Transcripts For KQED Nightly Business Report 20130119 : vima

Companies and i think 2013 will be a big year in which companies that have yet to go public in that space will do so. Reporter there are also several Big Technology companies that investors hope will go public. One is twitter. Although many i. P. O. Experts dont think that will happen this year. Another possibility is squarea mobile Payments Company founded by the man who created twitter. And, finally dropbox, a web based file hosting service. But, its understandable that Many Companies are approaching the i. P. O. Market cautiously. Theyre wary of becoming the next facebook with a stock price thats still well below mays offering price. Erika miller, n. B. R. , new york. Susie it took a long time for norwegian cruise lines to make the big decision to go public. Since the 1990s, it attempted several times to do an i. P. O. , but pulled back. When i talked with c. E. O. Kevin sheehan today, i asked him why he felt that the time was finally right. Its always a lot of pluses and minuses of being a public company, as you know, but at some point, we needed to take this step. And we thought this was the perfect time, you know, washington resolved its situation, and now we move into the new year feeling a little bit more comfortable that things are resolved. Susie so, kevin, how do you feel about the Stock Performance today . Year, its fantastic. You always want to have some wind at your back and see the stock perform well. We priced the ipo at 19, and, you know, i kind of thought wed be in the 2223 range, but when people run the numbers on this business it is an unbelievable story over the coming years, and i think a lot of people got it. Susie so do you feel by going public that this gives norwegian a better shot at getting market share from royal caribbean. Its not market share. That works counterintuitive because that restricts the pricing and gets into a very competitive landscape. When i was running avis, we were only as strong as our weakest competitor competitors and when one of the other players dropped their prices eventually you had to bring it down. I think allowing the industry to grow smartly and each of us in their own way keeps everybody away from thinking somebody is trying to make a market share grab. Susie this is such a competitive business and you do have big rifles. What does it take to win in this market . You know, its very interesting to watch the transformation of the company when i came in. We werent considered seriously pie the other players to where they are now look at everything we do and were the hot company, in my exprurk people want to come work furst and nobody wants to leave us. Susie what makes norwegian such a hot company . The north wegz brack away will be docking in new york. And Michael Bloomberg said this is a big deal. It really is. We have three broadway shows and edgy stuff that will give consumers another look at cruising. Susie so how is the cruise business these gays . Given the weak economy, how are bookings . You know, were feeling pretty good. Were filling our ships every single week with consumers that are having a ball and going off the ships and talking to their friends and neighbors and thats whats driving us gluldz you do interact a lot with consumers, whats your take on consumers . Are they willing to spend money to go on a vacation or are stay teastill cautious they dont want to splurge on a big trip . I think consumers have had a tough run and now they know what their tax situation is of for 2013 based on what happened in washington recently, and the ones work say i have nigh job, Interest Rates are low. Its not that bad. I want to take my vacation. Susie is business Strong Enough that youre going to add some jobs and what are your hiring plans . Every time we launch a new ship, it brings on a lot more employees. Were 20,000 strong at this point. And if you think about there are a couple of thousand that come along with each new ship were building in the future here. Susie kevin, thank you so much. Great talking with you. Appreciate it, take care. Reporter still ahead, more than half a Million People are expected to converge on washington this weekend for the president s inauguration. Well take a look at the economic impact. Tom u. S. Stocks were little changed, despite a big jump in growth in china. Chinas economy rose by nearly 8 during the last three months of 2012, up half a percent from the previous quarter. Still, for the year, chinas posted its weakest annual performance since the 1990s. On wall street the dow rose 53 points, the nasdaq fell one point, the s p up five points. For the week, the dow and the s p were the big gainers, both up 1 or more. The nasdaq up just 0. 