tv Wall Street Journal Rpt. NBC December 26, 2010 11:30am-12:00pm PST
hi, everybody. welcome to "wall street journal report." i'm maria bartiromo. reporting today from times square, new york city. investor confidence and american inje new ti with the man who runs the stock exchange and my conversation with michael milton. we'll talk money, markets and the future of health care. >> it concerns me a great deal. >> investors worry about bubbles but not this one. how to find the right sparkling wine at the right place to ring in the holidays. "wall street journal report" begins right now. >> this is america's number one financial news program, "wall street journal report." now maria bartiromo. >> here's a look at what's making news as we head into a
new week on wall street. if you did your holiday shopping online this season, you are not alone. the research firm com score says u.s. sales are up 12% compared to last year hitting 27 billion. computer hardware like hand held tablets led the growth. it is likely the monday after thanksgiving emerge as the heaviest online spending day for the first day in history. the markets hit fresh multi year highs on tuesday and are on track for the best december since 1991. traders continue to bet on the stronger economy for 2011. the u.s. houstoning market still in the doldrums. sales of previously owned homes up 5.6% for november. that translates into an annual sales rate of 4.68 million units, the worst year for home sales since 1997. if you are looking for a safe ride the ititute for highway safety released the list of the top cars for 2011. hyundai lead it is pack followed
by vw, gm, ford and toyota. social security checks will be a thing of the past soon. the government will stop printing paper checks in march of 2013 to eliminate the problems of lost or stolen checks. we are at one of the largest stock exchanges in the world, the nasdaq omx market site in the heart of times square. what better time and place to take the temperature of the economy and markets with the man who runs the place. bob, great to see you again. >> we love being here. it's appropriate as the ball comes down the times scare. the stock market has picked up with money in equities. what do you make in terms of retail investors, activity and the great performance for equities? >> certainly nasdaq had an outstanding year up 18%. that was on a 40% gain last year. so outstanding performance. what we look at is really consumer confidence. what we see is equity inflows
are correlated to consumer confidence. in the last month we have seen a change in the consumer confidence number and a change in equity flows. we're happy about that. >> interesting. okay. so the retail investor, is he or she back? >> when you look at retail activity for 2010 it's up mid single digits, retail activity. so that's positive. but i think more attractive is most of the retail activity contained in the institutional order flow. through the year we saw equity outflows. we have seen the turn where we are witnessing equity inflows. >> what are you seeing in terms of innovation in this country? you have a great vantage point with so many high tech and bio tech companies where we are seeing companies list. where is the innovation? >> we have the bird's eye view of innovation in the economy. in 2010 we have, i think, a very strong year. about 170 companies have come to market in 2010. that's compared to 60 last year
and 50 in 2008. clearly progress. most notably we had the first car company in 54 years come public. tesla motors, an electric car, pure innovation. we had smart technology, semi conductors. good things. 2011, 75 companies filed to go public led by skype, zip car, liberty mutual. >> so we are seeing innovation in energy certainly with the electric cars, innovation still in biotech. you make great points. you are seeing it in technology, social networking will be a big theme for ipos in 2011. s s >> i think it will be. there is one large social networking firm and nobody knows when the company may or may not go public. >> tell me about nasdaq omx. you have been on an expansion plan now for some time. you completed a transaction with dubai. what's going on? >> we completed a share buyback
with dubai last week and purchased about 10% of the outstanding shares. we have excessive cash, but in addition to that we made a number of key strategic acquisitions this year. last friday we announced the transaction to buy a company that provides pretrade risk management. >> in terms of globally, i know you have seen a lot of china ipos. is that still where the business is coming from? are you still trying to further footholds throughout asia? >> definitely. certainly china was strong in 2010. we expect it to continue into 2011. we increase our presence in that region, i think, on a regular basis. >> let me take you back to retail investor. we all know the flash crash was something very, very significant for the retail investor, certainly. we had the markets tumble drastically on may 6. what steps have been taken to ensure that this kind of activity doesn't happen again to scare away the retail investor who is really just beginning to put their toe back into the
water here? >> first if we had an identical set of circumstances that existed on may 6 we would not have the same impact. so there have been steps taken ourselves. the other exchanges with the commission to make sure that will not happen again. certainly the circuit breakers are in place today are a main deterrent from that kind of activity happening. we are happy to have it in place. there are other things we need to do. i want to make it clear the main protections for the market are in place today. and we understand the impact. there were equity inflows up through may. after may 6 we saw outflows. >> broadly on the economy, where is the job creation coming from? what are you expecting? >> companies that go public, 92% of the employment gains, hiring happens after the public event. so the fact we had 170 companies come public this year is a great
sign for employment. companies that go public go on a hiring binge after raising money in the public markets so. the fact we had the strong 2010, the fact that 2011 has 75 companies in the pipeline means good things for ununemployment. >> is it modest in terms of recover sfli. >> between good and modest. good is a strong word, but when i talk to ceos they are increasingly optimistic about the business outlook for 2011 and beyond. i think we are here at the end of 2010 feeling better than we have certainly in a number of years. >> we'll leave it there. great to see you. >> great to be you. >> up next on "wall street journal report" michael milkin joins us on the markets and investing in america's future. his passion for health care and education. toasting to a new year.
