tv Closing Bell With Maria Bartiromo CNBC September 19, 2012 4:00pm-5:00pm EDT
settling on wall street with the market giving up much of an earlier rally. finishing higher, nonetheless. nasdaq also off of the best levels with a gain on the session of about five points. the s&p 500 up but just barely. up by 1 2/3 points. most investors would likely be happy if that's how the year ended for this market. some are worried there's more downside to come. this market, rather than upside, between now and year end. from the fiscal cliff to the election to the market worries. should we be happy to hold on to what we have? let's get into our panel right now and get some thoughts. tim holland, thomas lee of jpmorgan along with our own bri brian shackman and rick santelli. tom, you came out with a report today. i know you had a call with
investors. talk to us about what you envision for this market. >> well, you know, what we're talking about is a phenomena that's really happened in each of the last three years, such as 2009, 2010, 2011. we get in towards the final quarter of the year, active managers, which is mostly mutual funds, are trailing their benchmark. in order to close that performance gap, which is the biggest since 1995, they have to buy stocks that will outperform the market, which is what we call high beta stocks. stocks that if the market's up one, they move 1.5 or 2. this has happened the last couple years. we think the phenomena will be bigger this year because, one, mutual funds are trailing by more than any other time in history. second corporate buy backs are substantial, and we're expecting them to be bigger this year because corporates don't really have an incentive to increase dividends because of unknown policy next year. also, because they're putting policies on hold because of uncertainty on the fiscal cliff.
>> there's a debate, of course. we heard from doug cass, who runs a money hedge fund. he says the response to your report about chasing beta, the markets in those years was weak. does the expectation change that in any way? >> it's a little more urgent for funds. i think the feed back we've gotten is there's been a lot of investors upset because they're saying, hey, look, the market's up 17. i might be at 15. you're saying the market's going to go up even more. how am i going to close that gap? i think there's a lot more pressure to close the gap now if there's a sense that the market can lift. you have to remember, qe is a very, very powerful psychological accelerant to the market. the feds essentially taking out all private credit supply in the next 12 months. >> so craig, as somebody who's putting money to work, is that what you believe as well? are you right now looking for
beta? >> yeah, we are. we're having a good year. we're in our small cap fund 22% for the year. we've jououtperformed, but ther going to be a lot of changes. a lot of volatility between now and the election. money flows will be key. we've talked to a lot of companies that are going to meet, have their board meetings right after the election and set their dividend policy between now and year end. we've identified a lot of companies that will pay some special dividends and such. money flows will be key. a romney victory, i think you'll see good in flows. >> so you think romney -- >> i think you'll continue to see outflows. >> so you think a romney win creates more money in the stock market? >> yeah, from overseas. it's more of a pro business environment. you'll see in flows if that happens. we'll see continued outflows, i believe, if you have an obama
win. >> rick santelli, obviously qe was great for the stock market. we keep seeing gains here. expectations are further ahead. you see it different. you have different angles in terms of the implications. >> i would look at it this way. i don't disagree with the beta argument. makes a lot of sense. i think the politics of november 6th could really put turbo thrusters behind that beta buying, but i think it could also put a brick wall in front of it. what's more, what comes next from the fed? unlimited to the third power? we're at a point now where if the stock market doesn't start to do a little bit more aggressive performance to the up side considering we're in unlimited qe-ville, i think that works against the stock market and some traders will exit because the performance isn't matching up. >> i like that qe-ville. mandy, what are you seeing out there? >> i think it's interesting the confidence. we were looking at results of a survey that was showing in 2012,
investo investors' confidence in the u.s. capital markets has increased to 65% after essentially either remaining static or declining every single year since 2008. i guess the question here is when you have a lot of bullishness on one side, does that signal a top in the market? we were talking to a number of guests on our show. you have to keep in mind a lot of people not participating in this rally, perhaps they've been climbing the wall of worry over this global growth concern, or the fiscal cliff, et cetera. there's still a lot of people who haven't gone in on this. even though there's bullishness and confidence in the market, not everyone has been able to take advantage. >> what are you seeing, tim? >> we're still pretty constructive, maria, on u.s. equities. to the earlier comments, a lot of investors played 2012 as a repeat of 2011. one of the reasons, or a few reasons we were more constructive is because we believe housing bottomed back
half of last year. the consumer delevered to a significant extent. you had monetary policy uniformly much more accommodative with the bank of japan coming to the party last night. you put all that together with an underowned asset class, good fundamentals, consumer staples and small financials and we think this market has legs. >> tom, any sort of red flags on the horizon? what, if initiation would reverse this course? >> well, you know, maria, i would say that in the short term, i think markets tend to really not perform well when we see prevailing bullishness. we track a lot of indicators when we look at futures p positions, hedge fund, beta. they've always coincided with market highs when everyone is bullish. we aren't close to those readings yet. maybe sometime in december, january is when we could start to see prevailing bullishness. i think to rick's point, i think you want -- i still think it's
very bullish into election day. the post-election period suspis going to be faced until after elections. >> all right. we'll leave it there. thank you, everyone. we'll see you soon. a lot of groups saw a lot of action today, even in the midst of a modest rally. brian saw a bunch of real outstanding movers on both sides. >> i thought we were going to finish at a new high for the dow and nasdaq. until the last ten minutes, it was the case. not the case. i want to look quickly at the sectors consumer discretionary, the only one that finished up more than 1%. obviously we'll talk about the oil star. bill mentioned pulti. you see what happened after that existing home sales number came out. a little bit of an afternoon dip with a bunch of other ek wquiti out there.
