[closing bell] stocks ending the day higher as the economy improves closer to a rate hike. joe: the question is, what if you miss? the fed has given no clear signs on when it is hiking rates, but it is looking for improvement in the labor market. alix: facebook earnings reports moment -- moments away. are there growing pains? joe: how does grand theft auto explain what of the biggest puzzles in the economy? alix: first, a rally is underway in the markets. a few days ago it was a very different story. joe: we got some very fun stuff that happened after the dollar dope, it was dovish, there was a reinterpretation and the dollar spiked to a four-month high.

alix: nevertheless, if you take a look at the breadth of stocks that we look at what a bit, 36% are above the 200 day moving average. quite low, the lowest level since last year in october. joe: it continues to be something that beck's is the market. another thing to hit on, the shanghai composite of 3.5%. such a wild market, a fun night there. alix: i want to take a deep dive into my terminal to take a look at marchant -- market reaction to the fed. hike for fed funds futures based on swaps, they are pretty much in line. i took a look at yesterday's implications and today's, they are pretty much in line as you can see. me take you back in time, back to the future, everybody -- remember? april 28. you can see as we stand here, standby, the difference we have

seen in the historical average and for an average. hold on, there we go. now you can really see it. here is what was expected to happen and the green line is the current expectation. much more aggressive market expectation now. joe: without we have earnings out and we go to jerk -- julie hyman. james: -- julie: estimates were for $.47 per share, revenue roughly in line. $3.99 billion is what analysts were estimating. excuse me. important numbers on twitter will be the number of active users. the number of mobile monthly active users. , an increase from the first quarter. it is also a little bit ahead of what analysts had anticipated. mobile active users are important here.

people looking at facebook on their phones once per day, 844 million. a substantial increase from the prior quarter. again, that's an important number. overall mobile monthly active users at one point three $1 billion. that's $1.31 billion. revenueimated 76% of ad came up 3% from the last quarter , a little bit in line with what analysts had been anticipating. of course, the obvious contrast with this is what we have heard from twitter, which now has a sort of stated purpose to reach the mass market. then some, there and really reaching an incredible number of people. although i am not seeing the headline of the daily active user number that i gave you guys. it is a little it short of

estimates. that's the danger. going into twitter earnings, estimates and expectations were very low. facebook was very high. pricing in an 8.8% gain in the if youfollowing this look at facebook shares and how they are actually trading following these numbers, we are seeing a decline of point percent, which might indeed be due to those monthly active -- daily active user numbers coming in a little bit below, really a little bit low but analysts had been anticipating. to shares are up 20% year date, trading near a record. that is the contact going into this report and the context you are seeing through these shares. i will see what else we can pull out from it. but that is what we have got thus far. looks like the shares are falling on the daily active user numbers. the rest of the numbers look pretty good. joe: julie hyman on the breaking news desk. we will have a lot more breaking

news later. last night's shanghai composite surge, this is one of the funniest charts i have ever seen in my life. looks normal, jagged, lots of weird diagonals and with one hour to go does this weird bird where doesotion that look like anything of ever seen. beautiful, big curves. there is something weird about the shanghai composite. everyone knows the government and a belated very publicly. looklast hour does not like a normal stock market to me, it is very strange. alix: it is, but i like the little whooshes. joe: is not beautiful? alix: we have some all-star guest for you today. chief economist from goldman sachs, princeton professors, here to discuss the fed decision and changes in statement language. such a pleasure to have you both here, gentlemen.

things thatthe big you will notice is they said they would hike rates when they saw some labor market improvement. people were really focused on this work, some. what do you take away from that? >> it is a baby step coming towards the labor market criterion, they are ready to hike. make aig, they did not changes to language or inflation in terms of wanting to be reasonably confident, indicating no progress towards that, saying that they are still monitoring developments closely. it was a big move and clearly the market did not take it that way. professor, did you see anything in the language that changes your outlook? professor: very little. i agree, it was a baby step. but it was in the direction of a

