alix: we are moments away from the closing bell. i'm alix steel. joe: and i'm joe weisenthal. ♪ [closing bell] alix: stocks ending the day higher after the federal reserve says the economy has improved and moves closely to a rate hike. joe: the question is, what did 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 moments away. are there growing pains?

joe: the productivity puzzle. how does grand theft auto explain what of the biggest puzzles in the economy? alix: first, a rally is underway in the markets. the s&p closed about its average, a few days ago it was very different. joe: we got some very fun stuff that happened after the dollar died -- dive. and then it 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% of listed stocks are above the 200 day moving average. quite low, the lowest level since last year in october. joe: it continues to be something that vexes 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 market reaction to the fed.

this is the 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. really picks up over the next 2-3 years. let me take you back in time, back to the future everybody -- my birthday, remember? april 28. you can see as we stand here, standby, the difference we have seen in the historical average and current average. that yellow line is what the market was expecting to have happened in april. the green line is the current expectation. much more aggressive market expectation now. facebook that, earnings out. the breaking news desk. julie: coming out three pennies i had of analyst estimates. estimates were for $.47 per share, revenue roughly in line.

$4.04 billion. $3.99 billion is what analysts were estimating. important numbers as with twitter, are going to be the number of active users. as of june 30. $1.49 billion, an increase from the first quarter. it is also a little bit ahead of what analysts had been anticipating. the mobile active users also going to be very important. the company says mobile daily active users, people looking at facebook on their phones, at least once per day 844 million. , a substantial increase from 798 million in the prior quarter. again, that's an important number. overall, mobile monthly active users at $1.31 billion. the company says mobile ad revenue represents 76% of ad revenue. that is up 3% points from the

last quarter, and a little bit ahead of what analysts had been anticipating. of course, the obvious contrast with this is versus what we heard from twitter. now it has a sort of stated purpose to reach the mass market. facebook is there and then some, 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. 968 million. that's actually a little sort of estimate. that's the danger. going into twitter earnings, estimates and expectations were very low. going into facebook, they were pretty high. the options market was pricing in an 8.8% gain in the shares following this if you look at facebook shares and how they are actually trading following these numbers, we are seeing a decline of more than 4%. that might be due to does monthly active users numbers -- or a daily active users, coming

in a little bit below. a little bit below what analysts had been anticipating. but shares are up 20% year to date, trading near a record. that is the context 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. on the breaking news desk. a lot more facebook later. i'm going to go into my terminal and look at last night shanghai composite surged. this is one of the funniest charts i have ever seen in my life. look at the beginning of trading, it looks like a normal market. jagged, lots of weird diagonals an hour to go, it does this weird ocean leave the motion that does not look like any stock market i've seen, these beautiful big curves. there is something weird about the shanghai composite.

everyone knows the government manipulates it in many ways. this last hour does not look like a normal stock market to me, it is very strange. alix: it is very strange. i like the little whooshes. joe: is not beautiful? alix: we have some all-star guest for you today. goldman sachs chief economist, and former vice chair of the federal reserve, and princeton defendor here to discuss decisions and changes in the statement language. such a pleasure to have you here. joe: one of the big things people noticed was they said they would hike rates when they saw some labor market improvement. people were really focused on this work, some. it was not in there before. what do you take away from that? >> it is a baby step coming towards the labor market criterion, they are ready to hike. i don't think it is a very big move, especially because they did not make any changes to the language or inflation in terms of wanting to be reasonably

confident, indicating no progress towards that, and also saying they are still monitoring inflation development closely. i don't think it was a big move and clearly the market did not take it that way. joe: professor, did you see anything in the language that changes your outlook? professor: very little. i agree, it was a baby step. but the baby step 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 between the two, maybe now you think it is 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. i wanted to point out something the fed said today. of labore, a range

market indicators suggest that underutilization of the labor forces has diminished since early this year. i pointed this out because they took out the language somewhat. in recent months. what was your in tapered tatian of this, -- 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. joe: really it sounds like you did not see anything in today's statement that moved the needle. jan: i really didn't. my own expectation is we will get lift off in december. if the data is going to be a lot stronger over the next few weeks, then that's what i am expecting. you could get september, but to me december is the more likely outcome. joe: another word that was in

the report was the word nearly. "the committee continues to see the outlook as nearly balanced." there was some question about whether they would remove the word nearly. they kept it in. 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 for a long time now. 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. that may have more of a bearing on the bidding odds for a rate hike in september over anything in the statement today. joe: would you say that that has more of an impact in a jobs report? -- stephen bennett jobs report?

