BUSINESS-01
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she's the exception on short maternity leave; Mayer Defends Brief Maternity
Leave; Cupertino Mayor says Apple Abuses Us; Cupertino Mayor wants to Raise
Apple's Taxes; How to Call a Horse Race. Aired 4-5p ET - Part 1>
Kosinski>
is examined. Latest jobs numbers released. The Canadian city of Fort
McMurray has now burnt nearly 250,000 acres of land. It threatens the
nearby oil fields and could have a ripple effect on the global oil markets.
Marissa Mayer is being criticized for taking a short maternity leave.
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business taxes saying they need to pay their fair share. The Mayor says
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Barack Obama; Donald Trump; Politics; Jobs>
[16:00:00]
NINA DOS SANTOS, HOST: And that is the woman's NBA ringing the closing bell on Wall Street. Though it's not quite a slam dunk session as the Dow finishes slightly higher today. It's Friday the 6th of May.
(BEGIN VIDEO CLIP)
SANTOS: Tonight, crunch the numbers before you vote. President Obama calls on the public to question Donald Trump's budget plan. A country at a crossroads yet again, Greeks go on strike in a protest against austerity.
And running Yahoo! is far from child's play. Marisa Mayer defends her short maternity leave.
(END VIDEO CLIP)
SANTOS: I'm Nina Dos Santos and this is "Quest Means Business."
Good evening. Well, tonight, this is not entertainment. This is not a reality show. The words of Barack Obama as he sent this warning to the American electorate. Make sure Donald Trump's numbers add up. On the day that the U.S. released its April monthly jobs report Mr. Obama says that the vacancy in the oval office needs to be filled by a candidate who won't break the country's financial system.
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SANTOS: He's calling for closer scrutiny of Donald Trump's record as a businessman and he's also asking voters to hold all candidates to account over their plans for the U.S. budget.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Folks who historically have been concerned about making sure that budgets add up. And that we are responsible stewards of government finances have to ask, does Mr. Trump's budgets work? You know, those are going to be questions that Republican voters' more than Republican officials have to answer.
(END VIDEO CLIP)
SANTOS: Well Michelle Kosinski is live at the White House this hour. Michelle, word of warning from the outgoing President, who's of course Democrat, but even people inside the Republican Party having similar questions it seems.
MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Yes, I mean this is clearly the big story here. So here comes President Obama in the White House briefing room there for the daily briefing. Which is a fairly rare occasion.
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KOSINSKI: He's there to talk about economic growth. But, of course, the first question out of the gate was going to be about Donald Trump, now, essentially, the Republican nominee. And then the President was asked, well, what do you think about Donald Trumps' taco bowl tweet?
It's an unusual question. This is referring to Donald Trump's tweet where he was shown eating a taco bowl on the Mexican celebration day Cinco de Mayo saying that he loves Hispanics. So the President's response was pretty annoyed there. He just said "I have no thoughts on Trump's tweets and as a general rule I don't pay attention to them." But I don't know if you should believe all that because what happens inevitably is that Donald Trump tweets something or says something, it makes headlines around the world and inevitably the White House is going to be asked about if not the President itself as we saw today.
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KOSINSKI: So what we've seen from the White House is kind of a slow ramping up as this campaign has developed. At first they would say, well, you know we don't really want to comment on everything any candidate says, then they started hitting Republicans but veiled criticism of Donald Trump although nobody had any question about who exactly the White House was referring to. But then the White House started really letting loose with the slams just like what we saw today, hitting Donald Trump for his reality T.V. past.
The President also said he didn't think that Donald Trump would be elected President because he said America has better judgment than that. So these two points are what we've heard from the President before several months ago and this seems to be about as far as the White House is willing to go at this point in criticizing the candidate.
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KOSINSKI: That's not to say it won't ramp up further. But you know the White House doesn't like to get embroiled in the fray of politics all the time.
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KOSINSKI: But you know over time as things have escalated or developed in the rhetoric to what we have seen now, the White House really hasn't been able to help itself and has wanted to jump in at least to the point of criticizing Donald Trump in these very specific ways, Nina.
SANTOS: Well, if we're going to talk about the economy here and Barack Obama was keen to point out, well, have a look at Donald Trump's business record, if he says that he's the man to fix America's economy because he has business acumen have a look at his record.
Let's look at Barack Obama's record over the last few years in office. The U.S. economy has actually weathered the storm, it's doing better than many economies around the world but many Americans don't feel like they're participating in that.
