tv Real Money With Ali Velshi Al Jazeera January 29, 2014 7:00pm-7:31pm EST
resign. the dow down right from the opening bell. i'm sunn tony harris. those are the headlines. "real money with ali velshi" is next. >> turmoil half a world away is taking a bite out of your 401k. to deal with it you have to understand it, i'm here to help. and how a new farm bill is affecting people who live nowhere near a barn or corner field. plus how the worldwide web just got a whole worldwider. i'm ali velshi, and this is "real money." >> hey this, is "real money." you are the most important part
of the show, so please join our live conversation on twitter at ali velshi and on facebook. i hope you got a good night sleep and a second wind today because tonight i'm going to tax your brain and mine. here is our challenge. i want you to understand what happens to the currencies and economies of far away places like turkey, south africa and india, and why they ended up taking a sizable bite out of your investments today. this is all about how markets and countries are connected, and those connections are taking a toll on u.s. stalks. they fell again today even before the federal reserve said they'll continue tapering or pulling back on the bond-buying program that has helped to keep the u.s. economy afloat the past few years. the dow lost more than a percent. the nasdaq and s&p 500 fell more than 1% each. the fed said nothing about the
turmoil that has been rocking emerging markets. that turmoil began last week when a report indicated that manufacturing in china may be slowing down spooked investors. here is the connection back to america. when the fed pulls back on its stimulus, it causes interest rates to go up. higher rates in the u.s. mean global investors don't have to chase higher returns from the emerging markets. they move them into less risky things like the u.s. bonds. as this shift happens, the only way those countries can prop up their currencies is to raise their own interest rates. south africa, turkey, india and other troubled economies like argentina have their own specific political and economic challenges that are depressing those currencies. the problems including corruption investigation in turkey. high inflation in india. mining strikes in south africa.
in recent days central bankers in all those three countries have raised interest rates to boost their currency. so far it hasn't really work. we have reports on the delicate balance that countries have to strike as they try to keep their currency stable and their economies growing. >> reporter: when a central bank raises interest rates it increases the valley of its currency, curbing inflation, cooling the economy and attracting investors seeking higher returns. on the other hand lowering interest rates devalues the currency making it less attractive to investors, but easier for businesses and consumers to borrow money and spur economic growth. that's the theory at least. in practice some forces are beyond the control of central bangers. especially those presiding over emerging economies vulnerable to sudden shifts in foreign investment. political unrest or disappointing economic news at home or in key trading partners
can trigger a capitol in emerging markets. so ask external market forces. >> what has happened is not a big shift, but the chain coming anticipated by the market is huge. >> for six years the feds' low interest-rate policies have pushed investors into emerging markets such as turkey, brazil, argentina and south africa where they could earn more for their money. many have profited handsomely from countries needing china's manufacturing. in recent weeks they have cashed in their chips for dollars, leaving a glut of devalued local currencies. while that makes exports more attractive, it raises the frightening spector of runaway inflation. >> inflation goes up which
typically means central banks in these countries who are trying to fight inflation raise interest rates and that can hurt growth. >> many emerging markets have cut interest rates in recent days in an effort to entice foreign investors to stay. but the return to the united states at lower risk is a powerful proposition. al jazeera new york. >> this obviously isn't the first time that world currencies are under pressure. go back to 1977 when situations in thailand spread across the globe. that weighed on currencies everywhere. can that happen again? let's go to a man who has 45 years of investing experience. he said situations have improved since that last currency crisis. jim, good to see you again.
>> thank you. >> you were managing money in 1997 when that happened. i guess people are worried, is that--are we going in that direction again? >> well, first of all remember that we had tremendous growth in the economy and the world economies, and in asset prices in the stock market right after that. the big message is you don't panic. this is a big powerful country. we have a bright long-term future. we will get through this. having said this there could be some short-term pain. asset prices are up a lot. they went up 25% last year. the fed has already put a lot of money in the economy and is going the other way so they can't bail out if there are any problems. the turks and the indians and south africans so far they're raising rates of currency is still going down. it has not stopped, and there is likely to be more pain, likely to be more economic contraction. there might be an accident in the financial markets because so much money was chased into risk-fixed assets and people got money who shouldn't have gotten
money. as we normalized here you might get a default or two in a company or country. so there is more pain, but keep your eye on the big picture. you could have a 10% to 15% drop in the stocks prices-- >> this is my viewers who enjoy that. they look at their 401ks, how much of this is the fact that those prices are arrest and some investors are looking for any excuse or reason to say, let me pull back. >> that's definitely the case. if you look back at 2013 we went into it, and if there was ever a reason to think that the stock market wouldn't have gone up, and it went up. and if there was any reason for this to continue, they say look for the mistake in the grass that you don't expect, it looks like we found it. last year was abnormal. you don't go up 30% and then expect another big year although some people were trying to make that case. if you made 25% to 30% last year, you made more than you
were entitled to. if you give back a little, don't throw out the baby with the bath water. >> we're one month in and we're down more than 3% on major markets. >> right. >> what should my viewer be thinking about right now? >> there are times to buy, times to sell and times to do nothing. right now i would say do nothing. it's too early to buy because you're still up a lot and the news is likely to get worse. >> you're up 30% and down 3, that's not a big discount. >> don't panic if you go down another 3% or 4%. don't sell because the united states is big and powerful, and we're going to have a wonderful long-term future. maybe not as high growth as before. it will likely get worse before it gets better, i would say sit there, do nothing. if there were certain stocks that you've been wanting to buy and you were afraid to buy them because they were up so much, have your buy pad out but don't
pick up the telephone or hit the computer. >> know what to do, but don't it yet. just as i like to say, know the password to your 401k. >> yes, know how to act but don't act yet. >> you don't have to drive a tractor to have a stake in the new farm bill that goes before congress. how families in the big city are going to be affected, too. and how the internet we knew it has just changed. you may never surf the web the same way again. that's "real money," keep it right here. progress, he's in washington d.c. this morning.