3 on the week. Susie House Republicans have an inauguration gift for president obama. Theyre offering up a compromise on the debt ceiling a three month increase in the federal borrowing limit. Its expected to come to the house floor next week, but it comes with strings attached. The proposal includes a condition that house and Senate Lawmakers pass a budget blueprint for the coming year or go without pay. House majority leader eric cantor said its simple. Congress shouldnt be paid for failing to do its job. Tom next week 80 companies are scheduled to turn in their latest Quarterly Financial report cards. But rather than the shortterm focus on the bottom line, our next guest thinks businesses need to consider all stakeholders, not just shareholders. John mackey is the cofounder and coc. E. O. Of whole foods market. Hes author of Conscious Capitalism liberating the heroic spirit of business. John, why is concentrating on shareholders a myth as you call it . I dont know if concentrating on shareholders is a myth. I mean, most companies do concentrate on their shareholders. Its just not the best business strategy. Because you have an interdependent stakeholder system where you need to create value for all of the stakeholders, and that will also create value for your investors or shareholders. For example, at whole foods market, we have to create value for our team members. If theyre happy and fulfilled in their work, then they will take care of our customers better and that will result in them being happy alcohol result in the investors being happy. Happy team members result in happy cut can mers which result in happy investors. Theyre all interdependent on one another. Tom is that the priority you put the stakeholders in, employees over customers over shareholders . I kind of think you have to pretty much equally pryor tietz customers and your employees as the most important stakeholders, followed probably by investors, then suppliers, larger communities and the environment. Theyre all important. They all need to be taken into consideration. But i think the real secret sauce to a successful conscious business is prioritizing customers and employees. Tom one thing you have to deal with when talking about prioritizing customers is retail prices. Food prices specifically. You deal with these every day directly. Food inflation is moderated certainly from the big yearoveryear increases we saw in 2011. Its been volatile, though. So how do you deal with that for your stakeholders, for your customers . Theres not honestly, theres not that much you can do about it because if your raw cost goes up, you sort of have to pass those on. And i mean, i always think people misunderstand inflation because its really just the currency depreciating and working its way out through all the different sections. If the federal government increases the money supply faster than productivity youre going to see inflation. And thats what were seeing in food right now because the feds been increasing the money supply greatly. Tom john, let me ask you about the investor class as a stakeholder. Whole foods stock is up 16 year over year. Is the stock price the clearest expressionave Company Value . Maybe not always in the short term. I think as ben graham once said, in the short term the stock market is a voting machine. But in the long run, its a weighing machine. So i do think sometimes stock prices get out of whack from the Intrinsic Value of a company. But it tend to correct itself. So it can swing wildly in one direction or the other but it will correct itself. So i dont know its certainly an important indicator. I dont know if its the best indicator. But you need to Pay Attention to it if youre a public company. Tom you certainly do, as you do, certainly, as want coc. E. O. Of whole foods. John mackey, the coauthor of Conscious Capitalism. Susie president obama will take the oath of office for his second term monday afternoon, while the crowds this time around will likely be smaller, washington is still ready for the expected boost in spending. Ruben ramirez reports. Reporter the review stands are up. The porta potties are ready. The fencing has been erected. The president ial inauguration is washingtons biggest event. But, unlike 2009s inauguration which drew nearly two Million People to washington, this years festivities are expected to draw just half that. This time around i think we are going to get a lot of people that did not come in 2009 simply because they were concerned about the fact that we had a Record Number of people in the city. Reporter its not just the swearing in ceremony. There will also be 40 inaugural balls around the city and, hotels, like the george are ready. We have cufflinks, we have steamers and people who can service that. We even have bowties and a concierge that knows how to tie a bow tie. Reporter the george is sold out. But hotels and restaurants arent the only ones that will see a spike in business. Limo services and Laundry Services because all the table clothes, all the linens that have to be laundered so those businesses get a huge boost this time of year. Reporter its a time, which is usually quite for d. C. s tourism industry. At the end of the day, its about economists, about people