tv On the Money With Maria Bartiromo NBC July 29, 2013 12:30am-1:01am PDT
on all dodge vehicles. hi, everybody, welcome to "on the money." i'm maria bartiromo. one of the biggest hedge funds indicted on charges of insider trading. what will that mean to the markets and your money? the architect of obama care. my conversation with zeke emmanuel. all right plan work? will it save you money? what impact will it have on american business? and then the krona craze. why are people waiting for hours for this tasty treat? the chef behind the crow nut and what's to stop it from getting stale? "on the money" begins right now. here's what's making news as we head into a new week on the money. one of america's largest, most
profitable and best known hedge funds is facing criminal charges. the federal government says employees of sac capital are guilty of insider trading. >> sac became, over time, a ver right table magnet for market cheaters. the sac companies operated a compliance system that appeared to talk the talk, but almost never walked the walk. >> the fund pleaded not guilty in court on friday and is run by billionaire steven a. cohen who is not named in the criminal indictment. in a statement, the company said it never encouraged, promoted or tolerated insider trading and takes its compliance and management obligation seriously. the charges didn't have much effect on the market, the s & p 500 ending up high, but a choppy week. amazon missed expectation bus netflix came in ahead, as did apple and face book. face book stock, by the way, soared after that, 30% in a day. among industrials, ford and gm
both beat expectation, as did boeing and gm. caterpillar missed big time. sales of new single-family homes hitting a five-year high in the month of june, up 8.3%. and above analyst expectations. the third straight month of gains in new home sales. there was concern that rising interest rates would slow down home purchases. a massive hedge fund indicted, earnings season in full year gere and the markets hitting new highs. a busy week. what does it all mean and how does it affect your sflirmt joining me is the author of "the investing guide, a random walk down wall street," a university professor and member of the investment committee of rebalance i.r.a. good tough on the program. >> thank you very much. >> thank you so much for joining us. it has been a busy week, hasn't it? saw the federal insider trading charges against that huge hedge fund, sac capital. do you think that has any impact on the retail investor? >> i think it certainly does. i think people get scared the
inside verse a real advantage over the public. i think it drives people away from the market. >> i guess it does shake confidence. once again, the people feel like the game is not a playing field, an even playing field. >> i think that's right. therefore, i think the s.e.c. coming down hard on this, i don't know what's going to happen, but the fact that is in the sights of the s.e.c. and they are going to try to make this as fair as possible is probably good thing, not a bad thing. >> they probably certainly have been working on this a long time. >> you bet. >> let me ask but this upcoming week, the federal reserve is meeting once again. we have got job numbers coming out, the second quarter gdp, typically a market moving -- market mover. what are you expecting from all the events in the week ahead? >> there's no question that things have slowed down and we are definite any a pause. but actually, i'm rather optimistic.
i think what happens, we are getting the rules of the sequester, the budget deficit is still big but it's coming down and it's the change that matters. the private economy is actually doing rather well. it's the government sector that's providing the drag on the economy. i think that drag is going to be somewhat less in the quarters ahead and i'm expecting a better second half and a better 2014. >> you are? and how would you characterize earnings so far? earnings, i think, are coming in better than expected. revenue is really not growing very much. >> absolutely. revenues are not growing much, but that's part of gdp growing very, very slowly. i think as gdp starts growing faster, now, i don't think it's gonna go crazy, but instead of being 1%, 1.5%, we are going to see a number that starts with 3 in 2014 and i think that's going to help on the revenue front. >> in terms of investing today, you have seen a huge outflow of
money coming out of bond funds. what would be an appropriate way a to look at one's retirement, look at your i.r.a., in terms of allocating bonds versus stocks? >> i'm actually rather worried about the bond market. i think people should remember history. the last time u.s. government bond yields were as low as they are today was at the end of world war ii, because we begged interest rates very low to finance the large government deficit. rates stayed low into thor 14ri 950s. and then started rising steadily till 1980. as those interest rates rose, bond prices fell. bonds became very, very volatile. and those who don't remember history i think are doomed to repeat it. we're in the same situation now. we're financing our large debt with what's called financial repression, keeping interest
rates very, very low. as interest rates normalize, this is not gonna be a good place for the bond investor. >> tell me what you're trying to do, from your new position at -- on the board of rebalance i.r.a.? >> well, basically the problem is this -- i've got a number of financial advisers who are putting portfolios together for people and there are two problems with many of them. z first of all, they tend to be conflicted. they will want to put things in your portfolio where they get a commission and secondly, they might charge you 1, 2 or 3% a year to look over your portfolio. with rebalance i.r.a. and with wellfront, which is another company that i'm associated with that does the same thing, we charge a very low overall fee that might be a quarter of one percent or a third of one
