Liz countdown to the countdown. Currencies gone wild. Just 24 hours after g20 ministers tell japan and other big missions, no currency wars. If a weaker currency helps their economy, plummet against the dollar and the euro. Wheres the trade for you . Top currency strategist helps you dig for the treasure. Are your mutual funds socking you in dividend taxes . A morningstar analyst teaches you how to countdown starts right now. Liz good afternoon everybody. Im liz claman. Happy president s day. Yes, the u. S. Markets are closed, but we are open for business. And good thing at that, breaking news in just the last hour and a half, the wall street journal reporting that office max and office depot are in talks to merge. Sources say the talks are fluid, could still fall apart, but an announcement could come as early as this week. Office depot is the bigger of the two with a market value of about 1. 3 billion dollars. While office max, about 933 Million Dollars. Both have pretty much skyrocketed over the second half of last year. Now, according to sources, the deal is expected to be stock for stock exchange. The possible merger could help the two Office Supply Retailers Team up against the 800 pound gorilla in the group, staples. Would the deal get Regulatory Approval is a very important question because you may remember an attempt by staples and office depot to merge was blocked back in 1997 by the federal trade commission. But now growing competition with other chain stores and online retailers like amazon have lowered Office Superstores clout. We have an analyst coming up in a minute to weigh in on this possible we stress possible deal. Stand by for that. The asian markets open for business today. Take a look, hong kongs hang seng slipping slightly. But look at the nikkei 225 out of japan jumping more than 2 full percentage points. You can credit a drop in the yen again for that equity spike. When the yen falls to a 33 month low against the dollar, that means that the companies in japan an the products they make and the products they make become more attractive to overseas possible investors and clients as the g20 commissioners give the green light to currency battles but say play nice and dont call it a currency war. Countdown goes shopping to find you the best deal for president s day. It might be shares in Real Estate Investment trust, manages the buildings for big box retailers like walmart, target, best buy, were talking to the ceo of ddr. Lets get right to the breaking news from the wall street journal, the report that just hit the tape, office depot and office max may be in merger talks. Lets get to a Sanford Bernstein analyst who is on the phone. Thank you for calling in. Do you believe this is a possible deal . Absolutely. This is a deal that should have happened long long ago. And i think were at the point where were actually going to see a deal come through. Liz let me ask you then, who gets the better end of this deal and what kind of savings would be reflected if they were to merge . Well, the market caps of office depot and office max are actually not that far apart. Office depot is valued a little bit [inaudible] clearly thats where the negotiation is going to be. It will be a stock swap where each owner of max will get a share of depot and vice versa. Today obviously they are in a room trying to figure out what that ratio will be. The good news here is that the potential synergies are so substantial in this deal. Our best case estimate is 450 Million Dollars annually, upside estimate is 6 to 700 Million Dollars. The synergies are so substantial that theres plenty of foundation for negotiation of a fair deal. Liz is there a foundation to take on staples in a way that would meaningfully be attractive to shareholders who might want to jump in, if this becomes a combined company . Well, this would become a much larger company, therefore would be a much more capable competitor against staples. Obviously its a very competitive space overall. You have amazon, costco, you have got others. And so from a pure Public Policy perspective, we think this is a deal that should happen, to create a stronger more better capitalized more capable number two player. Liz would you foresee any regulatory disapproval . When staples tried to merge with office max i cant remember which one it was Staples Office depot merger in 97, the merger was blocked. Liz will that happen again . Well, it will be scrutinized. There is obviously a precedent in a deal being rejected, obviously that was 15 years ago. However the basis was that case was price deferentials and we dont think the same case could be argued today. Again from a Public Policy perspective, i think there will be a stronger number two player to compete for consumers against a very strong staples. We think there will be scrutiny, but i dont think its insurmountable. Liz office depot has about 1,675 stores, about 900 stores for office max. Would we see closures . You would, especially in markets where theres all three. Where theres a staples, office depot and office max. What you typically find in a market like that, either the depot stores nor the max stores are profitable, and hence, if you can combine the two companies and close a store in one of those markets, the remaining two players would both do much better in that market. We think there could be as many 400 store closings in a deal like this. Liz one year