tv Street Signs CNBC March 11, 2013 2:00pm-3:00pm EDT
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are working and it's better for us in the long run so we have to learn to shed some of the guilt. >> it takes a village. we will leave it at that. >> we are going to leave it at that because that is all we have here today on "power lunch". sue, we'll see you when you get back here. >> and the dow is up 36 points. have a great afternoon. we will see you tomorrow on "power." ♪
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>> it >> it is the question we all want answered. what happens to stocks when the fed starts raising rates? we'll look at history and try to answer it right here on street signs. and find out what women can do to better bust through the glass ceiling. and how student loan debt may be hurting the housing market. >> and we will ask, what is the
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single best airline stock to own? >> if the douw holds its head above water, it will have said hello to its first seventh straight day of gains. and we have only ten points before it cracks its own record high. and something we have not seen since 2007. the vix trading below 12. want to get to you on the core of the new york stock exchange. we have volume that is low. what does this say about general sentiments out there? >> you have got a really interesting shift in sentiment. people still don't like this rally but they believe in it. and they really don't see any catalyst that will bring it down. the one thing that looked ba ee
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for the end of the month. now starting to look a little better. we do have this winning streak. you're seeing it across the board in terms of sectors. hospitals as well. a number of them at new highs. the sector itself is at new highs. that's the new indicator. these will be impacted by the sequester. people seem to think that maybe it won't hit as bad as people believe. >> thank you very much. we will be asking our market guests whether or not stocks and yields can rise at the same time. >> boy, i wish your panelists all the best. we're in a managed interest rate environment. the feds will lose control of interest rates or announce the end of a program or actually a
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third. the third area is that interest rates normally give out signals for people to make adjustments. if we reach the tipping point and the fed does lose control, the irony here is that they're not going to make anybody's interest rate life any better. it's going to be a very quick adjustment and my guess is it will have a little pain with it when it happens. >> all right. thank you very much. and i will wish our guests well. there really are two huge questions hanging out there. when does the fed start raising its rate? and what happens to stocks when it does? joining us, jim paulson, chief investment strategist and dan greenhouse, cnbc contributor. we will get right to the interview. look at this chart. the last time we were in a
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tightening cycle, it happened. >> i'm one to believe that when the fed starts to discuss and move towards normalization of the policy. if you think about the goal at the start of every economic recovery is to get to the point where the fed has to go away from its easing policy. what is missing is a constant fear of an economy. if the fed now also starts to show progress that is sustainable, i think it means higher valuations for stocks. i think we will get a period where both bond yields are
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higher. >> do you agree or disagree? >> i am going to 66% agree and 33% disagree. >> you left out 1%. >> it wouldn't be an appearance with me if i wasn't disagreeing with something. jim is exactly right. higher interest rates seem to be correlated. the fed raising interest rates is an encouraging sign. the fed is taking the appropriate action to reduce downside risks. where i disagree is in the initial response. i don't know that 94 is the entirely appropriate analogy. what we have seen is when interest rates tend to move in a somewhat dramatic fashion as they might when the fed ceases easing, stocks at best pause if not turn down. the stock market rally is going to pause for a while.
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>> we talk about the fed funds rate. then interest rates which the fed can kind of control but the bond market, itself, ultimately will control. do you worry about what rick just said which is sort of this concept that the fed loses control not of itself but of the otherall bond market. >> i have -- this is -- no. i am not worried about that. the risk of a spike in interest rates because inflation suddenly shows up or the chinese don't show up at an auction, that's something that we have been hearing about for a few years. the possibility certainly exists. but i don't lose any sleep. >> is there any precedence where the fed has lost control of the bond market? >> the fed is not going to raise
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their rates until the bond market tells them to. and 94 is a great example. bond yields went from 6 to 8.5% during the first nine months of that year. then the fed started to raise interest rates. we didn't have inflation that year. we had the fear of inflation. it only takes the fear of inflation, not actual inflation to get a run-away bond market that gets out of control from the fed. that could certainly happen. if i could make one more point, i think one of the big differences of this cycle from past ones is the starting point. we're starting from national emergency unconventional in any other post-war comparison. we will have to normalize policy.