spending money in the district and creating jobs. Reporter hotels have tripled rates and restaurants are on waitlist. Those looking for last minute deals will likely be disappointed. Rates for us are very competitive for the market and just based on our location we are going to do just as good as we did in the previous inaugurations. Reporter while the number of people visiting the nations capitol for mondays inauguration is expected to be lower than in 2009, the turnout is expected to be the biggest ever for a second inauguration. Ruben ramirez, n. B. R. , washington. Tom this was the last trading day of president obamas first term and a lateday push helped the major stock indices close higher. The s p 500 spent the morning in the red, before moving higher in the final 40 minutes of the session. The small gain was enough to put the index at a new five year high. Volume was much stronger. 983 million shares on the big board. Almost 1. 9 billion on the nasdaq. The industrial sector saw the strongest buying interest up 1 . The energy and utility sectors both were higher by 0. 9 earnings were in focus with plenty of attention on general electric. The conglomerate earned 44 cents per share, a penny better than estimates and up from a year ago. G. E. Said demand from china and other emerging economies helped offset the uncertainty with customers in the u. S. And europe. Shares gained 3. 5 . Volume tripled with the stock closing above 22 for the First Time Since october. G. E. Said boeing has not changed its delivery schedule for g. E. Jet engines used on the 787 dreamliner jet. Investment Bank Morgan Stanley had a much stronger than anticipated end to the year with Investment Banking and trading revenues up sharply. That helped the company earn 45 cents per share, reversing a year ago loss and well above what was expected. The bank has been trying to shift its business away from trading for its own behalf into more of a Wealth Advisory and clientfocused model. Shares rallied 7. 9 . Volume tripled as the stock sits at 17 month highs. Like other investment banks, Morgan Stanley has been helped out by companies raising money by issuing debt and using Morgan Stanley to help find buyers of those Corporate Bonds. Elsewhere in finance, American Express fell 1. 6 . Fourth quarter earnings were only about half of what they were a year ago. Credit card Company Capital one was down 7. 5 as earnings and revenues came up short of wall street estimates. Intel also saw a swift reaction to its earnings last night. Profits were down as the Company Continues seeing fewer sales of semiconductors for traditional computers. Shares fell hard, down 6. 3 . Among the concerns, stepped up spending by intel and the pressure than could put on short term earnings. Four of the five most actively traded Exchange Traded products were higher. The volatility note fell more than 6 with the broad market continuing to trade in a narrow range. And thats tonights market focus. Tom the stock market may be hovering near five year highs but tonights market monitor warns now is not the time to get real aggressive. Jason pride is director of Investment Strategy at Wealth Management firm glenmede. Jason, what makes you concerned about investors taking too much risk, even with the rally weve seen . Theres reason to be constructive about the economy and the markets. We have seen an improvement in the risks out there. Were seeing growth in the overall economy, but still, were in a period of deleveraging. Were still having to deal with a lot of the excess debt sitting out there. The levels will of debt if there were a destruction, it would be hard for us to deal with. You have to have some caution or condition about how it will ultimately play out during the longer term time frame building some defense into your portfolio makes sense displom youre doing that by going with Phillip Morris international. A nice yield of 4 . Thats a bit protective. And a stock price at close to 90 a share. What do you expect over the next 12 months . This is our broad theme of moving into the middle, taking away from the most risky equityes, taking away from the most defensive cash and treasury investments. That means being more defensive in equity. Its a quality growth dividend growth, stable business where the revenues will not move around a lot in different economic environments but because of their high profit margins, theyre able to generate a good amount of investment returns for us through the period. We think thats an ideal investment, preferg to be in the middle of the risk spectrum not on the two extremes. Tom are you willing to give up a littlibility of the volatility. In other words, do you expect Phillip Morris to keep pace with the overall market this year or do better or worse . Its not our intention to have Phillip Morris by itself keep pace just with the equity markets. Remember, this is a lower risk investment. Has some fixed incomelike qualities to it. It should be more stable through the period. If it delivers a competitive return to the mark, not necessarily outpacing it in an upward surge, that will be acceptable to us. While were taking less risk in equity, we want to take more risk in fixed income, squeezing into the middle of the risk spectrum for investors gloment same strategy you had when you were with us july 13. You were looking at big consumer goods, colgate palmolive, up 3. 