september lift off rather than december. i would not get too excited about it. if you saw it before it was a 50-50 bet that you. maybe now you think it's 47: 53 or 46:54, something like that, a baby step. alix: part of the big question has been the labor slack in the market. on balance a range of indicators suggest that underutilization of the labor force has diminished since early this year. i pointed this out because they took out the language somewhat. what was your interpretation of this, jan? jan: i did not think it was a significant change. it did take it out somewhat, but on the other hand compared with the beginning of the year it is sort of a truism that relative to the beginning of the year,

underutilization has diminished. we knew that. i don't think that the changes anything. sounds like you did not see anything in today's statement that moved the needle. alix: i did -- jan: i really didn't. if the data is going to be a lot stronger over the next few, that is what i am expecting. you could get to september, but december is the more likely outcome area alix: -- outcome. joe: another word that was in the report, "the committee continues to see the outlook as nearly balanced." there was some question about whether they would remove the word nearly. does that signify anything to you? professor blinder: no, when you just preserve what you said the last time it should not signify anything you they have had this view that the risks are balanced they maintain

that view. the only thing that i might add to what jan said, to which i agree, the eci report is coming out in about two days. at -- that may have more of a bearing on the bidding odds for a rate hike in september over anything in the statement today. would you say that that has more of an impact in a jobs report? -- then aobs report jobs report -- than a jobs report? professor blinder: almost. there is absolutely nothing showing on the price side. the only place that the worry warts about inflation have to look is on the wage side and they have been looking mostly at the eci. to me what was striking

was the lack of any sign posting. in the previous committee meeting they did some things to the language that indicate what it might be and why have we not? don'tt is partly that i think they really have a strong intention to go at the september meeting. interpretation at least. happens to be consistent my forecast. there may be confirmation bias, if possible. but i do think it is consistent with that. i also think they have been in the in the minutes congressional testimony that they don't need convert -- additional language to lift off. that is certainly what they would say to me it does seem pretty surprising that there is still a fairly large majority of pastors forecasting a september rate hike -- forecasters

forecasting a september rate hike area that seems like dramatic language for something that is supposed to be followed by a rate hike we later. professor, i wanted to ask as we wrap up here, what you up at night? is it the fed statement? professor blinder: no, i don't think so. i think it is the bad weather we are having lately area i am not very read about the decision of the fed right now. as janet yellen has taken to reminding us a lot lately, not really that much hinges, unless you are a bond trader, on whether the first rate hike is in september or december. a lot hinges on what rates are going to do between now and the end of 20 in. another 100 basis points? 50? that matters a lot. whether the starting point is september or december, that is of minor importance.

joe: all right, thank you to you both. alix: coming up, facebook is lower in after-hours trading. we will take a deeper dive after the break. joe: coming up, how does grand theft auto explain the biggest puzzle in today's economy? we will discuss with goldman sachs' jan. ♪

alix: i'm alix steel. joe: and i'm joe weisenthal. "what'd you miss?" alix: let's go to julie for whole foods action. julie: facebook sales topping estimates, monthly active users are ahead of what were

anticipating. but it looks like spending might be an issue. also has the company revenue rising 39%. looks like a mixed report with traders focusing on the negative right now. 76 cents of their ad revenue from mobile last order, up from 73% in the prior order. -- quarter. shares up to date, rising by a record and now falling. whole foods is falling sharply. topsails rising just 1.3%, less than half of what analyst had been anticipating. whole foods is known as a consistent grower interns of comparable sales. these are the lowest numbers i can recall. earnings per share coming one penny light of estimates, the company cutting its forecast for the full year, shares down

sharply in the after-hours session. alix: thank you so much. joe: i want to bring martin in from rosenblatt securities, the senior equity analyst joining us on the phone. martin, real quick, what is your take away? martin: solid numbers of ross the board. i think they do need to explain a little bit more, but they have been talking about hires ending and google set a precedent couple of weeks ago. facebook will probably deal with that. it is just a simple case of they didn't crush the numbers. it was a bead on revenue earnings and user metrics were very solid. daily active, two thirds of great numbers across the board, just not blowing it up. fundamentally i'm happy. monthly active users came in better than estimates, but when do they hit a wall of large