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and we get to name it. sethasauraus. really. your points from chase sapphire preferred are worth 25% more on travel? means better vacations. that's incredible. believe it...with chase sapphire preferred your points are worth 25% more on travel when booked through ultimate rewards. welcome back from the nasdaq market site in times square new york. michael milkin has been sfieding health care and education now for years. his institute hosted a partnering for cures medical research conference hoping to bridge the gap between micro scope and marketplace. i spoke to toby cosgrove about the need to speed up medical innovation. >> the number one cause of economic growth in the world. more than 50% of all economic growth in the last 100 years has come from medical advances.
the extension of life and improvement of a quality of life. so if you can make a contribution in some way to that it's the number one stimulus to our economy. >> what are you doing in terms of prevention? >> i think the issue of prevention is a main issue for america today. the report that was put out by the institute on an unhe wille think america three years ago pointed out it was costing the united states $1 trillion in lost productivity, absenteeism and out of pocket costs. the differential and the gaining of weight in america in the last 20 years. this issue in america is only 20 years. in 1991 america was an entirely different country in terms of its makeup and physique. how do we motivate america to get in shape? we are stealing resources from medical research, for insurance for the uninsured, for the education of our children, for
investment in plants, roads, bridges, et cetera. because we are diverting it to a substantial increase in diabetes, cancer. >> i'm really concerned about it. right now, 10% of the health care costs in the united states are secondary to obesity and by 2020 it's projected that 20% of the health care costs in the united states are going to be secondary to obesity. we have to do something about this. we will never bend the health care cost curve unless we do something about obesity. this was not part of the dialogue three, four years ago. >> you're right. >> it is now politically acceptable to talk about it where it wasn't previously. it has come to the consciousness of the leaders of the country and gradually you are seeing businesses, organizations begin to put things in place to fight this epidemic. >> let me ask you about the health care law and what kind of impact you have seen to the business. of course we know it won't be implemented for a couple of
years. what impacts have you seen, if anything? >> the problem is we really haven't seen the definition of the law. we've got 2,400 pages of law, but we don't have the statutes to go with it. it hasn't been interpreted in washington. it's very hard to know how it's going to impact us. my concern and we talked about previously that you begin to have the unintended consequences of delaying innovation, funding innovation by venture capitalists, et cetera. i talked with the venture capitalists concerned about the same thing. >> have you seen that? what kind of impact has it had on stifling innovation? >> we know that venture capital money is at an all-time low coming into health care. we don't see the early funding going on like we would five years ago. whether we can tribute that to the health care law or not, i don't know. >> this is a very important time for the united states.
we're at a tipping point right now. with 50% of the business of large pharma and bio outside the united states. with more than 50% of the cash outside the united states. in this last political campaign, many people deemed it beneficial to their campaign to be re-elected to beat on the biotech and pharmaceutical industry. the p.e. multiples of companies in this industry, if you make lipstick, if you make potato chips, diapers, carbonated water you're worth 70% more than if you are trying to cure and find a solution with your medical researchers for a disease. it is the best stimulus to our economy. $60 trillion for the elimination of cancer as a cause of death. $60 trillion for the elimination of heart disease. this is maybe the most important industry in the united states. and, yes, china is going to be the world's largest economy, but
the united states will be the world leader in medical innovation whether it's through patient care. >> i might add this is a big industry whether it's pharmaceuticals or so devices exported around the world and the world depends upon us for those products. >> let me ask you about the global economy. how do you see things? do you see any change as a result of, for example, the midterm elections? of, for example, the growth of china and latin america and the impact on the united states? what's your take on the u.s. economic landscape today? >> i think we have to ask ourselves. the united states with 6% of the world's population or 5% of the world's population at one time had 40% of the world's economy. today it has maybe 23% of the world's economy. how did that happen? we had the leading educational system in the world. other countries caught and passed us, so the challenge for
the united states is the realization that our health care systems, our medical systems, our educational systems are the underpinning along with property rights and democracy, et cetera, of the strength of the u.s. economy. >> my thanks to michael milkin and toby kos grove. up next we look at the bubbles in your favorite sparkling wine. and offer fizzy news to ring in the new year.