4 , add a dividend on top of that. And highyield Corporate Bond Exchange Traded fund to illustrate your affinity for junk debt, hyg, the ticker, up 4 plus the dividend pup still like these . We still like them. We still have holdings in both of them generally in both of them. We dont have direct exposure to the indix. We tend to do that in our own priority funds. The idea is still there. Last year, we got a bigger bang for our buck from that fixed income risk taking than from the defensiveness in equities. But that could either way, and we think that focus on the middle of the risk spectrum is advantageous versus the two extremes of traditional equities. Tom you mentioned you dont have direct exposure to the highyield Exchange Traded funds. What about the two equity uz mentions . The two equities we are direct exposure to. Our Friday Market monterguest is jason pride. Thanks for having me. Susie between twitter and facebook, the way we communicate keeps evolving. This week lous been thinking about connecting versus social networking. Heres author and educator lou heckler. There was this story in our local paper a while back. A married couple was sitting on a love seat in their home, virtually kneetoknee. Each had a laptop computer and they were typing. The interviewer asked them what they were doing. The answer were arguing about something and were doing it so our friends can be part of the discussion. Is that really connecting in the way all these social networks are supposed to help us do . Funny, isnt it . We have the power to be more electronically networked than ever before, but are we really connected . When we ask someone today if they have lots of friends, do they answer with actual, physical friends or electronic friends . Im not in the 2535 demographic, so maybe i see things differently. To me, connection comes from finding an area of common interest; exploring that interest with others and physical contact with one another. If i read something online about a friend and want to talk with them about it, i call them. I want to hear their voice, feel their emotion, share their joy or pain. Ill keep networking, but what i really want to do is connect. Im lou heckler. Susie monday on n. B. R. , with the markets closed for the Big Technology<\/a> companies that investors hope will go public. One is twitter. Although many i. P. O. Experts dont think that will happen this year. Another possibility is squarea mobile Payments Company<\/a> founded by the man who created twitter. And, finally dropbox, a web based file hosting service. But, its understandable that Many Companies<\/a> are approaching the i. P. O. Market cautiously. Theyre wary of becoming the next facebook with a stock price thats still well below mays offering price. Erika miller, n. B. R. , new york. Susie it took a long time for norwegian cruise lines to make the big decision to go public. Since the 1990s, it attempted several times to do an i. P. O. , but pulled back. When i talked with c. E. O. Kevin sheehan today, i asked him why he felt that the time was finally right. Its always a lot of pluses and minuses of being a public company, as you know, but at some point, we needed to take this step. And we thought this was the perfect time, you know, washington resolved its situation, and now we move into the new year feeling a little bit more comfortable that things are resolved. Susie so, kevin, how do you feel about the Stock Performance<\/a> today . Year, its fantastic. You always want to have some wind at your back and see the stock perform well. We priced the ipo at 19, and, you know, i kind of thought wed be in the 2223 range, but when people run the numbers on this business it is an unbelievable story over the coming years, and i think a lot of people got it. Susie so do you feel by going public that this gives norwegian a better shot at getting market share from royal caribbean. Its not market share. That works counterintuitive because that restricts the pricing and gets into a very competitive landscape. When i was running avis, we were only as strong as our weakest competitor competitors and when one of the other players dropped their prices eventually you had to bring it down. I think allowing the industry to grow smartly and each of us in their own way keeps everybody away from thinking somebody is trying to make a market share grab. Susie this is such a competitive business and you do have big rifles. What does it take to win in this market . You know, its very interesting to watch the transformation of the company when i came in. We werent considered seriously pie