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the bond yield is 2% below its normal level above inflation. it should be trading at 4%. but it's only at 2%, so i think you could have yields rise by 2% before we eecven get back to th starting point. >> good to make that distinction. in terms of a time-line, what kind of year would we be looking at? >> btig is firmly in the 2015 camp. there is a lot of debate about what the fed is or isn't doing. we have to remember that ceasing to purchase bonds is not at all the same thing as raising interest rates. the people in charge of the federal reserve and the way they model the u.s. economy entirely suggests that interest rates are going to stay low. from an investment standpoint to the extent that i expressed fear in terms of valuations -- in
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terms of stock market prices, that's not a 2013 story and shouldn't be a 2014 story either. >> i do get worried about what i call the methadone market. a 5% ten-year bond is now considered high. what we have grown accustomed to and normalization are two very different things. >> i agree with you. i think a binding level would be as you get closer to 4%. as you get to that level and beyond that will start to bite into the stock market. i really think that getting from where we are from 2-4, it is nothing but a fear discount.
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how do you get rid of an armageddon discount? you create confidence. it is likely to take bond yields back 2-4%. >> if i can say something. >> make it quick. >> jim would never forgive me if i didn't say why we get to 4% yields is as important as that we get there. >> thank you very much. appreciate it. >> you have been hearing about the so-called iphone killer that never seems to pan out. and samsung may have something that may actually work. >> and only 4% of fortune 500 ceos are women. we are leaning in to find out how to get more women to come to the table.
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>> check out >> check out blackberry. the stock is popping on blackberry 10 news. it will begin selling the z10 device on march 22. still 11%. >> a big bump there. samsung gearing up for the release of its newest phone and the buzz is getting really loud. some say it could be a real game changer in the smart phone space. will the phone live up to all the hype? >> samsung has not had to deal
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with hype before. the galaxy line has been formidable. it is just in the past year or so that samsung has gained market share. just as apple stock prices peaked and plummeted. now the s4 will have to show that it can take attention away from the iphone 5, which still dominated the holiday season smart phone sales in the u.s. the iphone 5 outsold all android devices combined. the blackberry z 10 is looking to gain back the market that it lost. i'm expecting this to be the year of software. so the software will have to be the stand out. you have heard the rumors about the s4 automatically scrolling based on your eye movement. i hope that samsung has much better ideas than that.
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voice command and near field communication which are areas we have seen samsung focus on. apple, i'm expecting a big software year from them as well. by the time ios7 comes out, if that happens, it will change the conversation about mobile software in a big way. >> john, okay. thank you. i believe you might be sticking around. after all of these years after being called the iphone killers and failing, will this samsung 4 actually get the job done? >> we are joined now by editor in chief of boy genius report. do we have to have an iphone killer? or can they both win? >> you can see right now in the market that both are really winning. samsung is doing quite well. apple is now the number one
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smart phone seller in the united states. mobile phones are killing it. both can work together. there is also, i think, the loop of people that will only buy a specific phone. those are people that love android, like certain things and absolutely hate apple. they are both coming back into play. >> user loyalty. samsung would like to be an iphone killer. what would the ga laxy s4 need to have? >> i don't think it needs to kill the iphone with 300 million people in this country and in the world, we can have more than one successful smart phone. you can have more than one choice and more than one succ s successful choice in a huge market. the iphone is successful, it's smaller in the hand and easier to use. the samsung has a removable
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battery, a bigger screen. there are choices. it's a market where everybody has got to have one so there are choices. >> you know, something interesting is user loyalty. is it user loyalty or entrapment? no matter how much i love a samsung phone, i don't think i could change if i wanted to. >> sumsung has been able to copy every single thing that apple has done down to the t, literally down to copy right infrengment. you talk about the movies, the store, the music. everything workings in everything. >> moving over to what i still use and that is the blackberry. the z10 will be $199. >> the blackberry is the wrong
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product at the wrong time. if you look at blackberry, they need to appeal to their old business users. those people want a qwerty keyboard to the low cost kids and people in developing markets and to the android and iphone users and they need something really compelling to pull them away from the costs that you were just talking about. the z10 doesn't really address any of these. >> ouch. the verdict is in. thank you very much for joining us. >> and something that will make you go oh. >> plus one trillion reasons why college grads could be the single biggest threat to housing. tdd#: 1-800-345-2550 seems like etfs are everywhere these days.
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today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.
