tv On the Money NBC September 29, 2014 12:30am-1:01am PDT
hi everyone welcome to a very special edition of on the money. i'm becky quick. my conversation with the last president. >> i just want to know if you know anyone. >> from apple, to hershey how they're doing the right thing and whether it's the bottom line. >> do consumers care about corporations or will they buy ind ind fund aou fincws rogram. uick. >> hereo ma new we the new new
econo economy is a andndnd smy smymy . in august climb to their highest level since 2008. a sign of strong consumer demand. they were up to a seasonally adjusted rate according to the commerce department. if you were looking for a taste of hardy stout in the morning starbucks has what you're looking for. it has the malt flavor. stores and it does not contain any alcohol. >> he is an investing legend. the man that iinvented index funds and founded the van guard group. his view on investing is one you want to know about. jack joins us this morning. thank you for being here. >> good to be with you always becky. >> it was a rough week for the markets. there were investors feeling nervous about things. i know you ignore the day-to-day moves but how close will you watch things like the fed and interest rates and are you
comfortable in their ability to engineer a soft landing for the u.s. economy? >> the odds are good we can do that. they're not 100%. nothing in our business is. but the market you mentioned investors are concerned. if i can correct you. >> traders, ight? >> short-term speculators are concerned. i don't think long-term investors need to worry. >> you feel good about things overall. you just tell people slow and steady? >> clearly the market is exuberant. it's certainly not cheaply priced but i don't see the good option of getting out and waiting because nobody is going to tell you if you get out when to get back in. >> this week the california employee retirement fund announced it would no longer be investing in hedge funds? do you think there's a place for hejd funds with more sophisticated investors? >> they have gotten more news over the years but not made much money. their records are meddling when
you look through it. the biggest problem is a selection risk. there's probably 1,000 hedge funds out there. maybe more. a quarter of them go out of business every year. mostly the smaller ones of course and i don't see any permanent advantage in hedge funds but i do see a perm nanlt disadvantage which is they charge a lot of money. >> let's talk about your allocation formula. you should own your own age as a percentage of bonds but include any pensions or social security in that calculations. with what we've seen happening in the bond market lately with the idea that we could see interest rates about to rise i just wonder if you ever change that strategy or if there's ever a time to take something else into account. >> well, just to clarify my position on this rule of thumb i've always used and your age has something to do with your amount of percentage of your portfolio and bonds. i include in that the value, the capitalized value of your social
security and for a loft people that's going to be, most people somewhere between $250,000 and $500,000. it's huge and it's got a cost of living hedge. so it's the value of your own social security is $500,000 and you're 100% invested in stocks you're there for 50/50 under my theory. so you have to take into account pensions and special security and all of that. now, that said, i'm pretty comfortable with the traditional 60% stocks, 40% bonds allocat n allocation. i don't think you need to adjust it every day or every quarter. >> there aren't too many legendary investors like yourself. is there somebody that you think is able to invest decade after decade one of those is bill gross. he's known as the king of the bonds. he announced he was leaving the bond firm he built up and is
going to janice. what do you think that? >> first of all bill gross is a legend. his industry had a lot of legends that have come and gone. bill gross has been good all his own career. he's smart. he's outspoken. he has a high level of integr y integrity. i think it's sad in a lot of ways to have him leave the firm he created to go to janice. but it will be a lot easier than a $3 trillion portfolio. it's their loss. >> if you had words of wisdom what would they be? >> stay the course. realize that if you get out no one will tell you when to get back in. don't think you can outguess the
market. no one can. >> thank you. >> great to be with you again. >> up next on this special edition of on the money, on the clinton global initiative, the former president talks taxes, global inversions and how long we'll be in the middle east. >> and does it pay off for companies to do the right thing? find out what big time ceo's think and as we head to the break take a look at how the stock market d the week.
♪ ♪ turn around ♪ every now and then i get a little bit hungry ♪ ♪ and there's nothing really good around ♪ ♪ turn around ♪ every now and then i get a little bit tired ♪ ♪ of living off the taste of the air ♪ ♪ turn around, barry ♪ finally, i have a manly chocolatey snack ♪ ♪ and fiber so my wife won't give me any more flack ♪ ♪ i finally found the right snack ♪ ♪ a broader mix of energies, world needs to move, to keep warm, to make clay piggies.
