Skip to main content

tv   Closing Bell  CNBC  August 14, 2009 4:00pm-5:00pm EDT

4:00 pm
>> this makes a little sense here. the big run-up, these guys have bought into the cyclical summer rally and they're very heavily invested. professional traders. we've put up numbers indicating 20%, 30% moves in big cyclical names in housing stocks, in industrials, in commodity stocksish in the real estate investment trusts in the last month. you've got a day like today where you get the consumer sentiment data way weaker than expected and you've got a little bit of a problem here because you're extended out there. it makes sense to -- that's where the weakness was today. even with that we're only down 100 points. i thought this was a very sensible reaction to that immediate data. >> it's a bullish bear market. >> and they love to -- the professionals love to pooh-pooh the consumer sentiment. it's just nonsense, it doesn't correlate with the consumer spending number. would you take that ris fk you were a praflgs tradofessional t were up 20% a month and commodity stocks, would you take that risk in you want to lighten up a little bit. and can i point out the volume's not that heavy. it's a friday in august. it's not like there is selling going on. there is not. >> i mentioned this with alan
4:01 pm
and pete costa earlier. we have an iou for that industrial production number. you can't just explain that away. that's not going away. there was definitely something that drove the industrial reduction index up. >> let's put it this way. you're going to get this choppy data. i thought it was modestly more positive but not that much more positive. the consumer sentiment number was a real outliar. in other words, if you look at the number of people who make estimates on those kinds of things this number you that got was way outside the estimates of most of the analysts, and that's what caused things to move around. by the way, we've got a little movement in citigroup here. i don't think there's much going on, but what will happen is next week there's a lot of data that's coming out that's going to give indications on credit card delinquencies for a lot of big banks. jpmorgan, bank of america, citi. and there's some discussion out there that maybe that data will be a little better than expected. >> all right. so there we go. bob pisani, thanks very much. we're down 80 points now on the dow, but it is indeed a down day and a down week as we wrap it up here today. "closing bell" is next. continuing with melissa francis.
4:02 pm
it is 4:00 p.m. on wall street. do you know where your money is? welcome to "the closing bell." i'm melissa francis in for maria bartiromo and here's what we are following at the close. stocks retreating after two days of gains amid mixed economic data. although we have recovered from the lows of the day. what really spooked investors, though, was a dropping consumer sentiment raising fresh concerns about consumer spending. and oil getting crushed today along with the broader market. crude down more than $3 or 4.3% at the close to close at $67.51 a barrel. here's a look at how we finished the day on wall street. the dow closing down on the day but likely well off the lows of the session. take a look. we had been down about 130 points an hour ago. making our way back a little bit at he the close. down 76 points, .8%.
4:03 pm
9,321 the last trade. the nasdaq down 23 points, about 1.2%. and the s&p 500 only down about 8 at the close k still above 1,000. let's get more on today's action. bob pisani's our eye on the floor of the new york stock exchange. bob, a little bit of a fightback there at the close. >> it was. boy, you read that really quick, melissa. that was excellent. let me tell you. she's right. we were down 160 points in the dow. that was much earlier in the day. we came back. one of the reasons is financials kind of moved up late in the day. let's take a look, for example, at bank of america here. volume picked up a little after 2:00. see that? there's a lot of stuff floating around. next week they're releasing master trust data for a number of the big banks. what this does is gives you some indication of credit card delinquency trends. the hope is trends will be improving a little bit. we've seen 30-day delinquencies improving a little bit. the hope is that will flow into the long-term delinquency bucket out there. we saw with a number of banks, capital one, two, they're getting data next week, and again, we don't know but there's some speculation.
