tv Wall Street Journal Rpt. NBC September 5, 2010 9:30am-10:00am PST
but murders doubled, making oakland the 4th most dangerous city in america. jerry brown. he just can't deliver the results california needs now. hi, everybody. welcome to the "wall street journal report." i'm maria bartiromo. on this week's show, the state of american labor. i'll speak with labor secretary hilda solis about jobs, the economy and working in the usa. we've got you covered from "a" to "z." "z" for sam zell that is. the real estate billionaire tells me where he thinks the economy is headed now. why he likes investments south of the border. she's a corporate ceo, a wife, a mother and a social site. now alexandra lebenthal is adding author to her list of achievements. i'll tell you about her new novel. 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. >> now here's sue herera with some of the stories in the headlines this week. sue. >> here's a look at what's making news as we head into a new week on wall street. it is the all-important piece of information about the economy that the markets have been waiting for, the jobs report for the among of august and it was better than analysts expected. the unemployment rate rose slightly to 9.6% and overall the economy lost 54,000 jobs which includes 121,000 government jobs, many of them census workers but the private sector created 67,000 new jobs, more than anticipated. that better than expected report was enough to boost the markets in early trading on friday. stocks ended a miserable august on tuesday with their worst performance during that month since 2001. the bulls took charge, though, on wednesday, the first day of september. the dow up more than 250 points partly object you on strong manufacturing news and kept going on thursday.
disappointing auto sales in august but mostly because they're being compared to last year's numbers when cash for clunkers was in effect. gm fell 7%, ford about the same. chrysler was up 11% and toyota down 31%. retailers reported same-store sales this week and they were surprisingly strong even though job worries kept a lid on back-to-school buying. most retailers beat modest expectations. encouraging news on housing. home prices rose in june for the third straight month according to the s&p kay schiller home price index which have measures actual sales but this is from a period of tax incorrectives still in place to encourage buying. on this labor day weekend a look at life of work in america. how many of you are faring on the job or in the job search. joining me secretary of labor hilda solis. ms. secretary, great to have you back on the program. welcome. >> thank you and happy labor day. >> to you as well. what's the state of american labor today, secretary?
>> let's look back when we took office here. we were losing over 740,000 jobs a month and we've slowly seen that now changing. the hemorrhaging has been slowed down a bit. but we know we still have to do more. we've added jobs in the manufacturing area and we're even adding jobs in the automobile industry, thanks that gm and chrysler have come out of bankruptcy and now are adding jobs. these are new jobs being created in renewable energy. i would say in new technologies, high tech and obviously in health care. >> so which american workers are in the best position right now would you say? >> i would say those workers that have some advanced training, that can help them transition into other jobs or into a higher level of their career. i think that's very important. all the facts bear out that the more education and training that you have, the better chances are that you're going to be competitive in this marketplace. federal government is taking time to make sure that we make
those investments. in fact, we have a program where we're actually paying for the training of employees. if an employer wants to hire individuals, we'll subsidize anywhere from 65 to 90% of the training that's needed for that person to be brat on and kept on and fully employed. >> some 8 million people have lost their jobs in this recession and of course some of those jobs in manufacturing, some in housing are not coming back. what are the options for those workers? do they need to go get new training? how can we efficiently retrain people and give them the right skill set? >> some of training is already ongoing right now. we have different partnerships that we've helped to fund with business, with labor unions and with community colleges. so people while they're working can also take time to get trained in the evenings, on the weekend or during the workweek. and what i see happening is i see a thrust in renewable energies and also in
infrastructure development. so when we talk about infrastructure, we're talking about high-speed rail. we're talking about different modes of transportation. we're talking about new ways of seeking to reduce our carbon footprint but also looking realistically at how to cut off dependence why to foreign oil and making the investment here and putting back the workforce in the manufacturing base. i think that's been our strength traditionally in the united states and we have to go back to that model, to nflt here in our manufacturing base. we have to be able to develop and create things and sell those abroad. right now we're not in a position where we'd like to be. but we're making those important investments and i see it happening as i travel around the country, whether it's now creating lithium batteries or creating a new hybrid vehicle or new assembly plants that went down that are now producing solar panels or wind turbines. all of these things are encouraging because they're manufactured here in the u.s. or at least most of the parts are. and i would say that's an encouraging sign for the u.s.
