What youre spending, and youll be fine. Okay, you know what . I think you did really well. I am very pleased with how you did. Im so pleased, im giving you all the money. [ laughter ] thank you. All right. Youre gonna make me cry. Thank you. Youre very welcome. I think ill always be a princess. I know in my head im doing it for myself now, you know . Like, theres no one watching me or testing me on anything. I have to purposely just do it for myself. Thats it. I can tell, i can tell she loves to go shop shes all out of control she cant stop designer clothes, jewels, hair shes throwing money everywhere my head is spinning head is spinning oh, oh, oh, oh shes a princess shes a princess shes a princess shes a princess modernday princess h hi, everybody. Welcome to on the money. I im maria bartiromo. We should not have to move a third bill before the senate gets off their ass and begins to do something. Everybodys not home for the weekend. Government by crisis and nothing gets done. How lit affect you . And my conversation with clive davis, the mitt hit maker who worked with everyone from johnny cash to bruce. Amazing stories from an amazing era. On the money begins right now. Announcer this is americas number one financial program. On the money. Now, maria bartiromo. Here is a look at the news. The fed is rescuing the markets and investors in testimony before congress this week. Fed chairman ben bernanke assured the market the Interest Rates will stay low. He said hes not concerned about eventually raising the rates. Markets were thrilled with the news and had their best twoday streak of the year. Dows Federal Reserve president ish rhode island archdiocese fisher said the fed is aware of what the stock market and economy are doing. We have been the source of fuel for the recovery we have had but there are limits. There is a danger of our becoming a narcotic. I call it monetary ritalin. Its served a purpose. It is a deliberate effort on behalf of the fomc to raise the market so we have a wealth effect that goes to the people. Thats part of the mandate from congress. I think its time to taper this off. The economy has grown for 14 consecutive quarters. The latest was weak. The second reading of the Gross Domestic Product was released. Revised up to a meager. 1. Some signs of consumer strength in the earnings. Lowees and home depot beat expectations as did macys. Jc penney missed by a wide margin. Telecommuting will be a thing of the past for yahoo employees. The ceo says the Company Needs a change in culture. All employees have to report to the building. Its a story of mixed signal this is week. Concerns about the mandatory spending cuts of the sequester as the market toys with new highs. Which one should you Pay Attention to . Chief investment strategist with Morgan Stanley and the chief investment strategist from politico. David, lets start with the markets. Hitting fiveyear highs this week. Amazing whats going on as the market flirts with highs. The market doesnt care about sequester. Should we . Do you think the rally holds . It will be dependent upon the four ps. Profits exceeded forecasts for the fourth quarter. Secondly, personal income. Wall street journal on friday talked about the wage growth has been anemic. Up only 2 . Third is production. That basically is the hiring. Not the wages but the hiring. Thats been relatively anemic as you know. The fourth p is politics. You hit on it with the sequester. Your Investor Base and viewing audience have to be aware of the debt downgrade by the United States. We go down maybe to aa. We are aa plus now. Or single a plus. If the profits continue strong. If hiring can pick up. Wage growth can pick up and politics dont get in the way the market can go higher. Politics has not gotten in the way. Even though we have all of this back and forth an spending cuts the market is going higher. Let me ask you. Whats the impact of the market at record highs or near record highs . Does it help the republicans who want to push for cuts or does it help the democrats . Does it put pressure on one side . It helps the republicans at this point to see a market thats not reacting negatively to the sequester that doesnt think taking 85 million out of the budget is a big deal. If the markets stay where they are and you dont see inconveniences to people its helpful to republicans. It means we get more budget cuts down the road. Harder for obama to make the argument we cant cut more spending. Its difficult for obama who said that we would see horrible impacts. Let me play you a clip. I want your reaction from paul ryan earlier this week. He downplays the impact of the sequester. Listen to this. Do we believe that the government which spends 3. 5 trillion can do with 85 billion less . Yes. Do we believe a government that spends more than 100 billion in money that shouldnt be spent could go after waste and inefficiency without raising taxes . Yes. Is it right what he said . What the democrats would say is we can cut that much money. The problem is how the cuts are implemented. They are across the board. Not targeted. Not taking out improper payments, waste, fraud and abuse. Its headstart, school lunches, stuff that matters to people. In the Defense Budget it could be a problem for National Security. Well do it in a targeted way and a balanced way. You want to eliminate the carried interest tax exception for private equity hedge funds. Take away loopholes, they call them. Its not the amount democrats are opposed to. Its the manner they are taken out and that there is no revenue included. What about the fed . This week the markets were reassured that bernanke will be there still buying bonds. The Bond Buying Program very much in place. How