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tv   Real Money With Ali Velshi  Al Jazeera  December 20, 2013 3:30am-4:01am EST

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delight triumphed >> you can follow that story and all that we are covering by logging on to the website on there's news, reviews. our top story is the ongoing situation in sudan. wall street had feared the fed stimulus move, but it turns out the stock market wasn't scared at all. we'll talk about what that means for you. also with the clock ticking down to a key obamacare deadline, see how health insurance companies are pulling out all of the stops to get you online. and mall shops luring buyers with perks you can only find online until now. money." ♪
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this is "real money." you are the most important part of the show so join our live conversation for the next half hour on twitter at ajreal money, or at ali velshi or on facebook. there has been a remarkable turn about in how wall street sees the world. all year stock markets have lived in fear that the federal reserve would pull the plug on its huge stimulus program and second interest rates higher and send stocks lower. the fed said it may begin tapering this year in june. the next day the s&p fell 2.5%. flash forward six months to yesterday, and the s&p rallied 1 -- 1.7% after the fed announced
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it would begin tapering. the s&p 500 index gaining almost 26% for the year. and most of this was due to the fed pumping money into the economy ever month to keep interest rates low. the fed has been promising to pull back as the job situation improves in this country. what has changed is that invest fors are now more confident that the economy can stand on its own two feet. that means 2014 could be a changed landscape for stocks. while predictions for what the market does next year are all over the map, on average, wall street expects the s&p 500 total return to reach 10% for the year, which would be a change from the seesaw of big gains and losses that we have seen in the recent years.
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now that the fed is starting to pull back investors will need to look more closely at the fundamentals of the companies in which they invest, and not count on them so much by them being buoyed by a continuously rising market. and they will are to factor in what higher interest rates do in the months going forward. investors need to keep their eyes on the bond market. yield or interest rates on 10 and 30-year bonds. that's the view of the man joining me now in this turn around in wall street views the taper. bill let's talk about this. the market has -- has surged. we didn't really all expect the fed to start pulling back yesterday, and we certainly didn't expect the market to have such a positive reaction. what is the analysis? because we all believe this economy is getting better?
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>> ali i think what you are going to see over the next couple of months is going to be very telling in this terms of how the u.s. financial markets set up in 2014. yesterday we had the announcement the tapering process going to begin in january. the interpretation there is that the fed believes the economy is finally at a point where we can take some of the training wheels off, and it can function more on its own going forward. we'll see if that confidence is well-founded or not, but that -- that's the reason why we had this big move higher in the stock market. but what i would say to the people watching the show is that you also have to focus on interest rates. because the first order of impact is going to be in the bond market. we see these ten-year notes trade $2.90, $2.95, if those rates start to spike
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significantly in the next few weeks, that's going to be a real problem. that's going to tell you that this confidence is a little bit premature. because it's the low interest recovery. >> sure, and those numbers are the yields when you buy these bonds. and as much as the fed says they are not going to increase the interest rate that it controls until sometime in this 2014 or unemployment goes a lot lower, a lot of my viewers are saying well why are mortgage rating going up? >> exactly. it's the long-term rates that the fed cannot control that are really critical to driving this country. the ten-year notes are where a lot of mortgages are pegged. so the stock market was up youed, but you want to focus on those rates. we need to keep those rates low to keep the recovery intact.
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happen? my viewer is much more accustom to watching the stock market. what are you watching for to see how the bond market ultimately reacts? >> i think ali both the stock and bond market if they can just hold these levels -- they don't have to do anything dramatic. the stock market really doesn't .need to rally much from here, but if approximate we can just stay around these levels. stay around these levels, that would be fine. in the equity markets if we could hold these levels around there, that tells you the market is comfortable with the present set of circumstances, and if we can hold these levels what that will tell you is that we're setting a base for another nice move higher in the equity markets. >> i want to quickly show you a chart. i know you are familiar with this.
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go back 20 years on the s&p. what does this tell us? you see three even peaks. this one is higher than the last one because it is a record on the s&p. what does this tell you? should we will worried? >> no, aly, that's a really good representation of what the boom bust cycle has been not only in this the economy but the equity markets as well. and this year in 2013, we broke above the highs that we saw in 2000 with the dot-com double. and with the housing crash, so if you get back below that 1500, 1550 area, that will tell you that this is really just kind of an overshoot, so we look at this as giving us a big brood landscape of how the market has traded in the last 20 years.
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and we want to stay above those peaks. >> thanks very much for joining us. wall street's flip flop reaction is not the only remarkable reversal we got in 2013. let's talk congress and the budget. we got one almost sort of. we went from a government shutdown to both the house and certain -- senate passing a budget in december. and that ranks number one on bloomberg's list of 8.5 things that went right in 2013. the editor wrote the story, and he joins me now. welcome. >> thank you very much. >> i have to agree with you. in the list of all of the things that were good in 2013, the idea that this entrance almost damaging congress finally got it together.
