Fed official: Fixing the job market could take years

Janet Yellen, the vice chairwoman of the Federal Reserve Board, thinks both Congress and the Fed need to do more to lift the economy.

NEW YORK (CNNMoney)

Janet Yellen, who as vice chairwoman of the Federal Reserve Board is number two in command to Ben Bernanke, believes that the central bank should continue to focus its policies on boosting the economy and the job market in particular.

"It will be a long road back to a healthy job market," she said. "It will be years before many workers feel like they have regained the ground lost since 2007."

Yellen is known as an inflation dove, concerned more about the weak job market than the possibility of prices rising rapidly any time soon. Those on the opposite side of the spectrum, known as inflation hawks, criticize the Fed's policies for weakening the dollar and potentially fueling asset bubbles, for example in bonds or farmland.

Related: Federal Reserves hawks vs. doves

Yellen nodded to those critics in her speech, but given the current low inflation rate, she said "it is entirely appropriate" for jobs "to take center stage."

She also cited the unemployment rate of 7.9% and the poverty rate at 15% as signs that both Congress and the Fed need to do more to boost the economy.

"These are not just statistics to me," she said. "We know that long-term unemployment is devastating to workers and their families."

The Fed's recent policies keep interest rates at record lows and entail buying $85 billion a month in Treasuries and mortgage-backed securities, in an effort to lower interest rates even further.

The hope is that by making it cheaper for consumers and businesses to borrow money, they'll spend more on homes, cars and other items.

"I believe that these steps will increase demand, and more demand means more jobs," Yellen said.

First Published: February 11, 2013: 1:33 PM ET

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Apple iWatch doesn't scare Pebble

NEW YORK (CNNMoney)

In fact, they're pleased that the world's largest technology behemoth is potentially encroaching on their territory.

"The more people are looking at smart watches, the more they might look at Pebble," says Pebble founder Eric Migicovsky.

Smart watches, which typically connect via Bluetooth to smartphones and often offer their own slate of apps, are currently a huge trend in hardware.

Pebble smashed through records last year by raising a whopping $10 million on the crowdfunding site Kickstarter. After Pebble became a sensation, many others followed in an attempt to catch onto the smart watch craze. Four of the top 50 most-funded Kickstarter projects are smart watches, and larger companies like Sony (SNE) and Google's (GOOG, Fortune 500) Motorola have jumped in with their own techie takes on the wristwatch.

A smart watch from Apple (AAPL, Fortune 500), however, could be a game-changer. The New York Times strengthened the iWatch rumors on Sunday, reporting that Apple is working on an iOS-powered smart watch that features a curved glass display.

"It's pretty cool that so many people are interested," Migicovsky says. "When I started working on a watch five years ago, I was a kid at the University of Waterloo soldering things together. And then to see The New York Times writing a story a month about smart watches, that is awesome."

Pebble, which found itself committed to 85,000 watches for Kickstarter backers, began shipping in January after a four-month delay. Migicovsky is loath to talk specifically about Apple, responding with a simple "no" when asked about whether the iWatch rumors made him the least bit nervous.

Related story: Why 84% of Kickstarter's top projects shipped late

Other smart watch creators agree with Migicovsky that an Apple smart watch would bring massive attention to the market.

"If the [Apple smart watch] rumors are true, they would instantly validate the category," says Bill Geiser, CEO of MetaWatch, whose Strata raised nearly $310,000 on Kickstarter.

Geiser says his product is focused on simplicity and design -- Apple's most defining traits. He admits that MetaWatch and other smart watch companies will have to differentiate themselves from the tech giant if Apple decides to get into the market.

"Apple is magnificently successful in all they do, and they will be in [smart watches] too, I'm sure," Geiser says. "But not everyone is going to want the same thing. There will be products that do things the Apple watch doesn't."

Other smart watch players hope to go the partnership route -- including Mio's Alpha heart-rate monitor, aimed at fitness buffs.

"We have a lot to offer, and we would absolutely be interested in partnering with someone like Apple," says Mio CEO Liz Dickinson. "The more companies that implement our technology, the better."

First Published: February 11, 2013: 2:38 PM ET

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Apple CEO Tim Cook to be Obama's State of the Union guest

Apple CEO TIm Cook will sit with the First Lady in special box seats at the State of the Union address on Tuesday.