KOSINSKI: Right, there's much pessimism out there and in fact today there was a new poll out by CNN and ORC showing President Obama's approval ratings and they're pretty good, especially when you compare to the lows that they were before.
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[16:05:00]
KOSINSKI: Right now 51% of Americans feel that he is doing well at his job. Less than half of Americans, though, don't feel like things are moving in a good direction in America economically. Still, that's a higher number than we saw before. Right now, it's at about 46%.
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KOSINSKI: So these numbers are nothing to be jumping up and down about but they have improved. And President Obama, you know, not too long ago, he did address that. In fact we asked the President directly, given that you're constantly touting the economic growth, the jobs numbers, which are good, I mean, you know there was some weakness in this month's and it's not as if it's been this, you know, rocket-like growth month to month necessarily. There's still problems, obviously, in the U.S. economy. Why do you think so few Americans are really acknowledging that? Why do you think the pessimism is there?
And what President Obama has said is that, well you know, it's not surprising, first of all, given the shake-up that the American economy felt back in 2008 that so many people lost their jobs and lost their homes he feels like there are still after effects of that, and given the rhetoric from Republican candidates out there. So that's really what the White House is up against. But of course, any time these good job numbers come out, that are positive in any way, they're going to want to celebrate those publicly, Nina.
SANTOS: Michelle Kosinski, thank you very much there live at the White House this hour.
Well Donald Trump's budget plans have already attracted plenty of scrutiny and also quite a lot of skepticism from the world of economics. His signature policy and a favorite talking point on the campaign, has of course been the issue of new trade tariffs, Donald Trump says that he would tear up existing free trade deals with countries like, of course, Mexico and China and put up taxes on foreign goods entering America.
He says in turn that helps to eliminate the $19 trillion national debt in just about 8 years. That's all while cutting taxes at home, as well. And to make that work it's estimated that Donald Trump's potential future administration if indeed that's what we see would need to slash 60% off of the government's spending bill, that's a prospect that some experts describe as frankly unrealistic.
Earlier this week Trump told CNN's Wolf Blitzer that he sees himself as "the king of debt."
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: As a very successful person, I would buy companies, throw them into a chapter, bankrupt it, negotiate. I would do great deals. I didn't use them for myself. I used them as a business person. Like others do. I mean many of the people, people in my top category use the laws. I know more about debt than practically anybody. I love debt. I also love reducing debt and I know how to do it better than anybody.
(END VIDEO CLIP)
SANTOS: Diane Swonk is in Chicago, she is the Founder and CEO of DS Economics. Thank you for joining us here Diane.
He describes himself as the king of debt, Donald Trump and the reality is is that you know whether you're looking at Reaganomics two or three decades ago or the policies that we have today where the debt pile is significant in America, if you print U.S. dollars you kind of can be the king of debt, can't you?
DIANE SWONK, CEO, DS ECONOMICS: Well, we certainly have gotten a free waiver in terms of being the reserve currency of the world and not had to pay the extraordinary higher interest rates other countries do when they run as large a deficits as we have and carry as much debt as we do. So that is true. That said, the numbers don't add up. Donald Trump's numbers don't add up at all. It's almost like he's just suspended all rules of math, let alone gravity.
SANTOS: Run us through exactly what issues you have specifically with this particular manifesto as far as we have it because it's in a rather anemic state, as well. It gives him a bit of latitude to say well look, I didn't really mean that, you know I've crunched the numbers and I really meant this.
SWONK: Well that's the issue is there's not a concrete policy.
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SWONK: but the policies that are expressed there's huge cuts in taxes which would require pretty much a lot of (kumbaya) in congress to get through to begin with but you know you can't get enough supply side economics to have that stimulate enough growth. And he said he won't touch social security, he won't touch any entitlements, he won't deal with any of the real spending side of the equation in any real way. And then he'll refinance somehow the entire debt of the United States with U.S. treasury bonds at a magnitude that's sort of unfathomable in terms of what impact that would have on interest rates elsewhere in the treasury markets.
It just doesn't add up. The kinds of explosion in debt without the rise in interest expense alone are pretty substantial if you take any of what he says at face value. And that's what's so disturbing is people are willing to take it at face value and just take his word for you.
(END VIDEO CLIP)
SWONK: And we need to hold all of our politicians accountable for how they're get to where they're going to go and also deal with the reality of the political environment we're in.
