everyone, welcome to "on the money." i'm becky quick. >> >> a mega deal in the world of social media. facebook's $16 million buy a sign of a bubble. we'll get to the bottom line on the bottom dollar. tiger mom roars back why some ethic groups succeed and why some fail. "on the money starts right now. here's what's making news.

as we head into a new week "on the money." facebook said "let's make a deal." and whatsapp said "why not?" it didn't come cheap. it spent $16 million to buy the mobile messaging company. it has more than 450 million users and only 55 employees. but what it doesn't have is a lot of revenue. it isn't clear what the profits are and runs no ads. whatsapp has been seen as a target by internet giants because of its use by teens and rapid growth. stocks continued to climb on the holiday-shortened week. the dow rising nearly triple digits on thursday. the s&p closing in on its all-time record, and the nasdaq climbing, as well. the markets fell on friday. the federal reserve's open market committee released minutes from its meeting in january. that was ben bernanke's last as chairman. making news, some fed members said that as the unemployment rate neared the 6.5% mark, it would soon be appropriate for the fed to change its guidance about short-term rates. that spooked the stock market. at least temporarily.

a disappointing housing number -- construction of new home fell by 16% in january. that was well below what economists had expected. yet another sign cooling market. at least part of the decline is due to bad weather. we're at the end of a mixed earning season. coke met expectations. walmart came in ahead but had a weak out election. and hewlett-packard beat the consensus. so did luxury electric carmaker tesla. tesla's guidance for the year is strong, as well. a really big deal, a big chill in the economy, and when the fed speaks, the markets listen. what does it mean to your investments? joining us karen finerman, president of metropolitan capital. and heidi moore, u.s. finance and economics editor at "the guardian." ladies, thank you for being here today. one of the big things this week was the huge deal for whatsapp. $16 billion plus the extra $3 billion that came through. it's huge. over 450 million users. heidi, when you start looking at this, does it remind you of anything from the dot-com bubble days? >> it reminds me of everything from the dot-com bubble days.

everything from the sock puppets to the overevaluation. that's what people are afraid of. it's hard to justify that much for a messaging app except through fear. facebook will be under pressure to prove this deal is worth. it especially when otherwise popular companies like instagram and youtube went for $1. billion in the past. >> i get it that it has 450 million users. karen, when i look at it in valuation term, holy cow. you can only do a $19 billion deal like that so many times. >> yeah. i think probably once to start. a good number to do. but it is staggering. you've got to see what do they see down the road that isn't apparent now. >> right. >> and i don't know. it's not clear to me. so not dumb guys and women. maybe there's something there. but it really -- it's just hard to fathom. it does seem defensive as opposed to something else. >> let's talk about what the fed said this week. that spooked the markets at least temporarily. for a day, the markets said, gosh, we got the fed minutes.

turns out that at the last fed meeting they talked about the idea that they would have to raise rates at some point. and i know it was only a few naysayers, but karen, was the market right to react that way to say, hold on a second, is there going to be a time where we're raising rates soon? >> so the door is now open for that. and it has been slammed shut for a long, long time. i think that is a little bit of a shift that's worth noting. however, i think that only happens when the economy starts to gain steam. so that's -- that is, i think, the more driving force of the market. an economy that gains steam even if the fed is -- >> let's talk about that. the economic numbers lately have been lousy. the markets have been giving all those numbers a pass thinking that it is part of the weather. what do you think? is this weather, or is there something more here? >> i don't think it's the weather at all. i think everyone's blaming the weather. really, if you go back last year, you'll see the same softness in things like the employment numbers and the housing recovery. it was -- they weren't really built on fundamentals. and only now we're starting to see it. i think the weather brought it to the fore.

for instance, with unemployment, labor force participation, meaning the number of people working, was falling. was rising even as the unemployment rate was falling. so that indicated weakness. with housing, you saw prices rising, but building permits are falling. so all that weakness is now just becoming more exposed. it's like the tide going out. >> i think when you look at the housing numbers in particular, you could make the argument that it has gotten more expensive. prices have come upon, but you've also had the mortgage rates that have risen, as well. karen, what do you think? is there their a weather temporary thing or for valley? >> i actually do think the weather had a meaningful impact. maybe if you just think about your life, what did you change -- >> yeah. i did. i can't remember the last time i went to a store. >> right. so -- some of the sales are lost for good. it's not pent-up demand that i think will be returned. i do think the weather did have an impact. i also think we had probably a little bit of excess momentum in the fourth quarter. not just in the economy but certainly in the markets.

