tv On the Money NBC January 5, 2014 4:00pm-4:31pm PST
welcome to "on the money." stocks are their best in more than a decade. what will 2014 bring? how and where to invest now. the face that offers a lot more than checking and saving. and much of the country battered by bitter winter weather. is it time to think about that getaway to warmer clients? "on the money" starts right now. here's a look at what's making news as we head into a new week. stocks began the new year with a
thud. the nasdaq and the s&p 500 had their first day in three weeks. for those of you counting, this was the first time in six years that stocks didn't rise on the first week of the new year. the s&p 500 finishing up 2013 with a gain of nearly 30%. the dow up almost 27%. both of them setting new records. the nasdaq was up 38% for the year and it hit a 13-year high. the s&p 500 home price index showed its strongest gains in over seven years. and an american icon will soon be fully owned bid a european company. the company is going to be paying more than $3.6 billion to a union controlled trust fund.
will 2014 be the year that the economy finally takes off? joining me now is the former chairman of economic advisers to president obama, allen kruger. thank you for being here today. we've been waiting for this moment. is this the year that we finally kick out of the -- and get into a better growth rate? >> i think we're going to see some pick up in growth this year. we've gotten past a lot of the damage caused by the great recession. i think we've gotten past a lot of the fiscal head winds. >> does that mean gdp at 3% or better? >> i expect it to be in the 3%
range and it will build from there. if congress raises the debt ceiling, if europe remains stable and continues to expand a little bit, i think we could see growth in the 3% range. >> that's a lot of ifs that are in that equation. we've thought this before only to have springtime see things fall apart. what's in store for the economy this year? >> i wouldn't say things fell apart. i'd say we've gradually been healing. 2013 was about the same as 2012. given the fiscal adjustment and the end of the payroll tax cuts and the sequester, i think that's a sign that the underlying economy has been healing. you see signs of that when you look at the housing sector. it's really turned a corner. we're finally seeing state and local government stabilize. >> if you look at the unemployment rate it is down 7%. if you look at budget deficits,
we've slashed those. why does this still feel like we're stuck in a pretty lousy position? >> 7% unemployment rate is too high. we lost far too many jobs in the great recession. we have a long way to go before the economy is back to full health. i think it is important to try to build on the progress that we've seen. >> we saw 13 states increase their minimum wage as of january 1st. what have you learned about the study? >> minimum wage increases tend to have very little if any effect on unemployment. moderate increases tend to lead the higher wages, but have very
little impact on unemployment. >> we're still trying to get our arms around the changes with affordable care act. what do you think the impact is going to be on the economy this year? >> the rollout of the affordable care act has some bumps to it. we are seeing some definite positives for the economy. we're seeing an increase in access to health insurance, particularly for young people, who gained coverage through their parents plan up to 26. >> you sound pretty positive overall in terms of what you expect for the economy, but if there is one thing that you worry about the most, what would it be? >> we have seen our recovery slow down by problems outside the u.s., by problems in europe, by slower growth in asia.
europe has a long way to go before they have addressed their financial issues and their debt problems, their banking issues. they're not out of the woods yet. you can never predict what's going the happen in financial markets. >> thanks for joining us today. what is in store for the markets in 2014? david, we saw a phenomenal year for returns in 2013. what happens in 2014? >> the economy and markets are not always in sync. a lot of risks diminished. we had a super year for the stock market. i think the stock market will give you 5% to 7% a year.
i'd be surprised if we get a double digit year in 2014 given how far we've come in the last year. >> would you be surprised if the markets turned in a negative performance for the year? >> i wouldn't be entirely surprised. but my guess is the market will go up. investors are feeling more comfortable investing in equities. interest rates are higher. that is going to push money out of cash accounts towards the equity markets. i think the stock market will rise, but the long-term investors need to realize it was not as cheap as it was. >> that raises the question when you look at different asset classes. would you look to bonds or some other instrument? >> i would still look at equities, but around the world.
no gains in emerging markets overall. valuations are cheaper in europe. i particularly like europe because even though the economies there have gone through a huge amount of trouble in recent decades, it's a hard to find a time when europe was doing well. they have begun to recover. with an unemployment rate of 12%, they have a long way to go before they get to full employment. there's a lot of economic growth. a lot of earnings growth. >> we just heard from allen kruger who said his biggest concern with the global economy is what could come from other markets. he said europe has been looking better, but we don't know what's around the corner. >> that's right. we need to distinguish between the economy and the markets. i agree with his view on the economy. when i look at europe, i feel
reasonably comfortable their on the right path. my bigger concern is asia. i don't like the rhetoric of asia and japan. that could slow the global economy. >> this is the time of year when a lot of people think about what their plan is going to be. your advise would be keep investing in stocks, but look overseas for other markets? >> people should make sure they diversify internationally. americans have less than 25% of their equity exposure is in foreign markets. particularly when the u.s. has such a good year, people need to take a look at make sure they have enough money outside of the united states. >> thank you very much. up next, we're "on the money."