[16:10:05]
SANTOS: Yes, it's also interesting to think that he can - he thinks that he can simultaneously on the one hand on trade alienate China, but also keep it as one of the largest customers for U.S. denominated debt.
Diane I also want to talk about the U.S. economy as it stands today. Irrespective of politics, 160,000 jobs created as per the latest Nonfarm payables numbers. That's not particularly stellar. Anything below 200,000 obviously is viewed as disappointing but there were some bright points in this report. What were they?
SWONK: Well, you know, when's really interesting is that the job gains were driven by professional jobs, full-time hires. These are college grads and they're actually higher up on the pecking order than just new college graduates, as well which is something we haven't really seen and that helped to boost overall wages.
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SWONK: We've also seen since the beginning of the year, low wage jobs this month not as good in the retail sector but in general surprising strengths since the beginning of the year in low-wage jobs despite the fact that we really are now seeing some traction in minimum wage - changes in minimum wages at the state and local level. And so it suggests a bit more durability in the job market than many people are giving it credit for.
(END VIDEO CLIP)
SWONK: That said, I think it's important to think of you know the labor market. We're still prying ourselves not only out of the hole of the great recession, the pain that you're seeing reflected in the polls is decades in the making and free trade becomes, you know, correlation doesn't imply causality. It becomes a scapegoat. The reality is we didn't prepare a labor force to work in the global economy and now that the economy is global it's easy for people to blame people on the outside rather than our inability to train ourselves and make the investment we needed to in human capital let alone other investments we've neglected over the years.
SANTOS: Diane Swonk, great to see you have a great weekend. Thanks very much for joining us on this important day for politics and also economics in the states.
SWONK: Thank you.
SANTOS: Well staying with the world of economics, the U.S. Labor Secretary, Thomas Perez spoke to CNN Money's Maggie Lake after those jobs numbers were released earlier today and he's been painting quite an optimistic picture about the health of America's job market.
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THOMAS PEREZ, U.S. LABOR SECRETARY: What to me is as important as anything about this report and the trend data is not simply the quantity of people that are getting jobs but who's getting those jobs. What we're seeing now is the percentage of long-term employed as an overall percentage of the unemployment rate is the lowest it's been in seven years. And two thirds of the people who -- two thirds of the reduction in the unemployment rate over the last year is from the ranks of long-term unemployed. And what that tells me is labor markets continue to tighten so that employers are looking at people that they were otherwise unwilling to look at for, you know, in the years before that.
MAGGIE LAKE, CNN CORRESPONDENT: I understand from an economic point of view a lot of what you're saying but we can see from what's playing out in the election that there are an awful lot of Americans out there and they are people with jobs who may have come back into the work force but they still feel very fearful about the economy. What's going on? Why do we have this - - this feeling that things are not working? If we have unemployment, the unemployment rate so low. Where's the disconnect in your mind?
PEREZ: Well, I mean -- I meet too many people who are working but they haven't had a meaningful raise in years. I meet people who are working and they're making $7.25 an hour. You can't live on $7.25 an hour in this country and that's why we have to raise the minimum wage.
We've got to do more to provide protections for workers because you know frankly this unmitigated assault on the labor movement has left a lot of workers vulnerable. And studies have shown that you know roughly a third of the inequality that we have seen in recent years is attributed to the declining labor union density in this country.
And so we've got to - and that's why the President is so supportive of collective bargaining and the labor movement and other efforts to ensure that workers have a voice in the workplace. Because you know when workers are together the power of we gives them that leverage. And when they are alone and when they get divided then they can be more easily marginalized.
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SANTOS: Well Wall Street rallied to finish the week on something of a high note as you can see here.
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SANTOS: Stocks closed up nearly 80 points after recovering from an 80% drop earlier on in the session. Shares of the mobile payment company Square, though, they had a really tough day as you can see here plunging more than 20% after this company revealed a bigger than expected loss for the first quarter.
CNN Money's Paul La Monica joins us to discuss all the stock exchange action including this live from New York.
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SANTOS: So Paul, it's been a bit of a topsy turvy day on the market ending up the week up but not by that much.
PAUL LA MONICA, CNN MONEY CORRESPONDENT: Yes, it was a good day considering the jobs report being lackluster but I think we're back in that weird sort of mode, Nina, where bad news on the jobs front is perceived as being good news because it probably means that the Federal Reserve may not raise rates in June.