4:04 pm
there you see capital one moving up toward the close as well. elsewhere, and melissa's right. stocks were weak all throughout the day but notably off their lows. and the story is very simple. traders have bought big into a cyclical rally in the last month. we've seen stocks, some cyclicals up 20% and 30%. in the last four weeks. a and it make sense when you get consumer sentiment like we had today with the michigan numbers way down to lighten up a little bit. i want to emphasize the volume is not particularly heavy. there are a lot of traders who insist there is a floor on the market, that if stocks drop a little bit from here, 4%, 5%, 6%, there will be traders interested in buying because there are people who missed out on that summer rally. that is a bullish sentiment out there. meantime, look at the cyclical stocks. we've seen some of these stocks in the home builders up 30% in the last four weeks. it makes sense to have modest declines here on a day like today. 4% roughly. commodity stocks, this group roughly did really well in the last four weeks. one of the big movers up, again, 2%, 3%, 4% declines in the usual
4:05 pm
heavily traded names here. retailers, very simple story here. some are raising their guidance like jcpenney, but here's the problem. analysts have already done that. they have already raised their guidance. they've caught up with these guys. and now the street's not terribly impressed. now they've got to start talking positively about fourth quarter and 2010 numbers and that remains to be seen. melissa, back to you. and by the way, for the week we're down about 1% on the dow jones industrial average -- excuse me, 0.5%. there's the transports, a little weaker as well. melissa? >> thanks so much, bob. taking a look at today's business headlines, another nightmare for boeing's 787 dreamliner jet. the aerospace giant says it ordered an italian supplier to halt production on the plane's fuselage in june after discovering microscopic wrinkles that could lead to significant deterioration of the structure. it is just the latest setback for the dreamliner, which is already two years behind schedule. citigroup upgraded to buy from
4:06 pm
underperform by bank of america, merrill lynch citing stabing credit quality and limited book value down side potential. and dole food is going public. the world's largest fresh fruit and vegetable producer says it will raise up to $500 million in an ipo and use some of these proceeds to pay down debt. the company will list shares on the new york stock exchange under the ticker symbol dole. let's break down today's market action with david kelly, chief market strategist at jpmorgan funds, and bill greiner, chief investment strategist at scout investment advisers. guys, thanks so much for joining us. david, let me start with you. what do you think of today's action? >> the market was obviously spooked by a low consumer sentiment number but i think the markets got this one wrong. nobody has pointed out there are only 250 people surveyed in that survey. it's a very small survey. i think consumer sentiment is pretty stable, it's beginning to turn here. so i think the economy is turning right now. it's going to be much stronger in the third and fourth quarters.
4:07 pm
and i think the market got it wrong by selling off today. >> bill, actually, david makes a pretty funny point. i mean, nobody ever calls me. 250 people in this survey. how much credit do you give it fwh. >> david i think is right about this issue. that the market is really centered on a daily basis behind the news of the day, and that really is a reflection of the nervousness of investors, which is very typical during times of economic change, which is what we're going through. i think it's very important, though, to keep the eye on longer-term data and certainly over the last two months, actually last eight-week period a full 67% of the economic releases that have come out of washington have been positive surprises. so i think you deal with it a day at a time. obviously with what's going on with this market. but i think we have to look back over the last month or two to get a sense of what's happening. >> but david, overall, the data is relatively inconsistent. it's kind of bumpy. you get one good thing and one bad thing. that's an improvement over what it was a month or two ago when everything was really negative.
4:08 pm
how do you set yourself up if you just accept the data's going to be bumpy for a little while here? >> i agree. the bottom of a v if you look closely enough actually looks like a u. we are right at the turning point right now. i think the right thing to do is to take a longer look and ask yourself, you know, if this is the 1980s or the 1990s again-f we gradually get through what we're going through right now and over the next few years get back down it may take us five years to get there, but get back to full employment, earnings up in the s&p 500, where should the market be then? and because of that i think you still have to as a long-term investor of course be careful about some sort of pullback here, but i think you should be a little bit overweight equities, make sure you can take advantage of a long-term improvement in the economy and the market. >> bill, do you agree with that idea, that it's going to be bumpy for a while here? how do you set yourself up for that? >> yeah, it probably will be bumpy, and actually, if you look back in history, melissa, to the first year of a presidential
4:09 pm