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some not so giant. when managing your weight, bigger is always better. ♪ ho ho ho ♪ green giant the internet age has not been kind to brick and mortar stores. today consumers preferred banking method is going online instead of their neighborhood branchs. one bank company has people walking back through their doors. ray davis, thank you for being here. >> thanks for having me. >> you decided it is important to have people coming back into
the branchs. why? >> it's a relationship of business. bankers are more successful when they visit with people face-to-face. the challenge for bankers is to try to figure out a way to get people to come into the store so we can build those relationships. that's the whole context. >> you're doing some innovative things. you're talking about having yoga classes that are there. what other kinds of things? >> book clubs. bowling leagues. we don't have branchs. we really call our facilities bank stores. the reason for that is it should be a place -- a bank should be a place where people come in and browse and shop and do some banking. >> what could you do for me as a banker in you know me well? >> we could do everything. our people are trained to do virtually every job within the store. no matter what it is, they're
there to service and help out. >> would you know it would be a good idea for me to take out an equity line of credit? >> yes. as we build relationships, we know what products and services you have with the bank. there's been a lot of talk about sales culture in a bank. i believe it is about service. if you do a good job at servicing and providing an experience for your clients, sales come naturally. >> the bank just celebrated its 50th anniversary. can you tell me what the name stands for? >> it is an indian name and it means raging waters. >> let's talk about what's been hang in the banking industry. there's been an incredible amount of consolidation. what has it meant to be a community bank that's operating in this environment? >> i tell you what, it's difficult.
i can tell you for the first time in my career that i think size does matter. it gives you more flexibility and more elbow room to maneuver in a very difficult market. there will be more consolidations. banks are very important to the economy of the united states. not just banks, but medium size banks and small banks. very important. i was just talking to a client the other day. we made their first $50,000 loan to start their business. without that, they never would have got off the ground. you talk to clients. if i asked you, what do you think of their bank? they're pretty good. >> yeah. >> everybody likes their bank. if i asked you about the industry -- >> banks in general? >> -- not so great. we're really on the good side of the team. >> i have talked to people in the past who said you are no
longer going to see any banks with market capitalization under $50 million? >> that's not going to happen. that hasn't happened. there are still 7,000 banks in the united states. the vast majority of those are very small banks in small communities that are the life blood of those communities. without some of these very small banks, these towns wouldn't exist. >> we've been watching the feds and the feds policies. there's been some talk about them lowering the rates. is that a good thing or a bad thing? >> it is not a good thing. look at it this way. for banks my size and smaller, it's very difficult. we make our money off of margin. when those numbers get skinnier
or that gap gets very thin, we can't make as much money. we can't do as well for our associates and so on. >> thanks for being here. up next, we're on the money. if you're digging out from this week's winter storm, a small sign of hope. spring is on its way eventually. we're going to take a look at the worst morning ever. [ angelic music plays ] ♪ toaster strudel! best morning ever! [ hans ] warm, flaky, gooey.
for the markets and the weather are surprisingly similar, especially when it comes to volatility. we're going to talk about what it means for the rest of winter as well with paul walsh and amy farley. she writes the trip doctor blog. thank you both for being here today. paul, we had all this weather that kicked through the holiday season and a big storm at the end. what does this mean for the retail figures? >> we're still in fiscal december through this weekend. it's really not going to be good. it has negatively impacted the season overall. we have lost basically two weekends. having this storm with the cold and the bitter cold at the very end of fiscal december is not good. retail traffic was done. it's probably going to be a net negative overall.
online shopping is going to be spectacular. >> amy, when people are sitting at home, maybe they start thinking about traveling. would it be the ski locations or the sun destinations? >> it's a bit of both. the storms will hold people up on the actual travel days, but it gets people anxious to get out and on the road. ski resorts will see a boost. people will be thinking about going to vale, colorado, lake tahoe. if you're sitting in the midwest and it is bitter cold, you're thinking about heading to the south for sun. >> paul, you and i have known each other for a lot of years. i asked you what the weather was going to be like on my wedding day months in advance. you told me it was going to rain and you were right.
how do you figure that out and how the consumer responds to that? >> i'm glad i was right that one time. what we look at from a long-range perspective is statistics. we look at climatology, to understand what the average is for that location. then from the retail perspective or a finance perspective, the most important thing to do is to compare what you would expect normally to what actually happened last year and then you can get a good read of what the directi directional change of what the weather is going to be. when we look into the spring of this year, knowing that last year was one of the coldest and wettest on record and it has a very negative impact on retail, i can say with pretty good certainty as we move into q1,
retailers are going to get a boost from the weather. when the weather changes, it's going to be very positive for them. it'll be more positive, too, if we continue to have this really cold weather. cabin fever kicks in. >> amy, people may be trying to get away. what happens if you are stuck at the airport? >> if you're booking travel during the winter, get travel insurance. you have to get that insurance before the storm is actually named or else it is void. if you're booking a trip right now for february, get that travel insurance. if you're stuck at the airport, use social media. it can take hours for an e-mail alert to arrive to you. the twitter handles will have that information for you.
you can be on the ball. you can be first in line to try to rebook your flight. one last piece of advice. you can buy a day pass to most airline lounges at an airport for $25 to $50. it is a great place to wait out a storm. it is much more comfortable. >> great advice. amy, paul, thank you both. up next, the news this week. and what made your news in 2013? the trends of social mediane check in at a time. [ male announcer ] progresso is so passionate about its new
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for more on our show and our guests, you can go to our website. and you can follow us on twitter @onthemoney. earnings season is going to be picking up again. on monday the ism the nonmanufacturing index will be released. on monday, the senate will vote on the confirmation for the federal reserve chair. on friday, that is the big number of the week. we'll be getting the jobs number for the month of december. finally, when you travel this year, will you tell us about it?
facebook has the trends report for 2013, including the most popular locations around the world. the happiest place on earth for check-ins, that would be disney land in california. other spots include times square, dodgers stadium, and san francisco's at&t park. that's today's show. thank you so much for joining us. have a great one and i'll see have a great one and i'll see you next weekend. ♪ in touch with the ground ♪ i'm on the hunt, i'm after you ♪ ♪ smell like i sound ♪ i'm lost in a crowd ♪ and i'm hungry like the wolf ♪ straddle the line ♪ in discord and rhyme ♪ i'm on the hunt, i'm after you ♪ [ female announcer ] only yoplait light and yoplait greek 100 are endorsed by weight watchers. it is so good
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