the other players to where they are now look at everything we do and were the hot company, in my exprurk people want to come work furst and nobody wants to leave us. Susie what makes norwegian such a hot company . The north wegz brack away will be docking in new york. And Michael Bloomberg<\/a> said this is a big deal. It really is. We have three broadway shows and edgy stuff that will give consumers another look at cruising. Susie so how is the cruise business these gays . Given the weak economy, how are bookings . You know, were feeling pretty good. Were filling our ships every single week with consumers that are having a ball and going off the ships and talking to their friends and neighbors and thats whats driving us gluldz you do interact a lot with consumers, whats your take on consumers . Are they willing to spend money to go on a vacation or are stay teastill cautious they dont want to splurge on a big trip . I think consumers have had a tough run and now they know what their tax situation is of for 2013 based on what happened in washington recently, and the ones work say i have nigh job, Interest Rates<\/a> are low. Its not that bad. I want to take my vacation. Susie is business Strong Enough<\/a> that youre going to add some jobs and what are your hiring plans . Every time we launch a new ship, it brings on a lot more employees. Were 20,000 strong at this point. And if you think about there are a couple of thousand that come along with each new ship were building in the future here. Susie kevin, thank you so much. Great talking with you. Appreciate it, take care. Reporter still ahead, more than half a Million People<\/a> are expected to converge on washington this weekend for the president s inauguration. Well take a look at the economic impact. Tom u. S. Stocks were little changed, despite a big jump in growth in china. Chinas economy rose by nearly 8 during the last three months of 2012, up half a percent from the previous quarter. Still, for the year, chinas posted its weakest annual performance since the 1990s. On wall street the dow rose 53 points, the nasdaq fell one point, the s p up five points. For the week, the dow and the s p were the big gainers, both up 1 or more. The nasdaq up just 0. 3 on the week. Susie House Republicans<\/a> have an inauguration gift for president obama. Theyre offering up a compromise on the debt ceiling a three month increase in the federal borrowing limit. Its expected to come to the house floor next week, but it comes with strings attached. The proposal includes a condition that house and Senate Lawmakers<\/a> pass a budget blueprint for the coming year or go without pay. House majority leader eric cantor said its simple. Congress shouldnt be paid for failing to do its job. Tom next week 80 companies are scheduled to turn in their latest Quarterly Financial<\/a> report cards. But rather than the shortterm focus on the bottom line, our next guest thinks businesses need to consider all stakeholders, not just shareholders. John mackey is the cofounder and coc. E. O. Of whole foods market. Hes author of Conscious Capitalism<\/a> liberating the heroic spirit of business. John, why is concentrating on shareholders a myth as you call it . I dont know if concentrating on shareholders is a myth. I mean, most companies do concentrate on their shareholders. Its just not the best business strategy. Because you have an interdependent stakeholder system where you need to create value for all of the stakeholders, and that will also create value for your investors or shareholders. For example, at whole foods market, we have to create value for our team members. If theyre happy and fulfilled in their work, then they will take care of our customers better and that will result in them being happy alcohol result in the investors being happy. Happy team members result in happy cut can mers which result in happy investors. Theyre all interdependent on one another. Tom is that the priority you put the stakeholders in, employees over customers over shareholders . I kind of think you have to pretty much equally pryor tietz customers and your employees as the most important stakeholders, followed probably by investors, then suppliers, larger communities and the environment. Theyre all important. They all need to be taken into consideration. But i think the real secret sauce to a successful conscious business is prioritizing customers and employees. Tom one thing you have to deal with when talking about prioritizing customers is retail prices. Food prices specifically. You deal with these every day directly. Food inflation is moderated certainly from the big yearoveryear increases we saw in 2011. Its been volatile, though. So how do you deal with that for your stakeholders, for your customers . Theres not honestly, theres not that much you can do about it because if your raw cost goes up, you sort of have to pass those on. And i mean, i always think people misunderstand inflation because its really just the currency