housing was obviously a help there. oil didn't hurt there either. the xal, obviously oil was a boost to that. i just want to quickly say facebook, not a lot of taulk ou there. huge volumes today. maybe they're starting to get on the right track when it comes to mobile ads. sprint also hitting a multiyear high. >> all right. thank you. let's check in with jackie. >> we were watching shares of jcpenney before the close. watching them now in the after hours, they are lower. now we're flat. it's because the ceo said the second half of the year would be just like the first half of the year. that wasn't too spectacular. we're seeing adobe down also. . >> don't touch that remote. we have a lot more in store on this special edition of the
"closing bell." coming up, unfair advantage? are exchanges really letting high frequency trading firms cut in front of every day investors to buy stocks? plus, all glitter. how should you play gold after it hit six-month highs? the ceo of new mock mining weighs in with his prognostication of the precious metal. and falling off the fiscal cliff. a new study shows the nation's budget deficit would still be in the hundreds of billions of dollars even if punitive spending cuts and tax hikes are inactive. is it time for americans to face that the need for belt tightening is now more of a fact than an option? the answer is straight ahead on the "closing bell." [ male announcer ] when a major hospital
>> welcome back. more scrutiny in high-speed trading now. one trader is calling it a rigged game. rapid fire trading firms are cutting in front of every day investors to buy stocks. he says that's just plain unfair. these are some of the reasons dennis says the system is broken and technology is to blame.
okay. you're defending an unpopular practice. make the case. >> well, unfortunately part of my job has become to defend against ludicrous and ill-informed allegations about a practice that most people don't really understand very well. in this case, these particular order types that people are complaining about that supposedly give people -- give certain market participants the ability to jump in front, these order types -- first of all, let me say i'm not a big fan because they're complex. part of the problem with complexity is it induces certain people who don't understand how the market really works to make serious allegations driven by paranoia. but in general, the ironic fact is that these order types exist to make the markets more fair, not less fair. the regulatory regime that holds the markets together has some
well-known flaws. so periodically, the exchanges have attempted to roll out certain order types to rectify those flaws and make the market for fa more fair, not less. but when you have paranoia-fueled discussion, those measures tend to be received the wrong way. that's what's going on here. >> right. but you haven't really defended high-frequency trading. why don't you think about that. i'm going to come back to you. dennis, you said billions have flooded the markets since the flash crash. you can't be putting all the blame on technology, right? >> there's a lot of factors that go into it. however, there's a remarkable correlation between investor in flow and equity markets when there's a rising market. this is the first time in history, i believe, where we haven't seen those in flows when the market's moving up. so there's a variety of things that indicate that investor confidence and confidence generally in these markets is
very low and for good reason. for example, the chicago business school just did a study. only 15% of the public has confidence in the equity markets. it's not paranoia. the sec settled the case with the new york stock exchange announced last friday for $5 million where the allegation showed that the new york stock exchange enabled proprietary non-public firms that were paying the stock exchange money to get in front of the public and to be able to get information a few seconds before the public feed, which of course they trade by. information now is money. information has turned into a trading strategy. massive amounts of money are being paid to these exchanges by the proprietary computer firms, so they can transfer that information and step in front or aside and advantage themselves. >> it's that it's happening in an incredibly rapid millisecond. what about those concerns?