percent. and we used my favorite funds, index funds, which charge rock-bottom expenses. >> like etfs? >> like etfs, the charge, almost nothing to get into a broad-based equity market. >> do you think the average american is saving enough for retirement? >> absolutely not. i think this is one of the crisis -- >> me, too. exactly. >> the average size of an ira is somewhere just over $50,000. we need much more. we really need to have a campaign to get americans to save more. >> good to have you on the program. >> thank you so much. >> thank you so much. vernon mallfield up next. up next, on the money and on your health, key components of obama care come online this fall. are you and your doctors ready for it? one of the administration's key health care architects, dr. zeke emmanuel will join me next. later, it's a treat worth waiting hours for. the cronut has captured new
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welcome back. are we ready for the obama care rollout? implement takes of the affordable care act approaching a critical change this fall. the mandate has been postponed, giving the implementation of the affordable care act an uncertain diagnosis. dr. ezekiel emmanuel is the former white house adviser on health care policy and vice provost for global initiatives at the university of pennsylvania. great to have you on the program. >> great to be here. >> thank you so much for joining us. let me ask you about the implementation of the affordable
care act. it's when the health insurance exchanges go online october 1st. >> right. >> some talk that the computer systems being developed for the exchanges may not be ready. these are supposed to be state-run and 34 states kicked it back to the federal level. >> right. right. >> for either help or to run it totally. what's the status? are we ready? >> we are going to know on october 1st. every state i know and the federal government are working really hard to get this up and running so i like to say two things. there's probably going to be glitches. even the president has said there are going to be some glitches. but those are software things that by year two, 2015, year 3, 2016, are going to be ironed out and it's going to be like shopping on amazon f you want to see what it's like go to the massachusetts connector up for years and really is like shopping on amazon. the more important thing in my opinion, is what are the choices people are going to have and what the prices? there i think all we've had is good news. 11 states have now reported what their premiums are going to be and the big ones, california,
new york, have reported remarkable savings. >> so, walk us through the consumer experience come october 1st. >> so you go online to your state exchange. you find it. and then you put in your zip code and you're going to find out what the offerings of insurance policies are. there are going to be four levels, increasing richness. that is, more benefits, lower co-pays and deductibles. and then you will go and, you know, for 60 to 70% of americans, they shop on price, so they are going to go to the bottom ones, the silver around bronze, they're called. and then they'll look and find one they like. they will find out what their subsidy level is based upon their income. and then they will see what the price is. and you have to buy the first month, but you'll see what your monthly premium is. now, for most americans, the majority of americans, they will have a subsidized premium that is going to bring the price down. and i think this is going to, first of all, going to be a lot more competition. you're going to decide what you want, not your employer.
and you're going to decide what the price point is, how much those benefits are worth to you. and i think it's gonna be a pleasant surprise to people what they can get and how much thing get. >> is this gonna be a hard sell for, you know, to those young, healthy people who typically need less medical care than older citizens? >> well, given what the rates are that have been published already, i think young, healthy people are going to actually find it quite desirable. if you could buy insurance for $34 a month, are you going to stay out? that would be crazy, even if you have to pay $170 a month, that's pretty goal deal. >> the employer mandate, why was that pushed out? >> two things. it is confusing, because it applies to full-time employees and who is a full-time employee, over 30 hours? the university -- i work at the university of pennsylvania, someone who teaches in the first semester but is not teaching in the second semester, are they a full-time employee or not? it became confusion. the second thing is it is not critical to the success of the bill. here's why. if you're an employer with less
than 50 employees, employer mandate doesn't apply to you anyway. that's more than 95% of all employers in america have less than 50 employees. most of the employers it doesn't apply. the big employers, 51 and more employees, they already provide insurance at the rates of 96, 97%. and once you get 200, they are at like 98, 99%. we are talking about 12,000 employers who the whole country who are affected by this. >> do you worry that businesses are saying that this is too big of a cost for them and they are going to just opt not to provide insurance for people? >> again, the big insurers, the big employers, they already provide insurance and there's no law mandating it. so, they are already doing it. why are they doing it? right? competent people like you, you go to an employer, expecting insurance u don't have insurance, you're really not interested. smaller employers, some of them do and some of them don't, about 50/50, depending upon size. and you know, the ones who are smaller, probably not going to
do it and no penalty. the ones who already do it do it is to attract better workers and probably continue. >> we all know the u.s. spends so much money on health care, more than $2 trillion a year. >> $2.8 trillion. bigger than the economy of france. >> so much more than economy of most other countries. >> right. >> so where is the rollout of reform in terms of bending that cost curve? how do we get costs down? it's predicted that medical inflation will decline in 2014. >> so, we have already seen actually over the last five or six years, a decline in medical inflation. that's the first thing. so, we are already getting some bending. second, there are many things in the affordable care act that are beginning to bend the curve. the policy on pine lidsing hospitals that have too many readmissions within 30 days of hospital discharge, getting hospitals to focus on keeping people healthy, getting rid of hospital-acquired infections.
