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Welcome to foxbusiness.com hi I'm Tracy Byrnes we -- -- Dow that is up 44 points right now so we -- makes news again for slowly came in.
Offered to -- things one we had some kinda sort -- elections last night.
Big deal with is the tea parties won it wasn't a full blown a mid term elections -- which are coming up in November but we did see some Tea Party years -- we in the -- -- -- the incumbents and it's both sides it's a pox on both houses were just basically seeing voters come out saying kind India.
Any again well didn't you guys and so we had some some -- sent some to be expected but nevertheless.
We so the tea parties reign supreme we also -- Japan -- in overnight.
Pump money into help it's a currency.
So we'll -- that lays out for the rest today hasn't done a likeable lot markets started off down.
Then we got some manufacturing data that -- not so good then as people started to dissect it realized maybe it's not so bad.
Marketed since pulled up a little bit so we got some green on the screen.
-- -- actually jumped saying that it expects in come its income to rise 20% this year.
That means it's anticipating people are gonna go out -- -- it up again we did see the other day that retail sales were up.
That little bit better than expected back to school people out there shopping explain to you that I did my black needy people are getting out there -- was -- -- get it see if nothing else.
But that being said the Dow is not moving we keep talking about how we're in this trading range -- probably gonna -- there for awhile.
Jack -- is with his right -- chief investment officer at Harris private bank.
Am I wrong in this trading range is probably -- say isn't it.
It seems that way Tracy you know where.
Just on this -- -- unfortunately on this roller coaster that in -- and isn't going very where anywhere and that's creating a lot of risk for people.
But what's -- I mean look at is -- the roller coaster and -- it's more like -- Himalayan though little ride that goes like this it's not much in either pose a big -- because there.
But what gets us off this you know this an amusement park ride is -- the elections is it.
The consumer get up there but saying -- -- I've -- -- I gotta get out there and shot.
Yeah I think there're there're couple things I -- there at some near term issues that we need resolved certainly their reelection.
Some of the taxation is some of -- near term legislation may be just it sort of just understand what the rules of the game -- for next year yeah I think that would help.
But you know it but when you take a step back and 30000 feet you say look you know the consumers got too much debt.
You know no matter what happens.
We can't expect the American people to continue to spend more than -- -- in fact not only that they're actually -- have to spend.
Less than they -- for awhile and incrementally last because of that this debt repayments so there are a lot of big picture issues moving out here we know we're gonna have to slog through.
You know unless there's just some.
You know surprise from outer space that you know we're gonna see this in this market you know continue to kind of plod along.
He has so you know I mentioned earlier we had -- sort of big events overnight we had via some like mid term elections in -- -- key areas.
And we had to -- coming in to broaden its currency the alleged Pampers what did you think of that movie and I don't what does it say about us here in the United States.
Whether it's what it says is fit to me that they did the move by Japan was certainly expected they'd been complaining about.
The high value of the yen for some time they were accusing the Chinese -- purchasing yen denominated securities.
And to help.
Prop up the NN I can't disagree with that in fact.
The Chinese have been -- big sellers of -- US treasurys -- big buyers of yen denominated securities.
I think the the accusation.
Was really more trade related isn't necessarily that the Chinese are buying yen because they -- -- invest there.
I think it serves their purpose to have an expensive again because it makes that you -- on the Chinese currency incrementally more attractive so.
I -- at some point.
All of these.
You know developed nations are gonna have to circle the wagons and -- and get China and a raise the value of their currency and it's really like -- -- -- -- many risks.
It sure is -- -- more also seeing exports down.
Even though the president made some big promise to double exports over the next couple years.
So that's not gonna help matters at all the -- of these elections now we -- the Tea Party years Mulally.
Emily is worried about these bush tax cuts and whether or not they're going to be extended yeah all -- -- figure this out.
There -- and I mean it's remarkable to me -- that here.
You know as business leaders were trying to put our plans together for next year we -- know what tax rates are going to be.
So I think that dot.
You know in some respects you can't blame you know business leaders and CEOs who are sitting on a pilot cash and -- and strong profit growth.
That they are higher and some may be beyond hopeful with a little clarity you -- to understand what the rules of the game we're going to be next year maybe the year after that.
We'll start to see you know that logjam.
Of information create actually create some jobs which I would've expected you know far more jobs this spring and we just didn't got to.
Yet to talk about that I mean you're.
-- in private banking so your clients are probably you know.
Well as you said trying to plan for next year.
What are you doing we don't know what's happening with the estate tax we don't know what's happening with any tax quite frankly and then any kind of small business client that you have.
Is is hanging on these health care unknowns.
And you know we Madonna this 1099 in the requirement as well but how do you plan.
Yeah -- that's basically.
Cancer that's the that's the problem and so.
You know where we can browbeat CEOs many of whom are my clients to say you know.
Go out there -- hire people.
They go well you know I'd like a few answers before I commit so you know there are -- access to capital.