can you blame high-frequency trading for the facebook fallout? >> no, the ipo of facebook had nothing to do with high-frequency trading. >> exactly. >> it has to do with technology. >> tell us how it works. >> they're not the same thing. >> you're right. although -- >> go ahead. >> so look, the sanction against the n.i.c.e., i don't believe they did anything intentionally wrong. i think that was a statement find by the regulators to try to signal a zero tolerance for error policy. that was clearly just a technological oversight. you know, that's my view on it. >> it's funny. first of all, to say it was unintentional that the people paying for access unintentionally got information before the public that they could trade on. >> there's no way they could get access to the data without paying for it.
>> the new york stock exchange doesn't care about $5 million, which they paid. let's be clear. it's caused confidence to go down. what you have is not just the fine against the new york stock exchange. you have the the night capital. you have the flash crash. they've identified almost daily mini flash crashes that are inexplicable. we see in the oil market the other day within four minutes a $4 drop. today, no one even knows why that is. >> are you saying that high frequency traders do not get at the top of the line, do not get in front of other investors? is that what you're saying? >> what i'm saying is high-frequency traders do have the ability to jump in front of other investors, but these order types such as hide not slide and other things that have been in the press a lot lately are attempting to mitigate the advantage that high-frequency traders have. >> is it working? >> that just makes no sense. why would they be paying so much
money -- >> the reason it doesn't make sense is because you don't understand how the market actually works. >> i know economics. >> this is not about economics. this is about the rules of the market. >> why would they pay so much money? we're talking about massive amounts of money, to get millisecond advantages of information, which they turn into a trading strategy. they obviously have to be making multiples of the mass amounts of money in trading in order to pay that. there's a hearing tomorrow in the senate -- >> those two things have nothing to do with each other. you're making an argument with apples and oranges. >> what's the point you want to make? >> the point i want to make is that all of these complaints that people have about the modern market structure, whether it's fragmented or whether there's an arms race that benefits high-speed traders over low-speed traders, these can all be traced to a simple flaw in the regulatory structure that was created by the regulators in 2007. there's a very simple flaw
there, which prevents ordinary investors from being able to trade effectively when the market is in a transition from one tick to another. while the market is ticking, slow traders are impeded from trading because of some flaws in that regulation. so exchanges have been trying to roll out new order types that eliminate the advantage that fast traders have over slow traders during market transitions. but people like brian who have an interest in scaring the hell out of people for their own check benefit have been kind of construing this in a very perverse way, making it the opposite. >> who is brian? >> let's look at -- >> dennis, i'm sorry. >> dennis. guys, we have to go. we have breaking news on jpmorgan. i have to run. i will definitely return to this subject soon. gentlemen, thank you. over to you, john. >> maria, the jpmorgan chase retail website has been down or
slow for many customers for the past -- at least the past hour. what we've learned is that an islamic group, an islamic hacking group has claimed credit for bringing down the website. this is the same group that claimed credit for slowing down or bringing down bank of america's website yesterday. so jpmorgan chase has issued a statement to us saying, we are experiencing slowness issues for some customers logging on to chase.com. we are investigating and apologize for any inconvenience. we don't know whether the group right now, even though they've claimed credit, this islamic hacking group, we don't know whether they're really responsible or it's a technical glitch and the group is trying to say they were able to cause it. >> do we know, john, if anybody's information has been stolen and used in the wrong way? i mean, when you say this group has hacked and taken credit for hacking and creating slowness,
what does that mean in terms of the data? >> it does not look like any data has been compromised at this point. we think it's a denial of service attack where they flood the website with hits. >> are you kidding me? all right. john, thank you. we'll watch this one. whatever happened to the halo effect from gold's huge run up? i'll talk with the boss at newmont next about his efforts to cut cost even as some predict gold will soon top $2,000. it's an interview you'll only see here, so stick around. later on in the program, with the fiscal cliff looming larger every day, one of my guests say it's going over it and it could be exactly what this country needs. he'll explain. stay with us. mitt romney: this president cannot tell us that you're... better off today than when he took office. anncr: well... here's where we were in 2008... tv anncr: the worst financial collapse... since the great depression... tv anncr: american workers were laid off in numbers not seen... in over three decades. anncr: and here's where we are today... thirty months of private sector job growth. creating 4.6 million new jobs.