depreciating and working its way out through all the different sections. If the federal government increases the money supply faster than productivity youre going to see inflation. And thats what were seeing in food right now because the feds been increasing the money supply greatly. Tom john, let me ask you about the investor class as a stakeholder. Whole foods stock is up 16 year over year. Is the stock price the clearest expressionave Company Value<\/a> . Maybe not always in the short term. I think as ben graham once said, in the short term the stock market is a voting machine. But in the long run, its a weighing machine. So i do think sometimes stock prices get out of whack from the Intrinsic Value<\/a> of a company. But it tend to correct itself. So it can swing wildly in one direction or the other but it will correct itself. So i dont know its certainly an important indicator. I dont know if its the best indicator. But you need to Pay Attention<\/a> to it if youre a public company. Tom you certainly do, as you do, certainly, as want coc. E. O. Of whole foods. John mackey, the coauthor of Conscious Capitalism<\/a>. Susie president obama will take the oath of office for his second term monday afternoon, while the crowds this time around will likely be smaller, washington is still ready for the expected boost in spending. Ruben ramirez reports. Reporter the review stands are up. The porta potties are ready. The fencing has been erected. The president ial inauguration is washingtons biggest event. But, unlike 2009s inauguration which drew nearly two Million People<\/a> to washington, this years festivities are expected to draw just half that. This time around i think we are going to get a lot of people that did not come in 2009 simply because they were concerned about the fact that we had a Record Number<\/a> of people in the city. Reporter its not just the swearing in ceremony. There will also be 40 inaugural balls around the city and, hotels, like the george are ready. We have cufflinks, we have steamers and people who can service that. We even have bowties and a concierge that knows how to tie a bow tie. Reporter the george is sold out. But hotels and restaurants arent the only ones that will see a spike in business. Limo services and Laundry Services<\/a> because all the table clothes, all the linens that have to be laundered so those businesses get a huge boost this time of year. Reporter its a time, which is usually quite for d. C. s tourism industry. At the end of the day, its about economists, about people spending money in the district and creating jobs. Reporter hotels have tripled rates and restaurants are on waitlist. Those looking for last minute deals will likely be disappointed. Rates for us are very competitive for the market and just based on our location we are going to do just as good as we did in the previous inaugurations. Reporter while the number of people visiting the nations capitol for mondays inauguration is expected to be lower than in 2009, the turnout is expected to be the biggest ever for a second inauguration. Ruben ramirez, n. B. R. , washington. Tom this was the last trading day of president obamas first term and a lateday push helped the major stock indices close higher. The s p 500 spent the morning in the red, before moving higher in the final 40 minutes of the session. The small gain was enough to put the index at a new five year high. Volume was much stronger. 983 million shares on the big board. Almost 1. 9 billion on the nasdaq. The industrial sector saw the strongest buying interest up 1 . The energy and utility sectors both were higher by 0. 9 earnings were in focus with plenty of attention on general electric. The conglomerate earned 44 cents per share, a penny better than estimates and up from a year ago. G. E. Said demand from china and other emerging economies helped offset the uncertainty with customers in the u. S. And europe. Shares gained 3. 5 . Volume tripled with the stock closing above 22 for the First Time Since<\/a> october. G. E. Said boeing has not changed its delivery schedule for g. E. Jet engines used on the 787 dreamliner jet. Investment Bank Morgan Stanley<\/a> had a much stronger than anticipated end to the year with Investment Banking<\/a> and trading revenues up sharply. That helped the company earn 45 cents per share, reversing a year ago loss and well above what was expected. The bank has been trying to shift its business away from trading for its own behalf into more of a Wealth Advisory<\/a> and clientfocused model. Shares rallied 7. 9 . Volume tripled as the stock sits at 17 month highs. Like other investment banks, Morgan Stanley<\/a> has been helped out by companies raising money by issuing debt and using Morgan Stanley<\/a> to help find buyers of those Corporate Bond<\/a>s. Elsewhere in finance, American Express<\/a> fell 1. 6 . Fourth quarter earnings were only about half of what they were a year ago. Credit card Company Capital<\/a> one was down 7. 