tv Street Smart Bloomberg January 3, 2014 3:00pm-5:01pm EST
control over money market rates if that proves necessary. as a result, at the appropriate time, the fomc will be able to return to conducting monetary policy. it is possible that some specific aspects of the operating framework will change. the committee will be considering this question in the future, taking into account what is learned through experience and the new tools. in the remainder of my remarks, i will reflect on the recovery prospects. the economy has made considerable progress since the recovery began foreign a half years ago. federal employment has risen by jobs.and a half million gdp has grown in 16 of 17 quarters and the level of gdp was five and a half percent above its plea -- above its pre-
unimportant -- pre-recession peak. has beenng system recapitalized and the financial system is safer. when the economy was in freefall in late 2008 and early 2009, such improvement was far from certain, as indicated at the time by stock prices that were nearly 60% below credit levels and very wide credit spreads. despite this progress, the recovery clearly remains incomplete. at seven percent, the unemployment rate is still elevated. the number of long-term unemployed remains unusually high, and other measures of labor utilization have improved than the unemployment rate. labor force participation continues to decline, and although some of this reflects of it-term trends, some
likely reflects potential discouragement about job prospects. in retrospect, many of the factors that held back the be identified. some of these factors were difficult or impossible to anticipate, such as the european sovereign debt crisis and the effects of natural disasters in japan and elsewhere. other factors were more predictable. we appreciated early on, although to a lesser extent than we might have, that the boom and bust cycles would take time -- that the boom and bust left severe imbalances that it would take time to work off. noted in research, economic activity following financial crises tends to be anemic, especially when the perceived it -- especially when the previous expansion was accompanied by gross.
the reflects in part process of deleveraging and balance sheet repair. institutions restore credit and ratios. in addition to these financial factors, the recovery reflects housing and real estate prior to the crisis, together with credit. indeed, recent activity in these areas is especially tepid in comparison to the rapid gains ine typically seen recoveries. although the forecast has tended to be overly optimistic, we have also at times been too pessimistic in our forecast of the unemployment rate. for example, over the past year, unemployment has declined more quickly than we or others anticipated even as gdp growth was lower a year ago.
this reflects a number of factors, including declines in when productivity gains are limited, firms need more workers. disappointing productivity growth must be added to the list of reasons why growth has been slower than hoped. incidentally, slower productivity gains were not evident until after the fact because of data revisions, and an indication of the frustrations of policy making. the reasons for the slow growth are not entirely clear. it may be due to the financial crisis. productivity improving investments in the formation of new firms or it may simply reflect slow growth in sales that have led firms to use capital or labor less intensively. hasbly, productivity growth
been slowest in sectors most hard hit by the crisis. long-term trends are largely unrelated to the recession. to the list of reasons for the slow recovery, weekend productivity growth and events in europe, i would add one more significant factor, fiscal policy. federal fiscal policy was expansionary in 2009 in 2010. since that time, it has turned quite restrict them. according to the congressional budget office, tax increases and spending cuts lowered growth by as much as one and a half spent -- one and a half percentage points. state and local governments have been highly contractionary.
at the current point in the recovery, employment at all levels of government had increased by nearly 6000 workers. in contrast to the current recovery, government employment has declined by more than 700,000 jobs, a net difference of 1.3 million jobs. correspondingn cuts in government investment and infrastructure as well as increases in taxes and reductions in transfers. although long-term fiscal sustainability is a critical objective, near term policies have lightly -- likely been counterproductive. it recovery is weaker than otherwise would be. the current policy mix is particularly problematic when interest rates are very low, as is the case today. on the terri policy has less room to maneuver when interest
rates -- monetary policy has less room to maneuver when interest rates are close to zero. might balanced policy mix lower the risks to financial stability without sacrificing jobs and growth. i have discussed the factors that have held back the recovery to only to do it -- not only understand the recent past, but also to look to the future. the school policy remains restrictive but the degree of restraint on economic growth -- fiscal policy remains restrictive but the degree of restraint on economic growth seems likely to improve in 2014. the states of local and state governments have improved, reducing the need for further contraction. notwithstanding the effects of somewhat higher mortgage rates, house prices have rebounded,
with one consequence being that the number of homeowners with underwater mortgages has dropped significantly as have mortgage delinquencies. -- allen'siege sheets have strengthened. partly as a -- balance sheet of -- sheets have strengthened. mortgage growers still face impediments. businesses are in good shape. the combination of financial healing, greater balance in the housing market, less fiscal restraint and continued monetary bodes well for the coming quarters. if the experience of the last few years teaches us anything, it is that we should be cautious in our forecast. what about the rest of the world? the u.s. recovery appears to be somewhat ahead of that of other advanced economies.
