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YOUR MONEY

Interview with Carly Fiorina; Stock Market Volatility Assessed; Celebrity Twitter Endorsements Analyzed

Aired June 29, 2013 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, HOST: All right, Americans are ready to get back to work, so what's holding them back? I'm Christine Romans. This is "YOUR MONEY."

The question that confounds this recovery, where is the job's boom? We want answers and that's why Carly Fiorina is here. From secretary for a small business to "Fortune's" most powerful woman in business six years in a row, it would take a whole show to go through her entire resume. Today you're the chairman of a charitable organization Good360. You were CEO of Hewlett-Packard. You know what it takes to create jobs and you know what it's like to lose them.

I want to talk a little bit about what we do right now to create jobs. For example, the Obama campaign said that they would create 12 million jobs in four years. That's actually a promise or a claim that Romney campaign came up with first. The Obama campaign said they could do it. This is what you would have to do to do that. You would have to have 250,000 jobs per month over the next 48 months. You can see we're not there yet.

You had advised John McCain in 2008 to ask you to do this right now. If you were advising President Obama how to create jobs, how to make that promise by the end of his first term, what would you tell him to do?

CARLY FIORINA, CHAIRMAN GOOD360: It's not sacrilege because he is all of our president and we want the country to succeed. We have a structural problem now called small business. Right now there are more small businesses failing and fewer starting that at any time in the last 40 years. And that's important because small and new businesses creating about two-thirds of the new jobs in this country and they hire about -- they employ about half the people. So when you have small business flat on its back, that's a big problem.

ROMANS: So tell the president how to fix it.

FIORINA: First we must lower our tax rates and vastly simplify the tax code. This really should be a bipartisan cry because Simpson-Bowles said the same thing.

ROMANS: Do you think the tax code right now favors the big companies who can have very well-paid multi-million-dollar tax accountants?

FIORINA: Absolutely. Washington works well for big business, big government, and big labor. But it doesn't work will for small business because when you have a 2,600 page tax code and all these loopholes, small businesses, a, don't understand it, b, can't take advantage it, and, c, the rate is uncompetitive. It's the highest in the world.

ROMANS: So big businesses don't pay the high tax rate but the small businesses do.

FIORINA: The small businesses do, or they're filing under personal tax rates, and those are going up as well, have gone up. So they're getting hit both ways.

Second, credit isn't flowing to small businesses, still. And third, 70 percent of small businesses say government is hostile to them. If you ask them why, they say, I don't understand how to get started anymore. The regulatory thicket is choking the entrepreneurial life out of the economy.

In fairness, regulations have been growing year after year after year after year after year for 25 years. We literally have a thicket of regulations now. No one ever repeals a regulation, but lots of people add to them.

ROMANS: So fixing jobs is fixing the small business environment.

FIORINA: Yes. I think so.

ROMANS: I want to ask you something else that's been -- for years companies have been moving forward with same-sex spousal benefits and same-sex couple benefits.

FIORINA: We did it when I was at Hewlett-Packard way back in 2000.

ROMANS: Even long before DOMA was addressed by the Supreme Court, you had briefs that hundreds of companies were signing onto about the same-sex marriage situation. This week we saw the Supreme Court make it possible for same-sex married couples to access federal marriage benefits.

In terms of business reaction -- two different reactions. This from the Chick-fil-A president Dan Cathy on Twitter. He said "Sad day for our nation. Our founding fathers would be ashamed of our nation to abandon wisdom of the ages, the cornerstone of strong societies." They quickly deleted that tweet. Chick-fil-A, of course, no stranger to the gay marriage issue.

On the other hand, you have Goldman Sachs, the big investment bank, they're flying the rainbow flag in response. Is it appropriate for companies to be weighing in on this debate?

FIORINA: Well, in some ways companies have already weighed in on the debate because they have provided benefits for same-sex couples. On the other hand, I think this is an issue where clarity is helpful, so now the Supreme Court is giving us some clarity. But it's clearly also an incredibly emotional and personal issue for so many people. My own view is the states ought to vote on this, vote on marriage, but the Supreme Court has spoken in terms of benefits. So let's move on. ROMANS: So a big conversation among women in corporate America and women at work is sort of this lean-in conversation. Cheryl Sandburg, Marissa Myer, she's not even 40 yet, she's running a fortune. Before there was these women leaning in, there was you. You're a very big role model. They probably wouldn't be where they are if it weren't for women like Carly Fiorina who are blazing the trail for them.

And I'm wondering if you think women now, this younger generation, these gen-y women, maybe they are going to decide they can start their families earlier, right, they can get married earlier, because it's not going to hold them back from a career because they're seeing families play out on the corporate stage.

