tv Wall Street Journal Rpt. NBC August 28, 2011 4:00pm-4:30pm PDT
hi, everybody, welcome to "the wall streetournal report." i'm maria bartiromo. ben bernanke speaks, the market listens. is the federal reserve out of weapons to fix the nation's economy? the o of starbucks with a controversial plan. a pledge and a promise to keep checkbooks closed. as a protoast against politicians. and back to school bargains. where to buy them, what to buy, from backpacks to ipads. keeping your kids supplied with what they need. "the wall street journal report" begins right now. >> announcer: this is america's number one financial news program. "the wall street journal report." now, maria bartiromo. >> here's what's making news as we head into a new week on wall street. does the federal reserve have
anymore bull lets left in its economic run? ben bernanke speaking in jackson hole, wyoming, on friday. he did not detail any attentional stimulus by the fed, but did say government needed to create policies to improve the economy, such as tax reform. the markets were not initially thrilled with the news on friday, but rebounded during the day. earlier in the week, the markets had a three-day winning streak. the dow rocketed 300 points on tuesday on better than expected economic data. a stunning announcement. one of the world's most important ceos is stepping down. apple's steve jobs says he can no longer meet his duties as ceo. the 56-year-old jobs has been long battling cancer. he's been on medical leave since january. he will stay on as chairman of the board. the company's new ceo will be tim cook, promoted from chief operating officer at apple. the move took a bite out of apple's shares. the stock tumbled on thursday but came back.
the world's most famous investor taking a big stake in a beleaguered bank. warren buffett investing on bank of america. on very important terms for berkshire hathaway. shares of the company jumped on the news. the big meeting in jackson hole, how does the economy shape up for the rest of the year. joining me is jack ablin. jack, good to have you on the program. thank you for your time today. >> thank you, maria. >> so, the markets have been watching and waiting to see what ben bernanke would say and do at this summit in jackson hole, wyoming. what is your reaction to the speech? >> well, i think it was pretty much big swing and a miss for the market. we had a big buildup earlier in the week in stock prices. i was fearful that that was in anticipation of the chairman coming up with some new magic solution. but realizing that he doesn't have a lot of arsenal left, i
didn't -- you know, i have to imagine he didn't sleep very well thursday night and, of course, friday morning, we saw that he really put the ball back into congress and the president's court. >> yeah, he said things like, look, we need to see fiscal policy, that encourages companies to create jobs. we need changes on taxes, we need changes on a whole host of things that's completely out of the fed's per view. >> that's it. if you think about it, for the last 30 years or so, every time the u.s. economy has gotten the sniff ms, we had the fed there standing by with kleenex, ready to lower interest rates and do whatever they can to prompt borrowing. now that interest rates are at 0, there really isn't a lot left for e fed officials to do. >> let me ask you about hurricane irene. we're obviously watching this amazing storm. and we'll probably be talking about the impact to the economy next wk. but what would you say, at this moment, would be the possible economic impacts of hurricane
irene, a hurricane this size? >> we have a lot of assets, a lot of network concentrated in a small area up in new england and the northeast, and it could have a pretty sizable impact on economic activity, just at a time when we're really looking for some, a tail wind, not this, a hurricane-force head wind, so to speak. >> let me ask you about the gdp. we got the revised reading on friday. showed that the economy grew at a rate of 1% in the second quarter. down from the previous expectation of 1.3%. is this a backyard ibd kay or the or important psychologically, what do you make of this? i know going into this number, a whole host of economists were lowering their expectations to around 1%. >> i think that, yes, it's back ward, but it's also a pretty poor trend, unfortunately. and there was an interesting editorial in "the wall street
journal" on friday that separated out government growth versus private growth and the good news is, i suppose, a lot of that deterioration that we're seeing in overall growth is really coming from pull-backs a from federal and state and local government. there is a reasonable, more like 2%, private growth. and so at least we have a pretty strong pry vault sector underneath this, you know, the pull-backs that are going on at the government sector. >> what did you make of warren buffett's investing $5 billion in bank of america? is this a positive? would you buy bank of america and the finances right here? >> i like the finances, i'm not crazy about bank of america. they still have some breaking up to do. i mean, if i had the opportunity to g warren buffett's deal, i think that would be a great one. he didn't buy the exbyty. what he did, he have a high dividend earning preferred stock
and has an option in buying shares at roughly 7 bucks or so a share. so, it's a huge potential for berkshire and one that at least lends some support to bank of america, at least to get through this situation. >> so, any other investment ideas. how do you want to allocate capital in this environment, jake? >> sure. overall, we have lowered risk. a lot of our men them tum factors brokdown, so, we reduced risk overall. however, within our exbyty exposure, we like u.s. large cap growth. we like dividend payers. we like companies that are buying back their shares. you know, given high quality companies right now, any of them can issue debt and intermediate term debt at 1% or 2%. many companies have earnings yields in excess of 7% to 10%. so, it would seem to me any treasurer with the where with all to borrow should be buying
back their shares here. and we'd like to buy companies that are doing that. on the other side, we still like commodities. notwithstanding this economic downturn we're seeing. the precious metals are doing well. and the grains, corn, wheat and the like, soybeans are doing remarkab remarkably well. it's holding up even in the face of these downturns. >> jack, thank you so much. >> thank you. >> see you soon. jack ablin joining us. there's been so much focus on the european banks in the last several weeks and the exposure to the debt crisis happening in europe. this week, i caught up with bob diamond to talk about the bank and its financial health. >> we're comfortable with our exposure to europe, because it's our banking business, our mortgage business. so, if you look at the situation in greece, we have virtually no exposure. if you look at the volatility around some of the bank names in italy, we have virtually no
exposure. >> talk to us about capital. this is the other big issue that everyone wants answers to. do you feel bar clay's will have to race capital? >> i tnk if you step back and look at the banks in the u.s. and the banks in the uk, very early on, the banks raised capital. in our case, for example, if you compare barclay's today to pre the crisis in mid 2007, the end of 2007, our core exbyty was at 7%. our leverage was at 20 times. 30%. we have 1 billion pounds every day. >> what about the zone in the european economy? what's worse off right now? 's correct to be concerned about the u.s. economy for a lot of issues that have been talked about, and the economy has probably been slow in the first half than most people expected.
