Ok, the selloff continues.
However we are off the session lows by almost 133 points.
At the main question for investors this year -- how is the u.s. economy?
Maybe, just maybe, better than the weather is letting on.
We are joined by our economics editor and barry.
Ok, barry, consumer spending showing strength.
What is going on?
Are people shopping despite the cold?
I think when you step back and think about what was supposed to be the main driver of growth in 2014, it was a dissipation of the negative impact of higher taxes, which really took a bite out of consumer spending in fourth quarter last year, and the fact that the consumer is made some progress in balance sheets deleveraging, we see the expansion in loans and even mortgage credit now.
I think the underlying story for consumers is not bad.
From the equity perspective, those consumer discretionary stocks got decidedly expensive by the end of last year as the market bought into that idea.
People are spending more money on credit, taking out more loans.
But hey, that's good?
The glass is half empty and half full in this case.
We got a big increase, point or percent increase in consumer spending -- increase in consumer spending.
The reason it went up so much in january was an increase in services spending, away from durable goods.
We spent a lot more paying for things we have to pay for.
At least we spent the money, but it is not an alloy good news.
Keeping us all warm.
I bought a new truck last year.
What do you think about car sales?
They were weaker than the market anticipated in february.
Weaker than the market anticipated in january.
The car companies seem to think they can make it all back, that purchases were deferred.
They have a reason to think that.
If you are going to buy a big ticket item like that, you are probably going to buy it.
That is what the car companies are counting on.
I have been making the point all along, my concern is -- you have bad weather for a few months, it sounds like a lot of those consumers will not be replaced.
You can talk about ends up demand all you want, -- you can talk about pent up demand all you want, you did not go out to dinner, that restaurant is not going to get that money back from you.
Yet, you look at the consumer spending numbers.
Barry, where do we come out in all this?
Is the weather in fact in issue?
Those are a bunch of really fair points.
What i would add, trish emma and to matt's point -- we had the best recovery in auto sales back in 2011, 2012, and even last year.
We are at the point where auto sales have leveled off.
If we're going to get a further boost from cyclical parts of the economy, it has to come from housing.
I am not talking about house prices going up.
I am talking about loosening the credit channel and getting first-time home buyers back into the market.
We thought the most durable trend would be a revival in capital spending.
We underinvested in our capital stock for 10-plus years, other than the energy sector, and that is where we thought the lifting of all of that public policy and certainty related to all of the government issues we have had the last two years, that would be the main driver and that would be a much more durable placed to pick consumer oriented companies.
We did see the pricing index today -- it went up a point more than people thought, giving some hope it would rebound a little bit.
But guess what?
The expiration of the r&d tax credits last year.
Congress did not renew those.
We are seeing bid increases -- big increases in november and december.
We have seen nothing in february so far.
What we do not know is whether we will see that building and, whether there was a temporal, prime shift with black -- prime shift -- you think that is inevitable?
The good part of the durable goods report last month, or last week showed a big pickup in january.
We had in industrials conference.
We got a lot of positive anecdotes from these companies.
They are much more interested in capital spending or even nurtures and acquisitions than simply vying back stocks.
I think we got to an important part of the recovery.
You look at 2013 and all you saw was buyback after buyback after buyback.
No ceo seemed willing to make that capital investment either in equipment or people, for that matter.
If we can change that, we will certainly change a lot for this economy.
Barry shared some anecdotal evidence.
What are we seeing in terms of the economy?
The most recent report showed some improvement, i believe.
It did show improvement.
On a rolling basis, it was a major change from what we had seen earlier.
We hope that continues going forward.
The big question is, do we see that as the weather warms up?
Maybe there is a hit in the isam report today that we are going to see that.
What will be interesting -- we will have a fed meeting in a couple weeks.
A week before that we will have the beige book.
Be anecdotal reports from around the country.
We will see about what they are saying about how the weather affected them.
Thanks so much, barry knapp, and of course our own michael mckee.
Automakers will be unveiling their own new models.
We will go to the auto show.
Might you be there, matt?
I don't have a choice.
You are doing your own unveiling.
I would not want to sound like a biased journalist, but that is my favorite brand.
We are back right after this.
? the geneva auto show kicking off with major automakers unveiling their hottest ticket items for 2014. if you forgot to get your ticket there, you are in luck because one of the most anticipated reveals is right next to me.
I am joined by ducati north america's ceo and we have the new diavel, which is a huge hit in north america.
I know guys who have switched over from harleys to this.
You guys want to take off the cover?
Let's do it here.
So, this bike was introduced in, what?
It is a lightweight cruiser, 200 kilograms, right?
100 20 pounds.
That is a massive boost over what you would get for a harley -- although i know harley guys say they buy them for different reasons.
How much of a pie do you put up in the cruiser market?
-- how much of a fight do you put up in the cruiser market in the u.s.? [indiscernible] whenever we design a motorcycle, we try to design -- beautiful, the best possible in the market, and at the same time we try to make it every time better, more accessible, comfortable.
You have the big calipers on here the new engine, which will be greek to most people, but it is near and dear to my heart.
I have it on my strata.
It is a big, big facelift.
It is a big facelift.
We work on all areas of the motorcycle, as i mentioned.
We work on the design.
Its beauty and it makes the bike more exciting.
We work on the aerodynamics.
We shortened the exhaust.