FIORINA: I certainly hope that's the case. I hope that young women coming up say, you know what, I'm in charge of my own life and I'm going to make my own choices about how to balance these things. I think it's still true that the work-life balance issue is more complicated for women than it is for men.

ROMANS: I like to call the work-life imbalanced. It's never really in balance.

FIORINA: Exactly, and there is no silver bullet. But the thing I notice about women, say, coming up -- I have two granddaughters now, you know, and they don't feel constrained. Their imaginations about what their futures can be appear to me to be much more unconstrained, and that's a wonderful thing.

Having said that, women continue to be the most underutilized resource in the world. They are the most subjugated people in the world. We have a long way to go, but we've also come a very long way.

ROMANS: Carly Fiorina, we covered taxes, we covered job creation, we covered women at work. Thanks for being with us.

FIORINA: Thank you.

ROMANS: After two elections and four years in the White House, President Obama still can't shake the perception that he wasn't prepared for the presidency. I'll ask a man who was there whether that's true. That's next on YOUR MONEY.

(COMMERCIAL BREAK)

ROMANS: In 2008, President Obama campaigned as an outsider. His message, I'm fighting the Washington establishment on behalf of America's middle class. At four years, in the heart of the Washington political machine, he took office again. You might think the Oval Office is the ultimate Washington insider, but lawmakers, donors, and journalists say, no, that's not the case. Jonathan Alter is one of those journalists. He has tracked President Obama since he was a state senator in Illinois, and he's been granted more access to the Obama White House more than almost any other journalist. His fantastic new book titled "The Center Holds, Obama and his Enemies." Welcome to the program.

JONATHAN ALTER, AUTHOR, "THE CENTER HOLDS": Hi, Christine.

ROMANS: It's so interesting. You say the president is missing this schmooze gene, which is something that is pretty much de rigueur for American politicians. And it's no secret, a lot of people have said this, but Conan O'Brien poked fun at him during the White House Correspondents dinner about it.

(BEGIN VIDEO CLIP)

CONAN O'BRIEN, LATE NIGHT TALK SHOW HOST: Some in this room have even accused the president of being distant and aloof. When I asked the president about it, he said, "Oh," and then walked away.

(LAUGHTER)

(END VIDEO CLIP)

ROMANS: If he's holding back so much, even the perception of it, why doesn't he do something to change that?

ALTER: He is starting to do something about it. He's playing golf more with Republicans and eating dinner with them once in a while. But it doesn't come naturally to him. The president's favorite movie, he says, is "The Godfather" and there is a line from Hyman Roth that says, "This is the business we have chosen." And something I think the president forgets that a little bit, that politics is about back- slapping and making these other politicians feel as if their being stroked and like they're getting attention and he needs to pretend to be their friend. He would rather spend time with his real friends, and in the book, I do try to kind of try to pull back the curtain and explain what he's like with those friends.

ROMANS: What is he like with those friends?

ALTER: He's joking around a lot, and there's some off-color stories in the book that I can't say on TV about the sorts of things that he says when he's with his real friends. And, as you say, he can't swing in public at all these pitches. So he really appreciates it when other people go after his enemies for him.

ROMANS: And it makes him look aloof, though.

ALTER: It does make him look aloof. And he doesn't get out and make people feel included enough. And he understands this abstractly, but because he has kind of a disdain for a lot of the normal rituals of politics, we saw that in the first debate. He just doesn't like those debates.

ROMANS: Just this week, the House Minority Leader Nancy Pelosi, she stopped short of endorsing Hillary Clinton for president, but she said something that was interesting, encouraging Hillary Clinton to run for president, and she took what some insiders read as a swipe at the president. I want you to listen to what she said.

(BEGIN VIDEO CLIP) NANCY PELOSI, (D-CA) HOUSE MINORITY LEADER: If Hillary Clinton were to run, and we think if she ran she would win, I believe that she would be the best prepared person to enter the White House in decades.

(END VIDEO CLIP)

ROMANS: That would mean more prepared than the current president.

ALTER: That's -- I don't see that, really, as a swipe, because the president was so inexperienced. I mean, he was only elected to the Senate in 2004 and he became president in 2008. He barely stopped by the Senate for a cup of coffee. Hillary Clinton has been in public life for a long time. Nancy Pelosi actually has a good relationship with the president, as does Harry Reid. It's more the other Democrats that he just doesn't schmooze with enough.

ROMANS: In recent memory, the president was at a White House Correspondents dinner and nobody knew who he was.