american worker. >> i'm glad you mentioned that high-speed train. i know that there is one in europe. and a lot of people wonder when in fact we will see a high-speed train like that in america. you are saying plans are under way for a high-speed train? >> absolutely. in fact, i know that in the northeast corridor and in different states there that are affected right now with the downsizing of the automobile industry, they have applied for high-speed rail. also in california here where i come from, they're looking at that long-term plan. and there have already been plans made for it years ago but there have been no funding. now we have been able to jump-start that. so i really do see a movement where we're connecting people and making it easier to commute to work, to live near where they work but also opening up business opportunities because as people make those stops at different places, they're going to go out and buy. they're going to eat at restaurants. they're going to create
industries there. i see this as a long-term economic development plan that is actually going to help to revitalize some of those blighted communities or areas that have been starved for so many years. >> and of course secretary solis, the business community really needs to add jobs. we know that government cannot create jobs. what is your view of the president's relationship with the business community? private sector experience is not significantly represented in the cabinet. is there anybody in the president's cabinet who has ever worked in business? >> well, i know that tim geithner has and i know that our small business administrator karen mills also comes from a business background and also had her own businesses. and many of the individuals that serve in the cabinet come from the private sector. they were either practicing law in the private sector -- and i'll tell you one of the things i don't get asked a lot is what my own experience is. i'm married to a small entrepreneur and i know when things are tough and when you meet payroll and can't and when you have to forgo making
payments or stretching the dollar. i have seen that happen. as a former member of the house, knowing and working very closely with some of our mid and big sized businesses in our district you have to pay attention to that. i think that's not a correct statement, that we really are looking at what we can do to help provide support to small businesses. and every time i go out, that's who i'm constantly meeting with. it isn't just the employees. it's the employers. because the bottom line as you said and i know is we don't create the jobs. the federal government doesn't create. we can help incentivize but it's the small and medium-sized businesses that do that. sl so what can you do or plan to do, secretary solis, to calm the business community when it comes to hiring more workers. >> >> i would say that they want to -- what i'm hearing is they want more access to capital and i think there may be some improvement occurring there so that people can expand their inventory and hire up people. and i think being a little bit more creative and really
realizing where they want to go in the next few years. so it's important to have good tax policies and also incentivizing small businesses so they get tax credit so they can move forward and not just on a two-year scale but looking at five and ten years down the line. that's what i hear the most about, that people really want to be able to plan for the next decade. and you can't just do it in two-year segments around election cycle. >> absolutely. thank you for having you on the program. >> again happy labor day to you and your staff. >> to you as well. thank you so much secretary solis joining us. up next my conversation with billionaire sam zell. the state of real estate, where he's investing and where he thinks the economy is heading now. looking at the financial crisis with fresh eyes and a sharp tongue. a novel approach to the lives of the once rich and powerful. let's get better prices... and better paint. let's break out the drop cloths, rollers, brushes, and tape.
