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tv   Bloomberg Bottom Line With Mark Crumpton  Bloomberg  February 12, 2014 2:00pm-3:01pm EST

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>> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line." today, an exclusive interview with st. louis fed president james bullard. and the behind the scenes look at last nights state dinner for french president francois hollande. president obama signs an executive order raising the federal minimum wage. >> to our viewers in the united states and those of you around the world, welcome. we have full coverage of the stocks and stories making headlines. julianna goldman has more on the
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white house state dinner. michael mckee has highlights of his exclusive interview with st. louis fed president james bullard. michael is with me in studio. this was a wide-ranging interview that you had today with mr. bullard. what are some of the highlights? >> he sees much better growth this year than many other people. three percent or better. he says the on implement rate could come down to 6.3% -- six percent by the end of the year. the fed has a conundrum. they anticipated 6.5% two years from now, and that was the threshold to talk about raising interest rates. what happens if you hit six percent well before that? that was a question that stephanie and i asked. >> we should wrap this up today. so i hope we can vote on this and vote soon.
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allmarkets are out there over the world watching to see what we do in the senate. >> obviously, that was harry reid talking about the debt ceiling on the floor of the u.s. senate. another thing we talked about with jim bullard is what happens in washington that affects the economy. he says that is another impediment removed, another reason things will pick up this year. back now to what he said about what this means for fed communications. >> the thresholds have been useful and have served a good purpose, but now we are coming through the on employment threshold, it makes sense to say they have done what they need to do and now we have to move to more traditional policy guidance. when we were back at eight percent unemployment, unemployment was declining, we did not want markets to think we would raise rates while unemployment was that high.
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--should we ignore the 6.5% >> they worked well in that period. we knew the day would come and we would pass through the threshold. that day is here. the thing to do now, in my opinion, is too good to more qualitative guidance. this will allow us to be more encompassing about the kinds of labor market and other indicators we want to look at in making a judgment about wanting to change interest rates. that is more of a traditional policy. in normal times we have not resorted to the sorts of threshold arguments. >> qualitative guidance means investors will have to try to invest on their own -- guess on their own when the fed will change interest rates. many officials say, he was speaking for himself. but he was speaking to the reality of the situation. >> what does this mean for the end of the tapering process? >> one of the problems they have
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still is inflation is still low. even if we see the unemployment rate start to pick up, they still need to continue stimulating the economy for a while. even though they are cutting back, they are stimulating growth. expect the tapered to continue through the year at a measured pace. >> what did he have to say about janet yellen? she has been on the hill, will be at the senate next week. >> as expected when anyone has a new boss, he said she did great. no surprise there. [laughter] he said she had all the right notes as far as what fed officials say and they do not much -- expect much change working with her. they have been working with her for about 20 years in the fed. >> thank you, michael mckee. go to our chief washington correspondent peter cook, where the senate is taking up the debt ceiling extension
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plan. >> good afternoon. the boat is taking place right now on the senate floor. you have a procedural vote that should make or break this entire issue, whether we have a debt ceiling crisis, or whether the issue is taken off the table until march 2015 at the earliest. a procedural move to take up the house bill that passed yesterday with just a handful of republicans, but enough to get it over the finish line in the house. they need 60 votes here, which means democrats need at least five or publicans to join them. mark kirk of illinois said that he would be prepared to vote yes on cloture to clear the legislation onto a final vote. the question is if there are four more republicans willing to join him. the idea is that there will and we will avert this crisis. names to watch, johnnyrk, susan collins,
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isakson, and bob corker, all in the past have been willing to break with leaders on this. we will watch to see how this plays out. a big moment for the president and republicans in congress as well if this issue is taken up the table before the deadline. >> you mentioned the 60 votes. there is the texas editor ted cruz. he says there is a problem with this and may try to drum up the works. works.up the >> he objected effectively to the legislation getting a simple majority, up or down vote. this is just a procedural vote, so that is why we have to clear the threshold. ted cruz is opposed to this. if he thinks this legislation should come with some strings attached to do with the larger -- atnd deficit problem,
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the end of the day, john boehner decided it was better to fight in the midterm election over other issues like obamacare and the economy overall. that is why he effectively through in the towel in the house. the question is how many republicans will join democrats in the senate. is atl us exactly what stake for both parties in this debt ceiling debate. --y do not want a recall replay of the fall, do not want a government shutdown. americans by and large blame republicans of the partial shutdown of the government. what is at stake for both sides this time around? andhere is a lot at stake that is why there was no appetite for another showdown, particularly from rank-and-file republicans, who may have even backed the shutdown a couple months ago. they knew this would be a political loser if they went ifo crisis mode again, and the full faith and credit of the u.s. was called into question.
