the focus was the maritime issues in the east china sea. oblems are growing involving the philippines and vietnam, with the increasing maritime activities on the part of china. we have difficulty with china in the east china sea. growing maritime activities of china must not cause tensions to neighboring countries. that would be unacceptable. territorial issues and the seabed resource issues must be resolved through dialogue according to international rules. change of the status quo with force is not acceptable. this is a consensus of asean nations and asian countries as a whole. that is why we believe that we should deal with china through dialogue in close coordination with other countries concerned. >> you mentioned a mechanism of dialogue between japan and china. at sea or in the air, between militaries, unintended collisions, unalerted encounters, if they occur could escalate. that be wiwould be a great conc. so communication lines should be in place between crews and top military officers to quickly respond to any unintended incidents.

the islands. china and taiwan claim them. the report also refers to china's increased maritime activities in the east and south china seas. it says that chinese are using military might to try to change the established order. it says the actions of china's leaders are inconsistent with international rules. japanese defense officials have also voiced concerns over north korea. the report says that north koreans are trying to develop ballistic missiles with an extended range as well as compound nuclear weapons and nuclear warheads. the report says north korea leaders may wrongly believe such moves will serve as a deterrent to the united nations. and it says there is a possibility the north koreans will escalate their provocations. >>> japanese leaders are putting the pieces in place as they prepare to implement a state secrecy law. it gives the government the authority to designate certain information as special secrets. they passed the law in december and now members of a government panel have drafted a set of rules for classifying information. nhk world has more. >> reporter: the draft released by members of the panel list

japan controls the islands in the east china sea. china and taiwan claim them. he met with former chinese foreign minister suggested both sides put discussion about the islands on the back burner. >> translator: i think we share the view that people in both countries must try to avoid any incidence over the islands. >> he also brought up the cabinet's decision earlier this month to allow for the use for the right of collective self defense so japan can help closely related countries under attack. and said other neighboring nations are concerned that may erode pacifist principles and said politicians in both countries need to speak frankly with each other if they are to solve their problems. >>> the people at the u.s. central bank have taken a snapshot of the economy and they like what they are saying. we have details on that and other stories from the business side. >> officials at the u.s. central bank put out their latest beige book. the title may sound colorless but the book illustrates the different shades and hues of the economy. from june to early july all

the step that china has been doing the other partners. also concluding fta free talks. and negotiating the sea boundaries by next year. this is a contentious issue. in the east china sea, we have the disputes with japan. south korea also had claims. or defend zone dipped into areas claimed by china. >> japan the enemy of -- the friend of the enemy is my friend. >> i think we should all get along. >> we should. we figured it out right here. thank you so much. news, japan airlines says they are prepared to apply for a credit rating. it means the nation half second-largest carrier may soon be allowed to -- it means the nation's second-largest carrier may soon be allowed to sell bonds. >> it is a challenge to maintain over 10% of profitability. i believe it is my mission to aim for even higher affability by taking cost-effective measures. >> wall street cheers ahead of the u.s. independence day. but what is ahead after the party is over? ♪ >> welcome back, i am angie lau. nq.mble for petsmart rose the most in two years. petsmart washas -- the biggest gainer in the s&p 500, which rose to a record. let's get more on the u.s. with my next guest. director of macroec

the middle east most obviously. you have serious problems with russia. you look at the far east, i could make the case that what we see going on in the south china sea and east china sea might be the most dangerous place in the world for a series of reasons. you look out at the world now where you cannot exactly work on two or three crises and figure out, put the others aside for while. they are all burning at the same time and it is hard for the u.s. government to organize itself and deploy forces to do with all those things simultaneously. we are not used to doing that. >> you were deeply involved in the fight against al qaeda in iraq which is the group that we are seeing reemerging, isis. is this a regional -- a group with regional ambitions that wants to set up its caliphate or is this a group that some suggest may be more of a threat than bin laden's al qaeda was? >> the al qaeda that we went after in 2001 when we went into afghanistan and iraq is different than what we're seeing today. the core element as the secretary of defense said is we had somewhat defeated them at the strategic level. and yet the franchise is alive and well. if not growing.