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used drug. more and more college graduates cannot afford to buy a new home because they are using all of their income to pay off the loans. >> i don't know. this is alarming news. there are two reasons why student debt is up so much. the cost of college has gone up a lot. and the second is that there is more students. that's actually good news. the number of 18-24-year-olds enrolled has gone up 50%. and that's good if we think -- >> more jobs? >> the problem is exactly that. the deal of education is that you take on debt because it's an investment, a bet that will pay off in the future.
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unemployment has gone up 17, 18%. those are really horrible numbers. they are not europe numbers but they are bad. >> we forget that debt is an investment. but the new york fed says this hurts the housing market because americans, younger ones, are debt averse. >> there is no question. what you're seeing is that the average age of the first home buyer is going up and up and up. we rely on first time home buyers to be affluent 20 somethings, go out get married and have a home. as employment comes back, the kids will use it in the work force. they will find jobs and eventually they will find homes. >> that's the sthetheory of the
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cycle but are there data out there? or is that an almost impossible thing to theorize on? >> the housing market is starting to come back. there is a cracker jack surprise that showed that the number of construction jobs in february is the highest since early 2007. that's great news. they went out and scanned the 40 biggest housing markets in the country. the housing market is having a turn around. i'm an optimist. i think it will trickle down into jobs. as more young people have jobs they will buy homes. >> thank you so much. nice to see you. coming up on street signs, airline stocks are flying high. what is the best airline to be in right now? >> and our can't miss interview with the man who founded aol. what he thinks is the next big thing in tech. stick around. ♪
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♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh it's monday.
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aree >> we are walking you through or standing you through the stock stories you need to know about this morning. and we do have dick's sporting goods moving to the crocodile miss. >> a swing and a miss. it's down. the retailer earned $1.03. revenue also falling short. they said comps would have been up if you backed out cold weather and fitness categories. you can't do that. if i back out the bad stuff the good stuff is really good. >> i like their thinking. best buy is actually doing quite well. they did get an upgrade. >> the stock is not moving because of an analyst in best buy's hometown says you should
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buy best buy. piper jaffray upgrading it. and price target goes to 26 from 16. it's a rough road but the management is on the right path. they don't just do it as a cost cutting story. they said this management group is focused on efficiency and operations. piper obviously thinks its neighbor is going to pay off. >> the ominous 6.66%. the paper says the stock could almost double next year. but do keep in mind. it is all right up 40% this year. >> and also, my goodness. live television, these markets are moving as we speak. >> taking a fresh look at the
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stock. they are upgrading masco. they are raising their target to 25. if you have concerns and their exposure to europe, those are fading a bit. and the company is cutting its exposure to 15% of sales. >> indeed. we have jazz farmers. jazz hands. >> exactly. starting coverage with a buy. here's the news. there is an $86 on the stock. a 45% upside. stock was ten bucks. it's going to 86. >> that is what i call jazz hands on steroids. >> that's a big band hand. >> here is something you don't hear every day. airline stocks are on a tear. many are up this year.
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phil lebeau is here with more. phil, this used to be a difficult business to be in and now the stocks go. what's behind it? >> the airlines are finally turning things around. look at what's happening with revenue per available seat mile this is the metric you want to look at. in the month of february, all positive. look at united. what's happening here? the airlines are benefitting because of tighter capacity. they have stripped out their larger planes. they have culled their schedule. so you have got a higher percentage of seats that are filled on the planes. and the airlines have holding steady on the air fares. they have only had one hike this year but they are benefitting because of what is happening with jet fuel prices. generally speaking, year-over-year, it is still roughly at the same place that
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it was. that's why when you look at the airline index, what a move this has had. you will see that all of the airlines have benefitted and that's pushing the index up. given the fact that some of these guys were up. so i'm not surprised to see a bit of a sell-off today. this is unusually strong quarter. >> down a little bit today. but check out what jim cramer is now saying about airline stocks. >> for the first time ever on "mad money," i am giving my blessing to buy delta, united, continental, southwest, and last but not least, u.s. air ways -- lcc. which that is the best airline to own of them all after their merger. >> wow. also bullish on some of the
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airline stocks, elane joins us now. it's been a great run. 40, 50, 60% for many of these names this year. how much more room could these stocks have to run? >> that's a great question and i think we're midway through a multiyear move for the group. this is going to be the fourth year in a row. in the past 35 years we haven't had four years in a row to report profits. we have got better pricing. they have taken one firm fare increase. they tried four others and at least parts of the four have stuck. and then just in terms of comps, we're coming into a period of time where the industry has easy comps so the numbers should be pretty good. >> you have picked up all stops in particular.