cycle, generally speaking the third quarter is normally a very tough time for the equity market. so if history's any kind of guide, we should probably expect the market itself to go through a period of contraction. don't know if it's going to be 3%, 4%, 5% or whatever it's going to be. but by the end of the year my bet is equity values will probably be higher than they are today. >> david, what's your biggest concern? what would throw you off track and make you want to change your strategy? >> oil. if something -- honestly, i think within the economy itself i'm actually pretty comfortable with the way the economy's turning. but i am worried about outlying problems. if something happens in the middle east, and there are lots of scenarios that could cause oil prices to shoot over $150 a barrel. that's the one thing that could set the u.s. economy and the global economy back on its heels. >> is that your marker, is it like triple digits or would 90 bucks be a concern to you? you're thinking 150 like where we were -- >> i think it has to be worse than before. so 150 to 200. but also it's the event that causes it because we're in a
4:10 pm
little bit of a lull mere in terms of the hurricane season-n terms of bad things happening in the middle east, but that makes me nervous. that's what i worry about the most. >> well, bill, it seems the event that would cause something like that would be the economy starting up again and speculators going back into that market. and i don't see speculator in a negative way. they make a market. but it just seems like a lot of money rushing back into the oil market could easily ignite to triple digits. >> that could be but you also have to thift supply side of the equation because i think what david's talking about is a demand issue or what you're talking about is a demand issue. on the supply side of the equation if we have a supply disruption, for example a hurricane in the gulf of mexico, or we have a politically driven issue occur within the mideast and you could easily see oil prices move up pretty dramatically because i think supply and demand balance right now is fairly tight. >> i don't know. that market -- i followed that market for a long time, and it trades on even more than supply and demand. there's a lot of other factors out there. >> absolutely. >> it's a whole other conversation. thanks so much for joining us. have a great weekend. here are some of the other
4:11 pm
stories we're following on the "closing bell" ticker right now. according to published reports, fdic will take troubled colonial bank group into receivership and sell its branches and deposits into regional bank bb & t. the deal expected to be announced later today would mark the largest bank flooufr failure of the year. bb & t shares trading higher on the day by almost 10%. tenet health care upgraded to outperform from neutral by robert baird on the potential for the hospital operator to keep reporting bet yes than xpd earnings driven by growth initiatives and cost cutting. the firm also raising its price target to $6 from $5. taking a look at that stock, it is also charging higher on the day, up about 8%. and 2-d and 3-d design software maker autodesk reporting an 88% plun ng chblg in second quarter profit because of a drop in sales. excluding restructuring charges that beat wall street's estimates. the company also forecasting third quarter earnings in line with analysts' expectations. and that stock trading up as a
4:12 pm
result up about 5% almost. many americans expressing real fear about president obama's health care reforms but will the growing anger over health care end up killing the bill or can it still get through congress? some answers in a moment. and new concerns about deflation being raised by the cpi report. coming up we'll discuss whether companies are actually rooting for some inflation or if that's just bad for business. we'll be right back. these days, when you have to spend, shopping online can help save.
4:13 pm
doing it with bank of america can help save a lot more. up to 20% cash back from over 300 online retailers with our add it up program. just sign up and use your bank of america debit or credit card when you shop online. it's one of the many ways we make saving money in tough times a whole lot easier.
4:14 pm
4:15 pm
bernie madoff's largest feeder fund has offered to set well massachusetts regulators, but the massachusetts secretary of state has turned down the offer. cnbc's senior correspondent scott cohn is here with the story. scott, why did he turn it down? >> well, melissa, he turned it down because he says it's premature. investors in the fairfield greenwich group lost an estimated $7 billion in the madoff scam, and massachusetts regulators, remember, charged the company should have known or at least should have protected investors from the fraud. the complaint was filed back in april. and this week fairfield greenwich offered a settlement. full restitution for all massachusetts investors. not quite as magnanimous as it might sound, though. there were only a handful of
4:16 pm
investors in massachusetts. so the settlement would have been worth only a few million dollars and fairfield greenwich would not have admitted guilt. so massachusetts secretary of state william galvin turned the offer down, calling it a thinly veiled attempt to circumvent the process and saying it is premature. besides, he said on "power lunch" today the offer had too many holes. >> there is no actual offer. there's been suggestions. but the reality is our goal is to get everyone and at this point we have not satisfied ourselves that everyone has been identified. >> but fairfield greenwich says the settlement offer did have a provision for investors yet to be identified. and the company says it's confused. when galvin brought the case in april, the company says in a statement, the stated goal was full restitution for massachusetts investors. that's what fairfield greenwich has sofrd offered, "so we are baffled," the statement says. there are a couple of larger cases pending against fairfield greenwich in new york. a lawsuit by the madoff bankruptcy trustee and a big class action suit. the company apparently wanted to