A lot of these companies -- is still out there I think that if they really wanted to borrow they could find sources of capital so I don't think.
We can't necessarily vilify the banks across the -- say they're not lending I just think that.
You know there's just not a heck of a lot of demand to expand.
Given that our.
You know -- passing utilization is in -- mired in the mid seventies right now.
But still are you still finding investment opportunities and I'll listen and we talked about how we're in this trading range.
Dow's up 43 points and now I'm and I feel like the -- has been -- 101500.
I have not at this point.
What are you finding you know where -- -- putting your clients money.
Yeah I mean we're essentially -- and find investments where you know.
You know and we're getting the money up front so in other words.
You know dividend plays income plays variable different kind of you know income oriented investments.
So for example you know we did lighten up and equities in June.
We put some of the money into preferred stocks we think that.
The financial -- -- in particular which by the way have been exempted.
From the in on this -- is -- yeah requirements so that's that's good news.
You know it's an environment that you know these these preferred -- paying generous yields and the and the risk associated with baking.
If these regulators get it -- it's a lot lower so.
We think that they risk -- -- on on financial preferred -- pretty attractive so that's one place where we're trying to get some incremental benefit.
And the finances in general I've had a pretty decent run you know the the excel left which is the financial sector ETF.
Over the last month is already up almost up on for -- -- over four and a half percent.
So you know I Bruins and the finances brought -- down it's are you expecting the financials to lead us out of this is well.
Well I think is certainly policy makers and regulators are doing everything in their power to do keep their blinders on and and look beyond the problem since so for that hey I guess in that respect yes I think that the financials.
Should continue to power higher now keep in mind Tracy.
That financials relative the rest of markets still trading -- probably twenty or 30% discount so you know clearly they got.
The other legs chopped out from under me in 2008.
They rebounded pretty strongly 2009 but still relative price to sales basis they're trading unit.
A deep discount and a lot of vets deserve but still as long as they've got some positive momentum.
They're good not a bad place to be.
You know I got to ask you it's a two year anniversary since Lehman Brothers went down.
He I don't think we've learned anything but -- do you see any kind of positive changes that have come out of this.
Think that -- you know investors are certainly you know recognize that.
This isn't just say you know a simple game where you that you put a dollar and -- you expect to make money you know in every market I think that.
You know off investors now have a renewed sense of of caution and and a sensitivity to risk.
I think that the investment market sooner or perhaps.
You know without this what we used to call the Greenspan put and media Bernanke put without -- on the table.
We realize that these markets are -- riskier place today than we originally.
Yeah they sure are and says.
It's -- Vegas Jack -- in chief investment officer Harris private bank thanks for being with us as always sir thank you.
It is a two year anniversary of Lehman and we got to keep talking about it because.
One will argue Lehman -- never went down another -- argue it should of bill Blackman is here with us to talk about all that right now.
We have we have a big anniversary sir and you know everyone looks back on this and says.
Why did we let why did -- why did the government force lean -- to file for bankruptcy when.
We saved Bear Stearns.
We sort of save Fannie and Freddie would put them in receivership.
But then there was one that was swallowed I mean you know the -- -- schizophrenic at the time right making all these crazy decisions.
Should Lehman have gone down in the first place.
-- future asking me the answer is I've gone down.
So what is so what happens didn't and we learned anything from this because we did the IG which.
One would argue makes absolutely no sense to those so.
The I mean are we getting any kind of consistency out of -- ministries in now.
Now and I'm definitely the problem where we're not getting any clarity we're not getting any consistency we.
The business world have no clue as to whether or not you are too big to fail or -- not too big to fail.
Are all whether or not the risk reward golf is -- -- our blog -- quite frankly we are.
And every bit much for term right now as we were back him -- -- October of 2000 and they.
But how does affect you know -- around Tulsa Oklahoma.
I know how it affected us here -- -- on Wall Street actually I could look out the window practically -- -- Lehman Brothers office and remember watching those four people carry their boxes out.
As -- indeed -- office in the -- went down.
But how did -- affect the rest of the world.
Well and that's become just surprised -- -- -- is currently as I possibly can but most.
People outside of New York didn't notice safe and I can I've spent my entire life building businesses and I kind of just as close to town and employees lose your job.
That's a travesty of the high order but honestly outside of new York and outside of Manhattan.
There really wasn't a significant impact of volatile chemicals are found there was more concerned about the the caterpillar factory imperial one -- shutting -- And that makes more sense to me actually and that's a product that many more people can understand that's for sure so we -- Lehman down.
Again whether and I should have been is just going into the history books did we learn anything from this I mean are we doing things differently because of what happened.
Well hi I don't think we have I think Wall Street and the banking industry -- side.
Has the shortest collective memory of any institution has ever existed I am just not sure they have learned I would hole.
That we all have learned -- -- -- and that is that for risk and reward to stay in bounds.
All have to be imply I want the government comes in and arbitrarily capriciously decide who wins and who loses that doesn't give any of -- certainly.