gdp is slightly below its pre- recession peak in japan and remains below pre-recession peaks in the u.k. and europe respectively. see grounds for cautious optimism abroad as well. as the united states, central banks and other economies have taken significant steps to provide policy accommodation, financial sector reform is proceeding in the effects of tight fiscal policies are waning. although difficult reforms in europe and japan are still in early stages, we have also seen indications of better growth in the a danced economies, which should have positive implications for the united states. emerging market economies have also grown quickly, after a 2013.g in the or staff of although growth prospects for the emerging markets continue -- slowing in the first half of 2013.
last month, we had a ceremony at the board to commemorate the centennial of the signing of the federal reserve act by president woodrow wilson. over its 100 years of existence, the fed has faced numerous economic and financial challenges. certainly, the past few years would rank among the more difficult times for the u.s. economy and for the fed. this experience has led to important changes at our institution including new monetary tools, enhanced policy communication, a substantial increase in the focus on stability and macro policy and increase transparency. we often speak of the federal reserve and other institutions as if they were autonomous actors. of course they are not. the fed is made up of people working within an organizational structure and an institutional culture and set of values. of my colleagues
at the fed for the hard work and creativity they have brought to bear in addressing the financial crisis. we end a have been well served by a culture that emphasizes -- we ands expert they have been well served by a culture that emphasizes objective expert analysis. many people are committed to pursuing the public interest. although the fed undoubtedly will face difficult challenges in the years ahead, our people and our values may be confident that our institution will meet .hose challenges successfully thank you. >> ben bernanke addressing the american economic association in philadelphia. we are joined now by our very own phil mattingly who has been listening in washington. the chairman made very clear the economy has come a long way but there is dull some slack. what stood out to you as you listen the speech?
>> the positive message is what led them to reduce the bond purchases last month, the taper. bernanke said the headwinds are starting to abate. that has to be good news for the economy in the months ahead. that was a direct shot at congress and the fiscal policy in a more broad, expansive way than i have seen or heard the chairman take before. he made very clear that the fiscal policies pursued by the federal government over the last couple of years, both in deadlocks as well as tax increases and budget cuts have contributed heavily to the slower recovery. that is something you hear behind the scenes from fed officials, but for the first time, burning he came out and called out lawmakers. hurdles remaining. >> you're absolutely right, calling out congress, just like you, me, and everyone else out
>> welcome back to street smart. look who is sitting next to me. >> stephanie ruhle in for trish regan. let's look at the big picture. >> these are three charts that will show you right now what is happening. we got a little rally. up this morning, down this afternoon. trying to win back some of the loss from yesterday. we are just below the all-time high we sat on the 31st of december. is gold. up about .8%. georger john paulson and
soros got out. >> ring the bell. hello. this is a big call the kel out -- came out of citibank. you have to sell the euro. right now, the euro is 1.3591. .ou are going to go to europe >> indeed, i will be in. close in three weeks. lucky me. >> i tell you what. we are going to our lead right now. it is a big day for boeing. to be voting for a third time on a new contract that would enable production on the 777. that would begin next year in washington. if they say yes, they will get a bonus and a contract extension. , boeing willo likely move production to another state and washington will face a credit ratings
downgrade. that is how big the stakes are. this is the third time union workers are coming together trying to vote on this thing. why is it so hard to get this done? >> when you talk about workers, a large percent are getting close to retirement. they don't want to make any changes. the younger workers see more jobs for the future. it is an intrigue union issue. -- interest-union issue. the airplane is going to get built. it is an issue of jobs, basically. washington makes it not business friendly accra we have seen so many companies move their headquarters to the state. >> asked boeing why they move to chicago. that was a message in terms of taxes and things like that. this vote is going to be
important because if it does not go boeing cost way, they will move to south carolina or one of the other 22 states. >> belling is playing hardball. the local machinists union is playing hardball. ultimately, who wins? >> jobs are jobs. the union is saying, i think correctly, that there is no guarantee that some of those jobs might not be contracted as -- out to someone else. we that as it may, this is going to be jobs in washington or somewhere else and that is the rock and a hard place they are in right now. >> what do you think is going to ?e the outcome >> i think it will probably go the way of keeping it in washington, but if it doesn't, the governor is right.