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it's very, very impressive, not just that they did it, but maybe it bodes well for the future. >> let's hope. without this deal the gdp would have grown much more slowly. though government has been a drag on the economy. 1.5% off of the gdp growth is the estimate. now it will be about a half of a percent. a much smaller, manageable drag. bloomberg predicts the economy is going to grow faster now. but to go to your point, does this bode well for other progress? i would have to think it's a confidence-building measure. this alone is not going to make the difference. there is too much -- there really is still a chasm between the republicans and democrats, but, you know, you build one little bridge across a chasm, happening. the next big test will be the debt ceiling. >> right. when we thought we were having a
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budget and debt ceiling issue that was going to have to go into january and february, that seemed all that serious. >> right. i think we will not go to the brink the way we did last time. i think that -- that brinkmanship hurt both parties and the president, but it hurt most of all the tea party fraction of the party. we have heard john boehner talking back to the tea party saying we don't want to go there. and giving the a message to obama saying we're going to hang move. >> the one way in which they could not be a drag on the economy is to really reform taxes. that's something both sides can get behind in fb different ways, but we're not even close to that. are we that much closer to maybe
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real tax reform in this country? >> it is always hard because 2014 will be an election year, and so people are more cautious about going out on a limb. >> right. >> there is almost no time that is a good time to do tax reform, because the benefits prove to the population as a whole in that the harms go to narrow interest groups that are very well organized. >> which means the harm often election. >> yes. because they are the ones who fund the campaigns. so that's why i cannot be super optimistic, but it's a step in the right direction. >> we are both on the said time about being what optimistic. peter it's always a pleasure to talk to you. well just five shopping days left until christmas, only four left if you are shopping for a healthcare plan to cover you by new years eve. coming up a look at what
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insurance companies are doing to try to get you to buy. and later how some mall stores have taken a play right out of wal-mart's shopping book. >> start with one issue ad guests on all sides of the debate. and a host willing to ask the tough questions and you'll get... the inside story ray suarez hosts inside story weekdays at 5pm et / 2pm pt only on al jazeera america >> from our headquarters in new york, here are the headlines this hour. >> al jazeera america is the only news channel that brings you live news at the top of every hour. >> a deal in the senate may be at hand and just in the nick of time. >> thousands of new yorkers are marching in solidarity. >> we're following multiple developments on syria at this hour. >> every hour from reporters stationed around the world and across the country. >> only on al jazeera america.
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consider this: the news of the day plus so much more. >> we begin with the government shutdown. >> answers to the questions no one else will ask. >> it seems like they can't agree to anything in washington no matter what. >> antonio mora, award winning and hard hitting. >> we've heard you talk about the history of suicide in your family. >> there's no status quo, just the bottom line. >> but, what about buying shares in a professional athlete? lackluster sales, mixed weather, five shopping days left before christmas, the heat is on for the nation's retailers. they are pulling out all of the stops which is why some stores are bringing the goods to you.
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de-live just announced a partnership to bring same day delivery service to several malls across the country. founder and ceo is at hugo boss in westfield century city mall. >> hi. >> i avoid malls as much as possible because i don't want to carry stuff around. tell me what you guys do for me. >> we can do everything for you. de-live is same day delivery service for merchandise bought online or in the store. we deliver it to your doorstep drivers. >> when you say -- tell me what drivers.
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>> yeah, crowd sourcing is a very innovative cost effective and flexible staffing model where we build up a community of independent contractors, and in our case they are drivers. they are available on demand and they work when we sen them work for driving. so we pay them when there is work, and don't when there's not, and it allows us to bring down the cost of same-day delivery, which traditionally has been out of reach to the masses. so be not only cost effective, but the cheapest shipping option a retailer can offer overall. >> what is the cost first of all? i'm shopping at hugo boss, buy a bunch of stuff, but i'm going to spend some time at the mall. tell me how the system works. >> the way the system is going to work, is you come here and buy something. and first and foremost if you are going to shop around the mall and pick up your bags at
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the end of the mall or have them delivered to the trunk of your car, that's absolutely free to you. if you decide i'm going out to dinner, i don't want to leave my bags in my car, you can deliver it home later for $5. >> how can that be that it costs me 5 bucks? who is making money on this? >> well, we're making money. and the way we are making money is pretty simple. let me break it down. let's just say i pay a drive 20 bucks an hour. and a driver comes to a mall and goes to one spot in the mall and picks up four packages and delivers those in an hour, he picks up 5 bucks. if he picks up more packages it will cost him left. so it doesn't take a lot of packages to bring the cost down to pretty cheap. >> this is much more efficient in a hypershopping season like
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now. does this work year around? >> absolutely. because we're pooling not just the packages that people buy in the store, but you could also buy something online. let's say you bought something from the hugo boss online and went to check out. today you would pick a shipping option. and you might be in california. and they are going to ship it to you from the east coast, but what if that product was available in the store which was three miles away from your home. wouldn't it make more sense to deliver it from the store than ship it across the country? so the order would come from the store and we would be picking that up as well. so from the consumer it doesn't matter where and how you shop, we're going to get it to you. >> great story. and good luck to you. >> all right. thank you so much. >> daphne is the founder of de-live. facebook is selling 70 million more shares of the stock to the public.
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that including 41 million shares from the ceo. he will intern buy a separate class of facebook shares that carry more voting weight so he maintains his control over the company. well that's it for us, that's our show for today. on friday how one retailer that sells silly stuff figures out how much inventory to stock for the holidays. i'm ali velshi. thanks for joining us. ♪ check czech
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>> welcome to al jazeera america. i'm stephanie sy. here are the top stories we are following: the senate approved a sweeping defense bill addressing sexual assault in the military. it will block commanders from overturning court martial decisions. it goes to president obama for his signature. >> russian president vladimir putin signed a decree to pardon gaoled oil ty can -- ty can mikhail khordorkovsky, he argued he was gaoled foros


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