Does -- think of the things we learned.
-- the things we haven't learned and Sunni that's one of the things we have not figured out yet how do you rein in risk right because.
Yeah you know there -- people out there trying to figure out what the next -- game is and that's what these guys dinner that's what makes them Smart and that's what makes -- wealthy.
Hey I'm fully and I'm I'm constantly in favor of reward I'm in favor of Smart people making Smart decisions American want from lots of money I'm perfectly good without.
As long as almost same Smart people understand that there should be your risk that runs proportionate to the rewards that they're about to forget.
And -- banking industry in this case from the women and complete.
There was only reward there was not rest until all of sudden one day they just pulled the carpet out -- -- All we're gonna watch you golf book by the way -- save Merrill will save bear -- find somebody to borrow long you'll find somebody to find indymac.
Will do all these other things that you at Lehman Brothers.
Now we're just not gonna be there for it.
Yeah I mean it.
When you think about it and I say even AIG got a great idea on the list did that we save them right when -- still saving them a day after day after day will -- keep saving them.
My kids are gonna end up paying for them as well.
We haven't seen jail time we haven't seen a perp walk we haven't seen anything from this do you think -- -- going to ever.
No no I think they're good Department of Justice already taken their wac they filed a couple of indictments.
They didn't get -- a conviction that I forgot to acquittals.
I think we've seen the last of any criminal prosecution.
For what is confident that the greatest meltdown in financial history of -- Did -- did financial reform the new financial regulations put in a place.
Do you think they're going to prevent something like this from happening again.
I think we can be optimistic and -- for quite frankly if history is only a -- from.
We don't -- we shouldn't have a lot of optimism.
Now we have President Obama appoints Elizabeth Warren.
Whether we like that or not whether we agree with her disagree with her.
She is gonna take action and a few takes action may be made the and the clarity of what's going to -- -- there'll be some guidance for the future.
You know we still don't know what to do with Fannie and Freddie.
We still really -- though we still don't know what to do with -- reading agencies.
I'm not sure why those things warrant tackled because -- -- big part of the reason and Lehman went down in the first place.
Why -- they would be reason that women went down I'm let's cut through the political Roderick.
I'll try to be nice to people pay yeah you're an abomination.
Fannie and Freddie -- the problem.
Fannie and Freddie what -- what caused all of -- make infect other people or more -- -- -- on this scenario than they did coming homeowners across America.
How to roll -- it taxpayers how to roll on the Wall Street how to roll on it but what poor planning and Friday it would not happen.
But yet we haven't fixed them this notice that's significant so -- that -- we're gonna potentially see this again.
Yes and yes -- -- if we went through all the -- in the Washington -- we're doomed to repeat those same mistakes and right now we continue to prop up Fannie and Freddie we at the treasury literally for the unit 200 billion dollar a year subsidy program.
That is what the market need -- -- -- what the market's gonna call for we need to take that the payroll.
And literally get this problem won't know what we're gonna end up exactly -- Japan -- don't lose a decade.
Of sitting here toying with them with an economic disaster.
Somebody needs to do something.
Other than throw more money.
Obsolete institution that no longer serve the purpose.
We can't we keep doing it right I think with Albert Einstein that said the definition of insanity is doing the same thing over and over and over again which would mean that my three kids are completely insane because there's no.
Methodical and what they do.
Will we -- symbol almost repeated we're given Fannie and Freddie money we're probably gonna give me I mean that it -- give somebody money -- so given the State's money that's for sure so.
I'm really -- Well what we are we're right back to us about how we were on five years ago now -- all happened two years ago.
But let's go back three years earlier and see what caused us all to.
To crash out in 2008.
-- to what we have now we have Fannie and Freddie and within the FHA.
Literally giving 100% wounds again.
Well what part of that don't they remember him that's causing the prices the last time -- repeating the very same mistakes.
-- that's comforting.
Diet and you know like to say -- Monday yeah.
-- -- -- -- why don't the Tulsa Oklahoma and you're right you probably could care less that Lehman went down caterpillar who -- bigger issue.
I wouldn't take a break right now we get back -- -- is here to talk.
All things important because actually -- important things I myself and uses information like Albert Einstein's insanity -- made a good sentencing.
I Dow's up between five points right now I'll be right back.
Let them back faxes dot com live I just have to tell you that I can get on our little -- yet this which is why haven't participated not because I don't say.
Believe they can't figured out technologically but that's my -- issue.
As he web series here this right -- I'm excited.
I did little blood out and start over but I don't even know where the outlet is actually corrected me on my -- Einstein quote.
The plan to implement -- -- the same thing over and over again and expect a different outcome that's the right amnesty now live or you're exactly right and that instant yes but that's the most important prize networks would keep doing it.
And we think it's an end differently -- same story when you think we're not that Smart apparently.
I feel we have a lot of unrest sir you we do.
Panic on the streets Dominique Strauss-Kahn he's the head honcho over the IMF.