not are going to lose jobs just because of this, but they are going to lose other jobs in the future. washington could be very much behind the curve in its traditional position as a major place to baird -- to build airplanes. >> i was in charleston this past weekend. absolutely gorgeous city. >> my favorite u.s. city outside new york. >> yes, it is. on restaurants aside, i noticed there were a on of dreamliner's parked the tarmac. a lot of maintenance is done in charleston. what other cities might benefit if in fact the contract is not voted on by the machinists in washington. you have wichita that may be pushing for additional work from boeing. you have places like mobile,
alabama and mississippi. places like columbus, mississippi are becoming centric. there is a whole slew of places. >> but does the infrastructure exist in some of these smaller towns? can you legitimately build a wide-body aircraft? >> is there the labor force. >> sure. and mississippi, there is a great labor force. there are in norma's amounts of --in norma's -- e norman s foreign amounts of innovation. these things can happen. >> your advice to each side? for those people that have a pension, i understand their issues, but the long-term issue is will you have jobs in that
robot.reated a dancing austrian researchers unveiled a robot designed to help the elderly. internationale robo cup soccer competition while french and japanese scientists created a robot you can control with your mind. motion sensors put robots in the boxing ring. was shown offry andokyo, and it does -- --4 truths to be just as looks to be just as mind blowing. robots even help with memory loss, useful to those of us who can hardly remember what happened last year. >> robots are really cool. when we come back, we're going
the assets, in other words, cash on the balance sheet. that goes back to 1960. a lot of cash, and look at this. payout ratios are very low. back to 1960. only 3.7% of earnings are being paid out in dividends. typically, that number is in the 30's. this is why we are making the argument that eventually businesses are going to start paying out more. who is likely to start paying more? in the s&p stocks 1500, we looked at where the dividend yield was at least one percent, the one year -- current dividend yield was at least three percent, and bloomberg is forecasting dividend increases. there is a whole team that does exactly that. their accuracy is about 88%.
these guys are good. here they are, 16 names. there are some names we know on here. there are too many for me to name all on air, so go to twitter. i have posted all 16 of these stickers. but it is out there, dividend growth is one of the big themes of 2014. justr closer is not focused on dividends. he is focused on deflation. he created and led morgan andley's global allocation emerging markets departments. welcome to street smart. thank you.
for 2014, you are big on the policy of flexibility. what does that really mean? itpolicy flexibility as pertains to central banks. i think the fight in 2014 is going to be about deflation. if you look at cpi, for example, you can see that it is declining in the u.s.. >> under one percent. >> and the outlier, as you see in the chart, is japan. japan is having success in breaking deflation. the way i look at it, the big three, the u.s. has gone from having the most flexibility early in the crisis to having the least flexibility. fiscal policy is in a deep freeze through the election and monetary policy is being tapered. then you have japan in the middle, the sure bet.
japan is going to continuously change money until they have inflation.he austerity is easing and i think 2014 will see the ecb coming into action in quantitative easing. the takeaway for investors is simple. the non-us developed markets are going to lead investment in 2014. the u.s. has been the leader since the crisis in terms of equity market performance. i am making the case that in the non-us developed markets, think europe, think japan, think the u.k., are going to lead global equity. i liked japan first and foremost. i came on the show over a year ago in november of 2012 -- at me just take the other side. you founded the emerging markets business for morgan stanley.
now you are running your own firm. you know asia very well. is this one of these things where you kind of fall in love with the region and it is hard for you to see it clearly, if you take away your natural bias toward the region? >> my natural bias is to japan, not to asia. bubble china has a dead they are trying to deflate, very problematic. i think the other countries have a bubble in the process of bursting. you are already seeing that in thailand, for example, where there are riots in the streets. i think asia, broadly speaking, outside of japan, has significant problems. there are one or two exceptions, and those are primarily in latin america. i like mexico. mexico has the best growth delta of any of the countries. in other words, growth in 2013 was one percent.
is likely tohange be better than anywhere in the developed markets. mexico did nothing last year. it was actually down on the year. it has a really great story that is starting to manifest itself and room to run for the next couple of years. the show. with us for good having you here. , is murdoch media power for 2014? ♪
current nfl season is the most watched ever. today, they sold their stake in star china to focus on other markets. the question, is rupert murdoch making all the right moves at the right time? let's ask jon erlichman. so many changes all at once. why? >> well, this is a company that is always moving quickly. it has an entrepreneurial spirit that's the way rupert murdoch roles. there are different parts of the fox empire. you mentioned the super bowl. to theirey broadcasting strategy. they have cable networks that are really a big revenue driver for the business. aspect, the pay-tv which is a huge international story for fox. even though, as you highlighted, they sold their stake in one chinese venture, they continue invested in the chinese
market. to the super bowl, you like talk about ad rates. advertising could be the market to watch for 2014. >> talking about the cable networks, they account for about 39% of revenues. as you look at cable properties, what excite ceo? >> for me, it is about the pricing. has been tostrategy narrow down what they do best so they could take cash and reinvest and what does work. i think this is an important avenue for them. behind all of this, it is just about raising the pricing. fox news could significantly lower their monthly numbers. cnn has higher viewership. i think the pricing story is really the story here. >> can you put some numbers on what each cable subscriber pays?