5 as earnings and revenues came up short of wall street estimates. Intel also saw a swift reaction to its earnings last night. Profits were down as the Company Continues<\/a> seeing fewer sales of semiconductors for traditional computers. Shares fell hard, down 6. 3 . Among the concerns, stepped up spending by intel and the pressure than could put on short term earnings. Four of the five most actively traded Exchange Traded<\/a> products were higher. The volatility note fell more than 6 with the broad market continuing to trade in a narrow range. And thats tonights market focus. Tom the stock market may be hovering near five year highs but tonights market monitor warns now is not the time to get real aggressive. Jason pride is director of Investment Strategy<\/a> at Wealth Management<\/a> firm glenmede. Jason, what makes you concerned about investors taking too much risk, even with the rally weve seen . Theres reason to be constructive about the economy and the markets. We have seen an improvement in the risks out there. Were seeing growth in the overall economy, but still, were in a period of deleveraging. Were still having to deal with a lot of the excess debt sitting out there. The levels will of debt if there were a destruction, it would be hard for us to deal with. You have to have some caution or condition about how it will ultimately play out during the longer term time frame building some defense into your portfolio makes sense displom youre doing that by going with Phillip Morris<\/a> international. A nice yield of 4 . Thats a bit protective. And a stock price at close to 90 a share. What do you expect over the next 12 months . This is our broad theme of moving into the middle, taking away from the most risky equityes, taking away from the most defensive cash and treasury investments. That means being more defensive in equity. Its a quality growth dividend growth, stable business where the revenues will not move around a lot in different economic environments but because of their high profit margins, theyre able to generate a good amount of investment returns for us through the period. We think thats an ideal investment, preferg to be in the middle of the risk spectrum not on the two extremes. Tom are you willing to give up a littlibility of the volatility. In other words, do you expect Phillip Morris<\/a> to keep pace with the overall market this year or do better or worse . Its not our intention to have Phillip Morris<\/a> by itself keep pace just with the equity markets. Remember, this is a lower risk investment. Has some fixed incomelike qualities to it. It should be more stable through the period. If it delivers a competitive return to the mark, not necessarily outpacing it in an upward surge, that will be acceptable to us. While were taking less risk in equity, we want to take more risk in fixed income, squeezing into the middle of the risk spectrum for investors gloment same strategy you had when you were with us july 13. You were looking at big consumer goods, colgate palmolive, up 3. 4 , add a dividend on top of that. And highyield Corporate Bond<\/a> Exchange Traded<\/a> fund to illustrate your affinity for junk debt, hyg, the ticker, up 4 plus the dividend pup still like these . We still like them. We still have holdings in both of them generally in both of them. We dont have direct exposure to the indix. We tend to do that in our own priority funds. The idea is still there. Last year, we got a bigger bang for our buck from that fixed income risk taking than from the defensiveness in equities. But that could either way, and we think that focus on the middle of the risk spectrum is advantageous versus the two extremes of traditional equities. Tom you mentioned you dont have direct exposure to the highyield Exchange Traded<\/a> funds. What about the two equity uz mentions . The two equities we are direct exposure to. Our Friday Market<\/a> monterguest is jason pride. Thanks for having me. Susie between twitter and facebook, the way we communicate keeps evolving. This week lous been thinking about connecting versus social networking. Heres author and educator lou heckler. There was this story in our local paper a while back. A married couple was sitting on a love seat in their home, virtually kneetoknee. Each had a laptop computer and they were typing. The interviewer asked them what they were doing. The answer were arguing about something and were doing it so our friends can be part of the discussion. Is that really connecting in the way all these social networks are supposed to help us do . Funny, isnt it . We have the power to be more electronically networked than ever before, but are we really connected . When we ask someone today if they have lots of friends, do they answer with actual, physical friends or electronic friends . Im not in the 2535 demographic, so maybe i see things differently. To me, connection comes from finding an area of common interest; exploring that interest with others and physical contact with one another. If