charts of both of these names, coming off a very low base here, they both almost mirrored each other. Its almost incredible, each dip. That could be attributed to if were seeing less business spending or what have you, but is there a stock play here . Do you have a favorite among them . Do you have a rating that you are going to change on monday tuesday . Office depot, market perform, staples market perform. Office depot, office max is much better for those two companies than it is for staples. Liz the News Office Depot and office max might merge, that according to the wall street journal. We appreciate you getting on the phone on this president s day. Thank you. Thank you. Liz he thinks it is a great idea. We will be watching this the minute the markets open tomorrow. In the meantime currency markets are already open for business today. And the bond king over at pimco has been weighing in with tweets. Yes, bill gross tweets. After the g7 meeting, pimcos bill gross who is widely followed when it comes to any investment move he makes, says to buy the brazilian and watch out for inflation. He warns of a coming currency war after this weekends g20 meeting that sent the yen as we showed you at the top of the program, near a 33 week low even as g 20 ministers say please dont use the term currency war. You can think it but you cant use it. And he points to the mexican peso for the next currency play. Its been looking extremely strong over the past six months. Lets get to my next guest who who agrees only in part with bill gross but has ideas of his own. Chief currency strategist at bank of new york melon. Good to have you here. Thank you. Liz people are constantly looking for yield and you could argue if the yen is dropping 33 against the dollar over the past several months, theres some yield right there, if you short the yen. Absolutely. You know, the way that most investors look at equities and bonds, they want to hedge away the Foreign Exchange return. That risk is something that they are not familiar with, and consequently they are now kind of leaving themselves out of a double play. Depending upon where you invest now, you need to consider not only the return on the underlying security, but also the Foreign Exchange. In many cases, it could enhance an otherwise drab return. Liz well we have had it could also hurt an otherwise decent return. It could. Liz now that you have the g 20 in essence over the weekend they said dont call it a currency war, but when the countries devalue their currency with a specific effort to improve their economy, then its okay. But either way, theres always a trade. So lets just drill down on the yen for a minute. Would you be shorting the yen because you know that japan is dying to weaken its currency so its exports become more attractive . They are looking to devalue the currency certainly not only to make their exports more attractive, but also to stimulate inflation in their economy. Thats one of the problems that they have been suffering for the last 20 years is deflation that has its own problems. So certainly you want to i think short the yen right now. Theres going to be pushback in the spring. Pushback from other asian exporters that are feeling the pinch. Liz theyre totally annoyed. Why does japan get to do this and they dont, i guess because they have a central bank that could easily maneuver through this. When you say spring, do you mean april may . April may, this in of itself is a currency war. Liz lets get to bill grosss column on the mexican peso. He is loving this. It was a couple months ago that a tweet came out he started piling into the mexican peso it looks like around last june. Since then the peso has been moving considerably higher and i just look at that and i say 10 . Not a bad move at all. Against the dollar. But tell me then where you see the opportunity with the peso because this is where you agree with him. Yeah, i do agree with him on the mexican peso. That was the tweet that was heard around the world, if you will. The mexican peso is a great currency. I would agree if not a great currency, certainly a very good currency. We would like to see the fundamentals in mexico a bit stronger. I think they are on the mend. But we have had a problem with dollar mexico breaking below about the 1260, 1250 level reflecting mexico strength, dollar weakness. Liz when bill gross put this tweet up, mexican peso looks good, i believe that mexican debt just began people began piling into that back in june when he started telegraphing that, and it has been a very strong trade. So maybe he was talking his book a little bit liz a little . Either way im sure he knows what hes doing. Why not then look at this and say what is their central bank doing . They are not devaluing their currency so you would go long that one because it is not going to be peso negative. I will tell you why we like the peso. Mexico is investment grade, its debt is investment grade. Majority of its trade in investment flows are going to the u. S. They are tied to the u. S. In terms of their direction. So with the u. S. Improving this year, mexico will improve. We see that the demand for their debt for their equities will continue to grow. If you want to gain a greater exposure to emerging markets which is the search for yield right now, you have to have a piece of mexico, even if the fundamentals arent quite as strong you would otherwise like. Liz