or espn?to cnn >> i will give you a couple of rough numbers. these are estimates. cnn is something like a dollar 20 five per subscriber per month. fox news is something like $.85. fx would be below that. news has a broader viewership. in terms of fox sports, you know -- to fourthd century fox has done is taken over. north of fiveg dollars. fox sports has the ability to consolidate a lot of content on those networks and the ability to get much much higher pricing. >> as i look at some of the hits of 2014, the films for 20th century fox, there were some big
names. what about the outlook for 2014? >> i think the big film story for this company over the next few years will be avatar. the same way that disney has made a big, bold bet on the star wars franchise, there are plenty of avatar related sequels that are going to be lined up and coming in subsequent holiday periods. it has worked out so far. that would be the calculated august that the studio is making. it is a big studio that is always willing to try something new. he saw walter mittie was one that they had out during the holiday season. it suggests we will try something that is not necessarily tested because we think it has a good storyline. i go back to the entrepreneurial spirit. curious to know about new technology. they end up taking stakes in
different businesses sometimes just to learn about them. >> as you look at the charts here, what jumps out at you. has had a great run. from 2000 nine to present, it is up six or seven fold. if you look at the daily chart, it is starting to bump up against resistance at about 35. coincidentally, a lot of have exercise resistance around the 34 level. i think you will see it go back to the 34 level. that is the minimum price i would get interested in. it is a great company at a not so great price right now. if we flip to the weekly chart, i think you will see potentially more downside for the long-term investor. a lot of this happened over the .ast two and a half years volume has continued to decline over the last two and a half
years and there are a lot of institutional participants there. i think the stock has run up quicker than its earnings have. i think either the stock has to consolidate or have a sizable correction and that will bring it back in line with its earnings. >> incredible to see that long- term chart from four to 34. jon erlichman, you got me all excited for avatar. we will be looking forward to that. thanks to the whole dang. -- gang. if you are looking for some investment ideas in 2014, guess what? you are in lack. chart attack is next.
questions. let's take a listen. are theround rules standard ground rules which are no questions or making speeches. when it crosses the line, i will intervene. let's start over there. for your speech, chairman bernanke. in 2008, the fed acted aggressively to protect money market mutual fund investors from small negative return but equity investors took negative returns almost every day. in fact, they lost nearly 50% from the start of the crisis through 2009. should the fed have acted equally aggressively to buy up , or was it a big mistake
to support the money market mutual funds. i have twooint out very distinguished colleagues who are all so happy, i am sure, to take any questions, particularly about production values. which, by the way, were led by the treasury department protect money market funds were not about the protecting of an investment of any individual or group. it was about avoiding precisely this issue. of af the key ideas financial crisis is a fire cell -- firesale mentality. enough liquidity not enough buyers in the short run, and we see reduced net holdersf other asset who in turn are forced to sell, and you get into a vicious cycle.
the money market funds that were were held by broker dealers and others. and the commercial paper market funds financial and nonfinancial firms in the short term. it was not a matter of protecting the wealth of any given group in the same sense that intervening with any given company was not an attempt to protect the wealth of any given group. it was an attempt to avoid a cascade of falling asset values and fire sales, which the run on funds wasmarket already creating. >> but the equity markets had to sell assets to, and a cascaded 50%. >> but they were not runnable. >> neither are money market funds as long as they act like mutual funds.
>> next question. my question is, the mechanism by which wanted tate of easing is seen to work. your original statements back in qe1, suggested that what you were doing was targeting higher or avoiding deflation, and the impression that generated was that higher inflation would allow fed rates to generate more stimulus. but your more recent statements suggest that quantitative easing works through reducing interest , buying securities that reduce interest rates. which is the more important mechanism? is a rising inflation or
allowing -- or lowering interest rates? >> i think you're mixing goals and mechanism. inflation.s to avoid we were concerned about deflation risks. and of course, deflation is not a zero run thing. inflation can cause problems. we adopted the quantitative easing policy with the objective of raising the inflation rate to meet our target. so,he same time, by doing we would of course lower interest rates and help the real economy. that was the objective. the mechanism, and of course, there is a lot of debate about how this works and so on, but the mechanism we have focused on is based on a friedman world and kind of -- in which there are imperfect substitute abilities
between different asset so that buying a different assets has an effect on the use of those assets. wet was the mechanism discussed today that i talked about in jackson hole right before qe2 as well. >> thank you. i just wanted to ask whether you could share with us a little bit more on how you balance transparency and accountability with central-bank independence, and what challenges other central bankers might face in trying to follow your example. >> why is it a question of balancing? -- well, ok, let me try a specific example. i think i understand where you're coming from here. the specific example, and i have a long footnoted my speech which, if you would like to take
a look at it, it is on the fed website. it takes a look at the so-called audit the fed legislation. that legislation is misnamed. it is not about auditing in any common sense at all. as i tried to emphasize in my spoken remarks, the fed is thoroughly audited. all transactions are thoroughly audited. record had a very good there. , which is an gao arm of the congress, has access to virtually everything that the and can come and criticize, record, etc. the one exception is that there is an exemption in the law for monetarying individual
policy decisions. so, the gao undercurrent law is not allowed to come in and say give me the records of your last meeting and we want to see whether you should have raised or lowered interest rates at the last meeting. that exemption in the law, which the 70s by the congress. we view that as an appropriate balance on the one hand. and of course, monetary policy is transparent as well. we put it all out in the minutes, etc.. but congress took the view in the 70s that exempting monetary -- examining monetary policy was needed as a tool for keeping congress from influence saying short-term decisions made by the dead. there is a balance.