4:17 pm
get the massachusetts case out of the way so it can focus on these bigger cases. but massachusetts is saying no, not so fast. melissa? >> scott cohn, thanks so much. the road to health care reform isn't an easy one. it was a week filled with contentious images of americans showing their fears and frustrations over president obama's overhaul of the plan. and there are signs the road will only get harder. has obama given the upper hand to critics of his plan and does he still have time to overcome these doubts and highlight the virtues of his health care overhaul? greg valliere is chief policy strategist with soleil securities and a cnbc contributor. tony fratto former white house deputy press secretary and a cnbc contributor. thanks so much for joining us. tony, where do we stand in this battle? >> there's still a lot of time left to go in this month. but i'll tell you, it's not looking good for the president. the white house said today the president was setting out to
4:18 pm
change some minds and it appears he's succeeding. every time he goes out he keeps changing more minds against the health care proposals under consideration in congress. so it's a real problem for them right now. >> greg, you don't agree with that? >> maybe my friend tony can help me. there are so many good arguments against this health reform plan, i'd be the first one to agree. but this euthanasia death squad stuff which is mccarthyite garbage, why haven't any republicans spoken out against this kind of demagoguery? >> i think we know exactly why. but instead of the health plan itself, let's talk about how it's being managed, how the message is being managed. i mean, greg, you said the issue is now radioactive for a lot of democrats. >> it is. and by the way, still don't understand why many republicans haven't condemned this rhetoric. but that aside, melissa, yes, i think it's radioactive, and right now the democrats desperately need cover. they've got to find some republicans who would support this. the democrats can't just sit out there naked, supporting it all
4:19 pm
by themselves. so the republicans, the blue dogs, the centrists, all of a sudden have the upper hand. >> is there any way to do that, greg? i mean, is there any way to get some cover? because it seems like they're losing. why in godtion name would republicans go out and give them any cover? >> i mean, max bacchus has got to get people like -- he's got to get some pretty conservative republicans on board. if he doesn't this thing is going to be on life support after labor day. >> greg, i actually think that's part of the problem, and let me be the first republican to condemn that rhetoric. i actually don't think that's what has this plan on the rocks. and that's the problem from the white house's standpoint. they are so focused on process here, they can't believe that there are people who have very legitimate concerns with this plan and so they think it's about process and they think it's just a communications problem. the problem is they have a poli problem. the president keeps saying he doesn't want more government involvement and at the same time he's creating a new government
4:20 pm
entitlement program. he keeps saying that he wants this to save money, and the cbo says it's going to cost money. and this confuses the american people. it's very difficult for them to deliver this message when he's trying to sell a plan that seems to stand in contrast to the standards he's put forward. >> it's just a really hard problem to solve. >> absolutely. and you've got to say, looking at reasons to oppose it, i'm not sure the country can afford this right now. there are some good reasons to oppose it. i think this has good implications for other issues. >> like what? >> cap and trade, financial services reform, taxes down the road. i think this is a real wake-up call for the obama white house that they've got to go moderate and centrist or they'll get nothing. >> greg, are you saying if they lose this one they could lose the other ones or are you saying it's just a priechler showing them maybe how to better handle the next couple issues? >> they're not going to win these issues on their terms.
4:21 pm
they're going to have to redefine success, especially on health reform. if they get anything by the end of the year, it's going to be so watered down by this process because it's been so ugly this summer, because the blue dogs have defected, that the white house is not going to get its way. this is a great story for the markets. >> tony, aren't they going to get something, though, and then declare victory? >> well, look -- >> something. >> if they get anything at all, they're not going to just declare victory. they're going to call it -- even if they get it, i'm saying, they'll declare victory and they'll call it historic and, you know, the greatest change ever. but you know, i think we're a long way from there even at this point. greg pointed to some of the things that are only going to make it more difficult as we go forward. we're going to see new deficit numbers, new revenue numbers. you know, forget about what people are talking about in terms of recovery. those numbers are not going to get better between now and the end of the year. they're only going to get worse. >> greg, what went wrong? is it the policy, like tony said? is it the way it was organized? what, if you could go back and
4:22 pm