so a little bit of pullback. put it in context from the rise last year, i don't think it's a big deal. i'm optimistic. >> would you be somebody who is still buying at this point? do you think that we get those good numbers and then keep pushing higher? at this point, we've made back the losses that we saw through the beginning part of the year. i guess we were down by 5%, 6%. >> right. >> we've bounced back, but we're still just below where we closed at the end of last year. >> there is -- there are things i would be buying, but that gets to be such a smaller number now of things that i think are -- you know, fairly priced. and then there's the frothiness that i think really -- can't explain. >> yeah. how do you figure out what the frothiness is, and what things do you think are worth buying? >> frothy is apparent to me. like at tesla. a great product. it's great. that valuation, though, is sort of almost mathematically impossible. i really don't get that. that's something i can't play in. it's frustrating to see, wow, things go up 400%, 500%.

but i can't ever get there. if you look at -- or even at amazon and you look at a walmart, the 13 times earnings, amazon at, you know, 100 or 200 times earnings. i can't make that work. >> walmart concerned me this week when they came out with earnings and said that there were problems. it's not just the weather, but also the broader global economic picture. and when walmart talks, we tend to listen. it's the largest retail sales in all of the united states. got a huge swath of what's going on. what did you guys read into that? is that a walmart problem or a low-income consumer problem? >> i would say it's probably a consumer problem. if you look at walmart's stock in u.s. gdp, they almost track each other exactly. the company is an indicator of what's happening in america. what you see happening over the past few years particularly is that discount stores and the low end of retail have been having trouble maintaining their profits. and that has to tell you something about the buying power of the american household. >> i agree with you. i think it's indicative of the

customer at walmart having trouble. remember, we haven't yet seen the flow-through from north of $100 oil which we're at now. natural gas, as high as it has been. we haven't seen any of that which is really going to pound that walmart customer even more. so i like the higher end. >> that's what you like is high-end retail. people more immune from the low end. >> right. >> thank you both very much for being here today. >> thanks. up next, we are "on the money." the fate of millions of minimum wage workers may be changing or not. the president's plan -- is it about job quality or job quantity? later, does your ethnic background determine your level of success? the tiger mom is causing another uproar with her new book. right now as we head to break, take a look at how the stock market ended the week.

the debate over raising the federal minimum wage from $7.25 an hour to $10.10 got a new spark this week with a government report that said an increase could lead to fewer jobs. now that is not surprising to economists, but the big question is whether it's all worth it. joining us now to parse the washington numbers game is peter orzag, global banking vice chair at citigroup. he served as director of the office of management and budget and the congressional budget office. and peter, thanks for being here. >> great to be with you. >> let's talk about these numbers. the cbo said the gradual increase by july of 2016 would eliminate 500,000 jobs, but it would lift 900,000 americans out of poverty. do you believe these numbers? >> look, the things where -- it's purely mechanical. cbo said that 16 million workers would be helped, and almost a million, 900,000 would be lifted out of poverty. there's very little judgment there. that's just literally a

mechanical application of let's look at where workers are in the income distribution and what will -- what the impact will be. where the judgment came in is with regard to that 500,000 job loss figure that you mentioned. >> right. >> i have to say that while there is a range of views, my own perspective is that's on the high side if you read appendix a of their report. the underlying study, my own read, suggests they lower elasticity. so that would then imply that the job loss would be smaller. >> although the cbo, we should point out, is a nonpartisan group. >> yep. >> they looked at it and admitted themselves the job loss could be from zero to a million jobs that are lost. so this 500,000 just comes out kind of in the middle. that is the number that's turned in to a political hot potato this week. >> what they're doing is they're -- they're basically imposing an assumption that when the wage goes up, firms will hire fewer workers. and the question is, how sensitive is that relationship. how -- how much do firms respond. they took the particular number for that elasticity. i think it's a little bit higher.

their number was higher than what the literature to my read actually suggests. so -- then you, therefore, wind up with a somewhat larger job loss. you framed it exactly right at the front. let's hypothetically say the number was 50,000 or 5,000. is it worth to to lift 900,000 people out of poverty even if some other people might lose their jobs? is it worth it to help 16 million people, even if they're -- there's always going to be someone, i mean, there will be one person somewhere who might have more trouble finding a job with the higher minimum wage than without it. so there are tradeoffs. i don't think they're as bad as what the cbo report suggested. we can't deny that there are tradeoffs. >> do you think raising the minimum wage is the best way to do this? other people have suggested that you raise the earned income tax credit. >> well, both and -- i do think that we're facing a pretty significant problem in terms of opportunity in this country. and -- and earning and income at the lower end of the income distribution.

