The negative rates --- Tom Keene
>> the rise of crude was over, think again. it hit a one-month high today. supply concerns, analysts and traders speculating that russian exports could be disrupted after utilities cut power to yukos, russia's top oil producer. looking at the price, above $47 a barrel again, up 75 cents, almost 1.7%. energy brokers point out that the nearly 10% gain in the past seven sessions could lead us to the $50-a-barrel price within the next few weeks. energy broker steven brees says he doesn't see anything to stop it anymore, adding that the other movers to watch include unleaded gasoline, heating oil and natural gas almost 7% higher on the day. verizon wireless won't take part in a planned mobile phone director and won't publish the numbers of their 40 million cellular customers. testifying on capitol hill today, the chief executive officer told lawmakers why.
>> this industry has not published wireless phone numbers. we did this consciously for the sake of preserving customers' privacy and control over their bills and discouraging interruptions from unwanted calls.
>> starting as soon as next month, other carriers, at&t wireless, cingular and sprint will compile a database of numbers for customers who let details be included. verizon wireless c.e.o.'s putting verizon at odds with the six largest carriers who plan to let their 101 million customers opt into the industry's first public director of cell phones. mr. strigl criticizes the director as a way of exposing customers to spam.
>> we think our customers view their cell phones as the one place where they do not face intrusions, why they have control over who calls them and to whom they give the number.
>> several analysts estimate that it may cost verizon wireless $2 billion in annual sales the service may generate if they choose not to participate. verizon wireless shares ended the day up almost 1%. even with today's increase by the fed, short-term rates adjusted for inflation are still negative, still below zero. as part of our "chart of the day," we bring in editor-at-large tom keene to talk about the negative rates.
>> what that is is the nominal rate minus inflation and there's many theories to use and it gets confusing. andy bevin from goldman sachs out of london today wrote a piece on their view on bonds and had fascinating insight that the u.s. bond market is starting to act a little bit like what we've seen in japan over the last decade. goldman sachs was not saying the economy is like japan, but with the negative interest rates, we can go to the chart and look at them, it looks like japan. here's 20 years of the three-month treasury bill, less year-over-year inflation and you can see the negative real rates in the orange box. back in the 1990's, the blue line, the average interest rate, real rate, over the last 20 years, 1.93%, the normal rate, if you will. here's the plunge with the federal reserve's accommodative policy to boost job growth and get the economy going again. what devon is saying is we've got what's called a flat yield curve with the difference between the two-year and 10-year is moving around flatter, similar yields. we have negative real rates and it sums up to a very interesting environment. goldman sachs is looking for rates to go up at some point here.
>> saying the u.s. economy is like japan's, not only its bond market ?
>> not so much the economy, the market . he's specific about this. they're not saying it's like the japanese recessions we've all come to know, but our bond market has curious attributes such as a disregard for fiscal policy, like some of the things we've seen from japan.
>> john barry was talking about the current account deficit, that's a disregard for fiscal policy.
>> some would say, yeah, i think that the summation of all these things begins to look japan-like. but goldman sachs not looking for low sustained rates, they're looking for rates to come up as the economy recovers.
>> when you use this analysis, the nominal rates, the real rates, where does that suggest rates are going?
>> higher. what we're hearing from people is this will work out, the fed will boost up rates, the economy will recover and real rates, inflation-adjusted rates, will come up.
>> how high do they have to come up to get to a positive number.
>> two full percentage points.
>> from where we are now?
>> from where we are now.
>> 3% to 3.75?
>> yes.
>> thank you, tom keene. stay with us, martha stewart said she wanted to put her nightmare behind her and they're taking her up on the offer. we'll have details on that next.