do it differently for success, what would you do? >> i think they were so obsessed with the hillary clinton template, where she tried to shove something down danny losten kousky's throat and they fail, that they went the other way. they abdicated to charlie rangel and nancy pelosi. so they defined the health care bill. and i think as the white house looks back on what they did wrong you just don't give the activists in the house that kind of carte blanche. >> tony, you know, president obama's a little less popular now than he was before all this started. but he was starting from, you know, like the level of a deity. wasn't some of it going to wear off by this point anyway? >> well, it was awl always going to wear off. the truth is you can go back and look at those polls. he started off at about the same place that other incoming presidents started. >> i don't know. >> no, i know the media wanted to convey that he was exceptionally popular for a new president. but the facts just aren't are there. you can go look at the gallup polls for president clinton,
4:23 pm
president george w. bush. and they're pretty much in the same ballpark. he wasn't at the stratosphere, but he has come back. that's for sure. >> the key in the polls is whether the public eventually will rogue recognize it and give him credit. you look at the michigan confidence numbers, the public ain't giving him credit for anything. >> that's because the public doesn't feel it. any kind of turnaround are only for people that are seeing the very early signs that aren't necessarily feeling it. you couldn't necessarily expect him to get credit for it now. wouldn't his popularity rise and fall with the economy? isn't that kind of the way it always ends up working out in the end? >> it will certainly have an impact. if there is a strong recovery and if you see that affecting households, then you should see his popularity improve. all else being equal. you don't know what is going to open up other policy areas that can have an impact. the truth is if you look back at other presidencies, once presidents lose popularity it is hard to recover it. it is a steeper climb going up
4:24 pm
than it is going down. >> and tony made a really good point a couple minutes ago. at some point in the next few weeks we've got to get the mid-year deficit estimates. this is going to be really ugly. this is going to medicate case for massive health care reform even more difficult to make. >> okay, guys. thanks so much for joining us. have a great weekend. >> thanks, melissa. >> up next on "the closing bell," some troubled commercial property owners are now taking a page out of the playbook of underwater homeowners. find out what it is and how it's impacting the public stocks of those companies when we come back. room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
4:25 pm
imagine... one scooter or power chair that could improve your mobility and your life. one medicare benefit that, with private insurance, may entitle you to pay little to nothing to own it. one company that can make it all happen... your power chair will be paid in full. the scooter store. hi i'm dan weston. we're experts at getting you the scooter or power
4:26 pm
chair you need. in fact, if we pre-qualify you for medicare reimbursement and medicare denies your claim, we'll give you your new power chair or scooter free. i didn't pay a penny out of pocket for my power chair. with help from the scooter store, medicare and my insurance covered it all. call the scooter store for free information today. call the number on your screen for free information.
4:27 pm
oh, no, diana. >> oh, no, melissa. that's right. we learned today the owners of resorts atlantic city, that is the first u.s. hotel casino to open outside of las vegas, they're turning the keys back over to the lender, credit suisse. it's all part of a growing trend of commercial jingle mail that's spreading throughout the hotel industry. now, sunstone was the first in june, giving the san diego w back to the lender. as revenue per room is way down, nationwide hotel owners are unable to cover their debt service, returning the property can actually be a good thing for the balance sheet. >> the ramifications for the owner are not as severe.
4:28 pm
it doesn't particularly affect their credit because most of the owners they're dealing with today understand the hotel is where the problem was and are happy to make new loans to them. >> and so others are following suit. ashford stopped bundling the $29 million highate regency dearborn debt giving it back to the ender. sellcore didn't repay the maturity from the boca raton embassy suites and wilmington doubletree. and morgan hotel say they intend to return at least one asset. since all that eases the companies' losses, are they now a buy? >> when you see the moving average of revenue per available room across the zero line, so in other words, you start seeing same-store revenue gains rather than losses, that's the time to look to invest in hotel stocks. and we think that revenue term probably doesn't come until late next year. >> so you have to ask what about the banks who get all these properties back? well, it's estimated they're going to be losing hundreds of billions on these assets. who's going to be losing it? well, the equity holders, the
4:29 pm
banks, but mostly the cmbs holders. for more on this go to the blog, realtycheck.cnbc.com. memsa? >> diana, you make it sound so easy but it's got to be harder for the companies to return these properties. >> it is so wildly complicated given the number of investors in these hotel properties and the reits and all the different ownerships that in a minute and a half i really couldn't explain it all to you. >> that's a very honest answer. we'll have a drink later. you can explain it to me. diana, thanks so much. consumer prices falling at the sharpest year-over-year pace since 1950. coming up, find out how that's impacting pricing power and a potential economic recovery. we'll be right back. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips
4:30 pm
tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.