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and across the world. when it comes to commercial real estate, he's the man to talk to. i spoke with him recently about the economy, the developing world and just where he thinks real estate is headed. tell me about the environment right now. everybody is trying to figure out where we are in this economic landscape. commercial real estate, has it come back? >> i don't think i'd call commercial real estate as having come back. i think, first of all, it's very difficult to use the term commercial real estate. i think more than ever, you have to look at each segment separately. so, for example, in the case of apartments, we haven't built any apartments since '07. the population keeps growing. therefore, we're going through a very stressful period with very positive numbers. i don't think you'd say that if you were in the office space business, but i -- although the office space business is improving. but it's improving at a significantly lower rate than where it was at.
whereas the apartment business is very rapidly getting back to the rate that existed in '07. >> and if we see mergers which a lot of people are expecting that also throws a wrench into things. >> could. a lot of tenants are working on lowering the square foot per employee. that's something that nobody really focused on. but in hong kong, the average sxwar footage per employee is something like 90 square feet. in the u.s. it's something like 250. >> i'm glad you mentioned outside the u.s. because i know you actually have been looking at a lot of places outside the u.s. i know you've been hot on brazil. you talked to us about that the last time we were together. over half of your investments right now from equity international are in that country alone, brazil? >> that's correct. >> so how come -- what's going on in brazil? >> you know, it's the u.s. 1950. >> is that right? >> now it's a growing population. it's energy self sufficient. it's food self sufficient. it's growing, and they've at
least now solved the problem of inflation. and they've got a very disciplined government that is socially aggressive and fiscally conservative. >> but what kind of changes will we see as we see government changes? >> well, hopefully whoever wins this election in october -- and it appears to be the case -- both of them will continue president lula's policy. if that continues to be the case, i would think that brazil is likely to be one of the number one or two countries in the world from a growth point of view for the next five or ten years. >> whether he does valuation start to bother you? you've been such a savvy investor in real estate around the world. but a lot of people are sort of on your heels in figuring out the strength of brazil right now. has valuation become an issue yet? >> i think not yet. i mean, i -- obviously, every industry is separate. but i think that you're dealing
with -- just to give you a frame of reference. the country as a whole has about 8% debt. >> wow! >> compared to 70% for the u.s. >> unbelievable. >> so there's a lot of opportunity. there's -- in the last, i think, seven years, 23 million people have moved from the poverty level to middle income. and our whole investment philosophy in brazil has been another emerging market, focus on that aspirational population and how they get service. we're in the housing business and the retail business. we're in the distribution business in brazil. >> and of course you've got some real big catalysts coming up. olympic games in 2016, world cup in 2014. take me around the world beyond brazil. i know you have interests in china. where in asia is ideal to you? >> well, we have three companies we've invested in china. i would say china is more
difficult environment to work in than brazil. i think we've looked at and been involved in a number of other asian countries, but not with any enthusiasm. >> and is that because of government control? i mean -- >> every scenario -- every scenario is different. and in some cases, there are very strict government regulations where they have a particular objective that they're trying to achieve. that doesn't necessarily, you know, confirm or conform to the proper motive. >> are you expecting a double dip in this country? where are we in the overall economic picture? can the administration be doing anything different? >> tell me what's going to happen in november, i'll answer your question. >> let's have some hypotheticals out there. let's say the dems lose the house which is what people expect if. >> i think that would be economically positive. i think the issue in the united states today continues to be
confidence and the unpredictant of the administration. and as long as that continues to be the case, i think people are going to be very hesitant to make commitments. >> my thanks to sam zell. up next on "the wall street journal" report , remembering the past. a woman's book on the rollicking september of 2008. become a fan on facebook.
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the fall of 2008 was more than just a season. two years now since the worst economic crisis in 70 years. we're still talking about the impact. recessionistas tells the tale of the financial crisis through the eyes of the once rich and powerful. it's the novel from the president and ceo of the wall street firm lebenthal and company. alexandra lebenthal good to have you on the program. your first novel published. congratulations. i'm really excited about this and want to ask you all about it but let me start with the municipality bond market. this is of course what your firm specialized in since the 1920s. a lot of investors went there from equities as we saw this fall in the last two years. you write about the fall. are they still as safe as they were given all of the concerns about the state of states and the local municipalities? >> a couple of things have changed in the last few years, which has made municipals much more prominent in terms of the
publicity sometimes negative. it's not that they are not as safe as they once were. but when the crisis happened in 2008, bonds went down and stocks went down and severe de-leveraging as you know and that affected municipals and ultimately affected municipal bond insurance which was the wrapper that many people used to feel great comfort saying my bonds are aaa-insured. for the time being those insurance companies don't seem to have the same relevance. people need to be a lot more careful about the individual bonds that they're selecting. >> so why tell the tale of the financial crisis as chicklet as they say? you discuss both credit default swap and oscar de la renta. i don't think you could do that anywhere else. >> exactly. at some point we may have someone saying they're weighing cdl. on a website called near social diary and writing about the financial world in fictional terms. what i found is women were coming up to me and saying i love your column.
