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U.S. Economy Improving; Program Allows Clients to Purchase Celebrity Lifestyle Temporarily; Germany and Argentina Set to Play for World Cup Championship; Qatar's Museum of Islamic Art Profiled
Aired July 12, 2014 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Run with the bulls and you just might get gored. I'm Christine Romans. This is "CNN MONEY." In every bull run a little blood is shed. That's what happened on Wall Street this week as the Dow industrials could not hold on to 17,000. The buzz from some on the street, maybe we're now in the final stages of this aging bull. That as companies begin delivering their corporate report cards, some with big fat "F's," especially in retail. Container Store blaming a retail funk for its lousy quarterly results, profits falling at Family Dollar, and throw in a crumpled cupcake empire, Crumbs shuttering every one of its stores.
Americans are buying cars and home but they're not buying ginormous 1,000-calorie cupcakes, apparently, even as some die-hard fans are trying to save that chain. Workers at Crumbs may be out of a job, but it's getting easier to find a new job. To get a job in this economy you have to boat bate out just one other person. There are now 2.1 job seekers for every available job. At the height of the recession, it was almost seven, seven job seekers for every available opening.
Put it all together and you have a U.S. economy that's better, but probably not strong enough to handle a hike in interest rates anytime soon.
Mohamed El-Erian is the chief economic adviser for insurance giant Allianz. So nice to see you, Mohamed. I want to take a look and show you the four gig biggest bull runs, the S&P's strongest bull markets. Right now the S&P 500 from March 2009 to today is up 192 percent. That's the fourth strongest bull market and the longest, quite frankly. From what you see from the Fed and from the economy and what companies are doing, is it justified for this bull market to keep going?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: Well, Christine, why have we had this bull market after what was a huge collapse? Three reasons. One is significant support from the Federal Reserve. The Federal Reserve has poured in liquidity. Secondly, companies have gotten really good at cutting costs. And thirdly, there's a lot of money on the sideline. So you've got this amazing rally even though the economy didn't do that well. That's why we've had this enormous gap between Wall Street and Main Street.
For it to go further, we now need real economic growth. We need companies that can grow their earnings, that can't cut their way to prosperity. And we need the Federal Reserve to be able to launch this genuine liftoff. And those two things are pretty uncertain. So I understand why people are getting cautious at this point. I would be too.
ROMANS: You would be cautious at this point too. The bull has been running for five years without a correction, five years without a real meaningful pullback. Then on Thursday we get these fears about a Portuguese bank blamed for the selling then. Are investors looking for any excuse? Are we going to finally get that 10 percent pullback?
EL-ERIAN: So investors are torn. On one hand, they realize that we've come a long way and relatively quickly given how sluggishly the economy is performing. And therefore any bit of bad news makes them hesitant. On the other side, investors have been conditioned to believe the Federal Reserve is their best friend. Whenever there has been somewhat of a selloff the Federal Reserve has come in. So you see this tension developing, and what you get is you get more volatility, and that's what's ahead I suspect.
ROMANS: The job market, it seems as though the job market has turned a corner. You and I have spoken about this before. But then I look at these consumer spending signals and they're really mixed lately. Is the recovery not strong enough for people to boost their spending or is this sort of the new normal?
EL-ERIAN: So the good news is that we have more jobs, and as you pointed out, it ease easier to get a job. The bad news is that earning growth is still very sluggish. At only two percent year-on- year, that's not enough. And therefore consumer demand is not as buoyant as you would expect. So the next important achievement, if you like, is to get better earnings growth, and that has to come with higher productivity.
ROMANS: Mohammed El-Erian, it's so nice to see you. Thank you so much. Have a nice weekend.
Coming up, crisis at the border. But here's what you haven't heard in the immigration debate. Here's what no one's saying -- it's getting worse because the U.S. economy is getting better. More on that next.
ROMANS: The U.S. economy is getting better with growing jobs, and word is spreading all the way to Central America. Here's what you haven't heard about the immigration debate -- an improving U.S. economy is another factor in the crisis at the border. There is a black market, of course, for illegal labor, and the message is this -- you get here and you will be better off.
In the past six months there's been a dramatic surge in unaccompanied children now from Central America. They're fleeing Central America's violent crime and crippling poverty. In Guatemala, 54 percent of the population lives below the poverty line, and 60 percent in Honduras, more than 36 percent in El Salvador. Many of the children making the harrowing trek over the border are trying to reunite with family members already here in the United States, family members who are seeing the tide turn in the U.S. economy for the better.