NEW YORK (CNNMoney)

Cook will sit with the First Lady in special box seats, said a source with knowledge of the matter. The First Lady's other guests at the 2013 State of the Union include the parents of Hadiya Pendleton, the 15-year-old girl shot and killed in Chicago last month. Monday's Congressional Medal of Honor recipient Clinton Romesha will also be Obama's guest.

The First Lady has a history of inviting tech leaders to the annual event. Last year's special guests included Laurene Powell Jobs, widow of late Apple (AAPL, Fortune 500) co-founder Steve Jobs, and Instagram co-founder Mike Krieger. Instagram sold itself to Facebook (FB) two months later.

Tuesday will be a busy day for Cook. At 10:15 a.m ET, he will speak at Goldman Sachs' Technology and Internet Conference in San Francisco, where he's likely to face tough questions. Apple shares have lost nearly a third of their value over the past five months.

Cook will also likely address activist investor David Einhorn at the conference, who publicly called for Apple to give some of its $137 billion cash hoard to back to shareholders in the form of preferred stock. Apple surprised industry watchers by replying with a statement, saying the company "will thoroughly evaluate" Einhorn's proposal.

- CNN's Gregory Wallace contributed to this report.

First Published: February 11, 2013: 5:58 PM ET

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Big financial impact from weekend blizzard

The snowstorm dumped as much as three feet of snow across the East Coast and brought many businesses to a halt.

NEW YORK (CNNMoney)

The two to three feet of snow that fell over many parts the Northeast brought many businesses to a halt, shut down offices and schools, grounded hundreds of flights and forced restaurants to turn away patrons.

What's worse is that the blizzard came at a time when many businesses are still struggling to recover from October's Superstorm Sandy, which forced the New York Stock Exchange shut for a few days, and shuttered small businesses for months. It slowed home building and kept people out of work.

President Obama declared a state of emergency in Connecticut after almost every county in the state received record snowfall. The town of Hamden was hit the worst, with 40 inches of snow.

"We are going to feel the impact of this storm for some time," said Connecticut Governor Dannel Malloy, who asked all nonessential state employees to stay home on Monday.

Related: Gas lines return ahead of blizzard

The weekend snowstorm, a product of two converging weather systems, forced the cancellation of more than 5,000 flights and knocked out power to more than 635,000 customers.

The blizzard brought rail transportation to a standstill. Amtrak nixing several of its scheduled runs and commuter rail services also impacted. Several states -- including Rhode Island, Connecticut and Massachusetts -- issued travel bans, and the U.S. Postal Service suspended deliveries in seven states.

The only saving grace was that the storm landed before the weekend, when there were fewer people commuting to work and it made it easier for clean-up crews to work the streets.

According to the National Oceanic and Atmospheric Administration, snowstorms can be have a devastating effect on the economy. They can stop the flow of supplies, take out communication towers, sink ships and kill off livestock in one fell swoop. On top of that . hourly workers lose wages because stores, restaurants and bars are forced to close down for days at a time.

"The cost of snow removal, repairing damages, and loss of business can have large economic impacts on cities and towns," the administration said.

In 2010, two major snow storms ravaged much of the country in February, which led to more than $2 billion just in insurance-related damages, according to Insurance Information Institute.

According to the American Highway Users Alliance, states suffered hundreds of millions of dollars more from the storms. New York suffered the biggest economic hit, losing a projected $700 million daily in retail sales and wages. Illinois lost $400 million, while Pennsylvania lost another $370 million.

Winter storms, in general, hurt businesses more than summer ones, according to the Labor Department. Data of weather-related work absences from 1977 to 2010 show employees are most likely not to head to the office because of bad weather in the winter months than in the summer. January tops the list as the month with the highest weather absence rate. February and December come in a close second and third.

"One reason is that winter storm systems can affect much larger geographic areas than other weather events do, spreading over a greater expanse of the North American continent than a hurricane, for example," the Bureau of Labor Statistics said in a report.

First Published: February 10, 2013: 4:20 PM ET

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Japan's Nikkei sprints ahead on Abe fever

Stocks shot up as the yen slid, but the rally may be losing steam

HONG KONG (CNNMoney)

Japan's stock market has been on a tear, adding more than 7% over the past month as investors cheer looser monetary policy and the buckets of fiscal stimulus being pumped into the country's economy, which together have depressed the yen.