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[16:15:10]
MONICA: And the closer we get to the election people are going to start speculating that the Fed is not going to will not want to do anything in the election cycle. So I think some investors are now looking at the jobs data as a sign that maybe the Fed is on hold until after inauguration day which is still a pretty long way away.
(END VIDEO CLIP)
SANTOS: Yes, it is. And that really means a revision of those predictions where people expecting two, maybe three interest rate hikes as we headed towards the second half of the year.
Paul, let's talk about specific stocks and we've got to mention Square as I was pointing out there, down 21% on the day. This is just a bit of a nightmare situation for Jack Dorsey, isn't it? Who founded that mobile payment system and now he's back at twitter, as well.
MONICA: Exactly Jack Dorsey is doing double duty. He's the CEO of both Square and Twitter.
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MONICA: And it's not as if twitter is doing all that well. That stock recently hit an all-time low. With regards to Square, the revenue growth is there. He's growing extremely rapidly. The problem is that the costs are growing at a higher pace than the revenues and that's why you have the losses.
Square faces a lot of competition in the mobile payments world. It is, you know, a very innovative company and a lot of small businesses use Square to process payments but I think right now the big question is, is there going to be enough growth to get that company to be profitable? And if not, Jack Dorsey you know has some more explaining to do to Wall Street.
(END VIDEO CLIP)
SANTOS: All right. Paul La Monica, thanks for that. Have a great weekend.
MONICA: Thank you, you, too.
SANTOS: Now let's take a look at how markets fared here in Europe.
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SANTOS: Stocks edged higher in the U.K. but still it was the FTSE's worst week for nearly three months. Some of the heaviest losses in the metals and mining sector and financials. German stocks also up on this session but as you can see the DAX only eking out a gain of about a tenth of 1%. Markets fell in places like Paris and also in Zurich.
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(BEGIN VIDEO CLIP)
SANTOS: Protesters were back on the streets in Athens today telling lawmakers what they think about new austerity measures that are being debated this weekend. More on that.
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(COMMERCIAL BREAK)
SANTOS: Greek unions kicked off a three-day strike on Friday protesting against new austerity measures that they say will hit people's incomes hard.
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SANTOS: Thousands of demonstrators took to the streets in Athens. Garbage collection, public transportation and other services came to a halt. The Prime Minister Alexis Tsipras, insisted that better times lie ahead.
ALEXIS TSIPRAS, GREEK PRIME MINISTER: (As translated) We are at a very crucial crossroads but we are determined much more experienced and much stronger than ever. That is why we will succeed. We will take this country out of the crisis and we will gaze into the future with much more optimism.
(END VIDEO CLIP)
[16:20:00]
SANTOS: After years of austerity in Greece there are plans for spending cuts to come. On Sunday, the Greek parliament will be voting on new proposals. On Monday Eurozone finance ministers are going to be heading towards Brussels specifically to talk about whether Greece should be getting anymore bailout funds.
And remember that Athens badly needs the money because it's due to repay billions of dollars' worth of bonds back to the ECB by the date of July the 20th.
I spoke to Constantine Michalos who's the President of the Athens Chamber of Commerce today. I asked him what would happen if lawmakers backed the new austerity measures that are to be debated on Sunday.
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CONSTANTINE MICHALOS, PRESIDENT, ATHENS CHAMBER OF COMMERCE: When certain high income echelons which in Greece they're considered over 60,000 euros a year will be called upon to pay approximately 72% of their total income you can imagine that these professional classes will try to find alternative solutions by transferring their tax base elsewhere.
And remind our viewers that tax rates, business tax rates in Bulgaria, Romania, Cyprus are currently running between 10% and 16%. So, therefore, the expected revenues, public revenues from the government will literally fly out of the window. So it will create tremendous problems to the economy. At the moment, we still have a Greek economy which is at a standstill. Primarily because of this uncertainty over the last few months and, of course, the lack of liquidity which is of paramount importance for a business to be able to operate on a day-to-day basis.
So I fear the worse will come following the vote. This movement by the government is essentially taken so that they can go to Monday's Eurogroup by using a leverage essentially against the IMF which wants a further 3.6 billion measures to the 5.4 billion which is going to be discussed over the weekend. And it's going to be an interesting but extremely dangerous period ahead.
SANTOS: So essentially what your' saying is because of the government relying so heavily on high income pensioners for raising all of this money through changes to the tax and pension system it's going to create capital flight which will just make it even worse for Greece. Does that mean that Greece will never get out of the spiral of needing more and more money drip fed by Europe and also by the IMF?