china scale. so we're going to see this place and the big it's a little bit harder to manage in the area of international security and we see examples of that now in the east china sea were japan and china have territorial disputes and the south china sea where japan malaysia. vietnam and the philippines have some very sharp territorial disputes and there were china says we want to be respected they want the u.s. to stand back that's harder to to make happen smoothly because there's no corporate charter like the i.m.f. or world bank within which to work we just have the rules of the united nations now you just mentioned. china rising and demanding more respond more room within the international system i think there is a similar sentiment here in moscow but in ball in the case of both of those countries that are rise is perceived somewhat negatively in the united states do you think those threats of both russia and china being exaggerated in the united states do those countries really pose such a significant threat to the united states because as far as i understand neither of the ones there was the global dominance they just want to be treated as equal partners. the

the middle east, it's bilateral. they don't talk about concerns of industrial espionage from china. they don't talk to us much about the concerns of china's increased security footprint and the threat it causes to the east china seathe allies in japan, south china sea, the allies in the philippines. the germans don't have much interest in that. the transatlantic partnership, the germans have been lukewarm. they see americans using the dollar to put sanctions against largely european banks most recently b.n.p. at the tune of $10 billion, and the germans don't like that either. >> charlie: nor the french. nor the french but the french kind of know this game and they were caught red handed. but if you ask looking around the world of all the relationships that have been damaged with the united states and we've taken hits over the last few years and you and i talked about brazil but germany is the most important taking the biggest hit no question and the ability of the germans to look elsewhere both not coordinating with us the way we might like on ukraine and also specifically in being able to work much more closely with china -- >> charlie: the point is we need the germans most. >> just more than anybody. we like th

the pacific region. we had a frank conversation about north korean provocations and china's activities in the east china sea and south china sea. yesterday, i returned from hawaii where they are participating in the rim exercise for the first time. not the first time they were invited but first time to choose to participate. military relationships in the region are important and we remain engaged. i met with my counterparts while in hawaii to discuss the national and regional implications of north korean provocation. this was the first time in the history that the chiefs of defense from these three countries, myself, its republic of korea and the japanese have met together in this context. across the board, these engagements reaffirm the importance of close partnerships in protecting our national interests and assuring our allies against an increasing number of threats. u.s. leadership is still regarded as the world's best hope for stability and prosperity. i think of the extraordinary men and women who safeguard these freedoms. they are on my minds as their families. thank you. > i was wondering if you cou

the middle east, most obviously, but you have serious problems with russia. if you look at the far east, i could make the case that what we see going on in the south china and the east china sea may be the most dangerous place in the world for a whole series of reasons. so sitting in the white house in the state department or defense department, you're looking at a world where you can't work on two or three crises and say i'll put these aside for a while, they're all burning at the same time. it's hard for the u.s. government to organize forces and deploy forces to deal with all that. >> jonathan: you were deeply involved in iraq, what is your sense of the threat al quaida poses? is this a group that, as we've seen some suggest, may be more of a threat than bin laden's al quaida was pre-9/11? >> that's exactly right. the al quaida we went after in 2001 when we first went into afghanistan and iraq is a much different al quaida than we're seeing today. i think that core element, as the secretary of defense said before he turned over to mr. hagel, is that we had somewhat defeated them at the strategic level and, yet, the franchise is alive and well, if not growing, and part of t

the words are interpreted. china criticized the change and its relations with japan are strained because of a territorial dispute because of islands in the east china seahave the advisor to the cabinet of prime minister and he joins us live from the japanese capitol tokyo and thank you very much for being with it and they have not demanded the constitution and let's get that clear, he merely reinterpreted it. explain to us why the need to do just that now. >> i think japan deserves celebration, if i may say so, because japan has been for long time an uniquely isolated case that has continued to say is no matter trouble you are under, i would come to help you unless i am under the threat or attack. suppose you are in a train car and you have found a passenger under serious attack and you have said in theory i could help you, but in practice i would rather not. which country would you like to trust more? such a country that japan has been or the country that would be willing to say, yes, in my capacity i would be willing to come to help you. >> now, your japanese neighborhoods disapproves of the changes and can you categorically say reint intreins will n

it go into the east china sea, and then we'll see more mudslides and landslides. if it moves a little bit to the north, that means sout south korea. we're going to be seeing quite a bit of rain, and i think it's going to be the flooding that is going to be the main problem with this particular storm. >> kevin, thanks so much. coming up, a first for the vatican. pope francis begging for forgi forgiveness from victims of sex abuse in the church. their reaction coming up. >>> plus dangerously close. a shackin shocking near miss at a major airport. >> the pope talked with victims of abuse one by one. it took 20 years for such a meeting to take place in the vatican. >> there were tears and high emotion. according to the official communique the pope told the six before god and the people i express my sorrow of the grave crimes committed against you and i humbly ask you for forgiveness. >> reporter: it will do nothing for organization in europe and the united states who describe it as a public relations stunt. that process the response from the pope's official spokesman.