He's putting out all sorts of warnings about unemployment and only in the US but around the world he says the labor market around the globe is in what he called dire straits he said.
That in -- long term unemployment leads to social unrest.
Not unlike those rightfully so in Greece that claimed three -- some four months ago in the numbers themselves unemployment.
-- -- pretty disturbing the number of people unemployed around the world right now -- the 210.
Thirty million jobs have been lost since this financial crisis has begun and by the way all those -- 1000003 quarters of them.
Actually lost in the richer economies and by the way the -- says you have to create 45 million jobs a year around the world foot ten years straight.
Just to tread water supply -- -- 45 million jobs around the world.
When we get -- we -- 45000.
Yes exactly how art Shell Oil -- Little fill those needs is another good disenfranchised he also talks about.
Those so called Lost Generation those twenty somethings who just can't get a job and what's happening is we're seeing this jobless recovery was seen.
Companies making profits but not reinvesting in -- -- so you're gonna have a group a generation -- that could very well be defined by.
Being out of work and Jack -- -- on earlier and then pointed it out.
It's not that the companies don't have the money to hire it's that they don't know whether they should because they can't predict the future in Colombia and this yeah well we -- say it but it's the truth yes.
Now the question world.
Solutions -- IMF.
In those kind of a little embed with the labor unions on this assailant we just need to keep become stay in this in place of course extend unemployment benefits help people.
Not lose their homes the same things we've been talking about for the last 23 -- Bank lending needs to pick up the -- number of countries now especially in Europe -- saying.
As we've been talking about.
We can't show this insanity anymore we can't keep throwing money at it it's time to -- the money in the IMF -- says.
If you create jobs and save jobs that in turn will actually -- -- offset the cost of the economic stimulus.
Which in part is true but meantime the deaths of these countries continuing to dismount and now.
-- you're overseas when Lehman fell two years yes you -- in London through and I was we were talking earlier about how the government was somewhat schizophrenic great.
They -- to Bear Stearns they tucked it into JPMorgan again OK but then we let Lehman go.
Then we could Fannie Freddie receivership you know we -- -- IG.
We -- and we we pick and choose and know we appeared to be somewhat schizophrenic in that sends a signal overseas -- and that's right yeah and panic yes.
What it was all of a sudden everything that you full had a solid foundation didn't -- -- the United States couldn't get this house in order and seemed to be running from one side of the ship to the outlook.
And it was doing this with the economy yet what are we doing you know that the state Bank of England was also somewhat in -- state of crisis what do we -- we've already -- northern -- don't forget which is -- -- has very -- actually had a run on -- we -- people sneaking around for a mile just to get their money out so -- was forty some -- in the -- that was before -- went badly and -- went down yesterday but after that chemicals that we study looking at -- world Bank of Scotland and -- -- school those toxic assets and then.
You know the rest is history but it was a huge shock it was very frightening to be honest with.
I guess right if -- leader can't believe Bernanke got out and if you look into -- -- states for something.
I can't even imagine what it was like to -- -- busy watching -- originated in the united stay right it was a little bit of anger.
-- yes yes and that was created but anger at the bankers around the world the border into it and -- border into it but didn't really understand what they were buying -- just thinking I'm getting good return on this thing possible on this.
Good deal while they didn't really know the possible to let Boskin of -- that -- just -- I have no idea yeah well that was the story I think across the word from.
-- yeah what's interesting with your story though is.
We're talking about the globe and now the unit rate and it just seems solution seems -- and let people hire us give us confidence -- hire an -- fix it.
Well the problem is just seeing these companies that won't -- productions has been going on forever because America -- a manufacturing economies really.
Gone away pulled out all that manufacturing is now in China and Indonesia and all these places who then.
Make it incredibly cheap on the backs of 1213 year old -- ground.
Then send it back to the US where we buy the dirt cheap prices of -- in the US can compete with.
My the product that's what's been going on so okay -- -- you gonna create these jobs manufacturing has gone away.
You can -- these companies incentive to build here and to create the product here that you just can't compete with these you know China Communist country.
And I don't tax system our tax rates are ridiculously high schools and -- great example -- and you covered the Microsoft story yes they -- get their money back in the United States.
Still it was more efficient than to -- to issue a dividend that's crazy what would you do drink.
-- that Microsoft has about all you know 4050 billion dollars in cash right now almost 80% of that is overseas.
Probably in countries where the local tax jurisdictions so much lower right they bring it back it -- to -- -- 35%.
Right off the top right to be taken now the US was able yet but.
If you forty -- 12% in the Cayman Islands and then you bring you back in we charge you thirty -- and we'll give you likely the floor of the senate.
Some things that he fine passing on a lot of incentive to bring that money back again fortunately.
It's not creating jobs and doing anything good in the United States is doing it will -- and it's.
And it's not good it's not going to -- it'll continue to stay that way they'll -- that money there.
They'll invest that money there and know how people that.
But that's one multinational companies have been able to live better than anyone else because at least they have those fingers out across the world and they can.