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there is also a snow storm down on washington. if they get this done, they could be out of here for the president day recess and could be at home for about two weeks. >> literally took an act of nature to get both sides together on this. peter cook, thank you. president obama is about to enter the east room of the white house where he will deliver remarks on raising the federal minimum wage. the president was then signed an executive order requiring federal contractors to pay their federally funded employees on new contracts a fair wage of at least $10 and $.10 -- $10.10 an hour. we will monitor this event and bring it to you live. coming up, we will look at the impact of easy money on your nest egg. ♪
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according toin,
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espn, the new york yankees captain and shortstop derek jeter says one to 14 will be his last. he says he will retire after the season. according to the philadelphia fed, 80% of the decrease in the american labor force participation rate was due to retirement. discourage baby boomers jobseekers are giving up looking for work. wants to be known as america's retirement company. of chief financial officer ing u.s. is with me in the studio. welcome to the show. thank you for your time. before we get to retirement, let's begin with earnings. ing recording fourth-quarter profit that beat analyst estimates, earnings at the banking division tripled. what led to the strong performance? to theme speak
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performance of ing u.s. and the performance we announced. operating earnings were up five percent from the third quarter, 70% from the fourth quarter of last year. -- 17% from the fourth quarter of last year. net income was $548 million. what is especially encouraging is we are unable to your plan to of the ongoing business 12% to 13%. we would bring that up from 8.3 to 10.3. that is really part of the improvement of the underlying fundamentals, improvement in investment margin, and keeping expenses flat year-over-year. >> if the company speeds up a that it got in 2008, what is the likelihood that dividend payouts may resume sooner rather than later? the european of
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inggroup -- i represent u.s., so we do not have any state aid to be repaid. we focus on the u.s. business, entire mid, asset management, an insurance. look ata clear focus to retirement readiness of americans. this is one of the biggest issues in the market as you probably know. >> as i mentioned, you want to be known as america's retirement company. do you think americans are ready financially and emotionally for retirement? >> no, there is a lot to be done in that space. every day, 10,000 americans turn age 65. that will continue for the next 19 years. they all ask themselves the question of the do i have enough assets to retire, and will i outlive my assets? there is certainly a big concern
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that savings are not enough, that the participation rate is not enough in the retirement plans. so that is the key of our proposition in the markets, to make sure americans are better prepared for retirement in the future. reserve's policy of quantitative easing, how would that impact retirement planning? >> for individuals, it has the following impact. if you look at retirement savings, when rates are low, you have less accumulation of your assets, and you have to really work on putting more money aside, start earlier, know what is the ultimate objective in terms of the total assets you could put aside. impactes is having an and even puts the issue of being on thed more prominent floor. >> speaking of being prepared, what do you tell your clients, how should they manage their portfolios in anticipation of the fed ending its stimulus
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program? how we invest at our assets for our customers, we have different kinds of portfolios which are more general accounts, where we have a fixed guarantee rate for customers. there we have a conservative investment policy. we also have accounts where people invest in mutual funds, and we see some target date funds as attractive opportunities for clients to invest in their retirement accounts and make sure they have the right mix for their account. the chief financial officer for ing u.s., thank you. great information on retirement and retirement accounts. up next, it is not everyday that you get invited to a white house the residentwith and the president of france. julianna goldman did.