when are you going to do another one? i totally understand everything that's happened now. and i realized all of a sudden i had connected with a different type of market. it kind of went back to old lebenthal where we always were focused on communicating in plain english. but i just loved theway people reacted to the fiction and found i had an affinity for it as well. >> was it difficult addressing actual events we experienced through fictional characters? the fictional characters obviously are based on real people. >> there are a lot of composites. two of the real horrible ones are made up. i never met anyone as horrible as that but certainly there are real people in the book and it does follow real events. there is a character that is a product salesman at lehman brothers and i track his net worth over the year and that weekend and what happens when you had a loan, a margin loan on your lehman stock. i tracked that whole weekend when obviously you were taping live every minute, i would assume. and imagine what some of the other characters were doing.
i myself was getting a manicure on sunday, that afternoon, when all throughout the manicure salon everybody was talking about lehman, et cetera. >> so you're specific about the details of the new york social scene. were you ever worried about re actions? the breakfast spot that some people that you know are actually hanging out? >> i was very careful as to -- if i was going to mention a place such as the regency, which i did and i do go to quite often. i asked permission. i didn't want to bite any hands that feed me, be it breakfast, lunch or dinner as it were. >> the wall street "y" in your book are not unlikable people. you are the ceo in your family's firm at the age of 31. you don't fit that profile yourself. >> no. and there is one character in the book who is running -- she ran her own firm and then she sold it and she's realizing what it's like to have corporate parents. >> sounds familiar. >> sounds familiar. she has children and has an active life. and she's sort of your guide through the crisis and through the book.
she's a wonderful, beautiful, lovely woman. no idea who she's' based on. another one really is a fabrication but she's kind of indicative of i think a certain mindset that existed where money keeps coming in and there is an annual bonus, don't care if it cash or stock, we'll keep moving up to the next level in our lives, the next house, on the ocean, the personal assistants, all the clothing, et cetera. i do think there are a lot of people that just didn't want to believe that the crisis was happening, the world was changing and then boom reports there was bear stearns and lehman and fannie and freddie and all of a sudden it was the stark reality. >> thanks for being on the program. >> great to be here. >> congratulations on the book. alexandra lebenthal. up next a look at the news this upcoming week that will have an impact on your money. as we take a break, take a look at how the stock market ended the week.
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for more on our show and our guests check out the website wsjr.cnbc.com. you'll also find a ling to my blog investor agenda.cnbc.com. a look at stories in the week ahead that may move the markets. monday is labor day. all u.s. markets are closed in observance of the holiday. wednesday the federal reserve's
beige book will be released. that's a monthly measure of activity in the u.s. regional economies. thursday the numbers on international trade will be released by the government. the trade balance tells us if the u.s. is importing or exporting more goods. that's the show for today. thanks so much for being with us this weekend. next week a look back at two years of financial crisis, from the september weekend that changed wall street to today. each week keep it right here where wall street meets main street. have a great week, everybody. happy labor day. i'll see you again next weekend.
the kincaids live here. across the street, the padillas. ben and his family live here, too. ben's a re/max agent, and he's a big part of this community. there are lots of reasons why re/max agents average more sales than other agents. experience, certainly. but maybe it's also because they care about the markets they serve and the neighbors who rely on them. nobody sells more real estate than re/max.
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