we're not there yet. but the real question is: whose plan is better for you? the president's plan asks millionaires... to pay a little more... to help invest in a strong middle class. clean energy. and cut the deficit. mitt romney's plan? a new 250,000 dollar tax break for... multi-millionaires. roll back regulations on the banks that cratered the economy. and raise taxes on the middle class. president clinton: they want to go back to the same old... policies that got us in trouble in the first place. president obama: we're not going back, we are moving forward. anncr: forward. i'm an expert on softball. and tea parties. i'll have more awkward conversations than i'm equipped for because i'm raising two girls on my own. i'll worry about the economy more than a few times before they're grown. but it's for them, so i've found a way. who matters most to you says the most about you. massmutual is owned by our policyholders
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welcome back. right to jackie deangelis we go with the market flash. >> a lot of movers today. another two-for for you. watching norfolk southern. the range now $1.18 to $1.25. that was a big miss. also watching shares of bed, bath, & beyond. they missed. they're down about 4.2%. >> all right. thank you so much. meanwhile, gold futures today pairing gains after hitting an intraday high earlier of 1781. by the way, that was the highest level since february 29th. analysts at bank of america say gold prices could reach $124 and ounce by the end of 2014 due to the federal reserves third
stimulus program. stock is still below sea level since january 1st. with me now is rich o'brien, ceo of newmont. he joins us in an exclusive to talk about how high gold can go and what drives his business. good to see you. thank you for joining us, sir. >> nice to be back. thanks. >> why do you think such a disconnect? prices soaring, yet the stocks of the gold companies stuck in the mud. >> yeah, i think what's happened during the year is physical gold has been kind of a risk on trade and equities have been a risk off trade. so i think regardless of the equity you're in, i think there's more discount related to those equities. then finally, just on the gold side, i think a number of companies have seen cost escalate, both capital and operating costs, and projects more difficult to build. i think there's been this dislocation. i think it's going to change though. >> it is going to change, you think. i want to get to that in a minute. let me ask you your thoughts on
gold. i think the last time we spoke, you said gold could top $2,000 an ounce. what's your take? we're at the highest level since late february right now. what drives prices even higher from here? do you still stick by that? you think 2,000 is on the horizon? >> i do. i still feel good about a $2,000 gold price in the relatively near future. i think reasons for that -- i think qe-3, what's going on in europe really unlimited purchases to me imply and now employment has really trumped managing the currency levels. i think with that we'll see currencies expand and with that i think the u.s. dollar and the euro will come down and gold will go up. i feel good about that as well as physical demand even though china and india are slowing their growth somewhat. they're still growing, and we're still seeing growth and that physical demand there. finally, investment demand continues to drive gold prices higher. >> and you think the stocks of the companies include willed have a cash out? >> i think there will be a catch
up. i think that gold stocks in particular have been punished over the last 12 months, and we've been trading until the last couple of weeks at really record low. price to cash flow, price to earnings. i think what we're going to see is as we start reporting earnings, as we start increasing dividends, particularly newmont because it's tied to price, that gold stocks will outperform the physical. i think we're likely to be in that leg of the cycle coming up. >> so when would we expect another dividend increase? >> for us, it's very easy to calculate. every time we see an increment over an average price for the quarter of $100, we increase our dividends. right now we're yielding at about 2.5% at a $1600 calculated average gold price. if we get to 2,000 that, be
double to 5%. we have the most leveraged gold dividend in the business, and i think this is one of the attractions to our stock versus holding to etf. you get up side from expansion of the dividend as well as upside from operating leverage and exploration. >> that's very good. very good analysis. thank you for that. you recently said the cheapest way to grow is through exploration. where are you looking to boost gold production? what about the barriers you faced, whether it be hostile governments or getting the access to the actual bullion? >> yeah, good point. i think what we're seeing right now at newmont over the last four years we've doubled our exploration budget. we spend about 60% of that or 70% near our existing mines. very consistent in adding reserves over time. we expect as we said earlier in the year to end the year over 100 million ounces for the first time in our history. steady additions at our near mine. on the exploration side, we're exploring in places like haiti.