and good morning, mr. fietz. >> good morning, del. >> are you confident that this year immigration reform passes and are you sure why it pass it's. >> i'm confident that the president will be talking about the importance of find of bipartisan agreement with this congress, and this is obviously the issue that seems more teed up to have the senate has passed a bill by a bipartisan super majority and now it's up to the house to pass it. and we know that the pass republican conference is meeting in a retreat this week, and one of the things they will be discussing is how to move forward on immigration reform. al jazeera america gives you the total news experience anytime, anywhere. more on every screen.
digital, mobile, social. visit aljazeera.com. follow @ajam on twitter. and like aljazeera america on facebook for more stories, more access, more conversations. so you don't just stay on top of the news, go deeper and get more perspectives on every issue. al jazeera america. >> well, you heard president obama talk about it in the state of the union address if you were watching it. a new savings plans that aims to help millions of americans to start building a retirement nest egg. just hours after th, the presidt was on the road promoting the my ra savings program. >> those who don't have a 401k on the job. don't have a mechanism to start saving especially young workers, you can get started now. >> here are the basics of the
myra. your household income has will be less than $190,000 a year. which is most americans. you can save up to $15,000 over a maximum of 30 years. after you have to roll it over into a rotherham ira but that's not a bad idea. you can withdraw your contributions at any time without penalty. but if you withdraw the interest before retirement you'll be hit with taxes. your money will be in a treasury, but your returns are puny. while this is a good tool to help you save this is not an answer to get you through retirement. to get you on twitter and facebook what is the best way to
get americans to save. >> stuffing the mattress. seriously. stocks are crazy and our bank yielded very little interest over the years. #savings. >> tell me what you think about tweeting me or leave us a comment on facebook. remember, if you stuff the mattress inflation will eat your money away. a vote on the new farm bill easily passed in the house of representatives today. now moves to the senate where it's expected to pass early next week. the $956 billion bill will extend farm subsidies for five years, eliminate the direct payment system regardless of how much they may have profited. it will cut $8 billion over ten years from the supplemental nutrition system or nap which provides food stamps to low-income families. it has been a sticking point in the two-year debate over the
farm bill. republicans were seeking $40 billion in cuts to food stamps. mary snow has a deeper look at how even the most modest funding cut could effect most americans. >> brooklyn, might be an unlikely place to see you effects from the farm bill. but the food pantry feeds 20,000 people a month. >> in my heart i look at what else can i do. >> to cut roughly $8 billion over ten years in food stamps or snap. the supplemental nutrition assistance program. >> this is going to drive more people to pantries and soup kitchens that are already on a shoestring budget. we can hardly afford right now to take care of the families who are coming. >> reporter: organizations feeding the poor felt the strain when congress cut the program by
$5 billion last year and more people turned to food banks and pantries run by charities. this latest run in the farm bill will affect more than a dozen states because new york is one of them, winsome stoner is concern the her husband's salary does not stretch far enough to feed their five children. they depend on food stamps. >> those who have a lot of children, there are those who are still working and trying to make ends meet. >> the debate is over the government spending and the latest cuts are far smaller than originally proposed, but it has not eased the worry for new york pantry as it braces for more demand. >> we're not here to be the front line. we're here to assist people whose food snaps are faltering at the end of the month, people who need a little bit of help. but if the government is going to go out of business of giving
people food, we can't make up for that. >> mary snow, al jazeera, new york. >> if you're one of the americans who use natural gas to heat the home, you probably won't like this. it's reached the highest levels it's been at since january of 2010. the price of the energy commodity has risen 31%. because of the cold weather it has been blanketing much of the country. if domain names is the real estate of the internet a lot of trendy neighborhoods have hit the market. historic change hits the worldwide web. it may an big opportunity if you run a small business. i'll tell you about it on the other side.