important is it . Is that supporting the market or is it more than that. The market was up 1 total return. Its up another 6 through friday. I find the feds help is basically supporting the markets. We need fundamentals to kick in. Hes doing the best he can. People like to criticize ben bernanke. The fed is doing the best they can. Its like a parent in the two parents are Monetary Policy and fiscal policy. One parent is exceedingly lenient and generous with gifts and candy and toys. The other is extremely stingy. I would love to see them come together. Isnt the fed bailing out the policy makers . Yeah. At this point they are. Ben bernanke has said this in his testimony. Can you, congress, please deal with your fiscal situation better than you are. He doesnt want to see the austerity the way it is being applied through sequester trags. He made it clear. He would like longterm deficit reduction that addresses Social Security and medicare which crushed us when the baby boom starts retiring. He doesnt want a lot of money coming out of the economy now. What should we do with your money today. You want to find places in this great big world where the tourniquet is released. Youre going to have monetary and fiscal accelerator pressed to the floor in japan. You want to own japanese equities. Secondly, you want to look at mexico. They are basically going to release the straight jacket they have had an the energy sector. Thats why youre drillers. You can play it through mexican equities, the big u. S. Drillers. You want to buy your u. S. Global guerillas which we talked about which are the u. S. Multinationals that sell at attractive valuations that have fortresslike balance sheets, pay dividends and Global Management focus. Thats what you want. Thank you so much. Great conversation. Ben white, david darst. Up next on the money, the changes at home and abroad due to sequester cuts and what the administrators go through to carry out the doomsday scenario. Then he worked with springsteen, whitney, aretha and more. Clive davis knows a bestseller when he hears one. Look at how the stock market ended the week. Back in a moment. Beyond washingtons debate over the march 1 automatic spending cuts those at the american agencies koing work domestically and internationally must contend with the coming cuts. Dr. Shah is the administrator of the United States agency for international development. Mary sciavo is the former Inspector General for the department of transportation. Thanks for joining us. Thank you. Raj, under the sequester the state department and u. S. Aid should see 2. 6 billion in cuts. Foreign aid accounts for 1 of the federal budget. Whats at stake as you look at the across the board cuts . Thank you, maria. First i would say my agencys mission is to advance Americas National security and Economic Prosperity by working in future emerging markets. Really what the steps we are taking to handle the sequestration challenge, as painful as they are, are consistent with your approach since we took office. We have been cutting programs and focusing on a businesslike, results oriented strategy that engages private sector companies, often Great AmericanCompanies Towards the mission of helping to build more stable and secure emerging markets. Walk us through having to administer this. Have you started to phase out programs . Whats the Immediate Impact on your work . Over the last three years we have phased out more than 300 program ps. Based on a rigorous return on investment approach to what well get as we go forward. Of course this is the international story. Lets talk about the domestic story, mary. You were Inspector General at the department of transportation during the Government Shutdown back in 1995. Give us insight into the process of managing operations while having to administer cuts. It was an entirely different attitude. I think the attitude needs to be resurrected here. We were told, look, youre a federal manager. You were hired to manage a multimillion dollar agency. For the whole multi billion agency for the d. O. T. And if you cant manage an 8 budget cut youre not a good manager. We were told to do it and make sure the American Public feel as little pinch as possible. Fou it seems to be the opposite. Everyone is saying, oh, everyone will be hurt. The bottom line in the federal aviation administration, out of 24 billion there is 11 thats exempt. 13 is subject to sequestration and omb said 1 billion will be subject to it in the end. Its not as draconian and the world wont stop. What about the cuts to the f. A. A. And the potential impact on Domestic Travellers. How will things be different if the agencies managed the cuts themselves and are you expecting a lot of upset this week given the Domestic Travel situation . No. If there is an upset we have to ask what are the federal managers doing. Remember, they had discretion within the department. Now they say they will close air Traffic Control towers. There were offers in the 90s that several air Traffic Controllers need to be shut because they are low activity. For example if they farmed out some of the towers they are threatening to cut. They have been asked to close. They have been asked to privatize. A private tower costs 500,000 a year. F. A. A. Tower costs 2 million a year. There is huge savings there. Many of the cuts have been on the books for years. This is a Market Correction for government. If approached with the right attitude they can do tremendous good for the public and the bottom line. And might come out with more discretionary funds to do things that matter like finish the next Generation AirTraffic Control program for one. I dont think the public should feel the cuts at all. If they are, its intentional. A