Trish, if you could hear this, you would want to get on.
Look, i think it is a beautiful bike.
Until they create a motorcycle with a cage around it to protect me from oncoming traffic, i'm probably not going to be on one.
But your core audience is not mean.
-- not me.
[indiscernible] at the same time it embodies all of the values of the ducati brandt.
And your audience is growing.
Record sales in 2012. record sales in 2013. never sold that many ducatis.
What about this year?
Going to do it again?
The signs are there.
We launched new products this year.
We have a limited edition motorcycle.
It is this superluxury product.
What do you attribute that to though?
If it is a superluxury product and the economy is struggling, who was buying?
We have a number of showrooms around the world.
They love sports motorcycles.
They are always looking.
This is what we do.
We go to our engineers, and we say if you could do a bike no matter the price, what would you do?
And they come up with this.
It was sold out.
I would say as far as the marketing, the sales experience, you use motorcycle -- technology better than other motorcycle competitors.
Competitors do not have the integrated website that you have.
But it is getting a little dated.
How important is that?
This is one of the areas we will invest more energy, our communication.
Is anyone who has the passion for biking and is not afraid of making a bowl statement.
There is only room for one, right?
You can get another back there?
You take back this -- you take off this carbon seat cover right here.
I can show you after the program.
she is going to be hard to convince.
It is a beautiful bike.
I think on the right track, it'd be a lot of fun.
Audi bought ducati a few years ago.
How much do they work with you on building these new products?
Actually, we brought to the market six new models.
Four of them are here.
Being part of the group has been a blessing for the company.
At this stage, we are still doing our own work at ducati.
[indiscernible] what is ducati remains ducati.
These are things going forward.
They want us to develop our ideas and give us support.
We are developing new ideas on the leds lights, just to give you an idea.
On the new bikes, i understand the diavel, this is a brand-new revealed.
We have seen a new reveal for the new monster.
Is there something else coming out?
I hear a lot of talk about possibly a scrambler?
Perhaps something more affordable?
This thing is $21,000. simply let me tell you something.
We love motorcycles.
We love to buy them -- we love to build them.
We are working on a new project.
You cannot talk about the scrambler right now?
[laughter] hey, thanks so much for joining us.
It has been a real pleasure unveiling this new diavel.
And i'm going to take it for a spin after the show.
Trish, let's go for a ride?
We are not going down that road.
I have gone way down that road.
That's why i get nervous.
All right, we will be back in two.
? i would probably get in a lot of trouble if i called the advertising industry boring, but since the 1990's the advertising industry has been about one percent of u.s. gdp and total spending has never really outgrown the overall economy.
What gives in this sector?
Where is the growth?
Eric chemi is the head of research for bloomberg businessweek.
The market is as static today as it was in 1920. it has never changed.
It has been flat line the entire time.
We're used see -- where you say things like finance that have tripled.
You see social media and the internet -- you think yeah, advertising is really growing.
But is this a transfer of funds?
The chart of advertising looks like gdp, which is why the percentage is just flat.
It is all a share game.
Everything you see on the internet just takes away from newspapers, television, and radio.
So, qc -- you see -- that is exactly what you see this.
They have to consolidate.
It is all about stealing share.
What does that say about the creativity of the ad industry?
Ad buyers like coca-cola, they have not got more confidence in the value of advertising.
You go back a century, and they spend about three percent of their sales on advertising and it has never changed.
They are no more confident than they were in the night t 90 -- in the 1920's. could it be the more the economy grows, the more they sell, and the shares sell the same?
If that were true, they would grow the shares.
We see this in every country.
All the countries we tracked, they are all -- the companies are only willing to spend so much?
And it adjusts for itself.
It adjusts for itself.
The internet, the first five to 15 years of growth look just like radio and television.
We can read the whole thing in business week.
So, we want to wake everyone there.
Eric chemi, thank you very much.
We have the top 10 stocks you need to know about.
The close is next.
? a lot of concerns about ukrainian tensions, number 10, down two percent, autodesk.
Autodesk transitioned to a trip -- prescription model was not convincing.
They reported models last week that missed analysts estimates.
Number nine, plug power, the highest into a half years -- two and a half years.
Walmart will use more than 1700 hydrogen fuel cells at six north american distribution centers.
Number eight is comcast, down more than one percent, close to buying free wheel for more than $220 million.
Of platform also used by viacom and direct tv to insert advertisements into on direct programming.
Number seven, microsoft, down this afternoon.
The newly appointed ceo is shaking things up according to reports in an effort to appoint a former political operative.
Mark pentz, the chief strategy officer.
We learned that two other executives to be leaving.
Kroger is flat today.
They recently approached safeway about buying part of their operations according to people with knowledge of the matter.
Cerberus capital is the lead bidder for the whole unit.
They would prefer -- prefer to be sold in their entirety rather than piecemeal.
Number five is men's wearhouse, up slightly after they reached an agreement to share confidential information with joseph a bank, moving the companies closer to a potential merger effort -- after several failed attempts, raising stock to $65 per share if discussions reveal a higher price point warranted.
These mergers, there is no such thing as an exclusive merger.
I was going to say that joseph a bank and men's wearhouse were getting on my nerves.
I think that shareholders probably feel the same way.
They want them to either consummate this thing or be done with it.
Unless you are getting an offer of 20 or 30 from a few months ago and now you are
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