we've recently decided to back out of the png, given costs there. we continue to look around the world. i think your point about even if we find something, bringing it in to development is really about political and social risk. it's about our ability to work closely with communities to get projects done. at the same time, the market doesn't like big projects. right now, big capital projects are being discounted because of their risk. i think we need to figure out as an industry how do we build more modular projects, get more community and government support, and show them that mining actually is a sustainable business that helps their communities. that's our challenge. we're up for it. >> that certainly is the challenge. good to have you on the program. thanks so much. >> nice to be back. thanks, maria. in an election about the economy, there's a lot of numbers flying around. we go on truth squad duty next to fact check the latest statements from president obama and governor mitt romney. i'm not sure anybody comes out entirely clean here.
then so much for the fed's latest measure to boost jobs. a new study conducted shows it won't make a lick of a difference in hiring. stick around. [ male announcer ] what if you had thermal night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
the long list of politicians who have been reminded that anywhere they speak there will be cameras. guess what? our investigations fact checkers can be everywhere too. scott cohn joins us now as he continues to break down what both romney and president obama are claiming in this economy election. scott, what have you found? >> maria, mitt romney addressed a lot of topics, not just the so-called 47% of that now infamous secretly recorded may 17th fundraiser. here he is on the need for a strong military. >> our navy is getting smaller. the smallest amount of ships since 1917. this president wants to shrink it. the list goes on. >> all right. so we checked with the navy. it is true that we have fewer ships now than we did in 1917. but we had even fewer between 2005 and 2009, including 100-year low of 278 ships back
in 2007. today's air force has about 2300 more active duty personnel than the air force of 1947. we have considerably fewer aircraft than we did at the end of world war ii. their average age is now more than 20 years. of course, the president does cut defense under his budget proposal. he blames congress for the half a trillion more looming urn t i the debt ceiling. the pro-obama super pac may have overshot in its new ad. >> victims? behind these doors, middle class families struggle and romney will make things even tougher, raising taxes by up to $2,000 to give multimillionaires a $250,000 tax break. >> as the saying goes, there you go again. romney has pledged not to raise taxes on the middle class. the $2,000 figure comes from a tax policy center analysis that
assumes he keeps his promise to make his tax cuts revenue neutral. of course, until he provides specifics, opponents will happily try to fill in the blanks, as you just saw. remember, we want to hear from you. maria. >> all right, scott. thank you so much. the romney 47% controversy has put a new focus on our entitlement system in america. as we discovered something very interesting, even though the fiscal cliff is deemed to be draconian, spending cuts, and massive tax increases, we'd still have a deficit. the country still will have a $640 billion deficit for the year. again, that's with the spending cuts and the tax increases. $640 billion annual deficit. michael lyndon is with me. he says going over the cliff is not a bad thing because without it the deficit would be over that number. michael, make your case.
>> i think there are worse things than going over the fiscal cliff. i think if congress were responsible and smart, they'd find a simple way to avoid the fiscal cliff and put us on a more sustainable deficit path. but if congress can't do that, the cliff is not the worst thing to ever happen to this country. yes, the deficit will still be large next year. by five years out t will be under $100 billion and well under 1% of gdp. that's about $3 trillion more in deficit reduction than the simpson-bowles proposal. that's a lot of deficit reduction. >> and? it's a lot of deficit reduction, but it's not enough. >> well t g, it gets you almosta balanced budget in the first ten years, which is better than any bipartisan plan out there. look, if we want to reduce the debt, this is a way to do it. again, i want to be clear. it's not the best way to do it. if you care about debt, it would handle it. >> understood. dan, why is going over the cliff not preferred, even if it does
cut the deficit next yearly nearly half? >> i guess in some way i agree with michael. there are worse things in the world, but my concern is that the fiscal cliff is overwhelmingly tax increases and the problem that we have in washington is that government is too big. here's the one statistic your audience needs to understand. if for the next ten years we can simply hold government spending down so it only grows 2.5% a year, we can actually balance the budget after ten years and not have any tax increases, make the 2001 and 2002 tax rules permanent. as much as i would like to significantly reduce the size of government, all we have to do is restrain the goat of government so it grows slower than the private sector and we balance the budget within ten years. >> of course, what dan is not telling you is that with the retirement of the baby boom generation, with rising health care costs, with the need for a robust military, we are not