what would you short . I do not like the brazilian real. The brazilian government is not comfortable with currency strength. They have had great deal of success over the last several years at controlling the pace of currency appreciation. And i would expect them to implement further measures, Regulatory Reform measures to discourage Foreign Investment. Liz where does this leave the u. S. Dollar . Were devaluing in a way by printing so much and by so much fed involvement, but do the others trump us and therefore make us look stronger . Yeah, this is going to be the tale of two halves, in terms of 2013. Dollar strength becoming more reflective in the second half of the year. Eventually we have to break with this negative relationship between the dow and the dollar. Normally when the dow rallies, the dollar rallies. That has not happened since we went to 0 Interest Rates five years ago. That has to change. So expect that to be more of a story for 2014. Liz michael has just explained to you that all you really have to do is look at what Central Banks are doing and if they are devalue devaluing their currency, you can short that and go long the ones that arent. Michael thank you very much. Thanks liz. Liz theres all kinds of investments beyond equities. Thats why we try and bring that to you. Speaking of which, for those of you in mutual funds, how about fewer taxes and more returns on your mutual fund investments, thats on everybodys wish list; right . Well the funds you are investing in might be bleeding all the green you thought you were making with them. We dig into the top funds that are specifically set to protect you from higher taxes. Yeah, you are going to be on the phone with your Financial Guys saying why arent i in these funds . Dont move we have the list for you. Coming up next, we break down the fundamentals of bigger returns with cara esser of morningstar. Dont go away. Were live and in business. Great, everybody made it. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. So we created the extraordinarily comfortable sleep number experience. A collection of innovations designed around a bed with dualair technology that allows you to adjust to the support your body needs each of your bodies. Our sleep professionals will help you find your sleep number setting. Exclusively at a sleep number store. Sleep number. Comfort. Individualized. Right now, queen mattresses start at just 599. And save 50 on our limited edition bedplus special offers through monday. Liz were following developments of a cyberattack today on burger kings twitter account where somebody hacked into bks page to make it look like mcdonalds page. Lets get to shibani joshi. Shibani kind of confusing because this website is normally used to tweet out deals and really is being used as a Brand Ambassador type website. But that will change a couple of hours ago that all changed a couple of hours ago as somebody hacked in and changed the logo saying burger king had been bought by mcdonalds obviously thats not true. Burger king has come out with a statement saying its come to our attention that the twitter account of burger king brand has been hacked. Were working directly with administrators to shut down the account until we are able to reestablish our legitimate site and authentic postings. We apologize to our followers who have been receiving erroneous tweets. So this chaos obviously needs to be examined, and were certainly going to continue to follow this. But its generating buzz for this company. Theres a little bit of upside there while all this stuff is also happening for burger king. Liz it would be too obvious to say that somebody from mcdonalds did this. Shibani mcdonalds came out on its twitter website. It said we empathize with our burger kings counterpart. Rest assured we had nothing to do with the hack. They are wiping their hands clean. You know, that is the obvious finger to point here. But, you know, but seriously this is a major issue, hacking obviously we talk a lot about. Liz can twitter trace these things . Shibani they can, but what theyve come out and said is they dont talk about whats happening for privacy and security reasons. They do work with authorities. They do take hacking very seriously. Tracking is a little bit hard to do, but theyre certainly you know, they certainly work on these things. Liz well, it was hard to find out when somebody hacked charlie gasparinos twitter page to make him look like brian williams, but im just saying. Thank you very much, shibani. That did not happen. Im kidding. It may be washingtons birthday today but you can still be looking to give yourself a present that will save you benjamins. One analyst has a fund picking strategy that could put more returns into your pocket and out of the hands of uncle sam. We wanted to bring in cara esser from morningstar to talk about the names of the funds that help you do just that. This goes to cara to the very heart of investors who say im in a good fund, they dont even realize that their profits, that their returns are getting taken up by all kinds of taxes. Correct . A lot of investors dont Pay Attention to that. If youre investing outside of a tax advantage account like an ira or 401 k , you do need to Pay Attention to whats happening to the taxes that youre paying on distribution from these funds. Liz lets talk about how you spot first the holes, the money holes, forget the money