Marc Rosenblum is deputy director of the Migration Policy Institute's U.S. Immigration Policy Program. Ana Navarro is a CNN contributor and Republican strategist. Marc, let me start with you. This surge in unaccompanied children obviously is pushed by smugglers, smugglers who are trying to convince people that now is the time to come. It's pushed by a lot of different factors, including gang violence. Some of these families, we've spoke with them. Our reporters have spoken with families who are trying to escape gang violence. But the improving American economy, that is a factor, too, isn't it?
MARC ROSENBLUM, DEPUTY DIRECTOR, MIGRATION POLICY INSTITUTE: Yes. We know in general that U.S. economic conditions are a big pull factor for unauthorized immigration, and a lot of these kids who are traveling to the U.S., their trips are being financed by family members who are already here.
ROMANS: We know, Marc, that the first jobs to be gone in the recession were things like hospitality, they were builders, they were construction workers, restaurant workers. These are the jobs that are coming back first the recovery and these are the kinds of jobs that are now basically funding this next round.
ROSENBLUM: Yes. I think that's right. We've seen since 2009 about a 20 percent or 25 percent increase in official remittance flows to Guatemala and El Salvador and Honduras. So we know, you know, families here have more money to send back. But I wouldn't want to overstate the economic driver, because we also know that this surge that we're seeing is only from those three countries. So the economy is not improving to an extent that it's driving illegal immigration in general.
ROMANS: In broader terms with those three countries, and let's be clear, those three countries have serious issues internally right now to deal with. Ana, interestingly business leaders are telling us they can't find enough workers. You've got a "New York Times" op-ed from Warren Buffett, Sheldon Adelson, Bill Gates, calling for Congress to act. You say this crisis, this particular border crisis from these countries, the children on the border, has actually made comprehensive immigration reform even harder.
ANA NAVARRO, REPUBLICAN STRATEGIST: I think it does make it harder. As you know I'm a supporter of comprehensive immigration reform, but I think it makes the argument of a secure border that much more difficult to tell the American public. When you're seeing kids cross the border -- in actuality, these kids are turning themselves over to border patrol agents because they want to be apprehended and then processed and then sent over to their families --
ROMANS: You could argue that the border is secure in that spot. The border patrol is right there. It's the internal policy that's broken, not necessarily the border right there, Ana.
NAVARRO: It's policies in Central America that are broken. It's policies in the United States, immigration policies that are broken. Part of what's driving this is our broken immigration policy in the sense that there's a lot of parents here with kids over there who let the kids in Central America, and who frankly have gotten tired of waiting and living without those children. Those children are growing up to be teenagers, which is when they are most vulnerable to gang violence.
ROMANS: They want them here.
NAVARRO: These are desperate parents cobbling together $6,000, $7,000, to pay a coyote, and they want their kids here.
ROMANS: So Marc, we're growing jobs in this country. In Los Angeles, for example, hotel workers could see the highest minimum wage in the country, raising the minimum wage to $15.37 an hour. It's hard to keep labor and retain labor because tourism is booming and there's a feeling in Los Angeles that people, workers should be able to share the wealth of these growing industries. So do we need to pay people more in general in this country, because if you have people from all over the world who want to keep coming here and will come here and work for low wages because they just want an opportunity, it doesn't put any pressure on business owners to raise wages?
ROSENBLUM: I mean, that's certainly an argument people make, that a restrictive immigration policy will drive up wages at the low end of the market by forcing employers to bid up wages and recruit American workers. I mean, the evidence -- and we haven't really tested that theory because we've never made it very hard to hire unauthorized workers. But we definitely don't make it easy to hire legal immigrant workers in those sectors.
And what most economists will tell you is that immigrants really take complimentary jobs and that wages for all workers tend to go up because immigrants come and take the jobs. But then they're also consumers paying rent and they're supporting broader economic growth.
ROMANS: And let me ask you a question. So here's the political part of this question. So how do you, if you're talking about comprehensive immigration reform, or at least just making it easier for people to come here legally instead of illegally, how do you square that politically in the conversation with Americans that there are 3.1 million people who have been out of work six months or longer and millions more who are simply out of work? When you have that many people out of work and companies saying we can't find the workers, how do you square that political debate?
NAVARRO: I think you spend your time showing them and talking about the economic benefits of immigration, about the need to replenish the workforce, about the fact that, you know, Americans aren't having children at the rate they used to be having. We need more workers in the workforce. We need more people in America in order to be able to sustain our current programs. And there are so many economic benefits to immigration that have been made over and over again.
Now, politically, I think we know sadly that immigration reform is dead for this year. Look, when John Boehner has said it, when the president has said it, when Congress, Congressman Mario Diaz-Balart, who was the Republican working on it has been told that by leadership, that it's not going to be brought up, I think, you know, at that point even I have to say, yes, it's dead for the year, something that's very painful for me to say. It doesn't mean that it can't be brought up next year. But I think the urgency right now is to take care of this current crisis, because the optics of this crisis are just real bad.