fed would do is remove that exemption. that would mean that the gao could come in and second-guess the fomc's decision, which i think would be pretty inconsistent with any common view of central banking independence. i think the balance where it is now is appropriate. giving congress day after authority. and i think it would be bad for the economy if the public and market participants thought that essentially whatever the fed did beingbject to immediately reversed or subject to substantial pressure by the congress.
>> i asked my students if they had a question for the chairman. there were a number of them. i have an interesting one. if you knew in 2006 what you know now, what step or steps would you have taken then to amend or ameliorate the financial crisis and subsequent severe downturn? >> that is a really unfair question. the reality is every policymaker -- this is the nature of policy. it has to be made in foggy conditions with imperfect information and a lot of uncertainty. , in order to do anything, i
think i would not only have to know in advance, but everybody would have to know that i know. arbitrarily started raising capital requirements by five percentage points, the banks would say, what? and it would be very difficult to get congress and other regulators to agree. this has involved many, many issues. one of the concerns -- i want to respond indirectly because of the point neil raise. the use of the macro credential type measures, i think one of -- one of the practical questions is can you put them in place quickly enough and preemptively enough? that is one of the things that the bank of england is working to try to find mechanisms for, more rapid response, so to speak. i think that is one of the real challenges.
the fed put in new guidance on commercial real estate for meant toich was strengthen the criteria for risk management. it said you should not have too much cre on your balance sheet, etc.. that process went through more to have a more nimble system. the answer to the question that bill raised, i am sure there are some things that could have been done. unless everyone collectively knew what was going to happen willing to work cooperatively to make those steps, it is not obvious you could have avoided it. one more question. >> you expressed concern about the premature phaseout of fiscal stimulus at the end of 2010. do you think in a future session it might be helpful if the
federal reserve were able and willing to give the cash transfer to the treasury so congress could sustain fiscal stimulus further without additional borrowing? think i am going to go there. no. [laughter] first of all that will not work. has ang the fed inflation target. even if. let me emphasize everybody. this is entirely hypothetical. [laughter] even if that were to happen, it is no doubt illegal anyway. even if it were to happen ends -- at some point the fed would have to undo that to get the money supply consistent with its inflation target and it would not affect the long run debt held by the government. i am not at all sure that would even work in theory.
bad idea to me like a in any case. fiscal policy ought to be made by the congress in thinking comprehensively about spending taxes and debt issuance. thank you all very much. [applause] >> we have been looking to the outgoing fed chairman ben bernanke taking questions. the chairmanred for a long time. have you ever seen him look so relieved, leaning on the podium? he is happy to be done. >> at 10,000 pound weight off his shoulders. it is like senior week. everybody looks back at the crisis and want someone to blame. things that could have been done differently. he looks at this in a different way. the system is so interconnected
everybody would have had to recognize this at once, not one institution or a couple. to be able to set the machinery in motion you need the central bank regulators and lawmakers and fannie and freddie. that is an interesting perspective. everyone tries to pin what institution or entity. everything was so interconnected everybody gets a little bit of blame. that is kind of his point there. another point and this he mentioned in his speech. to keep in mind. house republicans are targeting the fed again. they had a couple of years' rest. services financial committee has said they are going to do an intensive investigation, an intensive insight over it -- into the central bank. what you are saying from an bernanke today is a bit of a preemptive defense of the central bank. when it comes to the audit issues they are trying to avoid that. they do not want to get into this fight again with lawmakers.
in bernanke getting out front on that. >> he was laying the groundwork for janet yellen to take over. on wall thing happened street, the market close. if you missed everything that happened, do not worry. we will run you through the top 10 and talk about the markets. buying.fter both companies protect computer network's against hackers. >> micron technology down 3%. rbccompany is falling. capital downgraded the stock saying valuation has got ahead of fundamentals. last year the stock was up more than 250%.