so i would be in favor of doing both. now in a perfect world, i would agree with those who say do it through the earned income tax credit rather than the minimum wage. we don't live in a perfect world. and one other point on that, the very same people who say let's extend the earned income tax credit rather than raising the minimum wage are the same people who worry about the disincentives or high marginal tax rates as various programs and incentives like the earned income tax credit are phased out as your income goes up. so -- >> not only -- some of those people have, but i've heard people like warren buffett say the earned income tax credit might be a better way to do it, too. >> yeah. i think, again, in an ideal world, many people would agree with that. the problem is we're not in an ideal world. >> okay. let's talk about the reaction from some employers. the gap announced it would increase the minimum wage that it pays employees to $9 nationally and $10 next year. so you've seen that, walmart considering the idea of getting behind it.

are they doing this because they think it's the right thing? or are they doing it to try and get ahead of the curve? what do you think? >> well, see, i'd like to take people at face value. if you read what they were saying, they believe that it makes good business sense from their perspective. both to motivate their workers and to put additional cash in their pocket because they think that will help not only the broader economy but their own sales. >> you know, one thing -- their own sales. walmart said, some of the skeptics who looked at that said, yeah, maybe it means walmart's interested in helping their own sales by getting more money that comes in. others have said they're not going to cut prices by as much. others have suggested that walmart likes it because it -- they could maybe handle some of the -- some of the higher raises more than their competitors could. do you think there would be unintended consequences of things like higher prices just because people are getting paid more? >> if you take the share of the work force who would be experiencing a wage increase and factor through what the impact would be on the final product prices, it -- yes, directionally maybe there's a little bit of pressure. i think in today's economy it's immaterial. >> you know, the president is

expected to send the 2015 budget to congress next month. it will not include slowing the rate of entitlement increases by measuring inflation differently. that's something that the president offered in the past. it's not going to be in this budget. do you think there will be a political or economic price for that? >> no. i mean, look, that's a proposal that i have favored in the past moving to the superlative price index that i favor. let's be real, it's not going to happen this year. whether it's in the budget or not is a kind of optical thing that doesn't have any consequences for what will actually happen. >> all right. peter, thank you very much for joining us today. >> good to be with you. >> good to see you, too. next, we are "on the money." is the secret to your success baked in your dna? the tiger mom on how to earn your stripes in the economy. find us on facebook.com/otm. woo hoo! [ male announcer ] prilosec otc is the number one doctor recommended frequent heartburn medicine for 8 straight years. one pill each morning. 24 hours. zero heartburn.

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are certain ethnic groups more successful than others? the writer of "the battle hymn of the tiger mother" has a controversial ideas and new book. she stirred up the debate on her ideas on why chinese parenting methods are better than western parenting. in her latest book with her husband, she looks at what's driving certain minority groups to succeed. joining us on the triple package authors, amy chua and judd rubenfeld. thanks for being here. >> thanks for having us.

>> this caught my attention as soon as i heard what you were working on, what was coming up. it's a touchy subject, the idea of racial superiority almost, racial inequality at certain points. it's a provocative idea. i'm not sure that's what you two are saying, though. i think it's slightly different than that. tell people what you are talking about. >> our book could not be more opposite to racism in every way. first of all, we show that there are african-american and hispanic american groups far outperforming the national average, the white average. it's a tough economy, but there's this remarkable fact which is that some groups in this country are experiencing upper mobility at rates far exceeding the rest of the country. i'm talking about kids of poor and poorly educated parents rising at levels way over the rest of the country. our thought was let's look behind that. it turns out the fascinating thing is they're doing it in pretty much the same. we uncover that and think everyone can learn from it. >> what did you find in the numbers? what were the statistics that pointed you in this direction? is it eight groups you that found that you think outperformed?