Last week, the Nikkei rose to its highest level in more than four years, riding a wave of optimism that has coincided with Abe's rising political fortunes. While the rally may yet have a little further to run, stocks have probably seen most of the gains they can expect from the currency move.

A former prime minister who resigned his post only to ride a wave of popular dissatisfaction back into office, Abe has pursued a controversial set of policies designed to revive Japan's faltering economy and end decades of stagnation.

Japan is in the midst of a mild recession, and Abe has deployed supercharged rhetoric in an attempt to steer the country's central bank into aggressive easing. The bank has responded to the pressure, pledging to make "open-ended" purchases of government bonds and raising its inflation target to 2% from 1%.

Abe's government has also put in place an $117 billion fiscal stimulus package that will increase spending on public works, disaster recovery and provide aid to smaller businesses.

The actions have precipitated a sharp fall in the value of the yen, which has weakened by nearly 20% against the U.S. dollar since the beginning of October.

Another major factor helping to tame the yen is the country's shift from a long-term trade surplus to a deficit, triggered by the earthquake, tsunami and nuclear crisis of March 2011.

The national emergency caused the country's exports to drop at the same time as it began to import significantly more fuel. A weaker yen helps exports but also has the potential to hike costs associated with imported fuel, which could smother any broader benefits to economic growth.

Related: Don't fight the BoJ

Japanese exporters rank prominently among the beneficiaries of Abe's policies and the yen's decline.

A weaker currency cheapens the price of a country's exports, making them more attractive to international buyers by undercutting competitors. As a result, even the smallest move in the yen has a big impact on Japan's exporters.

Analysts at Capital Economics wrote last week that the yen's depreciation might not quite be over.

"We forecast the yen to depreciate to 95 against the dollar by mid-year as investors' appetite for risk continues to grow," the economists said.

The yen is currently trading at 92.7 to the dollar, within striking distance of the prediction.

"Since this currency forecast is no longer far from the current level of the exchange rate, we don't expect Japan's stock market to receive much of an extra boost in the coming months," the economists wrote. "But we still expect it to derive some benefit."

Related: Japan spurs talk of currency war

Other observers are worried that Abe's strategy raises the chances of hyperinflation, charges the prime minister dismisses.

The stimulus calculus could change this week, when Japan is set to release fourth quarter gross domestic product figures. Another quarter of negative growth would likely only fuel Abe's calls for more easing.

First Published: February 10, 2013: 9:07 PM ET

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Maker's Mark waters down bourbon to meet demand

HONG KONG (CNNMoney)

The bourbon producer, known for its signature red wax-sealed bottles, is watering down its whiskey in an effort to meet rising global demand.

The change was first announced in a letter from company executives to loyal customers.

"Fact is, demand for our bourbon is exceeding our ability to make it, which means we're running very low on supply," wrote Rob Samuels, the company COO.

Samuels said that "after looking at all possible solutions," the company was reducing alcohol by volume by 3%.

However, it seems likely that alcohol by volume will instead be reduced by three percentage points. Prior to the announced change, Maker's Mark was 45% alcohol by volume, and according to company literature, the bourbon is now 42% alcohol by volume, a reduction of 6.7%.

Related: Doubling down on Bourbon in the heartland

Consumers met the news with skepticism, filling Twitter and social media sites with complaints about the change. The company, however, insists the taste will be the same, and that Maker's Mark drinkers detected no difference during taste tests.

"This will enable us to maintain the same taste profile and increase our limited supply so there is enough Maker's Mark to go around, while we continue to expand the distillery and increase our production capacity," the letter said.

Related: Bourbon: America's export with a kick

Bourbon is a type of American whiskey that must be aged in new barrels and distilled at less than 160 proof. Maker's Mark is one of several brands produced under the Beam Inc. (BEAM) umbrella, which includes Knob Creek and Jim Beam. Water is typically added after bourbon matures to lower its alcohol content.

Matt Shattock, the CEO of Beam, told CNNMoney last year that emerging markets are driving growth in the liquor business. Shattock specifically cited bourbon, with its sweeter taste, as appealing to consumers in countries like India.

-- CNN's Poppy Harlow contributed to this report.

First Published: February 10, 2013: 11:06 PM ET

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Who called it Nemo anyway?

Snow plows sit in the parking lot of a Home Depot in Vauxhall, N.J., preparing for what has been dubbed Winter Storm Nemo by The Weather Channel.