the storm is heading over to the east china sea. w, look at that video. >>> the dow drifting further away from 17,000. the nasdaq sinking more than 1%. let's go to nicole petallides on the floor of the new york stock exchange. nicole, what is driving the trade lower right now? >> we're looking to the downside. there was a lot of talk obviously about interest rate hikes and when those are moved up. we heard from jpmorgan and also goldman sachs. but tech, today, melissa, leading the way to the downside. nasdaq down 1.1% on heavy volume. you don't want to see heavy volume with conviction. that means they're really selling. we're watching airlines very closely today. this particular group has been under pressure. delta is down 5% this week. it has been down since last week since we talked about the june number, june traffic and revenue numbers. traffic numbers though seemed a little bit higher it was a disappointment overall and really weighs on the group overall. the question is also about business spending and that business spending, t

easy for sony and the current phase of anti-japanese sentiment over territorial disputes in the east china seare not letting nintendo or sony -- >> so this is a pretty tough place for both companies. on the one hand, you have microsoft getting investigated for reasons that may or may not be substantive, and you have sony on the other hand with all of this national sentiments -- liz: do we know how the pre-ordered might come in? >> we don't know, jd.com is not commenting right now. you're placing the order on qq or wii chat. it's kind of like using what's app. so it's likely to do very well, and the deposit is just a small amount of money, about $80, to deposit and get that xbox one. liz: the chinese don't allow anything that has so zombies in, so i'm wondering -- not that i've ever seen halo, but is there stuff that might be banned? >> there are some limitations in terms of content, but what really is the hard part is surmounting the online gaming space. ten cent, qq, all these companies do very well because they're online. having consoles is a whole different situation especially with the int

alexander gerst aboard the international space station return to >> reporter: the storm battered the east china seashe said the wind was so loud she could not hear people that was in the same room. this massive storm look at this spirit you can see the defiant i of the storm right there. at least 10 people have been injured as a result of this storm and 1% on a fishing boat is missing. >> jacqueline: a category one storm it started out here this morning making its way through the seventh tip of japan. still a typhoon. southern tip of japan. >> jacqueline: taking a different path going over the coastal waters. you can still see the uncertainty could fall over the mainland. it will be weakening as it moved up to the north. the coastal waters there are cooler so it could not possibly strengthen. >> pam: americans aren't stockpiling assault rifles like they used to, gun sales have fallen sharply from a year ago. c-r-t research says sales dropped seven-point-six percent through the end of june, compared to the first half of last year. >> pam: gun enthusiasts apparently aren't as worried about new federa

strained relations with the west, and are accused of engaging in aggressive foreign policy that could destabilize their region. russia and ukraine and china in the east and south china seas. yet both are in need of diplomatic and economic support. even if the two may not see eye to eye on the price of gas, both are reluctant to criticize the other on political affairs. perhaps a reason for russian president vladimir putin east. i'm eunice yoon in beijing. >>> china's got some media problems of its own, like food safety, for instance. a u.s. owned meat supplier in shanghai has been accused of selling mcdonald's and yum brands, owner of the kfc chain, expired beef and chicken at restaurants in china. even though sales have been suspended, investors were feeling a little queasy today. shares of mcdonald's down about 1.5%. shares of yum brands down more than 4%. >>> still ahead, the aggressive steps that some retailers are taking to fight what they call a retail funk. and whether those measures are working. >>> some very welcome good news for the city of detroit. its plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in the nation's history is, quot