>> bp shares are down slightly. a federal appeals court will fast-track the appeal. bp claims a lower court judge that approved millions in payments for economic loss is not linked to the disaster. the oil company says it is paying out nine billion dollars. up satellite radio provider about 2%. upgrading the shares to by for rapidpectations growth. >> i listened to channel 59 which is country, the highway. >> number six. t-mobile. the stock is down three percent. poach t-mobileto customers offering up to $450 in credit for every phone line use whichever. that deal begins today. sprint down four percent
after getting a downgrade from steeple. willle says sprint struggle to obtain regulatory approval for its proposed merger with t-mobile. at&t is feeling -- stealing the clients. >> can sprint break-in? it is so far behind. i am a bit jaded. i started this job in 1999 coverings brent and deutsche telekom merger rumors. they have been going on for 15 years. i am over it. >> you look great. thank you. >> carl icahn supposedly buys as much as 40 million shares. he gave a note comment to our copilot.
>> number three on exelon. not feeling excellent. dow 2% after getting a pair of downgrades. it hit a 52-week low off of this news along with con ed and pg&e. >> delta air lines even today as all the airports shut down. don't to is up six percent. the best performer in the s&p. the airline has raised to a long -- a strong buy. this comes after the company announced solid gains in its december traffic. revenue jumped 10% from december 2012. >> airlines were the way to go. last time you took a commercial airline? >> he knows how to make money. d will be retiring its last dc-9 on january 6. >> they were made -- made in 1980 two. it is about time. i do not want to write a 30-
year-old airplane. do you? >> our number one stock, general motors. down three percent. -- 3%. sales down 6.3% while analysts estimate that they would rise. one of the worst performers in the s&p today. shares have made people a lot of money. >> i am not that keen on that color. >> make it solid red, nonmetallic. these of the stories we're tracking ahead of monday's open. we are not nerds, we are just guys. off.ck it climbing aoros is great wall of worry.
the billionaire investor said do not worry too much about the u.s. or europe has china is the number one risk for the economy. he said -- he wrote there is a contradiction in policies. he is a little more optimistic about america pointing to the energy room and improvement in banking and housing as signs our economy is on a stronger footing . >> it seems everyone is talking about china. --could see a u.s.-it's style crisis. there is a lot of concerns. leveraginglot of going on. health concerns and food concerns, they have had millions, hundreds of millions of people will it -- living well under poverty level with not enough to eat and they do not
care. you have to see them. >> when they want something they do it. when they want banks to lend more money they tell the bankers. that is how it works. >> that is part of the dilemma that. they have to a careful about leveraging. >> i will come out in defense of the chinese. they are trying to request rate -- re-orchestrate the economy. .ot easy to do >> they have been trying to do it for while. it is not an easy transition. >> it is an old headline. >> you actually believe any of the economic data that comes out of china? chang -- >> you took a tour through the ghost town. you are only -- the only guy in
a city built for millions. >> i have extended periods of time in china and they have a long time to go. looks to electric growth in china. the consumption of electricity -- 1.2%. that is here -- where he says reality is. >> china is not foreign. >> moving on. >> we are bringing it home. the nsa is trying to go the supercomputer according to a report in the "washington post." agency is in the process of developing a quantum computer that would help break encryption systems. staying ahead of others trying to build their own code cracking machine. adding such a powerful machine to its arsenal. estherre assertions from
snowden. that is not exactly a surprise. if they were not building a quantum computer i would be surprised. >> the eu is doing it and the swiss are doing it. enigma, that is what they do. not is their job. >> doing know anything? it builds on the conversation we had about edward snowden about whether or not there should be a plea bargain or a play to bring him back. it is that idea of privacy. the greater computers that can access more data so there are these privacy concerns. do you need these computers to be able to crack any code that is out there? >> i am ok with the government the able to crack codes. beo not want the ability to used against fellow americans who are just honest contributors. >> since 9/11, everything has changed and if we do not think the government is accessing all
the information out there -- >> the basic question is this. are you willing to give up some of your freedom for more security? >> we do it at airports. i would rather loose security. >> you are throwing out 300 years of i'm not going to just say jurisprudence. scholars say you give up some of your natural liberties to participate in a naturalized -- in a safer society. not too far from reality. >> moving on. but there is sale a chinese tycoon out there who says his offer to buy the paper, it is not a joke. he said he can spend all the money he has to buy the time and he has convinced of fellow
businessman in hong kong to invest 600 million dollars in the deal. according to an article he said if his chance to purchase the times fails he will find another news organization to buy. we have seen this before. they have all been interested in media properties. >> just think, rupert murdoch. value am a the stock market capitalization plus the bonds minus the cash on the beance sheet -- that would eight times. >> if you have an infinite amount of resources to have an outlet like the new york times, one could say you cannot put a price on it. >> agreed. >> that is a marquee brand. >> talking about another brand.
talking about blackberry. this girl is on fire. blackberry is not. the struggling company parting ways with alicia keys after just a short year. her album came out in 2012 and she was hired as their creative director. they have kept on losing market share. they have bigger things to worry about. >> i am talking about alicia brand. felt like, are you for real? this is an endorsement. is that where you are your pictures?
