E-mail a friendMaria Bartiromo
airdate October 31, 2006
One of the most influential voices on Wall Street, Maria Bartiromo is CNBC's business news anchor. She hosts the net's Closing Bell and the nationally-syndicated Wall Street Journal Report, for which she is also managing editor. She's also a writer for several business magazines and author of Use the News. Bartiromo was the first journalist to report live on TV, daily, from the floor of the New York Stock Exchange. She was previously a producer and assignment editor with CNN Business News.
Maria Bartiromo
Tavis: Maria Bartiromo is one of the most influential business journalists in America, and the host, of course, of 'Closing Bell' weekday afternoons on CNBC. She also has her own syndicated show called 'The Wall Street Journal Report.' She is also a frequent contributor to 'Business Week' magazine. And Maria, it's nice to have you hear.
Maria Bartiromo: Thank you, Tavis, great to be here.
Tavis: You really have been to the orient, haven't you?
Bartiromo: (Laugh) I just came back from China yesterday.
Tavis: I like the outfit.
Bartiromo: Thank you.
Tavis: We got a little shopping in, did we?
Bartiromo: Yes, I just loved it. It was such a fascinating trip, and I...
Tavis: You've been in that part of the world before?
Bartiromo: Never. First time.
Tavis: Oh, it was your first time.
Bartiromo: First time, yeah.
Tavis: So what were your initial thoughts?
Bartiromo: Okay, I went to Beijing, Hong Kong, Shanghai, and Macao. First my initial thought, as soon as I got off the plane, and this is something that I think is very concerning. There is a poor quality to the air. There is a stench in the air, and the reason is is because China is growing so strongly and fast that the factories are churning out products, products, products, and it is putting pollution in the air, and that's blowing everywhere.
As soon as you get off the plane, you feel it. That the smell, and there is a poor quality to the air. So that, I was a little unnerved about. My other instinct was, there's so many people. You could be driving on the highway, and there are clusters of 20 people crossing the highway. It's so enormous, and there are so, so many people. One point three billion people we talk about, but until you're actually in a city, and you see, like, Shanghai with 20 million people, and Beijing, where there are 10 million people, it's just a lot of people.
Tavis: Tell me in layman's terms, which you're really good at, making this stuff usable for the rest of us who don't watch these markets in the way that you do, why do we have to keep our eye, why is China in the news all the time, relative to its economy?
Bartiromo: Well, China is so big that the numbers are so enormous that it represents a huge opportunity for American businesses. So when you think about the fact that there are one point three billion people there, all of those people are going to need everything. They need checking accounts, savings accounts, debit cards, credit cards, financing for a home.
As the economy strengthens and we see growth take hold, we see that enormous market. All of those people needing so many things that here in America we take for granted. And that's why it's an enormous opportunity for companies here. Financial services companies are dying to get a piece of that market. That is also, because of the growth, there is this demand for so many products, so oil.
They need oil. They don't have raw materials there. They need oil, they need gold, they need steel, all this stuff. And that's what's driving up the price. So that's why there's this insatiable demand for oil in China, and that's why oil went all the way up to $80 a barrel. So there are real implications to this growing economy and this mentality in China that they wanna be the next superpower.
Tavis: So, how does that impact American business? And I ask this, again, not out of any particular naiveté, but I just saw an article the other day where Bill Ford from Ford, of course, was suggestion that if American auto companies are going to do better in the coming months and years, they're gonna have to get access to that market. So even the car manufacturers understand with all these people over here, if we could start to sell them our product, then maybe we could pull ourselves out of the doldrums that we are in. So how does that thriving economy, that growing economy, all those people that you saw everywhere you went, impact opportunities for American entrepreneurs?
Bartiromo: Everybody understands it. When you think about it, there are 330 million people in this country, America. One point three billion people in China. It's just an enormous opportunity for companies to sell there. So if we're seeing this additional revenue for American companies coming out of China, that's gonna mean more profits for American companies. Now I have to say, the Chinese companies, they recognize this opportunity.