the vast seas from the pacific ocean to the indian and those skies open and free. >> japanese and other leaders have voiced concern over china's efforts to assert its claims in the east and south china seas. >>> now abe's mission in australia was not just about strengthening security cooperation. another important element was signing a trade agreement. ron madison joins us with more on that from the business desk. >> that's right. after years of negotiations, abe and australian prime minister tony abbott have finally signed a bilateral economic partnership agreement. with this japanese people will be able to eat australian beef more cheaply and australians can buy japanese cars at lower prices. the signing ceremony was held in the capital canberra. >> translator: the japan/australia epa is a very important framework for bilateral trade and investment and has historic significance for our close bilateral relationship. >> today's visit is about a friendship, a special relationship, which has now been well and truly on foot for six decade the agreement says that japan will reduce its tariffs on frozen australian beef from the current 38.5% to 19.5% over the next 18 year

you know, as we see china sort of spreading its wings in the east and south china seas, some of that ied into potential for oil and gas reserves and for the fisheries. far more than that is driven by nationalism within china. it's important to disentangle those issues. how are we going to respond to? >> strategically there's things the u.s. has to deal with. >>. >> we thought we found the biggest impact -- where we saw the biggest impact or the impact on crisis. we've seen enormous increases. particularly in the price of oil. if you asked most analysts, they would have said $20 a barrel. now $100 a barrel is normal. we've seen enormous increases in the price of iron ore, copper, food, and when you get those prices going up,en only does it hurt consumers around the world, but it makes the security challenges associated with resources all that much more acute because the resource costs are such a bigger part of people's budgets around the world. disruptions to resource trade become all that more challenging, and so there's spillover effect from the economic side that make things even to

the guidelines that reflect the recent cabinet decision, while china repeatedly invades the territorial islands, and while the tengion in the -- tension in the east china seancreases, if infringement like this takes place in the islands, will japan and the u.s. jointly respond to the situation? what will the new guidelines change, sponsored by the china and the united states? so i would like to take the answer. discussions regarding the guidelines for u.s.japan defense cooperation are ongoing, and we are not an appropriate timing to provide any conrecte content yet, but i will continue working on this vigorously based on the cabinet decision. and when we evaluate the timing it is appropriate, we will release an interim report. and also with japan with related countries. the guideline is to ensure stability and peace in the region, but this is not for putting scenarios of certain responses. but we would like to consider that japan and the u.s. will cooperate seamlessly in peacetime to contingencies, including gray zones. so we would like to achieve regional peace and stability. i would like you to understand that guidelines are not for specific scenarios, b

>> well i would say that there's, you know, because of the places we operate in the east china sea, south china sea and in the pacom aor. we have interaction chinese vessels all the time. military naval assets, et cetera. i wouldn't categorize that in the past, recent past, any of these interactions would be of a harassing type of nature. so we continue to have a very productive dialogue with our chinese counterparts, particularly as it relates to maritime security forces and military forces of how we operate in a way, professional way with each other to eliminate the possibility of miscalculation through what might be perceived as harassing activity. >> admiral, julian barnes, "wall street journal.." two related quick questions. the, how worried are you about tensions between south korea and japan limiting u.s. efforts to get trilateral cooperation and will those send shuns inhibit the u.s.'s ability to keep the peace in the pacific? and are, on similar note you just finished or there's a recent exercise with indyaw and japan. how important has developing a military to military relations

countries, neighbours of the china, finding themselves the weaker partner in their disputes with and assertive china and their disputes throughout the south china sea and easthina sea. >> at least 10 have decide as a power of the typhoon moves across the philippines. warnings of surges and floods has brought hundreds of thousands trying to find safe ground. >> the typhoon battered the area for a few hours. in that time it caused damage. drng winds blue down the lines, leaving a third of the ski without power. several areas have been flooded and roads closed. the government says it is working overtime to get life back to normal. >> looep up operations is -- clean-up operations is number one. restoration of facilities is a priority. >> over 50,000 people have been told to evacuate homes and businesses. many are stranded. some people say the government could have been better prepared and should have learnt its lessons a long time ago. >> this is the biggest storm to hit the country since the typhoon last year. >> the government said it is improving the did asker prepare -- disaster preparedness programme. this is one of hundreds living in disaster zones. they

