you so much for joining us. aviv executive of the tel stock exchange for another couple of weeks before moving on. back to you. of tech and innovation, we have been looking at virtual currencies. today is day seven of bloomberg tv's 12 days of bitcoin. matt miller has been buying pizzas with it going, people have been set up selling and sections of it going. you're a good sport. funhis is the most i've been involved in. i was thrilled to meet the people involved in the community rated they had a great ip a down there. it me show you what i did,
had my dog along for the ride. let me show you what i did in brooklyn. ♪ appointmentmade an for deed to get a walk while we go to a grocery store in brooklyn, and why some foods and drinks with bitcoin. buddy. we are here in fort greene which is the heart of bitcoin urchins in new york city because the blocks, athin a few bunch of merchants that accept tcoi i will do all of my shopping on bitcoin. i saw something that tom keene as i owing to actually love. cream ale, i'm bringing this
back to you, tom. this is a bar that accept that going and every internet kid knows about it, but we decided, check it out. you know it is funny, a lot of people think about pizza when they think about bitcoin because that is the first thing that was ever purchased with the virtual currency. 10,000 bitcoin for a pizza. i'll he seemed to run into beer when i'd run into bitcoin. >> i can't imagine the reason. i am so glad that you got in on the it's going reporting. >> he had never been to new york city before.
>> what is the incentive for stores or merchants? >> the incentive -- >> it would be a hassle for them? >> not at all. if you use a third-party like bit pay or some other third p arty, venue is emerges only see dollars, euros, yen, or other currency you're charging. i pay you in bitcoin at the point of transaction it instantly translates into over -- what are currency once you and you get it. not only are you getting a buyer that has another way of a at euros so avoiding the four percent fee that you would get for amex. >> the merchants must love that . >> he didn't like new york city outside, but he might like it
>> it is now time for your bloomberg top headlines. russia says it will pop -- by $15 billion of ukrainian debts to defray cost from russian gas supply. there has been big protest in ukraine, the bigot since 2004, sparked after ukrainian officials decided to back a trade and political agreements that they did russia -- that favored russia versus the eu. angela merkel has been sworn in for her third term as chancellor . it took her three months to
build a grand coalition featuring her rival party. the mega millions jackpot has just sort to 630 $6 million. everybody in this newsroom running out. it is the second largest lotto in u.s. history, closing in on that record 656 million jackpot which was split between three winners last year. the odds of winning are about one in 259 million dollars. to d.c.,o down washington is a step closer to a budget cease-fire. we're bringing an arc chief washington correspondent peter cook. he has all the latest on the wrangling. what is going on? >> the latest is you can pop the champagne cork. the senate following the lead of the representatives today negotiating a partisan deal today. about 67-33. they needed 60 votes to wrap this thing up. 12 republicans joining democrats
giving the bill degree like to move towards final passage. that could happen as soon as tomorrow. this is a good cap because it is, as you said, a budget cease- fire. a deal that neither side really likes, but they like it better than the alternative. the alternative was the prospect of more government shutdowns, more rice management here in d.c., more of the two sides going after it other over the budget. they decided in the end it was not worth it, they should back this deal which set spending for the next two years. it does nothing on taxes and entitled rogue rims, but it does at least reach a cease-fire between the two sides. we're looking for a final vote on this as it is tomorrow afternoon, and then the final work of the congress, and the senate in particular that confirmation of janet yellen. republicans still standing in the way of democrats and terms of procedural hoops, even though they did wrap his budget deal up. >> thank you.