ALTER: He actually came up to me at that dinner in 2003, he came to my table at that dinner and he said to me, "You're one of the only people I know here." And so obviously he has gotten to know an awful lot of other people in that room, and when he wants to turn on the charm he can be very charming. But there's just this sense in Washington that he needs to use that charm more effectively.

ROMANS: In the book you say he talked he was worried during the election that if he lost, his presidency would be a footnote in history. Now that he's got the second term and these new problems on the Hill. Will he be able to build out his legacy? You know this man. Will he be able to build out his legacy?

ALTER: I think -- what's going on right now is critical on immigration reform. It's much bigger than the various controversies that have dogged him at the beginning of this year. That would be a significant part of his legacy if he gets it.

And the story I try to tell in "The Center Holds" is how did he get 70 percent of the Latino vote? If he had gotten the 65 or 60 percent, we wouldn't even be having this conservation about immigration because none of the Republicans would be taking part. But he delivered a message to them that they will not do well as a political party if they didn't get this bill through.

How did he do that? He introduced people like the Latina Oprah. A lot of people don't know who she is. She did ads with Michelle Obama in the campaign that were very appealing in the Latino community. He did an unbelievable outreach from what's called "The Cave," which was the secret annex to the Chicago headquarters of the Obama campaign that I penetrated where these 20-something analytics geeks to figure out all these new ways to appeal not just to Latinos but to all sorts of different voters.

ROMANS: Right down to the color of the emails.

ALTER: Down to the color of the emails that they sent out. Yellow got a better return than white, and 100 other things. Everybody knows Obama did a better job on the digital front. I try to explain how.

ROMANS: "The Center Holds" is the book, Jonathan Altar is the author. Nice to see you. Take it easy.

ALTER: Thank you.

VAN SUSTEREN: If you have money in the market, you probably need a chiropractor after the whiplash you suffered over the past month. Now is not the time to loosen your grip. Come on, bull riders. I'll tell you why after the break.

(COMMERCIAL BREAK)

ROMANS: Hey, nobody said riding a bull was easy, and this bull market has been particularly feisty, especially when a certain Fed chairman threatens to take away its food. The food, the $85 billion a month in stimulus the Fed has been pumping into the economy. When Fed Chairman Ben Bernanke suggested the Fed might taper those purchases if the economy improves, investors responded by selling everything in sight. Nothing was spared.

And now we're in this strange vortex where bad news for the economy is actually good news for the stock market. The first quarter GDP report out this week showed the economy grew at a measly 1.8 percent. You would have expected investors to see and run for the Hamptons. Instead stocks have rallied through most of the week. Fears of a correction for stocks have been greatly exaggerated.

What isn't exaggerated is volatility. The Dow Jones Industrial average has had triple digit moves up or down in nearly every trading session in June. If this is the new normal, you better put on a helmet, or certainly you get some bull riding lessons.

Michael Farr is the president and majority of Farr, Miller, and Washington, an investment firm. Nice to see you. He's also the author of "Restoring the American Dream." Richard Quest is the anchor of "Quest means Business" on CNN International. I'm going to start with you, Michael, because you talk about restoring trust in your book and punishing people who cheat the system. But can average investors who don't work on Wall Street or don't work inside investment banks, can they trust the stock market right now given this volatility?

MICHAEL FARR, PRESIDENT, FARR, MILLER, AND WASHINGTON: Long term, I think you can still trust the stock market. But short term, investors' questions and doubts and fears, I think, feel justified. You see something like an MF Global where customers' accounts are invaded and customers' funds disappear. And then there doesn't seem to be any consequences for management. You see these things like the flash crash, and you see things like the night crating thing, and I think people say, gee, I wonder if this is still for me?

For the long term, I think it is, but you see the kind of volatility, of course, that we've had in the month of June and you do feel like you really need to cinch the seat belt down a little more tightly.

ROMANS: But if you listen to your head, really, Michael, if you listen to your head and you didn't get into stocks because you saw all these things blowing up around you all these years, you're poor for it.

FARR: There's no question that emotion is the foe of the long-term investor. I said for years, if it feels bad, do it. Forget everything you learned in the '70s, OK?

(LAUGHTER)

ROMANS: Let's get a banner for that, moms and dads everywhere, if it feels bad, do it. What you're telling your kids not to do.

FARR: I could have it tattooed, maybe. But look, if you are loving stocks as we did in the dot-com or as we did in 2007, or perhaps as you're beginning to love them again now, you're probably better off at thinking about becoming a seller than a buyer. If you're hating stocks, as you did in 2009 when the market dropped below 7,000 on the Dow, that was the time to buy. So don't worry, certainly pay attention to how you feel, but you're better off as an investor doing the opposite.