>> you still have a blackberry? >> i do. >> i do to. i like that. >> i have a blackberry because i cannot type on an iphone. ryan seacrest has made this one million-dollar investment in a product that will -- will not eat up the battery. >> it is that you talk so fast. your thumbs will not keep up with your mouth. >> just get a sidekick. a blackberry and an iphone. >> we have to take a quick break. we will be right back. do not go anywhere.
>> this is one that worked well last year. he can return the favor in 2014 and the difference will be last year foreign buyers were the big impetus. this year it will be domestic buyers. it will lead to wholesale change in portfolio allocations from bonds to stocks. >> on the other side of the world you like european financials. they were so eaten down for so long. why do like them now? >> this chart does not show it. you have to go back a few years. european financials will benefit from two factors. the ecb will engage in quantitative easing to fight against deflation. they will want to know what they own and they will be transparent and that is going to bring n. the assets on their balance sheets have started coming down.
the feds -- will that reverse get big again? >> it will require caught -- quantitative easing by the ecb. >> gold miners. >> it is one of the losers. nextnk they can do well year in 2014. this was a big loser. the catalyst is basically all the financial -- hedge funds have done their selling. the miners will be one of big surprises. fixed income in 20 seconds or less. >> another loser in 2013 and a winner in 20 14. oversold, nobody likes it. no inflation and there is an opportunity and when to pretty
-- tapering comes. i think there will be a great return for 2014. >> default rates are still at all-time lows. >> they have refinanced. , you willportunity have to be more tactical than other places. >> always great having you on the show. thanks for the tips. the stuff of legends back in 1987. a new one is coming out. we have the year ahead to movies and entertainment.
>> automakers are not having a good day but we are. matt miller is here to explain my december was such a bad month. cannot say just because it was chilly out. >> apparently it was colder. >> automakers were not anticipating cold weather? >> it is not the automakers to set expectations, it is analyst. carshad estimated how many were sold. the estimated chrysler boosted sales. it was only 5.7. the analysts thought gm had a gain of 1.5%. gm drop to 6.3% and the same is true with toyota. for denise on -- ford and nissan up as much as expected. down 8% and change.
>> in a year and a new qe world. etf's that have crested in january beating the s&p threefold for three years in a row. how is that for performance? now.s let's get right to it. get --only are they great january performers, they have something going for them. i like this one, this is your narrow homebuilders. much more. this has been on a surge since
the fed announced its paper. it is a sign the economy is growing. >> and you buy it ahead of the spring selling season. -- this etf. the you have all the banks covered here. gets annk answer -- equal voice. this one has been searching all year. the third one is the marker -- market vector's russia. you have good valuations here and low pe and it has been lagging the emerging markets by 10%. definitely trading at a discount to other em countries. this could be a decent play on the real -- on the rebound.
i saw the movie this weekend. if you're watching this and you want to avoid financial middlemen, taking a lot of your money and your investment, one way to do that is to -- by low- cost etf's. 200e -- tracks stocks. it is commission free through schwab. u.s.ther is the ishares total bond market. that gives you 2000 bonds, corporate and government. the third one if you want to go international. check out the vanguard total international. in -- between the three of these the blended expense ratio would
be 10 basis points for 10,000 securities you get exposed to. you're talking about all of your investment gains to come back to you. >> i have been out all week. it is my first day back. you have to give a sticker of -- week area >> that is ticker of the week. >> that is fan. made anuffett investment. was up 60%. it is 50% european companies and you have a lot of exposure to spain, denmark, germany, only 10% u.s.. you have to buy into european recovery. >> if you are listening earlier you definitely want to buy into it. >> they subsidize a lot of
those. thank you. thanks for making it in from philadelphia in the snow. >> both of you may be watching football while on monday the ncaa is going to crowd a champion when the tigers take on florida state. biggame is going to pull in ratings for espn. who really wins during the college bowl season so i want to bring in our senior west coast .orrespondent how important are these college bowl games for espn? many?ere to many -- too hits.ot of them are big seems verymes, it
far away from mickey mouse. networks generate 45% of revenue. espn is a huge part of that business. you are talking about a one-two punch in terms of being advertising friendly. of bowle been reports games generating close to $1 million for a 32nd spot. they generate these huge fees from cable companies. in the hopes that people will watch these kinds of big events. that has been part of the winning strategy. about being so many of them and followed by different people, it is good for colleges as well. >> it was a few months ago, a h it fanfare and everyone said threat.g to be a
inthey have seen the value creating a similar type channel. you still have these regional challenge -- channels. bowl comingcotton up, it is a fox property. they still have these massive sports rights but you're right. the fact that so much sports has tradition, the biggest events to espn. you have some bowl games making their way to abc because it is part of the disney family but it has been an espn story. you want the marquee events on there. for fox, it still seems like the biggest events and up on the fox broadcasting network. >> i know what you will be doing this weekend. watching football. our senior west coast correspondent. >> there are severance equals that are set to hit theaters