Yeah you know diversify a little more.
It's good to see it good to see he's a great story here it is clear stories kind of nicely intertwined -- -- you really -- international I don't really lucky than good yet another new home you can be like bond.
On the international man of -- gave me.
Some good news -- Very I had they actually -- covering the unless it's and the IMF.
And it kills me that their solutions are an exact same -- more money -- it.
Do you -- that sawgrass on and then me the definition of insanity news of all -- insane and makes me feel so much better because that's just.
Nine if you -- they -- -- what we're trying to -- making an attempt to clean up our credit scores here in the United States and people actually are doing a fairly decent job.
Sarah TVs -- vantage score solutions.
Is with this nasty break president product management analytics and research to talk about -- this.
-- from the city city of brotherly love Philadelphia.
We do that.
Intend to -- yeah.
Some people yes absolutely that is an affluent people who are actually pretty stable and have very strong schools and it kept strong schools of the last couple it is so.
I'd say generally yes.
What's changed is it -- panicked or nervous so we're paying off -- bills or is it that were actually.
Paying attention to things -- mean what's making our credit scores get a little bit better.
Well I I think it's definitely people who are.
On being more conservative with the way they're spending and a way to -- in -- -- so we're seeing more people pay on time.
We're seeing people actually extend themselves.
Smaller levels so -- you know -- loans -- of mortgages and vehicles.
Basically people they just sort of saying let's have a smaller credit footprint.
Let's initially paid as -- -- time and be consistent about it that's a really important thing they're starting to be a lot more consistent about paying debts on time.
And to -- schools -- sitting remaining stable if not improving.
I affect -- study showed that over the last two years eleven million consumers actually had.
Behavior that would result in a credit -- and improving significantly.
And the next twelve months.
Yeah I mean you know we even got -- about -- -- notion that the second anniversary of Lehman Brothers falling you can argue that this whole financial mess.
Has more -- didn't look at our own financial homes -- in and take care of our own little.
It's you know private little corporations.
And our own households and so basing your results.
I -- you -- -- -- say that ten million consumers are actually it and improving credit quality.
That's something and and that's something we haven't seen in a long time I would think.
Well it's -- it's -- Importance and I think from the bank's perspective who have I think pretty much shut up shop for an Oscar but -- especially -- -- -- -- Lehman event.
It's really time now to -- opening up.
The way they're looking at consumers and especially looking for those consumers who log on to improve -- -- ten million consumers.
Who are going to become hired high quality in the next year.
Those are the -- you -- either find out whether their annual portfolios right now.
Or whether you can go and -- those consumers into your -- -- with more compelling products welcome compelling.
Known offering some things like that -- soon but equally -- fifty million who are extremely good quality and I like -- stay at that level of quality so.
-- that's another opportunity as well.
Abbott and an apparent that I think -- mean a lot of people you got all -- -- good quality improving their quality we still can't get loans out there I mean he still.
Let's break it down into credit scores right now.
You you this expedient in -- report shows that only 15%.
Have what you call super prime credit.
Yes super prime.
-- -- just -- -- this is a score of 900 or above think it it is an academic scandals make quality credit is 900 Nevada to subprime -- consume up.
And -- and really need to be that and then you prime consumer is eight 800 to 900 near -- -- 700 to eight Angie and all the way down.
-- -- sub prime once you fall under 700.
That's that's the right way to think about -- 700 and above.
And you know -- really very very good credit quality.
And you know you should be eligible to have reasonable conversation with a lender about it.
Good credit -- good pricing on an good offering.
700 and below -- below 700 and you kind of in the DF quality credit.
And nine -- your challenge and that those really consumes that we need to think about how to improve that school.
And get it above 700 -- to what is there -- things you can do to get your score up.
-- well most importantly.
Is to pay into your debts on time now -- paying every bill on time means that your school and improve dramatically.
In fact actually ran another study where we looked at consumers who how -- score of around six when he Fossum right to -- you know subprime range.
If they paid their debts on time over a nine month period.
They wouldn't get the score above 700 so nine months of -- time payment will -- -- they've improved fiscal.
Another thing to do would be to not Max -- your credit -- cons.
Keep your utilization.
That's how much you spend vs how much of credit limit is two between -- to 50% on these can't.
And also if you have older cons that you're not using don't think necessarily about closing -- on down.
When you have more old credit console old loans and -- credit file that counts that tells the the -- -- the scoring algorithms the the assessment tools that you know -- somebody has been using credit for a long period of time -- using it effectively and get points for that.
You can -- it's confusing I think to -- people rate on one hand you don't want to be available debt.
That to factor into the equation because isn't that -- sometimes a negative as well that you know I have a Macy's card with a 5000 dollar limit.
Although it's there's nothing on it the fact that that money's available to me could be a negative when they calculate my score.
No simply not oh victory is how much you've used and -- used at that.
If you had a 5000 credit limit and you spent 4199.
That would be a flag because and we -- know that you don't have much available credit last.