NEW YORK (CNNMoney)

Last year, The Weather Channel decided it would start naming winter storms.

Thus, Nemo.

The idea was to draw more attention to storms and get people to prepare, according to Bryan Norcross, senior executive director of weather content for the company.

Since this storm is hitting heavily populated areas, the Nemo name is getting much greater attention than the 13 smaller winter storms that came before it this year. Anyone remember winter storm Brutus?

A spokeswoman for the National Weather Service, which names tropical storms like hurricanes, said the agency has no position on the Weather Channel's decision to name winter storms.

Related: Winter storm brings back gas lines

In case you're curious, the name Nemo, like most of the other names in the 26 picked for this year, is meant to harken back to Greek or Roman mythology, not the Pixar-Disney (DIS, Fortune 500) movie "Finding Nemo." And no, the network does not intend to sell the storm naming rights to the highest bidders.

The Weather Channel is owned by a consortium that includes Comcast (CMCSA)-unit NBC Universal, Blackstone Group (BX) and Bain Capital.

First Published: February 8, 2013: 3:39 PM ET

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Obama to propose pay hike for federal workers

NEW YORK (CNNMoney)

The White House's Office of Management and Budget officials briefed federal labor leaders late Friday on the proposed pay hike.

Federal pay has been frozen for more than two years. A 0.5% pay hike is scheduled to go to civilian federal workers in late March. That pay hike was delayed when President Obama extended the existing pay freeze a few months to give lawmakers time to come up with a budget deal.

Union leaders were elated to hear the news.

Related: White House details pending budget cuts

"After all that federal workers have sacrificed the past three years, they have earned a raise. I repeat, they have earned a raise," said William R. Dougan, president of the National Federation of Federal Employees.

Congress would still have to approve the pay hike. In the meantime, House Republicans have plans to consider legislation that would extend the current freeze on federal pay through the end of this year.

First Published: February 8, 2013: 6:18 PM ET

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Google's Schmidt selling $2.5 billion in stock

NEW YORK (CNNMoney)

Schmidt, who was Google's CEO from 2001-2011, will sell up to 3.2 million shares of Google stock, worth about $2.5 billion, according to a filing with the SEC late Friday.

That would leave him with 4.4 million shares, or a 1.3% stake, and 5% voting power. That's a little more than half of what he owned at the end of last year.

Schmidt owned 7.6 million shares, which gave him 8.2% of the voting power, as of Dec. 31. This sale is part of a pre-arranged stock trading plan the company approved in November that allowed Schmidt to begin selling his stock this month.

"Using this trading plan, Eric can diversify his investment portfolio and can spread stock trades out over a period of one year to reduce market impact," said Google in the filing.

Just last week, Google's stock soared to an all-time high on hope that the company was nearing a settlement with European regulators over an antitrust probe. Turns out the European Commission says it's still reviewing proposals submitted by Google. But the hint of a settlement was enough for investors to jump in.

Related: 5 reasons why Google has its mojo back

Google's stock has been on a tear over the past six months as the company continues to activate a million Android devices a day, has successfully expanded into the broadband, cable and wireless arenas, and remains the dominant search engine.

Despite more competition from Microsoft (MSFT, Fortune 500) and Facebook (FB), neither has yet threatened Google's top spot.

Shares of Google edged lower in after-hours trading.

-- CNNMoney's David Goldman contributed

First Published: February 8, 2013: 7:37 PM ET

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Obama to propose pay hike for federal workers

NEW YORK (CNNMoney)

The White House's Office of Management and Budget officials briefed federal labor leaders late Friday on the proposed pay hike.

Federal pay has been frozen for more than two years. A 0.5% pay hike is scheduled to go to civilian federal workers in late March. That pay hike was delayed when President Obama extended the existing pay freeze a few months to give lawmakers time to come up with a budget deal.

Union leaders were elated to hear the news.

Related: White House details pending budget cuts

"After all that federal workers have sacrificed the past three years, they have earned a raise. I repeat, they have earned a raise," said William R. Dougan, president of the National Federation of Federal Employees.

Congress would still have to approve the pay hike. In the meantime, House Republicans have plans to consider legislation that would extend the current freeze on federal pay through the end of this year.

First Published: February 8, 2013: 6:18 PM ET

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