going to be able to constrain the growth of government spending, as he puts it to that low level. we haven't ever been able to. it's not about big government spending. it's about demographics and underlying issues. >> i don't know if you could say that for sure. it's also about spending. >> underneath that spending are the demographic issues and the underlying economic trends. it's not about obama, big government spending, as dan would have it. it's purely about retirement of the baby boom generation and rising health care costs. >> there's no question that demographics are there, but we did it in the 1990s under bill clinton. government spending only grew 2.9% a year. that's what gave us a surplus. canada in the 1990s -- >> what else did we do in the 1990s? we raised taxes. we raised tacks in the 1990s. >> it was also a very different economy. you're talking about an era of
dot-com. in the 1990s, going into the year 2000. you had all this euphoria. it was a very different economy. >> pause for a second. if we go over the fiscal cliff, we'll be going back to the exact same tax code we had in the 1990s. so dan's argument about how, you know, higher taxes will destroy the economy, i mean, i've heard that argument before. he made it, in fact, himself in 1993 about bill clinton's budget. it didn't turn out to be true. the fact is if we are worried about the fiscal cliff, we should be worried about the fiscal cliff, but it's the draconian spending cuts to investments and things that produce growth in this economy. that's what we should be worried about. >> you mention that it's the demographics. the fact is, the demographics have changed. we're living longer. people are needing these services longer in their life. yet, social security hasn't changed at all. with you talk about demographics, we need to address what hasn't been changed at all to meet the changing demographics. >> that's a good point --
>> that's an argument for entitlement reform. social security has changed. the retirement age has gone occupy. starting in the 1980s, there was a reform to increase the retirement age. also, the point about increasing life expectancy is a smalls a peblgt of it. it's not about increasing life expectancy. it's that there's a huge generation of people who are all about to retire at the same time. even if the life expectancy hadn't gone up, we'd still have this fiscal problem. >> final word. >> if we go back to bill clinton's tax rates, i'll agree with michael and do that if he's willing to go back to bill clinton's spending levels. burden of government spending has doubled since bill clinton left office. that's why we're in fiscal trouble now. the problem is government spending. >> very important point. gentlemen, thank you. we'll be back to this subject. i promise you. see you soon, guys. up next, thursday movers. tonight, our trio of wall street's top market watchers tell you what will make them yell first thing in the morning. stick around because what they say could put extra money in
your pocket. then are the fed's hopes falling flat when it comes to hiring? that's what a new study shows. stick around for an exclusive. back in a moment. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people
when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. welcome back. when federal reserve chairman ben bernanke announced a new move to stimulate the economy, he cited unemployment as the main target. >> the employment situation,
however, remains a grave concern. while the economy appears to be on a path of moderate recovery, it isn't growing fast enough to make s progress reducing the unemployment rate. fewer than half of the 8 million jobs lost in the recession have been restored. and at 8.1%, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels. >> clearly the plan was to boost hiring, but executive search company corn ferry is looking at a new survey. they're telling cnbc exclusively that the plan might not be working. they asked senior executives, quote, does qe-3 motivate your company to hire people now? 86% said no. joaning me now is gary burnson, the ceo. good to have you on the program. >> good to be here. >> it's a perfect question you asked. very straightforward. does qe-3 move the needle? what's behind this answer? >> it's reality. i mean, this is today's reality, right?
knowledge-based workers are increasing. technology has massive ly affected the jock markb market. >> so what's the problem? were you surprised that the fed's move really didn't change opinions in terms of businesses? >> no. >> you expected it. >> no. >> fed policy doesn't equal job creation. >> no way. look, it you look at the world around us today, i mean, there is this real fight. i mean, it's incredible. the fed lowering rates isn't going to have anything to do with our business. it's just -- you know, the underlying problem is everything is just in time, right? just in time for greece. just in time for spain, i'm sure, in a few months. just in time for the fiscal cliff. nobody is dealing with reality. we've made promises that can't be kept. we spent too much for too long. there's a several trillion-dollar bridge that it has to be gapped. that's what people are looking for. >> i really like this theme,
just in time. it makes so much sense. so what do firms, what are the ceos telling you they want to see in terms of really something tangible that will move them? >> some certainty. >> clarity. >> the plan from here to there. if the tax rate's going to be 75% in france, great. >> let me know so i can move. >> that's what it is. we can deal with certainty. what you can't deal with is, well, what's going to happen in california is the tax is going to go up by 5%. what's going to happen in the united states? people just want certainty, particularly at a time like this when china is in a recession. >> that is exactly what i'm talking about in my observation coming up. people are not going to add heads to the payroll if you don't know what your tax bill is going to look like. >> no way. you're kidding yourself. >> it's on congress, then. we need fiscal policy. >> we need leadership. we need a marshall plan. we need a grand plan that first starts with today's reality before you try to go to tomorrow. >> what do you think about the election? do you think the election changes this? does that bring us clarity?