I couldn't sleep at night I'm I'm I.
I was one of those at one point I mean we had.
When I was married 101000 billion trillion dollars on credit cards and now I guess.
Cleaned it all up I can't imagine ever going back there and it's is very scary to know you owe that much money but I guess there's a lot of people that do.
The average critical average credit card -- still hovers around 45000 dollars doesn't it.
It's still pretty high yet been released but what's coming interesting to understand is that if the average credit card balance is roughly 500 dollars.
You know the average credit limit is over 20000 dollars so.
You know you wanna be a big events that happened last -- -- banks credit card companies lowering credit limits.
But still credit limits and really very very high so there's a lot of excess credit out there.
Yes there is you know what is the one of me and I say one of would be real good things they came out of this financial regulatory reform is that he can't.
Issue can't -- credit cards anymore without somebody signing on and again I was victim I got a discover card like on the way at a lunch in college.
And the next thing you know I owed a couple thousand dollars on it.
Is that part of what's helping needy get credit scores up the fact that this money's no longer accessible to people.
When -- -- I certainly think especially in the -- credit ranges and that's.
When credit limits were lowers.
People definitely took that as a wake up sign and wake up message and stunted being a lot more careful about how they -- spending and what they were spending that.
You know with with the food -- their -- -- and things like that so.
We certainly have seen.
A significant reduction in spending in those lower credit time tears and -- -- -- improving as a result of that.
-- and again if nothing else something good I think came out of this whole financial mess people are paying attention at home.
Sarah Davies vantage score solutions senior vice president thank you for being with us and setting a -- a good news -- something.
You're welcome thanks -- thank you Sarah I really -- walk out of lunch and there was a -- table and I think like I got a free teacher.
Maybe Ed teacher it like bill that credit card application an exam at a card in the mail and -- -- their races thankfully.
That is gone I will have to cosigned so that my children could be often raises.
And -- there.
We're taking a break we'll be right back -- -- Talk about franchising and whine when we get back.
Welcome -- foxbusiness.com live did you hear that then dean dean did never I hear it's in my head.
That -- -- the insanity.
-- the -- of about thirty points right now.
We have a lot of them believe or not for not moving at all this stuff going on this like -- whipped shot action -- -- an education stocks.
Those are always whips -- so be careful in those the financials have pulled out back believe it or not so they're lagging.
We talked about MasterCard earlier -- -- has said that they expect.
To have good numbers going forward they expect this to get out there a surcharge and -- again even though we discern that we're improving our credit scores maybe it means we're gonna use our cards wisely.
Pay the bill off get the airline miles -- which is close to do you know keep this up -- -- debt.
That being said we also -- course have gold which as we talked about here on the show is sort of a big enigma.
That equities are up and gold at same time exposed to move in inverse directions.
-- we can't talk about franchising because I think this is really cool not to mention we gotta talk about chips and dip.
Again for free could actually get for free you get appropriate most selfless -- Up pretty -- successful franchisee in most southwest grill -- they -- interview with us today and I love the notion that.
-- you were just eating their everyday for lunch -- said Britain maybe I should and one of these.
That's right thanks Tracy for having me yeah I was leading there every day of the medical sales rep -- I decided that I had to open one for myself.
So what -- -- June decide to take entrepreneurial -- into.
I want to be self employed.
One of my personal goals as the open my own business by the age of thirty and I was eating and Motorola time and so I decided that I wanted to open -- -- -- -- tools widgets or doughnuts are mailboxes that are whatever.
I wanted to have my own business and had a passion for the -- -- He had -- six.
Good traffic and that doesn't solve the regular -- that's amazing you're 29 when you did this straight to you beat your goal.
That's try to do be my goal just barely and that -- and say kudos to you beat it.
You know said one of the biggest hurdles was coming up with the money so now when you open a franchise you have to put money in.
And -- with choirs of 400000 dollars is that true.
That's right on average about 400000 dollars total start -- costs and would you bat out of all thirty Dow at about 30000 so I had to go find a balance somewhere.
So I was looking at franchises and subway was actually cheaper -- as -- get into about a 120000.
Total startup called collapse us started there and I plan on getting SBA loan.
I started asking subway franchisees what they liked and didn't like about the business and I happen to run across some great franchisees in southern Georgia.
And we we met personally we talked to him we didn't like each other in they decided to loan me the balance of the 400000 dollars open our first location.
Now but it was that easy you just made some friends and they gave you money.
That's right personality charisma tenacity persistence all paid off isn't it that's what I call it gives me -- whatever.
OK so now.
You alone a lot of them how many franchises do you have now right.
Seven total now eight million dollars in 2000 in three different states is that correct.
That's correct OK so.
Yeah I mean I've never been through most of dynamic here the kids are free -- yeah I -- -- about -- -- you you agreed price point though for an economy that's struggling right.
Good food great race and you've felt -- -- this recession.
-- exactly right when I.
I invested in those southwest grill I did not think about how this concept was gonna do in the Great Recession that we -- about to have.