peter cook with us there from d.c. we are going to look at inflation falling faster than jobs. what it means for the fed. bob rice is here, and i know that people are saying that the fed may differ because it is closer to part of its dual mandate, taking care of employment, but you say that is only half the story? in fact half the mandate. jobs, and it is making little progress on that, and the other is price stability, and what is on here is that the closer they get to the job target, therefore the big -- brother way they're getting right now from the inflation target. >> springing up lice -- price stability, there are a couple of chart that you sent us this morning which really show to what extent there is this the virgin -- divergence between the unemployment rate and the indicators of inflation. yellow area shows you
that unemployment is slowly nudging down, but at the same time they are getting farther and farther away on their inflation target because inflation keeps dropping. while the unemployment rate has .8%, inflation has fallen about a full percent. christ this is a critical point to bad people criticizing the fed, saying this inflation or he, deflationary dance has been very dangerous. >> it really is very dangerous, and it is a very interesting thing about why it should be true. fromarther away right now reaching both of the dual ,andates, at least cumulatively look at how big the bar on the far right has gotten. when your brother way from reaching both goals today, then you work with qe3 started. >> what role was monetary
policy playing in this? >> with all this qe overt over an dollars -- trillion dollars, why are we not seeing more inflation? actually inflationary -- deflationary? is more boring than the mechanics when it comes to qe. the fed keeps talking about low interest rates, low interest rates, low interest rates, that transits to low inflation in one that in people's brain, and the market is that that simply listening to what the fed is saying here. >> the s&p up 25% this year. thank you for joining us. you haveome back, if ever been locked out of your own house you will want to hear from our founder -- our next guest, me.y ceo of key ♪
>> if you have ever locked yourself out of your own house, you will want to hear from my next guest, the founder and ceo of keyme. you can store, share, duplicate keys with information that is stored securely in the cloud. just locked yourself out of your own house 70 times you figured you had to have a solution? >> it was my wife, actually. >> waited for her under the bus. keep it moving. focus about how did you know that this product was really going to work in the big apple? , you is a massive problem have about 2 million keys copied every day, and about 5 million lockout easier -- lockout each year. we think it is a very interesting space to come in common with convenience and value. >> do you think that people were
ages at first that the key pattern was in the clouds of war ? somewhere. store any arsenal arsenalion -- information. the proof has been in the growing user base, and artie have tens of thousands of keys stored in our system. some people voiced security concerns, but we are more secure than existing to medication packages. >> how many downloads have you had? >> we've had tens of thousands of downloads, and tens of thousands of keys stored. people are starting to do valuable things with the service. we're solving lockouts, and copping a lot of keys for our users. people rave about it, because we are good with reception.
to not bee you doing taken over by a company trying to copy you or some of the smarthome tech that would rival your product? >> a great question. the thing that gives me confidence that no one is going to copy this overnight is the tech that makes our platform work is actually extremely challenging. we let you take a picture of your key from your phone, and the core of our technology is finding out all the geometrical features of your key. that is really hard. we have an amazing engineering team, and they spent the better half of the year developing this technology. it is pretty challenging stuff. on the electronic lock, there 3 billion locks in the u.s. --
the fed meeting, but we are off the lows, the s&p down about 5.20 dead deck out about two points. really little change at this point it. some datareacting to from november. time for today's sector report, and with just one shopping leak week -- week left till christmas taking a look at winners and losers. dy for joining us. we're talking about our business shopping. sent over a list of the winners and losers of the struggling companies. which retailers are going to, this tally see the best this holiday season? >> macy's. they continue to partner with key players out there to add nuances to their stores such as finish line and lids.
dick's sporting goods have really done well in the c older weather,. . ross's is doing well in the price stores. =--- >> best buy, a stock i would not would be -- i thought would be priced out by amazon, why is it on your list? >> showrooming. they are able to go in and match the pricing. if you bought in-store, or if you bought online, but act up and store, they gave you some kind of bounce back to come back into the stores between december 8 through the 24th to spend even more money.
they knew by getting people in the stores not only with a match the specific item, but more people would be doing the shopping there. >> edited -- a strategy that seems to be working for them. >> the trends have been tough, able to gett been rid of all of their inventory. sweaters and sweatshirts are 50% off. we're a little bit impacts i nordstrom -- are plucked i perplexed i nordstrom. abouthad a story recently a phenomenon i have never heard t, higher earners that are not yet rich. thiswill be spending less holiday season. that may hit nordstrom less than macy's -- more than macy's.
toit is a little bit early say they have the right strategy, but they taking some of the things that ron doesn't put in place from a branding concept and provide -- combining that with the promotions to drive business back into the stores. the stores look better, the staff has an energy about them, and we're seeing shopping bags from jcpenney's around the mall. >> thank you. we will be back on the markets in 30 minutes. "street smart," is up next. ♪ . .
>> sitting on their hands and staying still as traders wait for the big fed meeting tomorrow. all the indices down just a touch. the dow jones down for, the s&p off four. 59 minutes to go until the closing bell and we are scouring every market for your last trade today and the first trade for tomorrow. a lot of hesitation and concern ahead of the big meetings. the question is will they or will they not taper? they?l they or won't there was a bloomberg survey one month ago or 16% of the people surveyed thought there was a chance of some sort of december