ROMANS: Richard, if we could all be robots, right, in the investment world, but we are not. And this volatility is just mind-numbing. It used to be 50 points was a big move, now it's 100 points over the last couple of sessions, 100 points one way or the other. What's driving this?

RICHARD QUEST, CNN HOST, "QUEST MEANS BUSINESS": Nothing about we are seeing should surprise us for one simple reason. The rules of the road have changed. Bear in mind we've got QE-3. Until this crisis we never had QE-1. QE was unknown. So it's not surprising. Everything uncertainty, unknown, new rules, even the Fed admits it's experimental. Tapering -- these are all different concepts.

So it is not surprising in this environment that when something like Bernanke speaking or when you have gold moving that investors are just moving with an element of mentality and an element of uncertainty. Again, new rules of the road, high frequency trading. Everything is faster, everything is more detailed, everything is more pronounced. It's as if the markets are in glorious Technicolor.

ROMANS: Let's talk about the Technicolor of gold. Gold has crashed. Regular investors have been saying, oh, look what the Fed is doing. It's manipulating everything. I'm going to buy gold. Regular investors have been killed this quarter in gold.

QUEST: A dumb, stupid metal the love of which I have never understood except as a marriage band or as a piece of delightful jewelry.

ROMANS: Mine is platinum.

QUEST: Exactly. That's my point. People say having a bit of gold in your portfolio as a counterbalance. A counterbalance, what, for the day when it all goes wrong? The dollar has gone up, the gold has gone down. You would expect to see that. Gold has come back with no inflation, the gold has gone down. The run-up in gold was overdone two years ago, the falloff is probably done. A little bit of gold, but you can't eat it. ROMANS: Michael Farr, last word to you.

FARR: I think markets volatility is something, yes, that we've got to come to expect. You have to look through that as an investor. And you have to find a discipline and a strategy to get your money where you need it to be in 10 years or 20 years. So try and ignore the noise. Remember the old rule in the fish market. Ignore the yelling and screaming. Pay attention to the price of fish.

(LAUGHTER)

ROMANS: Michael Farr and Richard Quest, nice to see both of you this weekend.

Coming up, do you follow Justin Bieber or Kim KardaShian on Twitter, or Richard Quest? Just Kim KardaShian and Bieber, why their tweets may not always be what they seem. Yours are always what they seem.

(COMMERCIAL BREAK)

ROMANS: If you're one of the millions of people who follow celebrities on Twitter, you get an inside look at what the rich and famous are up to. But how can you tell if you're reading a genuine tweet or just an expensive ad?

(BEGIN VIDEOTAPE)

ROMANS: Justin Bieber gives tips on where to buy mother's day flowers. Miley Cyrus raves about her airline carrier. And Kim Kardashian tweets about her lip balm. But how do her 18 million followers know if she's getting paid or if she just really loves her chap-stick?

MARY ENGLE, ASSOCIATED DIRECTOR OF ADVERTISING PRACTICES, FTC: It's really important for the audience to be able to understand when someone is endorsing a product, saying positive things about it, whether they've been paid to do that or not.

BILL COSBY, COMEDIAN: How long has it been since your mom fixed Jell-O pudding for you?

ROMANS: For decades, advertisers have used celebrity endorsements to push their product. Using a famous spokesperson gives a brand more attention and more credibility. Now social media has opened up a whole new world for advertisers. They can access a star's million followers with just one tweet. But that attention doesn't come cheap, ranging from a couple hundred bucks to tens of thousands of dollars for one little tweet. The Federal Trade Commission Requires companies to disclose a paid advertisement.

ENGLE: We don't prescribe specific rules or words that have to be us used, but ad is very clear.

ROMANS: Some celebrities are using the exposure, like when Hilary Duff wished her father a happy Father's Day or when Charlie Sheen went searching for an intern so his 10 million followers new he was compensated for plugging Internships.com. ENGLE: The beauty of ad is only two characters long so it should be easy to do, even in a tweet.

ROMANS: But with only 140 characters to spare, some say there is no room for an extra hash tag.

(END VIDEOTAPE)

ROMANS: The FTC told us if companies fail to disclose ads, they could face investigations and legal action. For the record, Justin Bieber has a deal for 1-800-Flowers, so it's safe to assume that Mother's Day tweet was an ad. In terms of Mylie Cyrus or Kim Kardashian tweets, it's still unclear if they were paid or not.

Thanks for joining the conversation this week on YOUR MONEY. We're here every Saturday at 2:00 p.m. eastern, Sunday at 3:00. Until then, please find me on Facebook and on Twitter. My handle is @ChristineRomans.