pits, but where the leaks are happening. Do you look at certain funds and their tax rates . Is it very obvious . Sure, so theres actually a group of tax advantage mutual funds, so they say it right in the name, tax advantage, something, something, is the name of the mutual fund. Theres a bunch of mutual funds and closed end funds that use tax advantage strategies to their benefit and to the benefit of investors. And there are is a lot of closed end funds in particular that employ the strategy because many investors turn to closed end funds for the income generation potential and you overlay a tax advantage strategy, and it is really powerful for after tax returns. Liz were looking at a tax advantage global fund. Theres a couple here. Theres eto and etg. They have done beautifully since about three quarters of a year ago. Talk about this one. Whats in them . And what qualifies so that youre only taxed at what, 15 , versus higher percentages for other dividend paying stocks . So these funds in particular focus on qualified dividends. And qualified dividends have to meet a specific criteria, and that has to do with the firm and where its located thats paying the dividend and also with how long the Holding Period of the underlying security is. So these funds have managers that are very experienced in finding firms that can pay qualified dividends and making sure the Holding Period is long enough to get those dividends. And these funds also do some Different Things with dividend capture on Foreign Investment names and they also do a lot of tax so they dont distribute any Capital Gains and attempt to only distribute qualified dividends. Liz are you listening . Youre going to only be taxed depending on the metrics we just showed you probably 15 to 20 percent when it could be so much more in some of your other funds. How do you pick these funds . You talk about the five so called ps of fund picking. We rate both mutual funds and closed end funds based on what we call the five pillars. The first p is people. Were looking at the management team, whats the breadth of experience that they have running a particular strategy. And we also look at the investment process, what are they doing, whats the underlying strategy, how are they meeting the investment goal in the case of the tax advantaged strategies, how are they investing to, you know, tax advantaged income for the investors. The third p is parent, we would be looking at the fund sponsor, how shareholder friendly are they, do that have longterm incentive plans that are good for shareholders. Also look at past performance and fees. We want to make sure the fees are competitive for similarly invested strategy. Liz for the john hancock tax advantage Dividend Fund in both the global and regular one, what are the fees there . You know, i dont know that offhand. They are all very competitive. That John Hancock Fund is one of our favorites in the space. Liz took a big dive in december. Anything to worry about there . I dont think so. I think people were concerned about the fiscal cliff and what was going to happen there, so i think that was just a temporary market dip, but i dont think that investors have anything to worry about there. Liz i want your ow veers i want our viewers to know you have earmarked nine funds. We have put them up on our facebook. Com liz claman so you can see these tax advantage Dividend Funds so you know you wont be taxed away with all the profits of what you have been making. Thank you for educating us in the fundamental of funds. Thank you very much. Thank you very much. Liz cara is a morningstar analyst talking to us live on president s day. President s day, you know that means time to go shopping. Retailers across the country are slashing prices offering all kinds of deals to draw you inside the stores to spend. But hold on to your wallet, coming up, we have a deal for you. Ddr corp. Manages the Shopping Centers for all the biggest retailers like walmart target sears and best buy. Should you be adding their stock to your shopping bag today . Might just gain in value versus that blouse or that tv. Ddr corp. Ceo joining us next live in a fox business exclusive. You have to hear this one. Its a new day. If your a man with low testosterone, you should know that axiron is here. The only underarm treatment for low t. Thats right, the one you apply to the underarm. Axiron is not for use in women or anyone younger than 18. Axiron can transfer to others through direct contact. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these signs and symptoms to your doctor if they occur. Tell your door about all medical conditions and medications. Do not use if you have prostate or breast cancer. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet, or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritatiowhere applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. See your doctor, and for a 30d free trial, go to axiron. Com. You are gonna need a wingman. And with my cash back, you are money. Forget him. My Airline Miles will take your game rldwide. What im really looking for is i got two words for you rewards. Theres got to be better cards than this. [ male announcer ] theres a better way with creditcards. Com. Compare hundreds of cards from all the major banks to find the one thats right for you. It simple. Search, compare, and apply at creditcards. Com. First rounds on me. Liz so glad you are hanging out with me for this hour. David asman by the way yeah were all working because the Global Markets are still open. We could still talk about big plays on president s day. Is president s day the new black friday . Maybe. Retailers across the country are using the holiday to slash prices and offer very strong deals. Check out some of the top deals today we found. Walmart offering a 60 inch vizio hd tv for a 300 discount. The price tag, under a thousand, 998. Macys has a huge sale on jewelry. While the gap offers 40 off everything. Everything in the store. Theres one across the street here on 6th avenue. But we have an even better name for you, ddr corp. , its a Real Estate Investment trust specializing in managing value oriented shopping malls with a few names you might know like walmart, target, best buy as the anchor stores. Joining me now is the ceo of ddr corp. Good to see you daniel. Thanks for coming on the program today on a day when i know youre constantly checking the numbers, arent you . Absolutely, liz. Thank you for having me. Liz are shoppers moving through the stores . What are the reports you are getting from the field as we like to say . Shoppers are absolutely moving to the stores. Today is a big shopping day for a variety of reasons one, it is a great sales driven day. A lot of promotions and a lot of excitement at the store as you mentioned. The second is we just finished a year where we did a lot of clearance in january and not all of it cleared, so you can take additional markdowns in february and get rid of all that inventory that you hoped to move during the Holiday Season and through the january clearance season that you didnt move quite as effectively as you thought you would. So consumers are getting a great deal today. Liz this is the first president s day where i felt like i really wanted to shop and i really dont like shopping anymore, but i thought to myself there must be some amazing deals. Regionally over the past couple of months where are you seeing the most strength at your shopping malls . Youre in puerto rico and brazil as well. Here in the u. S. , lets start there. The value portion of the ready to work business is the strongest portion as we go through the Holiday Season with retailers like ross and tj maxx and marshalls and walmart and target and the ready to wear section of anchor stores like Dicks Sporting Goods all were very very strong. So any liz across the u. S. . Im pushing you here because i want to know is the east stronger than the west or the south better than the northeast . You know, its been across the u. S. A few years ago i would tell you the southwest was weak and florida was weak and california was weak and the northeast was strong, but right now, weve had a levelling of the playing field. The midwest has been solid. And were seeing it right across the u. S. From all of our ready to wear retailers in particular. Liz talk about well you guys call it lease execution. I would just say leases, you have signed 2,000 new leases and renewals in 2012 . Whats your outlook for 2013 . We think it will look a lot like 2012. A little over 11 million feet of leasing in 2012. We think we will do a little over 11 million square feet of 2013. The last three years we have done 33 million feet of leasing. Thats been able for us to drive rents, fill space and improve the credit quality of our cash flow across our portfolio. Were very excited about the demand thats out there because there really isnt a lot of supply and almost no new supply coming online at all. Liz can i read into what you are saying as the economy is slowly but surely coming back . We have a guy coming up at the end of the program who thinks everything is going way down. Im not going to say down in the toilet because my mother would get upset when i use that expression, but he thinks everything is horrible. Do you . No, we dont think it is horrible. One of the great thing about our business is we dont have to guess, because most of our most of our retailers actually report their sales. You can see the resiliency of the consumer. You can see where Profit Margins are. You can see what sales per square foot are. Again, while you do question sometimes why are things as good as they are . Why is the consumer as resilient as he or she is . The answer is they just are. And the numbers do not lie. Liz well, we got this Consumer Sentiment number out, the first one that comes out for the most recent time, and the household who had incomes below 75,000 were actually the most optimistic in this report. Now, Consumer Sentiments moves around a lot as we see on this very long chart, a ten year chart, but really, you see a big spike here from 2011 to 2012 and now into 2013. Your core client because you are in valueoriented mall stores, how are they feeling . What do you see . Our core client isnt concerned with Consumer Sentiment numbers. Theyre concerned with wages and jobs. Most of the people we deal with and most of the people we talk with, most of the customers out there that deal with our value and Convenience Retailers feel decent about their job. Weve had decent wage growth in 2012. We expect decent wage growth in 2013. Thats what drives the business. Thats what drives the business on a daily basis. Liz it is driving the stock. Your stock is up 21 over the past year, decent dividend of about 3. 