numbers where they cannot grow the base? martin: in terms of monthly active's in total, we will be in the slow teens growth rate looking into next year. what i really look at is the ratio of daily to monthly. that is where the ratio of two thirds comes in. of those using it any time during the month, two thirds are using it on a daily basis. i am looking or's ability in that. i think it's unrealistic to think that it would accelerate from the level that you said. one of thef -- joe: big stories is how well they have been able to monetize mobile. did you see anything interesting in this report? martin: mobile was up again as a total of percentage in revenue. going back a few years ago it was their first really breakout quarter where they accelerated, yet at that point mobile was

less than half of the revenue that it is today. have got the formula working. i think what is going on his advertisers are figuring out a way to spend the money on mobile ads that is working on phones, ipads and so forth. that was not the case a couple of years ago. that is still continuing to work and grow for them right now. much for thatu so take away. good, but not totally awesome. after the break, does this video ring a bell? the inaugural edition of grand theft auto circle -- circa 1997. the game has changed of it since then. what does it tell us about the more puzzling thing in the economy? we will be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" answersand theft auto the questions of the economy? joe: the answer is in the pixels. take a look at the 2013 version, the most recent, compared to 1997. lately revamped. doesn't resemble the same game. u.s. productivity has been slowing a lot, jan. you say that grand theft auto and what we have seen in that span explains this chart. how did that work? it slightly more broadly and say that statistics don't do a good job taking up wallaby improvement, especially in software and digital content.

there are some issues more broadly in technology primarily about picking up quality improvement in the display tricks. what the government statistics basically do, the version of the software program this year costs the same as what it costs five years ago, so there is no change to the price and there is not to adjusttrong effort for quality improvements. it is difficult to do. very hard to do. it should be done. it should show up as productivity growth, but doesn't. alix: when you look at growth, what should that number be? we have tried to come up with a ballpark estimate. this is very difficult. we are coming up with 7/10 of 1% in mr. productivity growth.

there is a lot of uncertainty around it. that is the older magnitude. joe: what are the economic ramifications? does it in flex inflation and the fed? weather is a lot of uncertainty around real gdp growth, real gdp growth is probably not the best measure of how well the economy is doing. at her to focus on labor market numbers. we can count people and hours worked pretty well, but we cannot count real inflation-adjusted dollars that well. i think that that is number one. number two, most of the -- possibly all of the counterparts for the miss measured productivity growth is miss measured at inflation. inflation is even lower than the already very low official numbers. that potentially has some dovish monetary policy implications.

that part is not going to have as big an impact as the practical debate area -- debate. just because this debate is in its early stages. at the focus on the labor market is important. joe: there seems to be less urgency. jan: that's right, it does go in that direction. again, i don't think it will have a big practical impact at that point. alix: when you take a look at i.t. contribution, what is the benefit? how do we fix it? that's pretty low. jan: is very small. it's very small. back in the 1980's the father of modern theory said in 1987 that we could computer everywhere but in the productivity statistics area -- statistics. the measure of contribution is lower now than it was back then.

that is a paradox of productivity. it looks more extreme that it did back then. joe: one of the big questions is -- the economy finally going to tilt back to labor so that labor can finally get some bargaining power? where do you see that? jan: i would expect that we get some move back in the pendulum towards labor. i mean, how much of the erosion in the share of gdp gets reversed over the next few years, it is hard to be consummate about that. i would expect stronger wage growth as the labor market improves and stronger real income growth. alix: we asked this question of the professor as well -- what keeps you up at night? jan: i am not particularly worried about the imbalances. externalnly about

influences. when i look at the world, the world economy and the areas where the imbalances are bigger is probably china. from a domestic perspective averagerom a growth of gdp growth rates, that's probably the place to worry most. in terms of spillover to the u.s. you with still have to say europe. i think that things are getting better, but there are still some problems there. greece has not yet totally sorted out a periphery crisis that could come back. the linkage between europe and the u.s. is much tighter. sorry, have to -- alix: we have to leave it there. joe: we will be right back. ♪

joe: "what'd you miss?" something that you don't want to

miss tomorrow, we get the gdp report. specifically watch the personal consumption number. how can consumers expect to go to .7%? alix: will they spend all of that? joe: alix: that is the que

where we will look at mark zuckerberg is investing. ♪ this is "bloomberg west." has a up, jack dorsey sobering effect on other companies challenges as stocks crumble. we will look at the long game or twitter. tom leighton here. when does he see the next