MICHALOS: Capital flight at the moment is extremely if not impossible simply because of the application of the capital controls which we have had since the 29th of June last year. So it's new revenues, new capital that's going to be created that will be created elsewhere in the third country, rather than Greece in order to avoid this heavy taxation.
What the government needs to realize is that the right mixture of economic policy is not overtaxing which it's doing at the moment and of course we have suffered this phenomenon over the last five and a half to six years without any real results, positive results, because the curve very clearly states the higher the taxes the lesser the tax revenues.
What they need to do is to also enhance growth into the economy. And ideologies against the private sector or privatizations or foreign direct investment have to change. This is a left-wing government and they have to realize that if they want to remain part of the European Union, part of the Eurozone, we have to play by the rules. And the rules in the globalized economy is that we have to enhance the private sector, something that this government is not doing at the moment.
(END VIDEO CLIP)
SANTOS: It will soon be sundown in Venezuela literally leaving many people in the dark. The government can't guarantee to keep the electricity on as an economic crisis grows deeper by the day.
CNN's Paula Newton has more.
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PAULA NEWTON, CNN CORRESPONDENT: For months now in Venezuela they've been rationing basics, people line up for hours just for food, hospitals are rationing medicines supplies and now everywhere except for in the capital of Caracas, the energy superpower is rationing electricity, too.
We travelled to the industrial heartland in the city of (inaudible) where scheduled blackouts are the new reality. From bakeries to small businesses to families, no one is escaping a daily dose of power rationing.
(Perez) walks us through his blacked out bakery. Every day for at least four hours the power is cut he complains and his business takes a hit. Besides not having supplies he tells me now I have to deal with the power rationing. He says the already precious products he has are at risk of spoiling, he can't make coffees, can't tell them when he will have bread.
It's the same for salon owner (Alison). No power. No customers.
[16:25:05]
City counselor (Manuel Molina) walks us through what was a busy business area now nearly (inaudible). What's the situation right now in Valencia? What critical is it? "The situation in our country and our city is critical right now" he's explaining. "We have seen 30% of the businesses close."
(Molina) blames the government mismanagement for the crisis but the Venezuelan government calls this a natural disaster. El Nino it says has deprived the Guri dam of water and it produces most of Venezuela's electricity.
(Gladys) isn't buying any of it. "My blender is broken. My refrigerator is broken" and she walks me over to show me, "I have meat in here and you can imagine this goes bad. I have to keep it closed." "El Nino" she says, forget El Nino. She, too, blames the government.
No matter who is to blame there is no quick solution and its taking a toll on communities and families. (Inaudible) never thought life could be tougher. Now every day when the lights go out they know it will.
(END VIDEO CLIP)
SANTOS: Well the head of one of the biggest investment firms in the United States says that China's consumer economy is thriving. The CEO of Blackstone doesn't think that the country is heading for a hard economic landing all. CNN Money's Cristina Alesci, asked him about his bullish take on China.
(BEGIN VIDEO CLIP)
STEPHEN SCHWARZMAN, CEO BLACKSTONE: Well, I don't think I'm bullish or unbullish. I try and be in touch with the truth. If you go back to the first six weeks of the year, where the markets in the United States, equity markets, were down 11% but one of the primary reasons allegedly was concern about China's hard landing. But the truth is more complicated. China's divided into two types of economy; one is their consumer economy, which is probably growing this 7% to 10%. That's pretty amazing for a shopping mall which is geared to upper middle. Not luxury. Not middle type of consumers.
China's rebalancing its economy. Some of it is purposeful. Because when the current President of China took office, his first speech was on the China dream. Well what's the China dream? Sounds a lot like the American dream. He wants people to have higher wages. He wants them to have better houses. And he wants them to have better health.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Donald Trump said something like China is raping America.
TRUMP: Because we can't continue to allow China to rape our country and that's what they're doing.
ALESCI: He was obviously referring to trade deals and manufacturing. You have always supported a Republican candidate. It looks like Trump is going to get the nomination. Will you support him if he becomes the nominee?
SCHWARZMAN: You know it's one thing to get a job, it's another thing to do a job. And I think Donald's doing a very effective job getting the job, certainly getting the nomination. And I think everybody wants to see what happens from here. Everybody has to sell themselves.
(END VIDEO CLIP)
SANTOS: Well raging wildfires in Canada are threatening key oil fields there with some companies halting production; the affects could be felt worldwide.