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at your holiday celebrations how many bottles open with a bang? it's the time of year for sparkling wine. unique players in the industry. we are looking behind the bubbles with the executive wine editor at food & wine. great to see you, ray. >> thanks for having me. >> thanks for bringing all the product. champagne just one product of the larger sparkling wine market. >> right. >> tell us about the industry. how are things going? >> they are going better than last year. champagne particularly, but sparkling wine in general had a rough 2009. it's a luxury, so people were pulling back on luxuries, particularly on champagne itself from france which runs average $40 a bottle. >> okay. >> 2010 is looking good. they are selling a lot more wine. >> u.s. total wine sales were up but sparkling wines, pretty
consistent. >> there is definitely room for growth. there's been huge growth actually in the affordable sparkling wines. proseco as a category grew in 2009. 40% increase this year. >> how does it differ from other sparkling wines? >> it's from italy and it's a little bit -- a touch sweeter, a little bit sort of broader bubbles, a more casual wine without the elegance and refinement. it's a lot of fun. >> this is one of the wines we are tasting today. this is different price points. >> mienetto brut is $12 or $13 a bottle. you will find variants. it's a fun sparkling fine. it's great if you're doing mimosas. you don't have to worry about pouring orange juice into it.
then we have argyle from oregon. it's an american sparkling wine which is a category usually a notch higher than prosecco. this is $26. others are around $20. made in the same way as champagne. the same grapes. this is chardonnay and pinot noir. the american sparkling wines tend to have more fruitiness. they are not as dry and elegant as champagne. they have more robustness. then we move to champagne which actually -- you know, sparkling wine is a broad category and champagne is specifically from sp chap pain in france and the chalky soils which give it that crispness. they have been good at creating the aura of magic around champagne. >> yes. >> partly because the wine is great and partly because they are good marketers. >> how much? >> that's $40 or $45. you will see discounting this
time of year. last week and this coming week are the weeks for selling champagne. >> i bet. >> it's a huge chunk. >> a huge chunk of the business is happening the last couple weeks of the year. >> oh, yeah. advancing the business in the fourth quarter as a whole. that's relatively true of the wine business in general. particularly true of champagne. and they would love people to drink champagne year round but it's associated with holidays and social occasions, celebrations. >> this is a special one. >> we brought a particularly special cristal which was created -- the original version was created for czars in russia. >> oh, really? >> back in that era when everything french was the thing to have in russia. this is the top, top wine from a producer. in this case roterer. it's about $220 a bottle. >> wow. >> not a small expense. >> is that the top champagne?
>> this and dom perignon and krug are at the top of the heap. the reason i put it in a white wine glass is champagne like this has so much complexity it's more like drinking a great white wine with bubbles. it can age the same way a great wine could. you can keep it in a cellar 10, 20 years. i went to a cristal vertical tasting and the wines were mind-blowing. still bubbles but more complex over time. >> is it better to age champagne the way you would age wine? >> i think it really benefits from it. it's lovely right now if you take a sip. >> cheers. >> absolutely. cheers. it's delicious now. give it ten years in a cellar and it takes on more fantasticness, i guess is the word. >> thank you for everything. thank you for bringing it. happy new year. >> cheers.
coming newspaper the week ahead that may move the markets and impact your money. the home index will be released as well as consumer confidence. on thursday we get the report on pending home sales. that for the last month. finally today, did soaring prices in the bird market make true love cut back this holiday? the price index tracks the cost of the gifts in "the 12 days of christmas." the tally is increased over last year. the rising price of gold for the key five rings is a key reason. the biggest spikes come from increases in wages and benefits paid to entertainers like the lords and ladies who didn't get raises in 2009. the price of birds really did take off. three french hens are up more than 200% over 2009. they never said love was cheap.
that's the show for today. thank you very much for being with us. next week if the new year's resolution includes bling we have a gem of a story for you. investing in colored diamonds. keep it right here where wall street meets main street. happy holidays, everybody. i'll see you again next weekend.
our points from chase sapphire preferred are worth 25% more on travel. we're like forget florida, we're going on a safari. so we're on the serengeti, and seth finds a really big bone. we're talking huge. they dig it up, put it in the natural history museum and we get to name it. sethasauraus. really. your points from chase sapphire preferred are worth 25% more on travel? means better vacations. that's incredible. believe it...with chase sapphire preferred your points are worth 25% more on travel when booked through ultimate rewards.