China knows how huge the opportunity is, and they're not gonna allow their companies and their market to be free and open to American companies to dominate them. That's not gonna happen. There's gonna be a limit to how much American companies can actually buy into Chinese companies. But it represents just an enormous new market of people and new business, which is going to make our companies more profitable.
Tavis: What kind of in-roads are American companies making, though? I hear your point that China's gonna limit that, but at the moment, what kind of in-roads are American companies making?
Bartiromo: There are some industries that are much more open than other industries. Financial services industry, that's been somewhat closed, but that's probably, in my opinion, the biggest opportunity. If we could see the banks, the Citi groups and Chase Manhattan banks, J.P. Morgans of the world actually own banks and own portions of banks in China, they're gonna be able to sell the credit cards, the debit cards, savings accounts, checking accounts, to all those people, and help them finance.
So that's one area that is not there yet, but I suspect it will get there at some point. Retail, I think, is wide open. There are the Home Depots of the world that wanna be able to sell to the Chinese, and I think retail has been a lot more open than, say, financial services. You've got the cola companies, the automakers. The automakers, I think, have a shot to actually get the Chinese to buy their products.
But Japan is eating America's lunch. Toyota is knocking the cover off the ball. Toyota's doing so well that why would the Chinese buy a Ford and not a Toyota when we know that Toyotas keep topping the list in terms of quality? So they have their own competitive issues, the U.S. automakers.
Tavis: While you're on this issue of the quagmire, for lack of a better word, that U.S. automakers are in, what say you about that? What does that portend for the future that so many of these companies, U.S. automakers, are in trouble at the same time?
Bartiromo: We need a real change in the healthcare benefits and the pension benefits that the automakers have currently agreed to. Look, they can't go back on their promises. They have to give their retirees and their employees the benefits that they've promised. But the new generation coming in, new workers coming into the automakers, they're not gonna get those benefits.
GM announces that it's closing plants down, but the expense that it faces, it continues. So even though there's an employee that used to work at a GM plant, but that plant closes, he's still gonna get his paycheck, he's still gonna get his benefits. That's why GM has the same cost structure. So that's one of the biggest issues, the legacy costs. Healthcare and pensions for the automakers.
Second biggest issue is the fact that they have to get the quality standard up. Because we can't keep seeing lists from the automotive list saying Toyota is number one in terms of quality. That's what continues to be the perception among people that are buying cars.
Tavis: I was about to ask, when you went to the health issue, I totally get that. But I was curious as to whether or not you were gonna rank that issue higher than the quality issue.
Bartiromo: Well, the healthcare issue, the expense is higher, because it's just much more expensive for the automakers. And on the expense side of things, they have to get themselves out of this issue. They need to have a lower cost structure. Nissan has a much lower cost structure. Toyota has a much lower cost structure than the American automakers, and that obviously is a real big deal.
Tavis: Going into these midterm elections, are you at all surprised, and maybe I'm misreading this, but I have not seen, to my read, at least, and I look at this every day, I've not seen the economy play the kind of role in these elections that the scandals are playing, and we can run down a litany of those. We won't do them, you know what they are. They haven't changed since you were out of the country for the last week, same stuff, different day.
Is it your sense, though, that the economy is not playing the kind of critical role that you thought it might or perhaps should play in these elections, or am I misreading this?
Bartiromo: No, no, I think you're right on. But I do think that when people head to the polls, it will be a referendum on Iraq, and it will be a referendum on the economy. At the end of the day, people are gonna say 'Look, do I feel better today than I did four years ago? Six years ago?' And the truth is wages are up. Even though the minimum wage needs to come way up, it is just nowhere.
But wages are up. Job creation has been strong. And the corporate sector is quite vibrant. You see companies today with an enormous amount of cash. That's why they're paying dividends; that's why they're buying other companies, and they're buying back stock. These are all very positive things. So I think part of the reason that the economy - the White House called me and said, 'Will you come and interview President Bush?' So, I did that last week.