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even the big price games. >> they are 7%. comps to a pretty easy one last year and then that continues. remember in march of last year they started having operational issues. delta we like because we think they are best practices in the group. they are just doing a great job. alaska, same thing. they are a well run, well managed airline. they have a number of monopoly roots. we really like the idea that we will have four decision makers. and with those four decision makers means we have better pricing environment. we don't get run away capacity growth. we call it the three cs.
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charging for everything. and consolidation. we think that all across the board helps the group. >> can i ask you about a stock that is not on the list? for years it is the only airline stock that they wanted to own. do they need to start charging for bags? >> two answers for that question. i don't think they do. although if they did, they would certainly make tons and tons of money because we have seen other airlines do the same thing. make lots of money. >> but they're stuck. they brag about it. but they are leaving probably billions of dollars on the table. >> don't think of it that way so much. remember who their ideal customer is. it's a leisure customer. they may not be charging outright for bags but they fares tend to be slightly higher. it's in there, just in a different line item. we have southwest to buy. it's just -- i picked four as
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opposed to five. >> and when we talk about better pricing for the airlines, that means bad for us, the consumer. thank you so much for joining us. coming up next, the fountain of youth in a pill. >> and we will head down to texas to find the next big thing in social media and technology. first let's find out what the first big thing is. >> with have many of them. you will not believe which country is now calling for an end to cyber warfare. also the hunt for yield has been and former wells fargo ceo will say that investors are not making any sense by trying to strip top executives in the corner office. maria and i look forward to seeing you at the top of the
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drink drink to. we all know that red wine has anti-aging propertiers. and now pharmaceuticals are trying to replicate a single anti--aging enzim. it can extend your life. in fak, they hope it can help people live to 150 years old. scientists say it could be a huge help in the fight against alzheimer's as well. drugs using that enzyme can be on the market. >> i will live until i'm 160 years old. >> but your liver will only live until you're 41. >> maybe i will meet it half way. >> lyle lovett saying that's
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right. you're not for texas. she is here with a guy who knows a few things about tech and probably wearing khakis. >> that's right. steve case is the ceo of revolution. thanks so much for talking to us today. i know that last year you invested in a start-up called home snap. have you seen any companies so far that you're going to invest in? >> we will see exactly what happens. it's a great community of entrepreneurs coming from all over the nation. the efforts are kind of the main thing i'm here for. but i have spent some time with entreprene entrepreneurs. >> okay. so of the companies you have seen so far, can you name one or two that are piquing your interest? >> one big trend is that companies are not just focusing on the internet, but how they
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can transform sectors of the economy. the internet is going to start disrupting these businesses, which is a big opportunity. what i just mentioned is over half of the economy has not been disrupted in the same way. financial services, entertainment or media. i think that's going to be a big trend and a lot of the companies are starting to emerge and focusing on the way education is delivered or the way health care is delivered. it's not just the internet in a stand alone silo but how it intersects and improves people's lives. >> and what to watch? >> the ones we have invested in are the hot companies to watch. >> you did invest in living social. is the deal a day service over? >> it's broader than that. i think of it as local commerce and social commerce. they have done a great job. there are only four employees starting at living social and
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now over 4,000 employees. the commerce is a huge category. most of the companies have been involved in it, it's rarely a straight line as they leave bumps in the road. >> there have been a lot of talk about challenges of going public. we have seen nasdaq launch a new secondary market service. do yo tell companies to hold off on going company? >> some companies it makes sense and others it doesn't. i think giving more opportunities to raise capital in whatever they they choose to is important. one of the reasons i supported the passing legislation of jump starting the business start-up. entrepreneurs could use that to raise money. and created an on-ramp to make it easier. not be subject to all the rules.
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if you're a $100 billion company has the same rules as a $100 million company. we have got to give people the flexibility to access capital as many different ways as possible. one way to do this. another way to do it is talent. >> thank you. listen, finding a great bar nearby and telling friends you're there is neat but it doesn't solve problems. but with revolution partners, everyday health, brain scope, you have targeted health. if you had one sector to invest in in tech, would it be health care? >> health care is huge. it needs to change both in terms of tools to keep people well. the whole wellness industry.