ROMANS: Thanks, guys. Nice to see both of you. Thank you.
NAVARRO: Thank you.
ROMANS: Coming up, imagine walking out of a hotel, seeing paparazzi everywhere, stepping into a limo, you're whisked off to an exclusive hotspot. It may be just another day for celebrities, but now everyone can experience that, of course for a price. That's next.
ROMANS: Some of the biggest names in business spent the week at CEO summer camp. Apple's Tim Cook, News Corp's Rupert Murdoch, Facebook's Sheryl Sandberg, and the Oracle of Omaha himself Warren Buffett to name a few all enjoying the summer weather in Sun Valley, Idaho. They're not just there for fun, of course. They are there to make deals. CNN MONEY's Cristina Alesci is there working her sources for us. Hi, Cristina.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Christine, it's easy to say that Sun Valley is all about the schmoozing. But there are serious conversations going on here. One is the escalating battle over online video. Now, Netflix is winning a lot of attention not just from Wall Street investors but from big tech behemoths. For example, today, I spotted Apple's Tim Cook having a very long meeting with the CEO of Netflix Reed Hastings. But the cost of content is rising. And Netflix isn't the only game in town. You've got companies like Amazon and Yahoo! trying to crowd in to online video. Speaking of Yahoo!, CEO Marissa Mayer did a great job of avoiding the press here and any questions about the company's turnaround. As for Facebook --
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Got a minute for CNN?
UNIDENTIFIED FEMALE: Sorry.
ALESCI: No, not at all?
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ALESCI: But behind closed doors, some of these executives will tell you they're just trying to stay ahead of a business landscape that's constantly changing. They're trying to get bigger and stay relevant. Christine?
ROMANS: All right, great work, Cristina. Thank you so much.
Titans of tech and business had the media chasing after them in Idaho this week as you see. But back here in New York City, anyone can get the paparazzi snapping for a price. Maribel Aber is here with the price some people are paying to live out their wildest dreams.
MARIBEL ABER, CNN BUSINESS CORRESPONDENT: Christine, people will pay for this. It's like a once in a lifetime experience. I followed two young women who experienced the life of a celebrity. They embraced the camera and the attention.
ABER: Imagine what it would be like to rock New York City like a star. One boutique hotel gives guests the unique opportunity to live the glamorous life for a day with the paparazzi experience. For $2,500, step into a world of luxurious accommodations, your own beauty entourage, and get ready for your close-up, because paparazzi will be tracking you for the perfect shot.
HEIDI AVEDISIAN, BRAND STRATEGIST, ROW NYC: We wanted to give our guests an experience that really felt like celebrity. And so we partnered with wonderful hairstylists from Paris. We get them fabulous haircuts. They have their makeup done and they are glammed up, and they actually venture out into the hotel and into greater Times Square with a photographer, their own personal paparazzo and their own celebrity moment.
ABER: What is it about and what do you think attracts them to the paparazzi project?
AVEDISIAN: I think anybody interested in this package is not afraid of the camera. It's really a different generation I think in terms of how people communicate with each other, with the greater world, and how they manage their own social media and digital footprint.
CHRISTINE BOESLER, PAPARAZZI PROJECT CLIENT: We're of the generation of taking pictures all the time. We love pictures. We take pictures.
ABER: Is this a regular occurrence for you? Do you live the lifestyle?
BOESLER: Well, I think that's what we wish our lifestyle were like, but it's definitely not.
ELIZABETH WILSON, PAPARAZZI PROJECT CLIENT: No. We both just graduated school, and parents have been helping out paying for things our whole lives. But starting in September and October we're both going to be struggling for money with rent for sure.
ABER: So how was it?
WILSON: It was amazing.
BOESLER: Everyone out here thinks we're actual celebrities right now.
WILSON: Which is Hilarious.
BOESLER: People are taking pictures on their phones. She just said people were walking saying, who is that? WILSON: That's hilarious. Besides that, it is so much fun.
ROMANS: Funny thing is there are real celebrities who have actually become celebrities because all they did is walk around pretending to be a celebrity.
ABER: Absolutely right. And if you're not into a being a celebrity but you want to do something else, you can be James Bond. There's a hotel --
ROMANS: A James Bond package.
ABER: A James Bond package for $2,100. But the best one I want to leave you with, "Pretty Woman." You can be pretty woman for $15,000, experience it. But you pay $100,000 if you want Wolfgang Puck to be there with you.
ROMANS: Wow. That is something. I love these young women, it is the generation that invented the selfie and now inventing your personal paparazzo. So interesting. Thanks, Maribel, nice to see you.