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a look behind the scenes of the glala. ♪
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>> the white house turned into party central last night as president obama threw a lavish state dinner for visiting french president francois hollande. got ana goldman exclusive invite and she joins me now to join -- talk about the evening and why she was rubbing international leaders, and while i went down the street having grown chicken. >> it was ok. no. [laughter] evening, veryiful glamorous, very special. there was a receiving line when they walked in. then you went into another
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receiving line where there were some hors d'oeuvres, drinks, and then you greeted the president and the french president as well. of their they had trolleys on the south lawn taking you around the driveway to this beautiful tent. don't talk over your cell, we see you walking in in the emerald gallon. very nice. >> i was teased for walking too quickly. i am not used to doing that kind of walk with the paparazzi. . it was interesting because given that president hollande is going through a lot back home, concerning his personal life, very low poll numbers, what was the atmosphere like? >> not only his troubles back home but also a substantive agenda for him to discuss with president obama between iran, syria, other issues ahead of his trip later this week to silicon valley.
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this was an opportunity where everyone put the partisan weighty issuese aside. paul ryan had just voted hours before not to increase the debt ceiling. he stayed until the very end. at the end also, as everyone said goodbye, he said, i was expecting to come to washington to have all of these serious discussions, but i instead find a dance club instead. you said partisan bickering. whatder if you can gauge the sentiment is between president obama and president hollande. do they seem to be on the same page, do they seem to like one another? >> it certainly seemed like a warm meeting. generally, when they have these state visits, they are designed to elicit these mormon moments where the two leaders -- warm
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moments where the two readers can share history, values. the trip to monticello was one thing. the ability to show u.s. wines from washington, virginia, and california. all of this is meant to highlight the bonds and ties between the different countries. even having different people and from thefrance u.s., it is just a warm atmosphere. >> before you go, president hollande is out west looking to get american companies to invest in france, isn't he? he certainly has been out there trying to get companies to invest in france. it is strange because he has been critical of some of these companies. get investment but at the same time questioning the tax breaks that they have.
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julianna goldman, fresh off of her state dinner last night. her first but probably not her last. now back to our chief washington correspondent peter cook on the debt ceiling debate. what is the latest? the last time we left you, the senate was ready to take the boat. >> we do not have a final outcome at this point. we are waiting to see if there are 60 senators who support moving on the procedural vote to allow the debt ceiling bill to come up for a final vote in the senate, the same piece of legislation that cleared the house of representatives last night. we are looking for five republican senators. we do not know whether they have stepped forward on the republican side to support the procedural move to get to the 60 votes. we know if they reach agreement here there are people outside the united states to have a great interest in the outcome here. one of them is the french finance minister, who was with of thea last night, part
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trip with francois hollande. i spoke with him a short time ago to talk about the state of the economy and france, and what it would mean to france and the global economy if the administration could cut this deal over the debt ceiling. >> what i can say is it is good american economy and world economy. when things are fit in washington, things are better in the european economy. the american economy is so important for the rest of the world. >> we will have more with that interview coming up in "street 330 p.m. eastern time. we will keep our eyes on the senate floor as that continues. threshold is what they are trying to get to. they could go on and take the final vote on whether or not the senate will pass that
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increase in the debt ceiling. it is 26 minutes past the hour. that means bloomberg television is on the markets. julie hyman, good afternoon. >> let's take a look at where stocks are trading. we do not have a lot of decisive action today, sort of a breather of a session after that rally, the biggest in a year. storiese negative helping to prevent any bigger rally today from happening. in terms of the individual the worstwatch, erformer in the s&p 500, lorillard. another cigarette company, the a victory electronic cigarettes. they signed an agreement to merge with a branding company. they expect to complete multiple other transactions.