good manager can manage an 8 cut. Very good news. So, raj, whats the big damage of the sequester drama . For far less than 1 of the federal budget we put more than 4 Million People on b aids treatment in africa. We save 220,000 children under 5 from malaria in africa. We have supported 8 million Young Children including 3 Million Girls in school in afghanistan. If we fall back on those commitments around the world, others look to america to lead. We put ourselves at a National Security risk. I felt that viscerally last week in mogadishu. I was the first u. S. Official there in more than 20 years. There is an opportunity to advance a country and to reclaim a nation from a terrorist organization that has an avowed desire to harm america and americans. Its all for less than 1 is of the budget. We do our work now in a deeply business like manner. Its a dilemma. Looking to do the right thing outside the United States when youre facing tight budgets inside the United States and wanting to do the right thing for americans as well. Thankses so much. Thank you. See you soon. Up next on the money, the man with the golden ears. Recording industry legend clive davis will join me on the business of music including what hes listening to now. Find us on facebook. Look for maria bartiromo. Back in a moment. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. If you name any of the best selling recording artists of the last few decades from di lap and springsteen to Whitney Houston and alicia keys my next guest led many of them. Clive davis was president of columbia records, founder of arista and j. His memoir is called the soundtrack of my life. That book continues to rise on the bestseller list, now hitting number two. Congratulations on the success of your career. You have worked with so many music legends at the beginning of their career when many of us didnt realize what was to come. How do you know when a musician will be a commercial hit and really connect with paying audiences . My first test, i never signed an artist before. We have to go back to the pop festival in 1967 in monterrey. I saw janis joplin and big brother and the holding company. It was the midst of a music revolution. I got that over powering feeling whether its a cliche, the tingle up your spine. I dedicated myself to signing her. I did. Then i started trusting my ear when i saw santana, bruce springsteen, earth, wind fire. I built a track record of signing artists that became halloffamers. Superstars. Did you want to go into the Music Industry from the beginning . You were a lawyer. I got there through luck. This is pure luck. I became the lawyer for columbia records. I was a lawyer for five years. One day, my boss first offered me the Musical Instruments division because he was becoming a group president. By luck, his executive Vice President wanted that, looked at me and he said, okay. Youre going to have columbia records. It happened just like that. What a career. So what happened . You have seen so much. What happened when apple came on the scene . Technology changed so much about how consumers interact with music. Digital music sales replacing actual purchases. I cant remember the last time i saw a record store. My personal work hasnt changed at all. I have to find the stars of tomorrow. Whatever the form of delivery is. Whether it was the cassette, cd or digital. But the record industry was late in embracing the digital revolution. So regretfully, there was a substantial number of people in the public who thought they could get music free. Instead of coming up with a legal way to make this happen, it was illegal. Its been illegal. There is a lot of piracy and thats affected you. For me, is this one of the case where is the underlying business is made obsolete by technology . No way. Music is as vital today as its ever been. So gradually, as we root out piracy. As we embrace the revolution, this year for the first time, records, worldwide sell more than the last year. I know we are making progress. But we were hurt for a few years. Who are the big stars today . Adele from a Commercial Point of view, you know, is the biggest. Her album would sell 22 million worldwide. Unbelievable. I have a grammy party every year the night before the grammys. This year i wanted to show the vitality of new artists. I put on miguel, the lumineers and as a duet Jennifer Hudson with Gladys Knight doing i heard it through the gram vipev do you subscribe to screaming services . I listen to streaming. Im aware of everything. But i have to worry about going over the hill. I have been fortunate. Every week i take a tape of a record that just hit the charts so my ears dont go over the hill. I have seen too many peers rooted in the songs and tempo of yesterday. You have to keep up. Ive got to keep up. Not all the response to the book has been positive. What about Kelly Clarkson . She took issue with your comments about her. Has there been a reaction to the opening up in this book thats surprised you . No. Kelly, we had a difference of opinion on memory, what my reaction was to one of her songs, what her reaction was to two of my songs. Quite to the contrary. In the industry, everybody gives for every employee whether its entertaining, b educational, revealing. The reception has been spectacular. Clive davis, a music legend. Up next, a look at the news that will have an impact on the money. And how do you plan for retirement. A look at Pope Benedicts nest egg when we come back. Weve worked hard to keep it. Bp has paid over twentythree billion dollars to help people and businesses who were affected, and to cover cleanup costs. Today, the beaches and gulf are open for everyone to enjoy and many areas are reporting th