." >> from east ukraine to the middle east to the south china sea, serious foreign policy challenges to set the white house. the situation is an argument stability unseen since the 1970's. washingtonnow from is jay solomon who covers foreign affairs and national security and carol lee. i am pleased to have the both of them. welcome. >> thank you for having us. >> tell me where did the idea come from that you simply see a lot of dots that were connected and you said wait a minute, what is going on? after looking at the dots, tell us what you mean about an arc of instability. was think for me i traveling a lot with secretary kerry over the past few months. every week, there was another crisis. ukraine, iraq, syria, the middle east. it is a continued crises and trying to figure out what is the unifying theme. it was difficult. i think what struck me was the sense we do have a time where the u.s. is kind of pulling back. a lot of voters wanted that, they wanted to be left engaged. at the same time, there are all these challengers coming whether it is the russians, the chinese, the irania

>> because of the places we upgrade in the east china sea via frequenwehave frequent inteh vessels of kinds hav, civil, maritime security, military naval assets etc.. i wouldn't categorize that. any of these actions would be a harassing type of nature so we continue to have very productive dialogue with our chinese counterparts particularly as it relates to the maritime and military forces how we operate in a way professionally to eliminate the possibility for this calculation >> two quick questions. how worried are you about the tension between south korea and japan leading u.s. efforts to get the trail after a cooperation and while those tensions and have it the ability to keep the peace in the pacific and on a similar note, you just finished the race in exercise with india and japan. how important is developing the military to military relationship in india than with you and what is the next step forward in that partnership? >> let me start with the second question first. in exercise we do in india as you know we are in the process of doing our annual exercise that is occasionally

the media east region plagued with instability. i was in singapore to meet with partner nations. we had a frank conversation about north korean provocations and china's activities in the east china sea and south china sea. yesterday, i return from honolulu to china is participating in the rim of the pacific exercise for the first time. not the first time there've been invited, but the first relationships in the region are important. i also met with my counterparts while in hawaii to discuss the national and regional implications of north korean provocation. this was the first time in history that chiefs of defense from these three countries, myself, the republic of korea and the japanese have met together in this context. across the board these engagements re-affirm the importance of close partnerships in protecting our national interests and assuring our allies against an increasing number of threats. in every theater u.s. leadership is still regarded as the world's best hope for stability and prosperity. as we enter this fourth of july weekend i think of the extraordinary men and women who safeguard these freedoms. they are always foremost on our minds, as are their families. than

. >> charlie: from east ukraine to the middle east to the south china sea, serious foreign policy challenges beset the white house. the front page of today's "wall street journal" described the situation as an arc of instability unseen since the 1970s. joining me from washington, two authors of that piece, jay solomon covers foreign affairs and national security for the journal and carol lee is the paper's white house correspondent. i am pleased to have both of them. welcome. >> thanks for having us. you. >> charlie: let me begin with the question. tell me, where did the idea come from? did you simply see a lot of dots that were connected and said, wait a minute, what's going on here? after looking at the dots, tell us what you mean by an arc of instability. >> i think, for me, i was traveling a lot with secretary kerry over the past few months and it was just kind of every week there was another crisis. ukraine, iraq, syria, now the middle east, it's just this kind of continued crises and trying to figure out what pulls them together, what is the unifying theme, and it was difficult, and i

. >> it really is the balance of geopolitical stability we are seeing right now, at least currently. but that is all changing as china agitates in the south china and east china seasou feel that the facts on the ground could change the business relationship, moving forward? >> in some ways, i think it will accrue to the benefit of u.s. companies. people like the idea of doing business with america. they liked the idea that they can trust the delivery, service. some of these concerns in some ways accrue to the u.s.. we have pivoted to asia. there is a u.s. pivot to asia. i think that can benefit u.s. firms. >> thank you for joining us. up, more on what our reporters will be watching when markets kick off. >> there is the bell. we are taking a look ahead to the opens in japan. our intrepid reporters are here to tell us the stuff they are keeping an ion. let me guess -- something to do with wimbledon. >> djokovic of course won wimbledon. ,-- uniqlo, the sponsor. >> there it is. sponsorship,r beginning in 2012, may. i am not guaranteeing a shareprice move. the brand will be happy with this second wimbledon final. >> it think they are going to share that shirt? >> i im