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we have seen an explosion in that he cigarette business by independent companies and also the big players. more on the markets in 30 minutes. ♪
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>> welcome back to the second half-hour of "bottom line." i'm mark crumpton. our top stories. home depot plans to add 80,000 temporary workers this spring, the same as last year. spring is when americans traditionally spend more to pick up their homes. rising home prices the last two years have encouraged owners to spend on their properties. donations to america's colleges and universities set a record last year. rise to attributed the
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the run up in the stock market. almost $30 billion was donated, a nine percent jump in the previous year. stanford led all universities, raising $931 million in donations. they potentially historic winter storm is forecast to coat georgia with ice as it barrels through the south. governors in seven southern states have already declared emergencies. the storm will make its way north in the overnight hours. washington, d.c. make it up to four inches in new york city, three inches. more than 2500 flights have already been canceled. for the commodities report. su keenan is standing by in the newsroom with the details. inback to explosive gains natural gas. coffee futures have jumped more than 35% since november a windows two together have put commodities to a six-week high today before they gave back some gains. meanwhile, call in the janet
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yellen effect. gold rising to a three-month high today on the fence outlook. one strategist says you have janet yellen and james bullard picking it clear that the fed is hurry to endin a stimulus. silver in its longest run of gains since 2011. natural gas was in rally mode again today, rallying the past but getting back those gains right before the close. as one trader said, the market is finally finding the big supply picture. some predict more volatility, like what we saw at the close today. ahead of this latest storm which is set to hit the northeast are warninglities of power outages. we are seeing electricity prices jumping as cold weather protection the man boasts.
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oil prices the highest in four months on bottlenecks in supplies. gas futures jumped on refinery issues. forecastnment's latest shows gas demand is rising. they say pump rises are falling. this year's average price will be a dime below what >> we were at last year. what is the outlook for coffee? >> the drought in brazil has barely dented the rally. there is an expected return of grains in brazil. this could support higher prices at retail, which means we could be getting an act or jolt when we buy our morning coffee in the weeks and months to come. thank you. there are signs the housing recovery may be slowing down. u.s. home prices rose in fewer cities in the fourth quarter of last year and mortgage
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applications declined two percent last week. jonathan miller is the president an ceo of miller samuel, appraisal and consulting firm. he is here to sort out what is happening in the housing market. thanks for coming on today. what is causing the slowdown? >> i think we are shifting back to normal reality. the last year we saw tremendous triple digit -- double-digit price growth, but the fundamentals were not there. stagnant incomes, tight credit, high unemployment, yet housing prices are rising sharply. the slowdown is sort of a reset to more normal or realistic conditions. >> if this is a return to normal, is the township a sign of things to come? a settlingshift is back to a more sustainable level of activity. you cannot have double-digit price growth, sharp rise in
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activity, with mortgage rates trending higher, and the fundamentals still very weak. are seeing what was artificial growth, i guess that segues nicely into fed policy. how dependent was the housing market in the u.s. on fed policy? >> dramatically affected by policy. part of it was interest rates. the bigger part was rates being so low, the fact that credit has , because interest rates have been so low, lenders do not have a spread, they cannot ease their guidelines. they cannotbecause ease their guidelines because we do not want to go back to those days where people who did not qualify for a market just got one as long as they sign their name. >> exactly. we are out of that era. i was very concerned, especially going into this time last year,
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that the market was too frothy and that we were headed for a bubble. the sharper rise in interest essentiallypring pulled people in the off the markets, off the fence initially, but then we are settling into a more normal condition. >> janet yellen was on the hill yesterday. she said housing still poses a systemic risk to the u.s. economy and called on congress to establish a new housing finance system, saying "it would explicitly define what the government's role should be in helping the housing sector." what role should or should not the government have? essentially, the government has been a guarantor for the banks. i am not sure we want to remove that, especially right now since 90% of all mortgages are flowing through, in some form, the
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former gs yes, fannie mae and freddie mac. i am concerned about a huge shift in the system. the focus should be ways to make credit ease to more historic levels than where they are right now. >> you talk about a shift in the system. is this something that will eventually have to happen? >> i am not sure it has to happen. gotproblem where the gse's into trouble was over the last 10 years. beginning with the depression through now, there were no issues -- to cut young to have off. we were waiting for the president of the united dates. he is prepared to sign an executive order for federal contractors to pay their employees a fair wage of at least $10.10 an hour.