2 . We follow you all the time out there in cleveland, actually beachwood ohio. Nice to see you today. Thank you. Liz happy president s day. I hope it is a very green one for you. Thank you very much. Liz ceo and president of ddr corp. There are so many stocks out there that have done absolutely beautifully. Some have done horribly. But we try and bring you all of them here to let you know whats going on even though the markets may be closed. Check this out, shares of a company you might not have heard of, but if you own stocks, were pretty sure you have touched inner workings work. Shares are up more than 140 over the past three years. So we are taking you for a look inside inner workings with the ceo and president. We will tell you what they do and why were pretty sure if you own stock youve touched their work. He is joining us next in a fox business exclusive. [ male announcer ] you are a business pro. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Its delicious. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. 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We will explain what that means in just a second. Lets just enjoy this stock chart for a moment its shares are up more than 140 over the past three years. So how is inner workings continuing to be so hot on the presses . Eric belcher is inner workings ceo and president joining me now in a fox business exclusive from chicago. Eric, first lets explain to people exactly what you do. You do marketing Promotional Materials and printing for small and medium sized businesses; correct . Well, liz, i would say it a little bit differently, we actually source for large corporations as well. We advocate the corporations outsource their print procurement function to us and then we on their behalf procure things like direct mail, in store sign imagine signage, packaging, labelling, anything with their label on it. Liz what are a couple of the names of the Biggest Companies with whom you do business . Were working with unilever in 30 Different Countries right now. Work with intercontinental hotels, really a large number of Companies Across the pharmaceuticals, retail, consumer Package Goods business, financial services, Pnc Financial just signed on with us at the end of last year. Liz thats fantastic. You came in with record Fourth Quarter numbers. Record revenues. Up 19 . Record revenues for the entire year for 2012. Its doing beautifully. We saw the threeyear stock chart. Spin it forward. Whats next for you you corrected me at the top and you said i would say were in Bigger Companies now. I assume that is where the really rich areas are that you look for to mine at this moment, is that your next big effort . We did 797 million last year. So 600 million wasnt that long ago. It was the year before. And as we look forward, it is true that big corporations have a lot of spend in this area of noncore competence, that being print procurement, usually not a lot of data and information, a reliance on local regional providers and Sales Relationships with manufacturers, so we go right through that and thats how we get at the efficiencies. I do think Going Forward you will see a tremendous amount of growth from our Company Coming from the large corporations that have been driving our growth over the last few years. Now, that said, the middle market, small to medium sized businesses are also in need of our services. They are in many cases paying the most out of anybody for the materials that we supply our corporate clients. And therefore, weve got a new initiative and aimed directly at supporting the small to middle market business. Historically we have not spent a lot of effort in that. Thats why you probably mentioned at the beginning of this segment that we focus on small to middle market businesses. It is actually a brand new focus for us, but we think theres a huge opportunity there as well. Liz right, right. We knew that and we did mention that it was 690 Million Dollars in market cap. But we always want to be the most correct. So we look forward to whats happening when it comes to change in demand. I like to talk to ceos like you to find out whats really happening at the business level. Are they putting in more orders for the printing that they need done and for the businesses that you offer . Well, i do get asked quite often whether or not the printed materials that we supply our corporate clients are under some sort of pressure from new digital solutions. We dont do any work in the space of newspapers and books and long run publications or black and white printed materials. The store signage and packaging and labels and direct mail that we do, actually the marketing are associated with many of those products is holding up quite nicely in this new age and we see order volume neither growing nor shrinking over the next five to ten years. So were growing quite rapidly, but were not in a growth industry. It is more were rolling out a brand new novel situation and were convinced that our solution is the way of the future. Liz then you are definitely coming up with all kinds of opportunities to turn that business in big because its not just you know, we spread it out over three years. Just the last year alone youre up about 25 . Lets get rid of this guy before he corrects me again on other data points. Eric, thank you very much. We appreciate it. Thank you, liz. Liz eric belcher is inner workings ceo and president. The Ticker Symbol is inwk. 12 of the flow