next big move, in my opinion, the thing undone and needs to be done is big payment reform. moving off the fee for service system. you pay a doctor a fee for everything they do a hospital a fee for everything they do they have an incentive to do more, quantity over quality. we need to change that incentive and that's, i think, the next big thing. >> some people say that the weakened economy is really accounting for a drop in the rate of growth because people were opting out of costly care. right. that's probably true for some of it but not all of t most of the data suggests that this drop in health care inflation predated 2008, predated the drop in the recession. and there was a little blip in 2011 in terms of an uptick in inflation, people thought people were getting things -- health care services they postponed. but it does look like this slowdown is actually real and i think that there are other things being put into place that are going to -- that are keeping hospitals and doctors looking to save money. we still have some unfinished business and i think that's
extremely important to actually attend to, changing how we pay doctors mainly. >> zeke, good to have you on the program. >> great to be here. and thanks for the session. >> dr. ezekiel emmanuel joining us up next. next on "on the money", the key of cronuts, the chef is here. he will tell us the recipe for small business success and serving up a new dessert sure to keep you cool this summer.
welcome back, there is no sugar coating it the cronut is the hottest food item in new york, the combination of a crow sant and doughnut has people lining up for hours for the privilege of shelling out $5 for each one and many leaving empty handed. i'm here with the chef behind the cronut right now, dominique ansel, the former executive pastry chef at restaurant daniel, under celebrity chef, daniel boloud, before opening his own bakery in soho. thank you for joining us. >> thank you for having me here. >> thank you. what do you have there? >> marshmallow ice cream. inside is ice cream. >> there is ice cream inside. >> ice cream coated with
chocolate wave fer. >> looks unbelievable, with the ice cream. i want to talk to you about the cronut here. you came up with this idea of the cronut. you have become famous forth dessert that you created it is half-croissant and half-doughnut or special dough? >> is a special dough. we copied the house crow sant for the texture and the dough is similar to a croissant dough. it is something we launched the beginning of may and we change the flavor every month. >> why do you think it is so popular? people are lining up for hours for this. >> something different, unusual. everybody know what is a doughnut is. everybody know what is a crow sant is. make something special. >> you are increasing demand? >> we have increased the production since the beginning, but very important for me the creation -- i keep myself busy
and i really enjoy creating new things. our shop is not only about cronut bus beautiful dishes, like this one. >> i remember years ago, the cupcake all of a sudden became hot. how did this happen, one pastry becomes hot and how do you make sure it doesn't just become a passing trend? >> really unexpected for us. it went viral overnight. i was very surprised. a couple days, hundreds of people lining up for the cronut. >> amazing. constantly creating new dessert. tell us each one you brought. these are lovely things from your bakery. >> this is a specialty from bordeaux in france. it is very like crepe batter. the outside is caramelized. this is probably my favorite, a dka. a specialty from france. and my take on it, it is a much lighter version. there is a lot less butter, a
lot less sugar. >> looks phenomenal. >> on the bottom, a take on a french classic. this is a ring of cream puff inside this caramel, peanut but the and chocolate. >> amazing. so you studied and worked under chef daniel boloud. howe how did you get the resources to open your own bakery? >> i worked for daniel for six years and after that, decided i was moving on and opening my own bakery. >> good for you. good for you. was it tough to open your own business? >> it is different from being a pastry chef to being a business owner. >> sure. and was it easy to get the funds needed? >> i had some savings and i start it had on my own. >> good for you. congratulations. you have trademarked the cronut is that right? >> that's right. >> tell me about it. >> we trademarked the cronut to make sure we can keep doing it
and keep our creation at the bakery. >> congratulations it looks delicious. we so appreciate you bringing everything. chef dominique ansel, for joining us. we appreciate it. we will take a short break. when we come back, we will look at the news this coming week that will have an impact on your money. being rich isn't all it used to be. what is your magic number when it comes to financial security? [ male announcer ] how do you do a summer clearance the dodge way?
more on our show and our guest, check out the website, otm.cnbc.com and i hope you will follow me on twitter and google plus. both @maria bartiromo. first, the stories that may move the markets and impact your economy. another week of heavy earning outs with merck, nicer, exxonmobil and procter & gamble reporting second quarter results. master card, sprint, nextel and aig will also release quarterly numbers on tuesday, the federal reserve's open market economy will convene. and on wednesday, the gross domestic product of the second quarter is due, a market mover. and thursday, automakers report sales for the month of july. on friday, the markets we will be watching for the jobs report, the big number of the week. that may upset the tone for the markets. finally today, are you rich? a recent survey of investors by ubs asked what is wealthy and found that in these uncertain times, 60% of respond dents with
balance sheets greater than $5 million considered themselves wealthy. of those worth $1 to $5 million, just 28% said they felt rich. it's all how you look at it guess. that will do it for us today. thank you so much for joining me. next week, a rare look at supporting a future generation of innovators. i will talk to the parents of amazon founder jeff bezos with kids and big ideas. each week, keep it right here, where we are, "on the money". have a great week, everybody. i will see you next weekend. subpoena .
>> royal highness. prince george. cambridge. is here. hi everybody. welcome to "access hollywood". this is weekend edition. i'm shaun robinson we hit the might year mark biggest stories that captured our interest and no berth news with more anticipation than that of prince william and kate middleton little 1. live on july 22nd and tim is there all along. >> big breaking news we understand new baby boy has been born. >> i learn right now it's a son. the new heir is a baby boy. >> now we hear it's a boy. it's a boy. this is coming across as we have of information. >> yes. royal highnesshe