even then 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. that is what gives it kind of elevated importance these days. alix: to me what was striking was the lack of any sign posting. on one day might raise it. typically it is before the committee meeting, they do something to language that indicates. what do you expect that might be and why have we not seen it? jan: it is partly that i don't think they really have a strong intention to go at the september meeting. that is my 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

saying, in the minutes in the congressional testimony that they don't need additional language to lift off. that is certainly what they would say. but to me it does seem pretty surprising that there is still a fairly large majority of forecasters, forecasting a september rate hike, despite the fact they are saying they are monitoring downside risks on inflation closely. that seems like relatively dramatic language for something that is supposed to be followed by a rate hike six weeks later. alix: professor, i wanted to ask as we wrap up here, what you up -- what keeps you up at night? is it the fed statement? professor blinder: no, i don't think so. [laughter] i think it's the bad weather we are having lately. i'm not worried about the position 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 another 100 basis points? 2016. 50? 200? 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. spending apparently up 82% as -- at the company. also, revenue raising 39%. looks like a mixed report with traders focusing on the negative right now. 76% of ad revenue coming from mobile, up from 73% in the prior quarter. profit of $.50 per share forces -- versus 47 sent analysts. shares up to date, rising by a

record and now falling. whole foods is falling sharply. the companies top sales rising than half what analysts had been anticipating. whole foods is known as a consistent grower interns of -- in terms of those 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: for more on facebook's earnings, 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 -- across the board. theyentioned spending, need to explain more, but they have been talking about higher spending. but google set a precedent couple of weeks ago. facebook will probably deal with that. it is just a simple case of they

didn't crunch the numbers. it was a good solid number. user metrics were very solid. daily active, two thirds of monthly. great numbers across the board, just not blowing it up. fundamentally i'm happy. alix: talk about monthly active users. obviously better than estimated, but when do they hit the wall of able tombers, no longer grow the base? martin: i think in terms of both monthly active 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. that is the bigger metric. i'm looking for stability in that. i think it's unrealistic to

think that it would accelerate from the level that you said. law of large numbers right here. joe: one of the big stories is how extraordinarily well they had been at monetizing mobile. did you see anything interesting in this report? martin: mobile was up again as a total of percentage in revenue. if you go back to years ago, summer of 2013, it was their first breakout quarter where it accelerated yet at that point , mobile was less than half of the revenue that it is today. they 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. alix: thank you so much for that take away. good, but not totally awesome. michael joining us from rosenblatt security. joe: after the break, does this video ring a bell? the inaugural edition of grand

theft auto circle -- circa 1997. the game has changed a bit since then to say the least. 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?" alix: we told you that grand theft auto explain the biggest puzzle in the economy. joe: the answer is in the pixels. take a look at the 2013 version, the most recent, compared to 1997. it is completely revamped, does not look like the same game.

of goldman sachs, the u.s. productivity has been slowing a lot over the years. you say that what we have seen in that 16 year span is explained in this chart, how productivity is slowing down. how did that work? jan: i put it slightly more broadly and say that statistics don't do a good job taking up quality improvement, especially in software and digital content. there are some issues more broadly in technology primarily about picking up quality improvement in that if leaders. what the government statistics basically do is say, a version of a software program this year what he didme as five years ago, so there is no change in price and there is not a strong effort to adjust for quality improvements. it is difficult to do. very hard to do. but conceptually, it should be

done and that is something that should show up as productivity growth, but doesn't. alix: when you look at growth, what should that number be? if we are around 1.7%? jan: we have tried to come up with a ballpark estimate. this is very difficult. when we look at the different areas that we think are subject to bias, we are coming up with 7/10 of a percentage point with missed productivity growth. there is a lot of uncertainty around it. that is the older magnitude. joe: what are the economic ramifications? in where productivity is measured in what you think it is, does it affect inflation and the fed? jan: i think fx a few things. if there 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. better 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. of or possiblyt all of the counterparts of mis sed productivity growth is measured at inflation. inflation is even lower than the already very low official numbers. that potentially has some dovish monetary policy implications. i think that part is going to be something that is not going to have as big an impact in terms of the practical debate. int because, this debate is its early stages. but the focus on the labor market is very important. joe: that all things being equal would suggest there is 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. but it does go in that direction. alix: when you take a look at i.t. contribution, what is the benefit?

what do we feed, and what should it be and how do we fix it? that's pretty low. jan: it's very small. 1980's, the father of modern growth theory, set in 1987 that we can see the computer everywhere but productivity statistics. fact, the measure of ip contribution is even lower than it was back then. that paradox of productivity looks even more extreme than it did back then. joe: one of the big questions is, is the economy finally going to tilt back to labor so labor can finally get bargaining power and wage growth? where do you see that happening? jan: i would expect we get some move back in the pendulum towards labor. i mean, how much of the erosion in labor share of gdp gets

reversed over the next few years, it is hard to be confident about that. stronger wagepect growth as the labor market improves further and ultimately stronger in real income growth. alix: we asked this question of professor blinder as well. what keeps you up at night? jan: i am not particularly worried about big imbalances in the u.s. it is mainly about external 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 there, from a growth of average gdp growth rates, that's probably the place to worry most. in terms of spillover to the u.s., you still would have to say europe. i think that things are getting better, but there are still some risks there. greece has not yet totally sorted out a periphery crisis that could come back. the linkages between europe and the

u.s. are much tighter. alix: we have to leave it there. thank you so much for joining us. keith economist at goldman sachs. joe: we will be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "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 consumers do are expected to grow two point 7%. crucial for keeping the economy afloat. alix: and will you actually spend the

♪ >> from our studios in new york city, this is "charlie rose." nfllie: we turn now to the and the decision by commissioner roger goodell to uphold tom's suspension for his role in deflategate. the quarterback is scheduled to sit out the first four games of the season for his alleged role of improperly deflated game balls. they cited new evidence brady destroyed his cell phone that had text messages. this behavior, the league said in a statement, went behind -- beyond failure to cooperate and