And I think the reason - he could talk to anybody, right? He didn't need to call me to do this. I think the reason why he targeted me to do this interview is because he wanted to get his face in front of the economy. He wants the average American to think of him and his administration being attributed to this strong economy that we're seeing. And the reason, I think, that people don't do that is because they're worried. We've got terrorism, we've got the war in Iraq, and there's a lot of anxiety out there.
Tavis: I saw that interview. That's the one where he used the phrase the Google. (Laugh) 'I used the Google,' said the president. That's the interview you're talking about.
Bartiromo: I asked him if he uses Google.
Tavis: Yeah, the Google, I saw that. We'll leave that alone, Mr. President. That said, you've mentioned minimum wage, which is a fascinating issue for me. I totally get why it hasn't moved in the way that it should, from a political perspective. But you cover money matters, that's what you do. From a money perspective, why can't we move this? It seems like it makes so much sense, and yet in the industry that you cover, there's so much resistance to it.
Bartiromo: I don't know, Tavis, I really don't. I asked the president that. I think that there's such an enormous gap between the rich and the poor, and everyone would be so much better off if we evened this out a bit. And the minimum wage does need to come up. I think that at this point, 80 percent of voters do believe that the minimum wage has to come up. I think this is an issue that is not going away, and that it will move up. I think at some point, we'll actually see movement on this.
So, we'll see. I think it's one of the issues that voters will take to the polls, and if they feel that the Republicans are encouraged to do something about it, that will certainly be a positive for that side. But they'll continue to say, 'Look, the stock market is at record highs, right? The economy is growing. So people are richer than they know.' And that's true, to a certain extent. But I think more money in people's paycheck would go a lot farther than (laugh) an increase in their 401k.
Tavis: And how do you explain, how does Maria explain, what does Maria say to American voters about this juxtaposition, or the lack thereof, between Exxon-Mobil making more and more money every quarter, and the price of gas still being too high for the average person, who's gonna be casting his or her vote in just a few days from now?
Bartiromo: Well I have to say - look, I'm a Capitalist. I feel like people should make as much as they could make. You work hard, you climb the ladder, and you get to some success, you deserve, you should be making the money that you make. The problem that I have with the corporate CEO making so much money, and these large companies making as much money as they are is when they don't have a corporate citizen hat on, good citizen hat on, and they're actually giving money back, trying to make refineries so that they could actually move the needle when it comes to the price of oil.
That hasn't been enough. Look, oil prices are at very high levels, and Exxon-Mobil is an oil company. So it's going to benefit. I do not buy into the idea that the government should be regulating business and should put a tax on the oil companies. Because if we're gonna do that, then what's the argument not to say, 'Hey, we're in a real estate boom. Let's tax the real estate companies. Well, the bank started energy trading desks, let's tax the banks.'
You're going into a dangerous road there. But I do think that the oil companies have a fiduciary duty to say, 'Look, Americans are paying this amount for gasoline. We need to be putting X number of dollars in a fund so that we could be making new refineries across the country so that we could have more gasoline, and then we could drill for more oil in this country.'
The other side of the coin, though, 'cause I asked the executives this, why aren't you putting more money into helping this problem that we're so reliant on oil from the Middle East and elsewhere, and they say, 'Maria, the same senators that want to tax us, a windfall tax, are the senators that say you can't drill in Anwar, this place is closed off to you, that place is closed off to you.' Now I know, you have to take those answers with a grain of salt, but this is what the oil company executives will tell you.
Tavis: Well, I enjoyed the conversation, I enjoyed the outfit. (Laugh) And I'm glad you could stop by here on your way back to New York City.
Bartiromo: Thank you very much, Tavis.
Tavis: Nice to see you. CNBC's Maria Bartiromo. Up next on this program, famed photographer Annie Leibovitz is here. Stay with us.
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