Coming up, the World Cup final is tomorrow. Fans are shelling out tens of thousands of dollars for a seat. And it's not just fans of Germany and Argentina paying those prices. The hottest ticket in the world, next.
ROMANS: All right, $5,000 could buy you a decent used car, it could buy four plane tickets from New York to Tokyo, or it could pay for five months of groceries for a family of four. But $5,000 might not be enough to get you into the World Cup final in Brazil tomorrow. Zain Asher is here with look at what price fans are paying to see the big game.
ZAIN ASHER, CNN INTERNATIONAL CORRESPONDENT: If you want to see Germany play Argentina and you haven't got a ticket yet, a ticket in the secondary market could actually cost you anywhere from between $5,000 and $20,000, Christine, I know. We've been looking at some of those resale websites, for example Ticket Biz, eBay, as well, and you would think at prices like, for example, $12,000 people wouldn't be interested. But these prices are actually getting bids. A World Cup finals ticket face value is from anywhere between $440 and $990 depending on where in the arena you're sitting. You're talking about ticket prices going for 10, 12 times face value.
ASHER: I know. So check out the stadium here. Its capacity is 75,000. And FIFA has actually already said that demand right now is 10 times capacity. A lot of people want to see this World Cup.
ROMANS: Who are buying these tickets? ASHER: The result might actually surprise you. It is places like
Chile. We know Chileans love their soccer. But it's also, get this, the United States. This particular World Cup has been hugely popular with Americans, but it's also in the proximity between the U.S. and Brazil.
ROMANS: Northern hemisphere, geographically desirable.
ASHER: Exactly. But also Spain, they won the last World Cup. They didn't do so well this time. But I do have to mention, though, that in Brazil it's highly illegal, ticket scalping. You cannot buy a ticket and resell it for more than it's worth. The only reason eBay can actually get away with it is because in the U.S. there's no federal law banning ticket scalping. So you might be able to get away with it buying it here, but if you go to Brazil and try to get into the stadium, you could be arrested. Watch out.
ROMANS: Thanks so much, Zain, so nice so to see you.
The next World Cup is in Russia. After that in 2022, the tournament moves to Qatar. Aside from prepping for that, its capital city is rapidly modernizing. It's also using technology to preserve important pieces of Qatar's past. CNN's Erin Burnett takes us to Doha.
ERIN BURNETT, CNN CORRESPONDENT: It's one of the newest cities on earth. And 15 years ago almost none of these buildings were here. Across the bay from the Doha's futuristic skyline is a brand-new monument to the past.
SHEIOKHA MAYASSA AL-THANI, CHAIRPERSON, QATAR'S MUSEUM AUTHORITY: You have the skyline here, which is the modern Doha, and then right over there you have the past. We're right in the center between past and the future. And we try to build those connections as we go along.
BURNETT: Sheikha Mayassa bint Hamad Al-Thani is building those connections at the Museum of Islamic Art. The museum is designed by legendary architect Diane Pay for the Qatari royal, lured out of retirement to create what he calls a piece of sculpture. It's roughly 380,000 square feet, standing on its own island to ensure no buildings would ever overshadow it. In just six years the museum has built the largest collection of Islamic art in the world, including manuscripts, ceramics, ivory, and precious stones. The exhibits date back as early as the seventh century and have been collected from three continents.
AL-THANI: Islamic art is a living art. It doesn't end with a certain period of time. Every collection or every kind of material requires certain conservation methods and certain attention.
BURNETT: What do they do in the conservation lab?
AL-THANI: So if there's a carpet, for example, that needs to be stitched up or preserved, they work on it. If there's a ceramic piece that needs to have some conservation work or restoration work on it, that's done. Every day is a new day. Every piece has its own requirement. It's like having children.
BURNETT: It's a full-time staff that works on --
AL-THANI: Yes, of course.
BURNETT: -- on the technology of saving art.
AL-THANI: Of course.
BURNETT: Each piece is carefully inspected with the latest technology and everything is kept in a temperature-controlled setting to protect it from heat that can top 125 degrees Fahrenheit. Since becoming the chairperson of Qatar's museum authority, Sheikha Mayassa has been named to the "TIME" 100 list of most influential people. Her art budge set $1 billion a year, thought to 30 times more than New York's Museum of Modern Art. And the deep pockets of the Qatari government have enabled her to fulfill the goal of preserving the past for the people of the future.
AL-THANI: The past is something that will always be here and will always be preserved and protected. And from there we get innovative ideas of how to create new bridges between our past, our present, and our future.
ROMANS: Thanks, Erin, for that. And thank you for watching CNN MONEY. We're here every Saturday at 2:30 p.m. Please set your DVR so you never miss the money news that matters most. And check us out on the web 24/7. You can follow us on Twitter. Have a great weekend.