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>> all right, it is done. thank you. [applause] that, the president of the united states signing an executive order increasing the minimum wage for federal workers. the phil mattingly is with us from washington now. do we have any idea how many people this will touch once the order takes effect? >> numbers are not specific right now. what the administration is saying is they think it will be a couple hundred thousand. here is why they are not totally sure. applyxecutive order would january 1, 2015 to any new contract signed or any renewed contract. right now they have about 250,000 people in the pipeline. put abody really wants to
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solid number on it yet until they get a sense of where contract will be in january. >> do administration officials really believe this is the sort of initiative that will address the income inequality that has become central to their agenda? >> it is a start. they are aware the dynamics on capitol hill, getting a large-scale federal increase to the minimum wage is unlikely, so long as republicans are still in control of the house. can actuallythey do something on this, as the president said, and while it was not hit millions, it will affect a couple hundred thousand. when i spoke to the labor secretary, he made this point. they hope this looks successful, ends up proving wrong the business idea that this will hurt jobs or cause employers to lay people off. that way, they can take that to congress and bolster their case. phil mattingly, joining us from washington, thank you.
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miller, president and ceo of miller samuel, gracious to stay with us through the break. what type of impact will this have? the idea is to give people at least a living wage, but part of what you said earlier, one of the things that will help revitalize the housing market will be employment and wages. people -- athink minimum wage, it would be a challenge to qualify for a mortgage until we see some kind of credit ease. it is more a statement about the direction of the economy and hope for the growth in the economy than it is specific thousands. miller, thank you for your patience. not the first time you have been cut off by the president. thank you. stay with us. continues.e" a live shot from the u.s.
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senate. they are still looking for that 60-vote rush holt to reach cloture. peter cook will be back on the other side of the break. ♪
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>> you are looking at a live shot of the united states senate. lawmakers still looking for that cloturethreshold, the vote, so they can get to the final vote on a debt ceiling extension. chief washington correspondent peter cook is standing by with the details. we talked about the possibility of drama on the senate floor. usually a pretty staid place, but this is drama. these people standing around not doing anything right now. te being this boat -- vo left open for now, searching for the 60th vote to get them over the hurdle. they needed five republicans to
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join with the 55 democrats in the senate to move this legislation forward, this procedural vote. as we talked about earlier, no republican wants to vote for this because it does not come with any strings attached. it is a tough vote politically in this midterm election year. a lot of republicans up for reelection, facing primary challenges are more conservative challengers. this is not the kind of boat you want on your record if you are pretty -- facing a primary challenge. i sources tell me there is an effort right now to convince enough republicans to join democrats and back this. they might be close but they are not there yet, otherwise we have -- would have heard an outcome. the fact that they are leaving the vote open tells you that there is an effort underway. can seee at home and the faces down there, mitch mcconnell is one to watch carefully, as is bob corker.