What ended up helping me -- was that Moses known for great value -- huge California style burritos for small price point.
Then you get the free chips and salsa that you referred to.
And so in the great in the Great Recession we have found out and noses faring very very well the same store sales for the system are around 5%.
And we are so far through August 42010.
Same store sales same time period last year where about nine and a half percent in our stores so.
We really have a tiger by the tail.
When you and you know these stores.
These lower and type foods stores tend to have -- high turnover in employees you know the McDonald's burger -- the world college kids come in and now.
-- you can't even really keep your employees through all this too haven't you.
We have we have we we go above and beyond we -- things like 41 K health insurance.
Of course a very nice individual to yes you seen -- with Steve I've come where you have you.
What happened a couple of very let's start to dog go go to those first look at prayer event -- and comer with a.
That you now.
You have plans to buy more in the midst of all this.
That's set a set since our same store sales are up -- are but thankfully the bank that we -- in South Carolina is able to continue to lend us money when capitals very tight right now.
So we have plans to open to wanted to -- the mall Augusta Georgia and one that the senator downtown Charlotte.
Of those to -- within the next four to six months and people -- along.
You're you know I anything you -- more than minimum you off he said to -- up 41 K and benefits is this at cook.
A corporate -- or is this something that you as a franchisee have decided to do.
That's this is something that as -- franchisees are able to choose on their so that's cool we want we want we we wanna keep the they turn -- to a minimum we want to reward our employees we want invest in them and make sure they stay around and we've done exactly that.
Can -- talk about big decision process between.
Opening your very own Southern California Mexican free tip joint vs picking up a franchise -- many onto Bruno Mars trip you know who claim that you -- -- -- will say.
Buying a franchise isn't really underwear -- you just picking up where somebody left off it's done for you.
Let's write -- -- there's benefits to each way if you originated concept and you know that you don't have to pay royalties.
But frankly seriously I was not Smart enough to start my own business from scratch.
I had to beg borrow and steal somebody's somebody else's business model I had to take their recipe for success and I had to replicate it on my.
So once I was able to do that and I gave me confidence in one location we -- able to parlay that into multiple locations.
Still you move up to New York area because I'm not sure and I'm I'm going to be so remiss if I say this but I don't even know if there are any in the near -- Manhattan area.
The same when you again -- lives -- there are.
There are some of the New York area that these most explosive growth from those southwest grill right now is in the northeast.
They UV for the systems around 920000.
AUVs in the northeast are approaching one point four million.
-- -- -- -- -- -- Average unit volume will apologies that's okay that's a lot of tips I was just told there's one and in Staten Island so I'm so I gotta get out more that's what I got to do.
But your Columbia, South Carolina that place is still year your big winner.
That's -- first -- you.
-- -- that's right college kids really take to the product price point is low.
It's an energetic exciting concept lively colors great music great -- core.
So any any of the moves that are near college campuses really really do well this is.
Very cool and it's very inspiring.
And I think that I understand I'm not nearly as Smart either if I were ever to go the -- I think the whole notion of franchises great big decorated and everything for you right you told -- -- decorate it.
That's exactly that they give you the recipe for success and you just go out and you have to replicated so I love it.
So but yet but they're bound paying 5% royalties now ongoing so there are some drawbacks it's.
The it was okay that's actually -- decent placing you payback on ever on your seven franchises 5% of bottom line goes back to -- -- total sales 5% of total sales.
Its free -- he would come in God's kids come Albany, New York Steve Taylor thank you so much -- -- on us and sharing your story.
Thank you Tracy welcome they do and I am number the -- Steve Taylor franchise own -- -- southwest grill and I am sorry I did not know that there are any in New York City I might have to.
You know I was gonna -- to go to -- and try you know I think that back I'm not going to -- island and now he can't you know I can't.
I am gonna go out to it -- if I'm not mistaken are we ready to do this.
Really take a break then we're going to Italy them now -- Coke and wine Italy.
This made my day we'll be right back.
Welcome back foxbusiness.com live.
Ever on -- -- and our free tips and if anybody actually thinks I can open a restaurant they're crazy.
I would be the first -- -- -- in your -- if you (%expletive) me off.
I I just to not be -- people this is why there's nobody here -- you feeling you know when he ran mean look at Evan I'm not I'm not direct restaurant tour.
-- -- -- But I am a wine drinker and I'm a huge fan of wine and trying so hard to learn about it and so.
This fabulous guest was booked in my honor Simon neo fight when it comes to line.
But I have been out there to Tuscany LSD and -- -- is with us thankfully.
-- round she is that family ambassador to the marking the end scenario as states.
I mean it is it even dynasty at this point isn't it Alexia.
Yes hello -- smoothly if there.
And dynasty because we go back to be six to I'm part of the 26 generation so it's a long time.
Thirteen 85 when I saw that number I thought it was a tight battle at -- 26 generations of wine making.
How how could you possibly sustained something and continue to do -- well after all these years.