we look at the second half of the year. there's good news, as well. interest rates have been lower than expected. we had oil off about 10%. we've had a faster recovery in japan after the earthquake and the tsunami and we're looking at 2% of growth in the second half in the u.s. >> thanks to bob diamond. up next on "the wall street journal report," starbucks ceo howard shurlchultz to boycott political donations. can he teach washington about fiscal responsibility? and later, it's time for shopping. back to school shopping. how to find the best prices. take a look at how the stock market ened the week.
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welcome back. starbucks chairman howard schultz is frustrated, and he wants washington to wake up and smell the coffee. he's calling on his fellow ceos to boycott political donations. in light of the tone surrounding the recent debate over raising the debt ceiling. i spoke to him this week about his call to action. >> i think all of us can agree on one thing, and that is in observing the debt ceiling negotiation between the administration and congress, we had a fracturing of leadership. and that fracturing of leadership had produced such an air of uncertainty and fracturing of confidence in the marketplace, in the world, and as a result of that, i felt very strongly that america deserves much better than this. and as a result of that, we sent a letter out to business leaders across the country. 100 ceos have responded. but most importantly, i received e-mails and letters from thousands of americans, people i've never met who have shared with me their concern and their
stories about the fact that they feel they're being left behind in america. they don't have access to the american dream. and this all is about leadership and a fracturing of trust and confidence. we want to send a powerful signal to washington, with civility and respect, that we do not want to embrace the status quo. we want you to go back to work. you took an oath of office to represent all of america, not partis partisanship. please, do the work we sent you to do. we deserve better than this. >> good for you. i agree with you. everything has gotten so toxic, howard. so, tell me about the responses that you've gotten to the company. nasdaq's ceo among those who have signed on. who else has signed on? >> well, the response is republicans and democrats, it's from silicon valley, consumer brands, tim armstrong from aol, mickey drexler from j. crew, kevin johnson from juniper. these are all people who are not
looking at partisanship but citizenship in addition to that, with 9% unemployment, 42 statements in america who have budget deficits, there's a crisis of confidence in america, and it's serious. we need a sense of urgency and we need leadership. it's about job creation and the economy. we can't get to that until the leaders in washington remove the uncertainty in america. >> so, when you say withhold political contributions, to everyone or -- >> i want -- >> what -- >> what i want to do is, we set up a website in the last 24 hours, which is upwardspiral2011.org. you can get information there. we're saying two things. please suspend your donations and your contributions to the incumbents in the administration and in congress until we have a long-term debt ceiling deal. we send a signal that the status quo is not working. there's a crisis in america. congress should not be in
recess. and we've got to get the country going, getting back on the right track. >> yeah, well, given the looming crisis and the key issues that still hang in the balance, medicare, medicaid, is now the right time to be asking americans to disengage from the political debate when we've got these issues that need to be addressed? >> i'm not asking them to disengage from the debate. quite the opposite. i want them to raise their voices about their concern. because these people feel like they've been left behind. but i do want the people who are funding $4 billion in 2008 and an estimated $2.5 billion in 2012, which i think is obscene, for the presidential election cycle, to stop sending money to washington. we deserve better than the leadership we're getting. >> do you plan to expand the campaign? i know you've gotten a huge response. >> i think this is just the beginning. i think, stay tuned, because we're going to be back with more information and i think another way in which i think we can send
a, a signal to washington about how serious we are and how dissatisfied we are. >> why you, as a businessman, are you doing this? is it because you're right in the thick of things and you see the result of some of this bickering, and that is sort of inaction and people just sitting on their hands? >> well, i think, you know, for me, personally, i can speak for anybody else, i watched what happened in washington, it made me sick. i could not sit by and just witness what was going on without just raising my voice and saying, "i want to try and, with respect and civility, make a difference." i was surprised at the ground swell of support. i think there's a seismic change in consume earl behavior, a fracturing of confidence in what america stands for and i -- i really believe this is a -- a very, very important moment in the history of our country. and the sense of urgency that i believe and others feel for whatever reason is not being