that's why we are supplying natural gas, to generate cleaner electricity, that has around 50% fewer co2 emissions than coal. let's broaden the world's energy mix, let's go. a broad period of economic expansion in the united states. he was the first baby boomer president and these days he devotes most of his time to his charitable foundation. by the way he also happens to be an expecting grandfather but the 42nd president of the united states still has a lot to say. all you have to do is ask. that's what i did this week at the clinton global initiative. >> i think it will be an extended involvement with arp o
arpaioer aarpai arpaio -- air power and providing support to the people that are fighting isis and trying to create a more inclusive set of governments in the middle east. inclusive governance is the only thing that works in a situation like that. yes i think it will be going on awhile but on the other hand i don't think it's a projected long involvement in a land war. we don't need to be there on the ground and i don't think that it means a land war in iraq. i actually think in this case the president and the administration's strategy has a chance. >> let's turn to things we're focussing on in the united states. that's the economy. the stock market has been going gang busters. people are feeling better because home prices have risen but at the same time we've seen the middle class stagnate. what do you think is miss something what's wrong? how do we fix it.
>> median income hasn't gone up because the labor markets aren't tight enough. we haven't raised the minimum wage as we should. i hope we will. the second reason is we haven't changed the job enough that is to raise the median income and have more poor people working their way into it. the combinations of jobs has to pay on average higher wages. the third thing is that gdp growth doesn't need growth in median incomes because company after company takes more of its profits and spends it on dividends, stock buy backs, management increases and less on sharing it with the employees broadly although i wouldn't be surprised if the next five years that didn't start to change again. i predict to you that the next big front in this will be corporations moving away from
what was a new idea in the 70s which is only thing that matters are the stockholders and the executives should all be paid according to the stock price back to maybe the employees and the customers should matter more. in a 21st century world where power is dispersed doing good and doing well will become closer aligned. it will be the profitable to do the right thing are corporate inversions unpatriotic? it's been called that in lots of places in washington? >> a lot of these countries feel duty bound to pay the lowest taxes they can pay. america has to face the fact that we have not reformed our corporate tax laws when 100% of the people from democrats, republicans, independents agree we need to. i should make full disclosure here. i signed an supported the bill that raised the corporate taxes in america to the level they are now.
so let me make full disclosure. now i remember the decision we made and the day we made it. i said look we can ask for more but don't go above the average rate. that average rate was in 35% and we hit it. bulls eye. now only japanese companies, for a variety of cultural reasons don't leave. pay about what our companies do. we have the highest overall corporate tax rates in the world. we need tax reform. meanwhile the treasury should do what they can. it's their duty to collect whatever money is owed under american law. if they can find a way to discourage people from moving overseas they ought to but the best discouragement ask to reform taxes and give incentives to repatriate $2 trillion overseas and put the rest of america to work. >> doing something like that and overhauling the corporate tax
code probably would take two sides that would be willing to talk with each other and work with each other in washington and i just wonder if you know anyone that might go to washington in 2016 and start that process? >> that may be -- [ applause ] >> i have been assaulted by cleverness on all fronts for quite a long while now. that may be the cleverest in i've ever heard. my thanks to president clinton. up next, from the clinton global initiative, corporate conscious and the bottom line. one company that has a bad history and how it's trying to repair it's image and it's actions. >> do you think that it actually changes your consumers mind? do you think that they vote with their wallets? >> by the way, you can find us ...we need to break up.
here at the clinton global initiative i spoke to executives at three major consumer brands about the importanceov of responsibility and if consumers are buying it. >> all three of you had companies that had to deal with environmental concerns and other concerns that have gone around and you have all taken decisive action. i'm hoping you can talk about what each of you has done. first of all you spent most of your career in the epa and other government agencies watching
what happens with the environment and policing things there. can you tell us what you're doing in your new job at apple? >> it's a wonderful position because as i tell so many people it's about reach and scale. this is a corporation that when we make one change, when we move all of our data centers to 100% renewable energy it scales automatically because of the size of the company. so the challenge which is really fun and i'm sure we'll all agree is to build on a real history of innovation and accomplishment and then to figure out when douk the next thing because in this time of shrinking government the public sector is doing all it can but the private sector can be as impactful. >> one of the things you are been focussing on is small farmers. >> we call it coco link and we have put about 50,000 phones in the hands of remote farmers and
we have partnered with private sector as well as the government to make that available and it brings market information, pricing information and one of the really neat things about using that kind of technology is you have a farmer in a remote area and if they have a problem they may not have access to ask questions. now with these phones they can take a picture of the bug or a picture of a tree or fungus or whatever it might be and they send it off to the top universities around the world and five minutes later they have a response and action plan. >> did you have any idea what a fire storm genetically modified food would be? >> no. to the agriculture and whole food debate is front and center. we have a place at that table. i firmly believe that agriculture has such a strong part to play in mitigating the effects of climate change and in a busy crowded world that's
going to be more busy and more crowded we need to figure out how we produce a whole lot more foods on a shrinking footprint and consume less. so the action is collaborate and much more actively across the entire food chain. it's hard for us to talk to consumers. we're so far back but we have been doing a lot more work with food companies and the food companies have gotten a lot more engaged in the conversation. >> i'd love to hear from you three what you hear back from your customers. lisa, apple is known as a young, hip, cool company. we know that's the demographic. >> hoping that rubs off on me. >> what do you hear back from your customers? >> well, you know, this is about -- it's actually an interesting place to be because the company is itself innovative and drives initiatives because of the entire to be on the cutting edge of things. what we find though is that there's a great feedback loop
there. what people love about the brand is that innovation, you know? taking the impossible and turning it into done. if anything it's holding ourselves to the bar as high as possible and not taking -- not taking the current technology or the current approach for granted but saying can we go beyond that? that's what you see every day at apple. >> you have one of ten brands my kids recognize. >> thank you. >> i don't know that they care where you get the chocolate. >> consumers really do care. we ask ourselves a lot about what is the consumers changing relationship with food and in our country a high percentage of our needs are met in terms of diet but as we ask ourselves these questions around this choice what it really is is about transparency and it's a good thing. people want to know about from farm to fork you know where does my food come from?