is shorted. We like to point that out, but the stock has defied those shorts. Are stocks ready to collapse as the markets crawl yeah, i said collapse. The markets are crawling toward alltime highs. Some investors are less optimistic than others. But should you be . Coming up, that pessimistic guy, a portfolio strategy founder and president will tell us what areas he sees will suffer and where he thinks there may be some opportunities to make money now. While cnbc is on tape, were open for business. Liz look at year to date charts or go back a year, you can see it looks very good, but many bullish investors out there are calling for continued slow yet upward economic recovery. My next guest not so much, he says we are flirting with recession and the inevitability of rising Interest Rates will lead to a stock market crash. I dont like to say crash on the air. I mean, unless you really mean it, michael, Michael Pento is joining us now. I never use the word crash. Liz why . You said were flirting with a recession. Liz im quoting you. Last quarters gdp print was negative; right . You need one more for it to be called an official recession. Not that far away. Liz not that far away. Listen, we had the bush era tax rates, they went away, most at least some of them; right . Payroll taxes went up. And now were facing higher Interest Rates. And i think they can go to 3 1 2 because thats where they were in late 2010 before we had the european bond crisis. Liz are you talking about 3 1 2 on the u. S. Ten year. Liz thats our benchmark right now. Wanted to be clear on that. Right now were exactly at 2 2. 01. Lets not quibble over it. Liz do you want to pull an eric belcher from inner workings . [laughter] liz it is what it is. The fed is involved. The Central Banks are weakening their currency. Is that a good thing . Liz it is not, but i dont care. Whats the trade . You can never balance your payments by wrecking your currency. Looking at what happened in 05, 08, with china, you cannot increase your exports by wrecking your currency because everything priced in your currency goes up. You can forget about that. But lets be honest, we are in the middle of a currency war. I mean japan, what are they doing over there with their inflation targets . Bernanke 85 billion dollars of monetary purchases per month. Liz you are not wrong. You are not wrong. Say that again. Liz you are not wrong. Now teach me how to make money off what is out there. Okay, short bonds. Thats one thing. Tbt, tbf, two great etfs that anybody can buy. Liz tbt and tbf are the funds are some of them double short . Tbt is double short. Double short the lehman 20 year plus treasury. Liz so as these things start to weaken, you make double your money. Yes, not tbf. Its a straight short on the 20 year. I also like energy. I have been long energy. By the way i think even though the economy is heading for a train wreck, precisely because the economy is built on trillion dollars deficits, 6 trillion dollars worth by the way since the Great Recession began in december of 07. Its built on massive deficits as i just said and 0 Interest Rates since 2008. What do we have to show for that . An almost 8 unemployment rate. You can correct me by saying 7. 9 and get me back if you want to. Liz i will pull an eric belcher. You see we have negative gdp what is that getting us . Liz lets go with gold then. Where you long gold . Gold stocks are down look at the gdx down 40 in the last 18 months. We have a significant position about 15 in portfolio strategies. Listen, if you had 85 billion dollars worth per month of fed debt montization you have to own some gold. You have to. Once we hit 3 1 2 on the 10 year, thats going to stall this already fragile economy. Then bernanke has a decision to make. Is he going to sit on his hands and watch a recession ravage the economy once again or is he going to increase the amount of his monthly monetary purchases . I think qe 5 is right around the corner. I cant say qe; right . Quantitative easing. Liz lets go to healthcare. You are long that . Yes, its been very profitable for us. Liz why is that . Were a diversified portfolio. I have some commodities liz nice chart here. Absolutely, xlz. Liz you are making money even though you have a pessimistic outlook and thats an important point to be made here. Listen, where is the feds money creation going . Its got to go somewhere. It is not going into the bond market. It is going into the stock market. However, once we reach that prior 3 1 2 threshold that i mentioned, 2010, thats where we were, and i have every reason to believe that well be there in the next few quarters, watch out below. Liz Michael Pento, good to see you. Does it shock anybody that hes really good friends of peter schiff . Hes with pento portfolio strategies. A new book coming out. Yes, available at amazon. Liz yeah, the coming bond market collapse. We had gary kohn of Goldman Sachs worried about this as well he didnt say collapse but is concerned about the pile on trade there. And so should you. Liz and i will. Thank you very much. Thank you very much for having me. Liz everybody read the book. On this president s day which man in the white house has seen the most green in the market . Stick around. Well fill you in on what we mean by that right after this. Stay tuned. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say
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