stream" coming up right after "real money." >> len novo is getting another opportunity to disrupt the market. thethis is a rare sign of defeat for google, which is stepping out of the hand set market after losing billions since taking over motorola in 2012. as for lenovo buying it's way back to the top seems to pay off big. it bought ibm's personal computer division in 2005 and since then it has become the largest shipper the pc h hes ine world. total sales in 2013 rose 63%
compared to the prior year. monthly active users rose to 1.23 billion, that's a gain of 16% year over year. the company which will mark it's tenth anniversary also saw strong growth in mobile advertising revenue. facebook stock rose 12% in after hours trading. and continued problems for yahoo. the company reported respectable sales in profit, but failed to improve online advertising sales the core of its business. yahoo was once the web's advertising leader now has fallen behind google and facebook. noyahoo was the worst performer and lost 8.7% of its market value. top level web domains. a flood of new top level domains will hit the market this year
like dot-bike and dot-singles. it will help you find what you're looking for faster. new top level domains could change the web as we know it. >> they're calling it the biggest land grab in internet history. tens of thousands of unique web addresses will soon be up for sale. the internet is no relegated to dot-come or dot-net now that the landscape includes a slew of new tlds or top level domains anything to the right of the dot. >> there are domains that speak to who you are and what you're all about. >> there is the whole idea of providing communities with their own distinct identity on the internet moving away from generic terms that exist today dot-come, dot-net, so on. to say dot-catholic, dot-kosher,
dot-gay. they'll have distinct presence in the internet, and be able to innovate. >> secure the name that is just right for you today. >> so dot-come can now be dot photography, dot-pizza, dot-love, and a dozen more that will be released over the year. dozens of companies applied for their own tlds pay be $125 for each application. big name brands are also jumping on board. >> like ibm, google, amazon, and dot-rolex, so on and so forth. these companies want to establish their own identity complete with their own company name and brand name to the right of the dot which they believe will add more value to their businesses. >> google bought 100 other
tlds including dot home, dot music, and dot youtube. the organization that organizes and enforces all the unique addresses for the web said, i began to see the expansion when names began to slink. >> it allows for opportunities. it's as though a road system has gone from a two-lane to multi lane highway system. this will allow communities to get together and wield around a particular purpose that has meaning and purpose of how it's identified. >> until now they are assigned those that own dot-net, dot-tv, and what people can buy.
they said most consumers will not want to going outside of the dot-come domain. >> the company called donuts dot co it's got nothing to do with donuts, but investors have pumped $5 million into the company. donuts dot co plans to put out a new batch of domains every week. starting with dot-bike, dot-gu dot-guru. we'll skip by the question what this whole donuts.co, and tell me about this process. can i buy one of these top level domains and attach my name to it. >> yes, you can starting today. and in the coming weeks and months every week there will be more of these extensions
available. you buy them and use them just like you buy and use the domain name today. but they're going to have the difference. they're going to reflect what it is that you do. >> is there a market demand for these endless domains? >> we believe there is. this is a phenomena that we think is not going to be an explosion of people buying in one instant. these are products that people as people get on the web in the coming months and years, they're going to be looking for a good memorable descriptive domain name that describes what their website does, and we think one of our names will fit the bill for many of those businesses. >> hue do you deal, this could make it more easily to perpetrate fraud because you can take best buy.com and make it best buy.mobile how do you keep
people from buying domains that is not theirs. >> we don't find that to be an argument. in the new top-level do any there will be less of that activity. there has been specificity of what you get now that the desire to infringe at microsoft.pizza is not going to be there. for a variety of reasons we believe it will be safer places. in the preamble it was mentioned that brands are getting their own. if you want to get authoritative information about google, go to a google address. >> i own velshi.com, but i don't velshi.pizza.
if i want to protect myself do i have to buy those? >> i think there will be a lot more attention in the number of small business who is find a new and better way to communicate on the internet. >> if i'm a major corporation, and i want a top level domain i can create it. how does one do that. >> you go to apply, if you're rolex, you go to apply to the entity. go through that process. that first phase has already happened. there have been 19 applications for about a thousand unique streams. so there are about 500 brands that have already applied in this round. if you didn't apply in this round, and you want to apply next time you might have to wait a couple of years to do that. >> will individuals be able to apply? >> yes, individuals can apply now. there is no restriction on who can apply for what. that phase is done. the names that were applied for are in place. but when it comes about, exactly. >> thanks so much for doing
this. richard tindall founder and ceo of donuts.co. turkey, south africa, those places sound like they're a world away, but it's amazing how their markets are playing out in our markets, and how economic decisions are made here and sweeping coo across the rest ofe world. we talked about currency, but less talk about people. each of these emerging nations have a middle class with the same kinds of aspirations that you'll find here at home. as their central banks raise interest rates to defend their currency, their middle class will suffer the same way you suffer when the fed raises rates. that in turn means weaker demand for american product and services. when you think about it, that's a problem for our own middle class. it seems that middle class problems are the same all over the world. it's an election year so you'll be hearing a lot about i middle class, much of it noise.
when you want a clearer less cluttered examination of it you'll find it here. on monday i'll bring you my first hour-long session, america's middle class, rebuilding the dream. i'll be joined by robert raich, bowl schiller and personal finance expert suzy orman. that will be right here on al jazeera america. i'm ali velshi, thanks for joining us.