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better ways to manage decide. it needs to be transformed and will be transformed. i think that's going to be a big trend. i think education is a big opportunity. some of that will start impacting k-12. the way people learn in school and after will be very important. we invested in a company that is working with 600 colleges and universities to create an active learning platform. >> very interesting stuff. we look forward t t seeing. thanks so much. >> let's start up america. >> brian and mandy, back over to you. >> folks, i want to call your attention to shares of apple. the stock is spiking higher. volume also spiking up for
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apple. the stock now positive on the day. clearly something is going on. we are making calls here. full use of the team to figure out why it's doing that. apple shares spiked. >> indeed. >> next up, proof, hard proof that it pays to eat lunch. >> plus just 4% of ceos at fortune 500 companies are women. that is only 21 out of 500. we're going to debate that coming up next. [ male announcer ] when it comes to the financial obstacles military families face, we understand. our financial advice is geared specifically to current and former military members and their families. life brings obstacles. usaa brings retirement advice.
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does it does it pay to do lunch? a researcher wanted to find out if business deals actually improved when people negotiated over a meal. resermgers compared simulated negotiations that took place over a meal in restaurants to negotiations in bland, boring conference rooms with no food to eat. guess what? those who ate together while negotiating either in a restaurant or over food brought in created significantly increased profits than those who negotiated without dining. those who negotiated in restaurants created 12% greater
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profits. no mention of how much booze was in each meal. >> it is the topic of water cooler conversations today. facebook coo sheryl sandburg's "60 minutes" interview last night. >> i'm not suggesting women aren't ambitious. i am saying and i want to say it unequivocally and unapologetically that the data is clear that when it comes to ambition to lead, to be the leader of whatever you're doing, men, boys, out number girls and women. >> her new book "lean in" is generating quite a bit of buzz around the role of women in the workplace as you can imagine. she's featured on the cover of "time" magazine. is sheryl sandberg on to something? let's ask karla harris and carol evans, president of working mother media. great of you both to join us here. >> thank you for having us. >> karla, do you women are our own worst enemy? basically it's our fault for not
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being ambitious or aggressive or confident enough in the workplace or are there real barriers holding us back? >> i don't think we're our own worst enemies. at the end of the day i think women certainly have the qualifications. they have the experience. if there's any place we should invest more it should frankly be in relationships. it's relationships that make the difference at the end of the day. especially the sponsored relation with respect to moving up within any organization. >> that's up to us. the company is not going to come to you and sign you a sponsor. you have to build a relationship with someone who can help guide you through an organization, you mean? >> i feel strongly there's a difference between the mentor and sponsor. the mentor is a person you can tell the good, bad and ugly to. this is the person you tell the intimate details of your career with. they must know you very well. they must be able to give you tailored advice specifically to you and your career aspirations. the sponsor, on the other hand, is the person -- not the person you tell the good, bad and ugly to. this is the person that spending their political capital on you behind closed doors. i think it's a two-way street. you must spend the time identifying who's a great sponsor for you but the
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organization must also create those types of situations where you can get exposure to people who are -- who have a seat at the table, who have decision making power so that they can see your atalents. >> carol, what to you think is the role of the company in terms of helping women advance? you don't want it to backfire and have a pro-women policy. >> i think you do need a pro-woman policy. the 100 best companies we name every year to the working mother list are very pro woman. that trickles down to every woman in that company. men, women, boys, girls. something that's good for all of us. what's the worst enemy of women? certainly it's not ourselves. i guarantee there's a lot worse enemies than ourself. >> we can handicap ourselves by feeling i want to be liked. i don't want to speak up, speak out, i just want to be liked. >> sheryl's book runs through all of that very beautifully. lots of good advice in there for women. tremendous advice. but i do not want the
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responsibility of corporations, especially in this country, to get displaced by our focus on our own inabilities or lackings. what i see is that companies in th country need to do more because our government does so much less. we have no mandated paid maternity leave in this country. we have very little support for child care. high quality child care in this country. that puts our country at a disadvantage to all other countries in the world in the developed nations. unless companies step forward and do something. and, trust me, a lot of companies do nothing. only 16% of companies in this country have paid maternity leave. >> maybe paternity leave like the scandinavians would be a good thing as well to level the playing field a little bit. >> yes. >> both of you, thank you for joining us. obviously a hotly contested, deeply personal issue. a very interesting one. >> very important one. >> thank you both. a quick break. first, stocks at the highs of the day. s&p 500 within ten points of its all-time closing high of
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