>> actually, there were dozens of groups that outperformed that we were rigorous -- census data, income by ancestry group. we looked at pew foundation. there's not a sentence in the book that's not backed up. this is really a snapshot in time. i mean, these for other purposes are doing really well. >> right now. >> yeah. and there's this generational decline phenomenon that we talk about. asian american kids, they are blowing it out of the water. their s.a.t. scores are 140 points above the national average. the most interesting study is that by third generation, asian american kids did no better than anybody else. >> that to me was the most interesting part. you're not talking necessarily about it being in your dna, you're talking about how people are raised and their background. >> we prove it's not genetic. this showing about third generation asian american kids not performing any differently than the rest of the country proves it's not biological, it's not racial. the same pattern exists for all these other groups.

almost all of them. second generation rises. third generation declines. the only explanation is it's something going on in the families. the cultures of the first and second generation group. >> what is the triple play? what are the three characteristics that these groups have? >> the first is a sense of exceptionality. this feeling that you're special. and there are actually many sources for this. it doesn't have to come from belonging to a group. it can come from a parent who just makes their child feel incredibly special. but just feeling special alone is not enough. that can lead to complacency. so added to that exceptionality you need a dash of insecurity. >> the one that i hate. you have to walk around feeling insecure about yourself in order to push yourself more? >> well, the -- think about this, the opposite of feeling like you need to prove yourself, you haven't done enough yet, the opposite of that is feeling entitled. and all the studies show that there's nothing good about feeling entitled. that people who are entitled actually can be miserable. they -- they're often selfish to the extreme.

you know what, they don't feel happy when they don't get the job that they feel entitled to. and the third element is impulse control which is discipline and -- one thing we looked at when we studied all these different groups, you know, what to mormons have in common with indian americans and persian americans. we found that they all start very early with their children. at preschool level, they really get their kids to do much more focused and disciplined activities for a much longer time than the rest of america. >> so what's the pushback that you all have gotten since going on a book tour with this? what have people told you? >> you know, if you write a book about group differences in america, of course, there's going to be sensitivity. but you know, what we're saying in a way is something we've all got to, you know, be able to face facts. we're saying, for example, that asian american kids in the first and second generations are doing better in part because their study habits are different. and if we reached a point where you can't say that, where you get accused of cultural racism or stereotyping, when you're just talking about facts, we're

tying our hands behind our back. what are we going do with our education policy, our anti-poverty policy if we can't face and confront those facts? >> the points that anybody can do this, push harder. >> to say that a certain group is outperforming now doesn't mean they're better. especially since we show that after two generations they go back to the mean. >> amy and judd, thank you for coming in. appreciate your time. it's certainly an interesting subject. >> thank you. >> thanks so much for having us. the news that will have an impact on the money. and cash was once king. what else may have gone to the throne. the times are changing literally and virtually. woo hoo! [ male announcer ] prilosec otc is the number one doctor recommended frequent heartburn medicine for 8 straight years. one pill each morning. 24 hours. zero heartburn.

for more on our show and guests, go to otmcnbc.com or follow us on twitter @onthemoney. you can follow us on twitter on @onthemoney. here are stories that may impact markets this week. reports from home depot and berkshire hathaway. on wednesday, new home sales numbers are out. thursday census bureau releases an advance report for durable goods order for january. and on thursday, federal reserve chair janet yellen will testify before the senate. on friday, a snapshot of economic growth when the estimate for full year and fourth quarter gdp is announced. virtual currency is bigger all the time especially in texas where everything is bigger.

the first atm allowing customers to buy and sell bit coins for cash was unveiled this week in austin. that's just in time for the arrival of 30,000 techies to the city's south by southwest conference. located in a bar, the machine scans the user's palm print and a government i.d. before allowing transactions. the bit coin is currently worth more than $600. the digital currency is not backed by any government, and yeah, i'm still a little skeptical about the whole thing. that is the show for today. i'm becky quick. thank you very much for joining us. next week, what's hot in housing. we'll look at the recovery strengths for buyers and sellers. each week you can keep it here, we are "on the money." i'll see you here next weekend. [ tires screech ] [ car alarm chirps ] ♪ [ male announcer ] we don't just certify our pre-owned vehicles. we inspect, analyze, and recondition each one, until it's nothing short of a genuine certified pre-owned mercedes-benz

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it's our passion for produce, combined with our strong sense of community. and we're able to deliver that experience by living local. ♪ >> narrator: in this episode of "american greed"... samuel israel the third, the big money hedge fund manager... >> carl catauro: most good fraudsters, and ponzi schemers in particular are people who strike all the right chords. >> desperate to succeed... >> guy lawson: he lived through the most decadent era in human history, and was a creation of it and was destroyed by it. >> and the scam that bilked investors out of 300 million dollars. >> john siegesmund: literally, within the space of minutes, i had lost $336,000 dollars. >> it all leads to this bridge and a suicide note... leaving investigators with two key questions... "where's the 300 million