next year? this year? "entertainment weekly's" film critic is here. and remakes and reboots will rule the industry. they are the locomotive that is link the industry ahead. you can be cynical about it and you look ahead and we have got 3 coming out. spiderman 2." no original thoughts left? rex there are. people want to see the familiar. this is the stuff that is keeping the movie industry going. and remakes iels
am looking forward to. i will give you an example. i really like the first captain america film. i thought it was a solid comic book will be. it looks a little more sci-fi -ish. redford is in this movie. >> you can have not just people who are buying the dvd but there ss the products and game associated with it. >> that is built into the culture. this is the air we breathe. they are making these movies now better than these two. the good filmmakers want to make comic book movies and fantasy movies and things like "the hunger games." as filmexcited by them
makers. you look at christopher nolan in the "batman" series. the quality of these films is better. "robocop"see the films. create know they can great special effects. >> you take a movie like the top grossing film of 2013 which was "ironman three." that was directed by shane black who was known as the screenwriter of lethal weapon and a couple of other things. wasought his direction terrific. for the reason you said. had an interesting story. that is why it was the top grossing film of the year. that these film
makers want to tell the stories. >> even when there is a bad number two sequel because people i into the franchise, are two they going to see that film? >> that was a big hit but all these movies had to be good. the best of them are hit aiming high as movies. they're keeping the movie industry going. industry hasthe become. tell us about that one. >> george clooney directed it. it was going to be a lady in release. george clooney dreck of this film which is a historical heist movie about this order, it was put up by fdr to gather these
are just orient and have them become this heist team that would go in and steal art that the not season stolen and returning to the original owners. you have got george clooney, matt damon, bill murray, great cast. it looks like a heist movie. historical film to it. >> who is the biggest spending audience out there? rex young people. people in their teenage -- in their teens, their 20's. y.a. is being released, "divergent." fit and because her mind cannot be fit into one of the categories in this dystopian world. you have to fit into. she is a rebel and a
have directed this. and i love the show. by film has been directed clinet eastwood. who directede guy ridges of madison county." >> i thought it was a deep movie. >> always good to have you here. thanks for being here. >> we will stay on the media beat. we have some breaking news. the pretty media corporation has announced a proposal to make holding. a you never beat against john malone. liberty is in the game. >> it is unbelievable when you
>> time for weird wall street. it is time for business. where business is bizarre. adam once solved one by accident. how fast can you solve a rubik's cube? a nine-year-old from china just set a new speed record for his age group i doing it in less than 12 seconds. he has been solving puzzles since he was five. his father is his mentor and the nsa has videotaped of him. just kidding.
he is a veteran speed solver. he knew his son had real talent 7.n he beat him iat age strapped to are raised 147seats and feet off the ground. serve 42 diners. dinner is $230. >> you get a view. >> people are going for the experience. >> a little wacky. >> i would do it. should we go? >> that is it.
>> it is 56 past the hour. bloomberg television is taking you on the markets. and when you -- i want to get you caught up. closing the day down slightly unchanged. -- i&p down just below will call it unchanged on the day. let's look at treasuries. year notes, again, almost unchanged on the day. here we are ending the first couple days of the new year with not much happening even though we saw many sectors today down or ending the year without much happening. we are also watching the kbw
bank index rallying 35% in 2013. the best year since 1997. there are so many people out there questioning whether financials can continue to not rob morgan. he said it is still a good place to keep your money. he made his case to deirdre alton earlier this morning. take a look. >> they were one of the areas a number of years back obviously that was crushed the most so the p/e ratio for the group contracted the hardest. i still think that even though as you say the group did well last year, i think there is still some balance sheet repair the has to go on with some of the big banks. inot of niche financials insurance, they are turning out earnings. you will see it combination of andinued earnings groups multiple expansion. unemployment will fall
faster. if you look back to the jobless recoveries of the early 1990's in the early 2000's. not only -- the expectation is the defendant -- the fed ends tapering. chance theyood will break that promise. >> facebook about investing in bonds bursa stocks in the new year. >> if the tenure reaches 18% the question is could and that pull some people out of stocks and into bonds? you would probably need to get up to four percent on the tenure to reach that threshold. there has been a number of studies on that. is knocking people out of stocks and into bonds. >> there you have it. markets" forhe this hour. i am stephanie ruhle.