on school is supplies every yea. and the second most important season of the retail industry. so, how to find the best prices? steve krezner is with me. he's the respect of pricegrabber.com. steve, great to have you on the program. >> thank you. >> so, price comparison, daily deal sites, certainly becoming bigger and bigger and a real booming part of online commerce what's the impact to your site when events like an earthquake, a hurricane, occur? of course, we're watching this hurricane irene impact so many people's plans. do you see consumer demand spike for everyone is things or slow down? >> we see them slow down in anticipation of the event and spike afterwards and i'm certain we can see a lot of demand nor emergency kilts coming up. >> how does price grabber work in terms of back to school shopping? what is the experience like? >> well, it's a free service where they can come to the site and get expert reviews on tens of millions of products and
compare prices for those products across the network of over 10,000 merchants. >> what do you see right no in terms of people actually spending money? >> absolutely looking for value. so, looking for deems, looking for bundles. it's not just lowest price. it's being know doesed on their needs and finding ba ining valu. >> your consumer data shows a lot of back to school shoppers, 48% plan to spend $250 per child this year. that's 25% plan to spend more than $500. tell me what this season looks like for retailers and what people are spending their money on. >> at first, retailers overall, it's a flat issue. the expectations are in line with last year, which shows real resilience. and people are looking for devices that multi-task. the high end folks are looking at electronics. and a lot of people are looking for value in the basic goods, clothes, backpacks. >> sure, some typical, some
atypical. let's talk about some of the products. you brought some things today. talk to us about the products that are mt popular for folks, particularly those visiting price grabber. how can you find the lowest price? we'll start with this. this is the microsoft office software. >> this is office ten for home and students. goes with multiple platforms. it is a must-have for college students going to school and most high school folks and works across all the technology. >> how much is that? >> that's about $100. >> what about the headphones? of course, headphones, you have a lot of different kinds of them. tell me -- >> exactly. these are really hot. these are the beats by monster, the dr. dre's. for kids going back to school, they connect quality headphones into mare multichannel devices. >> dr. dre got a lot of pop popularity around this. the sound is very, very good. >> very good. >> backpack, everybody needs one for school. >> right. you see some people working on trying to get extra life out of
their backpack, but a popular item. about $70. >> 70 bucks. crayons? >> $6. people really looking to save money on everything. a lot of people are shopping for crayon prices. >> okay. and you have the ipad 2. how do you fd the lowest price on the ipad? this is tricky. >> it is tricky. and it's a very tightly controlled price. and so i think people here are often looking for convenience and looking to be able to shop at nonstore hours to get this device. >> the calculator there, graphing calculator. >> right. every year, a big back to school item, a lot of power, a lot of technology. the economy becomes more technology-driven, you see a lot more people buying tech gear. >> everything is technology-driven, right? personal electronics is the hot thing right now. are these bigger deals for college students or younger kids in terms of electronics? >> electronics this year are shoeing more to the college student. we're seeing fewer elementary
and high school parents buying electronics for their children this year. it's really skewing to colle students. >> steve, thank you. thank you for walking through the hot items for back to school. up next on "the wall street journal report," we'll take a look at the news this upcoming week. and then are baby boomers bad for the stock market? what one generation's attitudes another.an for the wall lets of
more on our show and our guests, go to wsjr.cnbc.com. and follow me on twitter. look at the stories coming up in the week ahead that may impact your money this week. on monday, the latest figures on spending will be released. on tuesday, we get the s&p home price index. that tracks housing markets across the country. and minutes from last month's meeting of the federal reserve open market committee coming out on tuesday. thursday is september 1st already. total auto sales for the month of august will be out. and, on friday, the latest employment mark. find out how many jobs the market has lost and gained. finally tonight, are 60 somethings back for the stock market? many baby boomers are cashing out on stocks. economists at the federal reserve bank of san francisco compared the price to earnings
ratio to the stock market with the ratio of middle age to older people in the united states. the results, as the market has fallen, so has the ratio of 40 somethings buying stocks to 60 somethings selling stocks. that golden boomer selloff may be bad ns for the younger port foul yoeps. timing is everything. that will do it for the show for today. thank you for being with us. next week, join me. a best look at the top american cities where you can get the biggest bang for your buck. each week, keep it right here, where wall street meets main street. have a great weekend, everybody. i'll see you next week. restingf the biggest names in american finance. stay with us. but i was still taking a risk with my cholesterol. anyone with high cholesterol may be at increased risk of heart attack. diet and exercise weren't enough for me. i stopped kidding myself. i've been eating healthier, exercising more, and now i'm also taking lipitor. if you've been kidding yourself about high cholesterol, stop. along with diet, lipitor has been shown
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