. >> but it's those things and the east china sea issues with japan -- >> sure. >> with the philippineso when you go and come back, we'll have you on again to tell us what you found. thanks, john. >> looking forward to it. >> great. >>> coming up, jim cramer on wells fargo and what to watch today, rest of the day, and next week on wall street. we'll be right back. with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. could help your business didavoid hours of delaynd test caused by slow internet from the phone company? that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip. fly to florida. win an award. close a deal. hire an intern. and still have time to spare. check your speed. see how fast your internet can be. sw

the scenes with china and russia. states andted containing russia. >> some of that. >> that is why this is quite interesting. toe see it as an effort broaden the sphere of influence thehe peninsula and east-china seastates is an ally of south korea and japan. enemyy are the common between china and south korea. historical issues between the two. >> that is where it comes into play. south korea is the enemy of north korea and china is the only friend of north korea. these talks are important and what we have seen is a friendly relationship with the president. china, he did half of it in china. apart from north korea, what is the headline? >> north korea. is theother headline economical operation. obviously, china is an important trading partner and they are talking about direct trade. they are talking about it possibly being finished by this year and the other is the boundary issue. >> i have never heard of bugaboo. i am 75 years old. they will push the boundaries off. they could overlap. so, there are political tensions. >> thanks. president is instituting a anti-corruption drive here. something that is designed to kill two birds with one stone's, it gives a better perception on the global stage.

china. each of the container is filled with computers, closed even cars. went recently everything east to shanghai and then europe by sea. pull cuttingest to the journey time from six week 22. me weststics boss tells china has always suffered economically from having terrible transport links with the world. strengthening the connection will speed up and industrial transformation and boost global competitiveness. >> high tech are getting the message. not just hardware but software is moving in. with markets works in europe and north america. >> the transformation has been revolutionary. it has opened up a lot of opportunities to come out here. before it was a nightmare. now it has opened up. more convenient to go west and east. >> until recently, china has always relied on foreigners for railway engineering. even a decade ago it was european know-how that started to move into high-speed rail. now china builds its own. is stolene technology from others. >> one of china's new generation already 12,000s, kilometers of high-speed track and once to die in -- double that by the end of the decade. critics worry about corruption

question of libya, the question of ukraine, the question of chinese claims on islands in the east and south china seahese are all problems that have largely developed under obamas watch. he gets full credit for some of the problems, only partial credit for others. host: thoughts on the past couple of callers? caller: i think there is one area that i would like to see the demonstration kind of push a little bit more. guest: let's look at a more holistic way. it's not just the individual problems. we do have instability in the world. there has been some the system from former officials for need for a grand strategy. we're still awaiting a new national security strategy to be released. i think the dissertation is dealing with a world that is much different from any other present administration has had to deal with. it's not just the level of instability in the number of problems. the world is changing in terms of the internet revolution. the flow of information. you have competition in cyberspace now. i think they have done a decent job grasping those challenges. what i would like to see kind of a more

the regional situation. that means international situation. obviously, angela merkel will be interested in knowing about china's views on its recent assertiveness in the south china chinad also in the east seahave these islands that are contested with japan. one of the interesting things i she will probably probe and see how that relationship is going between russia and china. some people are arguing because of what the u.s. is doing, and europe i should say, doing in the ukraine, pushing russia back, sort of pushing russia towards china. interesting for her to actually get some idea of how close that arrangement, that potential alliance is between china and russia. anna? >> david tweed, thank you, joining us from hong kong. up, the top corporate story that you cannot miss for the trading day. stay with us. ♪ >> first. bloomberg. to "countdown." i'm anna edwards. >> i'm mark barton. think your morning cup of coffee is expensive, think again, caroline. kale diamond claims to be the most exclusive coffee maker, selling kilos of coffee for tens of thousands of dollars. why is it so expensive? we went behind to see what a ultra luxurious coffee is all about. we are purveyors of the world's fine

territorial disputes and what is going on in the south china sea and east tennessee will come up tomorrowresting to have two cabinet secretaries traveling together, secretary kerry and secretary lew. have we seen that before? think it is pretty standard for both of them to come. you left the meetings to join us on the phone. we appreciate you taking the time. hopefully, we will speak to you again tomorrow. thee go back to july and advent of earnings and revenue season. it is upon us and the linkage of how companies perform is in each instance tied to labor costs. is an economist and he joins us. let's talk about the revenue line we are going to see. phenomenal gdp has been lousy for a long time. appropriate revenue growth? >> it is likely to be for rather than six. in terms of operating profit growth, we will do someone better. somewhat more than that. i think it will grow more than that this year for technical reasons. >> what is the pressure to cut costs right now? general, is this a time of job reductions for our companies? no, i think you saw yesterday's data for the u.s. economy over