You know trust their traditional -- Obviously so they're more than 600 years of involvement in the business are extremely welcomed the history that we have behind us.
-- -- of the innovation and what we have been in the last there.
-- in decades and centuries.
And in the right businesses so they put an aspect and so do things together.
Obviously you have to make a big responsibility he gets their car out myself and for my article says so -- -- this moment involved in the business would make.
That big responsibility I think that's a great challenge to try cool it was to better for the caricature implement fluid that's been done.
The past and that that's kind of part of this crowd loved the most is that there's -- -- strong women who are basically taken over the wine industry because.
They -- vineyards are all -- -- basically all over Tuscany -- the right is that correct.
There's even attempted classic cook.
And they don't need -- -- blue -- which is -- new emerging area and costing me.
And then boom that we have a property cook so that's I -- produce the majority of unlikely things.
And they'll also have a slump probably peaked in two military court -- the second Palestinian region anticipate with just the blue -- -- -- Dramatic scout which is -- to.
Now -- you guys were a part of this super Tuscan revolution.
Back in the seventies I'm a huge super -- fan.
What do you -- now going into the future what is the future of -- because why is so hot these days everyone is drinking and chasing and learning.
-- -- -- -- -- knowledge nowadays -- what that was in the 1970s.
But worrying that through that discipline doesn't.
Was that the person because some lusty women which works there including -- -- out there.
In that would have been the -- seventeen run.
And then I think that was extremely important because for the first time -- was seen.
Could be could consider all the high quality and upload if quantity.
And so what is happening now obviously is there couldn't it's.
Has been done in the past into giving up couldn't move.
And then -- -- I think that nowadays does that others had this much more knowledge.
And much more anxious in that the complaints and especially -- -- -- generations so they're requesting who.
At least something of different.
Yes and it's just.
-- winds are amazing I was near your vineyard when I was in Tuscany and -- had the wines.
They're a wonderful.
But it's not just and I think that is better drinking these bottles I mean China is a huge player now isn't it in the wine business.
Absolutely packed -- -- that I was looking the last thing is I'm looking -- -- the US market as a brand ambassador for the family but before that I was little.
Don't call before -- And I was looking up the middle East Asia and Australia.
And now you know the other payments that didn't sit in my kids weigh less and -- I think the US many many years ago.
And that it's very challenging this solves a huge potential in China -- they might hit.
Where there's that.
I don't know back -- just and especially the young generation -- repeat this this very important that has traveled a growth of Chinese.
We are back in China -- cool.
This -- me I'm -- customers.
Perhaps they are and and and you know there was a story in the Wall Street Journal today that -- actually the demand is still high they're pushing up prices up of many good bottles of wine.
How are you able to -- price competitive in this whole industry -- there's so many vineyards these days.
-- being there and so but I also think especially on the dias at 2000.
You know so -- -- 2010.
Where it hasn't been different but the more difficult for luxury brands and obviously -- a luxury brand to.
You know -- to us about I.
Glass it's going to be different because -- bloody.
And be blue in the resistance more than 600 yes it's a nice solid Brendan.
And that's -- solidly blue and isn't thinking Romans exactly web.
Custom man not a -- so -- doesn't.
Flu sometimes lead to good -- goes back and really nice to brands that are solid that better mood.
And that -- driving and up.
Success they've quite hit it.
Yes and I agree with you especially for not us like myself who doesn't know much.
People on the brands you know the brands that have been around forever and you know they taste good and you know you're gonna get you know what you paid for out of that bottle.
Have to ask you.
-- six generations of -- is a little pressure on you growing up to go into the family business.
Did you want did you really want here I mean the -- -- -- think that I'm gonna go be a doctor.
My -- there.
To a three sisters always give us the opportunity to to do whatever you want good.
We'll see and then the business of who want to -- into the business or not.
And the natural radiance from harassing me I decided to -- the business couldn't read it and eighteen to 23 years -- Depending who the sisters.
South I got in the business could be -- -- back.
-- he decided to groups -- do -- to -- college and it's neat -- followed.
The contract and -- So specialize in that look at the and from there obviously continue -- and it wasn't my major for many years and I looked -- strokes -- -- that Simpson asked.
The UI and I mean your inspiration and your unfortunately your video is heading up I wish you were here in the states CB keeps me because I had.
Lionel is the open court -- you -- the bottle and then I get stuck after that.
Bless you and tonight your family has been on the tables of so many families throughout this world and that we thank you and things are coming to us via Skype from Rome.
Got a little little technology here in there.
The messier and scenario for the Stanley ambassador for that like -- and -- worry -- -- and -- thank you so much.
We -- their.
I think next to show should be live from -- -- new edition it's new and usually the case did and I could explain it better to you actually I can learn from there.
Produce at that -- being said the Dow down 23 points was sure everybody Centrino wants talk about wine.
I and then we gotta go.
Take it I'm -- wine I have a bottom there to my mom taking its goodbye have a good day.
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