>> well, that's a tough one. i mean, it's not sure. because the people that running for office, are they going to actually operate, or is it just going to be what they do with a speech, right? what really counts is not the speech but what you do in between the speech. >> the truth is, we may not get the clarity because they're not dealing with the issues like the fiscal cliff until after the election. so we won't know tax rates. we won't know the regulatory environment. >> that's absolute sli right. i honestly don't think much is going to change when it comes to the election. >> nothing -- not much is going to change, so this year are you expecting a recession in 2013? give me the implications as a result of all of this. >> thing is the nike swoosh. i think this is a decade of readjustment. as americans, we have spent way beyond our means. i think if you look at the growth rates in the '90s, 2000, they're not real. we borrowed against our homes to buy mobile homes. that's what america did. my fear now is we're going to start that all over again.
>> so give me one idea that you think will actually move a ceo to add new heads to the payroll. >> lock in a tax rate. lower the tax rate. for me, personally, half our business is outside the united states. we're not competitive. our tax rate in the united states is, you know, 10 percentage points higher than the rest of the world. just do something. lay out the plan. >> so that businesses feel like they actually have a shot in terms of hiring and it's not going to bankrupt them. >> that we know what the new normal is. absolutely. >> great conversation, gary. thank you very much. we appreciate your time tonight. >> thank you. so you want to move your money in your portfolio first thing tomorrow? three of wall street's top money pros will tell you how they're playing it next. and ben bernanke's talk with the finance committee to get us off the fiscal cliff. stay with us. flash
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china's flash manufacturing number tonight. that will have an impact. we get initial claims here and we get the fed. a lot coming up. i am lookingt at earnings in light of general mills today. i think volumes are starting to get better for the industry and looking hard at crest. >> thank you. kevin. you're up. 30 seconds on the clock. >> the economic data likely to be mixed. we are expecting weakness in manufacturing but improvement in initial jobless claims. the funds report is likely to show a small improvement in net worth. there are several oofficials speaking. given that the fed has signaled that rates will remain on hold until at least 2015 comments are unlikely to be that important for the time being. >> so we won't focus too much on that. noah to you. 30 seconds on the clock.
what is on your list for tomorrow's movers? >> we are looking at the fed numbers. they had a 50% improvement from last month however that was still a negative number. so the consensus seems to appear an increase maybe of two points to a negative four. it is heading in the right direction but still negative. we see that as having impplications of earnings reported to the end of this year. >> we appreciate you keeping time, as well. we'll take a short break and my shots on bernanke's private meeting. maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students.
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and finally tonight my observation on the monetary stimulus and what it means for job creation. tonight dallas federal reserve president will be speaking in new york city about what the fed did last week and what it may mean to actual economic growth and job creation. i will bet he will say not much. fisher has been one of the few on the fed to push against new stimulus even though he was pushing for it during the 2008 melt down. fisher being a former business guy and a money manager will discuss what he is hearing from the ground level.
his business colleagues while sitting on $3.6 trillion on cash on balance sheets are unwilling to use that money to hire new people and add heads to the payroll because they have no idea what their tax rates will be in 2013 and beyond and which agency will be overseeing them. would you as the runner of your house hold take on new expenses if you did not know what it would cost you? probably not. all of the questions is congress and the white house. it is clear the fed feels like it needs to take actions because congress is not doing its job and getting some resolution to all the open fiscal issues. we are in limbo. this is why at this very moment bernanke is in a closed door meeting trying to prod them to get this done. it is clear easy money from the fed does not translate to new jobs. companies are sitting on the
money instead of using it to hire workers. they are buying back stock and paying out dividends. maybe we should stop criticizing the fed. if you may disagree with bernanke's methods what can't be debated is congress is not doing their job. before we go take a look at the day on wall street. it was a winner. the dow jones up about 13 points. nasdaq picking up about 5 points and the s&p up about 2 points. all major averages ending off of the best levels of the day. oil prices big move on oil today. down another $3.53 a barrel down to $91.76. for crude a week ago it was kissing up to $100 a barrel. that will do it for ""closing bell"" tonight. i hope you will follow