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one of the republicans who could support this effort to at least bring it to the floor for a vote. drama on the senate floor on the even though it may not look like much. >> also watching this carefully is wall street. the majority in the red. dow jones industrial down 45 points. s&p 500 down fractionally. thing that is important for people to bear in mind, the clock is working against congress in all of this. we heard jack lew say february 27 is the deadline. air is a snowstorm about to hit washington. if this would go down in defeat, there would need to be an effort in the senate to gin up some new agreement. any change in the legislation would require the house to return to washington. right now the house is supposed to be on recess for two weeks time. house democrats have already
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left for their retreat in maryland. there are challenges if this does not go down. not insurmountable, but it means they are pushing harder and harder against that february 27 deadline. we know that would raise fears in the market and around the world that this is an issue that cannot be dealt with in a timely fashion. interview the french finance minister. he also expressed concerns about this. he expressed optimism that washington would address this. he could not envision that they would not address this. that is always the expectation with the debt ceiling, but this is always a tough political vote. he talked about how important it would be, if they can move past this in washington, how important that would mean for the french and the global economy. >> peter cook watching the proceedings in the senate. thanks. stay with us. ♪
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>> coming up later on "street an inside look at the big business of fashion week. welcome back. this is "bottom line." you can also watch us streaming on your tablet, phone, and on time for hot shots. a look at some of the day. -- some of the most compelling images of the day. 250 artist took manicurist to a whole new lovell. some used soviet characters for inspiration, some turned to alice in wonderland. the gold went to the creator of the wine harvest themed manicure.
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talk about overstaying guests. when a powerful storm hit germany in december, a woman brought her three-year-old arabian horse inside her home. it appears it got too comfortable and now wants to stay there. we say there is no point in closing the stable door when the horse is out of the barn. really? if you are done with the freezing temperatures, so is this for-year-old. he was shoveling so he could play outdoors, so he got -- but he got too frustrated, so what do you do? get help from the big guy. warm!us, make it >> [laughter] with us. another check on market movers is on the other side of the break. returns in a moment.
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breaking news. the united states senate has advanced a debt limit bill, clearing the way for final passage. peter cook was telling us moments ago that there was drama on the senate or but apparently -- floor but apparently they got the 60-vote threshold they need to advance the bill clearing the way for final passage. peter cook is standing by. you mentioned high drama but they found the book they were looking for. tally, 67-31. that means all of these negotiations, arm-twisting was an effort to get as many
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republicans as possible to support this legislation, to support this procedural vote. harder for them to be criticized if the republicans were on board. that group includes, as i understand it -- have not seen upon a roll call tally -- mitch mcconnell and john cornyn of texas. why is that significant? both of those senators are running for elections and face primary challenges in their home states of kentucky and texas. this will be a vote that will undoubtedly be talked about in those races back in their home states, a political risk for mitch mcconnell and john cornyn. >> thank you, peter cook. that is "bottom line." i'm mark crumpton. julie hyman is next. >> let's get you caught up on where stocks stand, about one hour left until the trading session. dan earlier, the s&p 500 down three points.
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the nasdaq is up 55 points. it looks like the debt ceiling , itse debt limit bill passage not having much of an effect. four-dayf of that rally, stocks taking a bit of a breather. this week on "in the loop," betty liu spoke to different officials about the federal reserve. she asked her just what they took away from general -- janet yellen's testimony yesterday. >> it really assures the forward guidance for the fed but this is a fundamentally driven market. fundamentally driven markets can be subject to changes in sentiment. we have to be mindful that any forward-looking data flow could be very choppy. >> so fundamentally you feel we
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are recovering, which is why you have gone back to neutral? >> we have. we have seen better data flow from the global economy. very positive there is a global recovery going on in 2014, even better than 2013. we do know there could be choppiness. >> choppiness could be in the future. more of the same that is. more on the markets in 30 minutes. ♪ >> good afternoon. yesterday's rally just a memory today with the dow in the red. to hold itsggling gains as the senate passes the debt limit bill.
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welcome to the most important hour of the session. 59 minutes to go until the closing bell. i am thrilled to have alongside me alix steel. welcome back, just in time for the storm. >> glad i got out of washington, d.c. on in the markets today but hard-core a traitor to get a read. traders are having problems right now. and wesley are excited about that story. let's get to the big three stocks we are going to watch. >> individual stories are weighing on the overall market today. one of them, the company cut its sales and profit growth forecast. it is because of venezuela, which makes up about two percent of its sales. currency exchange fluctuation policy changes there in venezuela


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