what's in my food? that's a really good thing. >> as you talk about all of these programs that you have put on, do you think that it actually changes your consumers mind? do you think that they vote with their wallets when it comes down to this? lisa? >> i think there's a journey, right? the first is that you have to do it. you to take the actions. it's fascinating that all of us is starting with things we've done. not aspirations we may have. here's the proof points. here's the places we found where our employees and our customers can engage on this but then you have to tell them and i think the communications and eastbound gaugement aspect is really harder than it sounds but incredibly important. j.p. echoed transparency. you can't be 100% transparent when you're competing but you can be open and honest and engaging and as much as possible
tim likes to say we keep our product development famously some what secret at apple but on other things like clean energy we want people to know what we're doing. >> how do you tell people about it and not sound like you're bragging or it's some pr on you. >> that's a great question. a piece of it is consistency. so in the business we're in the time lines are long. the product cycles take a long time. so choosing a hand full of goals. being realistic on the milestones and being consistent on how you report on those and it's interesting here with branded companies and the other for me is being a part of collaboration. companies can't do this on their own. >> hugh, lisa, jp, i'd like to thank all three of you. >> a look at the news for the week ahead and do consumers care if companies have a conscious? that's next on the clinton global initiative.
♪ ♪ turn around ♪ every now and then i get a little bit hungry ♪ ♪ and there's nothing really good around ♪ ♪ turn around ♪ every now and then i get a little bit tired ♪ ♪ of living off the taste of the air ♪ ♪ turn around, barry ♪ finally, i have a manly chocolatey snack ♪ ♪ and fiber so my wife won't give me any more flack ♪ ♪ i finally found the right snack ♪ ♪
for more on our show and our guests go to our website and you can follow us on twitter at on the money. here are the stories coming up that may impact your money this week. on monday figures for august come out. tuesday we'll be getting consumer confidence numbers. on wednesday the closely watched ism manufacturing index is released. we'll be getting auto sales for
the month of september and braes cancer awareness month begins. on friday the big number of the week when the employment report for september comes out. joining me right now is shannon sky lett skyler. shannon, thank you for joining us today. >> thank you for having me. >> we have been talking about corporate responsibility and can you really have landscape in corporate america today? >> sure. it's really evolved over the years. people would know it most family as philanthropy and four or five years ago it shifted around corporate social responsibility and also live around cause marketing and today itsz really a lot about purpose. what's inherent to what the company is meant to do. it's inherent to the traits and leadership they actually bring in and it's about really connecting economic, social and environmental good. >> there's a fine line. the company has to be careful in letting people know the good works they're doing but not sounding like they're just trying to get good pr.
i think the hardest thing is really to know when you're going to win and when you're not. so really to try to figure out i want to tell you about it but i don't want you to think the only reason i tell you about is it is so you think i'm good. that's why we're seeing the change between somebody wanting to program and talk about it and somebody really focused more on systemic adoption. do you think it resinates more with younger consumers? >> well, studies would show that they want to make an impact in their job and they're going to do it. but we also see that baby boomers because of what they have lost and because of the opportunities they haven't necessarily taken during their lives that now they have a chance to give back and do something they didn't do when they were younger. >> thank you for your time today. >> thank you very much. >> that's the show for today. i'm becky quick. thank you for joining me. each week keep it right here. more on the money. we'll see you next weekend.
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