i read something online about a friend and want to talk with them about it, i call them. I want to hear their voice, feel their emotion, share their joy or pain. Ill keep networking, but what i really want to do is connect. Im lou heckler. Susie monday on n. B. R. , with the markets closed for the Martin Luther<\/a> king junior holiday, we bring you an n. B. R. Special edition u. S. Innovation. America has a long history as the worlds leading innovator. But what will it take to stay competitive and remain a beacon of innovation . Suzanne pratt has the story. Reporter the u. S. Has put the world behind the wheel and an iphone in millions of pockets. But, we may be losing our competitive edge. Some say its because americas fragile economy is a distraction for corporate america. Others point to our inferior infrastructure and subpar public education. But, adam segal senior fellow at the council on Foreign Relations<\/a> and author of advantage says the big problem is others are gaining ground. We have been running in place for the last three or four years because of the recession, spending on r d, and big ideas seem to be fairly scarce. While china just continues to funnel more and more money into it. Reporter still many argue the u. S. Will always be extremely competitive because we are the most innovative place in the world. What better place to witness innovation at work here at ibm in Westchester County<\/a> new york. This is the home of watson, big blues super computer. Watson was clever enough to beat jeopardy champions at their own game just a few years ago. Now, i. B. M. Researchers are working on new uses for the brianiac computer, particularly in the field of medicine. Bernie meyerson calls himself i. B. M. s head geek. He says innovation is critical for companies and societies to survive and thrive. And, yes, there is a magic ingredient. Continuity. In the down cycles of the economy the temptation is always, well, well just cut the front end, we wont do our research, were not going to work on development. So you empty the pipe. Then when the economy turns and it always turns, when that economy turns you have nothing in the pipe. And, people run you over out of the gate. Reporter but, not all innovation happens in multibillion dollar labs. Here in manhattans fashion district, www. Ilikewhatyourwearing. Com is trying to ignite a fashion revolution. Started by olivia gossett, the website sells cutting edge clothing by rising designers. But, its also an online magazine one that uses cute articles to sell products and foster those independent designers. I think were opening up gateways in the industry for other people that otherwise wouldnt have a chance to make a name for themselves. You know you see the same dress on four different websites for four different prices from the same label and youre left kind of wondering isnt their more out there. Reporter ilwyw. Com may not help cure for cancer, but it might create jobs. And, its part of a push by new york citys borough president Scott Stringer<\/a> to make the big apple a destination for start ups. What he calls the innovation economy. How we take advantage of it will define the economic success of this city at a very interesting time in our history, after 9 11 post hurricane, dealing with infrastructure challenges and budget deficits and we need to expand our tax base and we need to take advantage of whats happening right now. Reporter exactly how we take advantage is ripe for debate. But, most agree better education and visas for the scientists we train in the u. S. Is a good start. And, remember what i. B. M. s myerson said about continuity its just as important to a country, as it is to a company. The moment you believe there is no danger of losing your edge is when it disappears on you. Reporter suzanne pratt, n. B. R. , at the Watson Research<\/a> center. Susie be sure to join us on monday for our special edition on american innovation. Thats it for us this friday evening. Have a great weekend everyone. You, too, tom. Tom goodnight, susie. Well see you online at nbr. Com and back here monday night. Captioning sponsored by wpbt captioned by Media Access Group<\/a> at wgbh access. Wgbh. Org comprehensive Immigration Reform<\/a> and gun control take front and center on the political stage. With preparations for the president ial inauguration under way in washington, scott shafer reports from the Nations Capital<\/a> where hes been talking to california lawmakers about their hopes for legislation. Theres got to be some way for the 11 Million People<\/a> who are here without their papers to somehow get right with the law. Whats next for the debate in congress . As the debt ceiling hovers over head . Plus governor jerry brown up close and personal. In an exclusive interview with pbs newshours spencer michels. It drives me crazy when people say, you havent done anything. Should we cut the colleges more and pump it into the prisons . 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