4:31 pm
4:32 pm
the consumer price index falling 2.1% over the past year. it is the largest decline since 1950, and that's sparking some concerns about deflation. cnbc's senior economics reporter steve liesman joins us now for
4:33 pm
what that data means for business and why sometimes companies are starting to root for inflation. >> just a little bit. you know, root for a little bit. no one wants a lot of it. as many of you may be fiefrnding out first hand it's a tough environment in which to invest. here's the c pichlt data. unchanged on a month-to-month basis. minus 2.1% year on year. the core rate up just a little bit. 1 1/2% year on year. we'll look at those. the inflation rate has now been negative for five straight months. that is the longest stretch since 1955. core inflation you can see here it's not deflation but it certainly is disinflation. down from the highs. this takes out food and energy. not as bad as the deflation scare of '03-04 but maybe on the way there. economist joe naroff says --
4:34 pm
>> 2 the% inflation is not going to be anything that gets any businessperson or any households to guess worried. 0% is a problem. negative is a problem. if we get up to 2, 2 1/4, it's not an issue. >> look at some of the issues surrounding deflation and stocks. puts pressure on pricing. the top line's not growing naturally as it does in an inflationary environment, puts a premium on cost-cutting as in shedding labor and productivity as in making those machines work better. the debt burden grows. if your wages were stagnant or even falling, the burden of your mortgage would go up. same thing with companies holding debt. and guess what, a lot of companies had a lot of debt coming out of the most recent boom. bonds can look more attractive. so the relative bond stock equation changes. the only thing you've got going for you is the friendly ded fed. this is macro data. look at which ones have pricing powers when the top line is faltering as it is now and which ones can control their input
4:35 pm
costs to see which will profit in this disinflationary or deflationary world. melissa? >> joining us now is michael darda, chief economist and david cota. before we get to this discussion we're going to get to mary thompson at the news desk who has a little something for us. what do you have? >> we have the 13-b filings of warren buffett's berkshire hathaway just out and i want to give you an update as to the changes in his portfolio as of june 30th. he increased his position in johnson & johnson. and he decreased his position in a number of companies. i'll run through the companies for you. decreased holdings in united health care by 1.1 million shares. decreasing his holdings in car max by 3 million. he also decreased his position in conoco phillips, eaton down 1.2 million shares. home depot down a million shares to 2.7 million total. and wellpoint, the share holdings there declining by 1.2 million.
4:36 pm
as expected, his stake in constellation energy has been completely sold, but we knew that already. so again, an increase in his holdings in johnson & johnson. decreases in united health care, car max, conoco phillips, eaton home depot, as well as wellpoint. back to you. >> mary thompson, thanks so much. david, when i was listening to steve's report there, deflation always scary because you like to inflate away your debt especially if you're a small nation. if you're a company, deflation really difficult to deal with. so who has pricing power to deal with that? >> i'm not sure anybody has pricing power. >> i was afraid of that. >> steve reported very accurately if you dig into the inflation report today you can see in some very technical points from the cleveland fed the median cpi and the mean estimate and in the inflation report a third thing called the chain cpi. you can see that we're going to have this cpi at a very low level for a long period of time.
4:37 pm
this does not turn quickly. it means pricing power will be difficult. >> michael, another one of the points, everyone keeps saying the fed is putting so much money out there into the economy, that's going to be inflationary. i was one of those people for a long time. i think down the road maybe. but as of right now a lot of that money is remaining on balance sheets at the fed, it's not really out there recirculating. >> no, it's not out there recirculating in terms of loan growth. but i think we have to remember loan growth does tend to lag the business cycle. typically, loan growth will bottom out a quarter or a few quarters or even a few years after a recession trough. so we really shouldn't look at that in terms of whether the fed's getting traction. i think we should look at things look the credit markets, which have been improving a lot. so i think the fed is having a big impact here. in terms of the inflation and deflation debate i think the deflation that's in the headline cpi is going to prove to be temporary. the core cpi i think will be low for a while. a third of that is owner's equivalent rent, which is essentially flatlining now.
4:38 pm
until rental inflation starts to pick up, they'll probably be a pretty tight cap or lid on core inflation. so we're probably not looking at big jumps in core inflation for several years. but that's not unusual either. both of these indicators tend to lag the business cycle as well. >> the trouble you have, guys, is when you look at stocks and inflation or deflation it's very hard to draw a very direct correlation between do stocks do well in inflationary or deflationary environments? i did a little work and it showed 11 months after inflation starts ticking up the stock market can do quite well. but that may be also because we're in one part of the fed cycle versus another. we had periods of time when deflation has been good for stocks and times when it's not been good for stocks. there's no definitive period that's better for stocks. it is true, though, that in times where there's no pricing power what you do want to do is look for your monopolies or your
4:39 pm
oligopolies, and i'm thinking of guys like microsoft that have a mauft-half kind of thing where they can at least maintain prices where they are right now. there's inflation and stocks right there. i lagged that 11 months and it's a pretty good fit. >> what about the argument that inputs are cheaper? i understand debt is a bigger burden to carry but what about the fact that energy is cheaper in an inflationary environment? >> that's a good story. i would just add one thing to what steve said. when prices are relatively stable, you do not get distortions in company inventories and earnings reports. so the earnings that you get reported are of higher quality. and the stock market will pay a premium for a reliable higher-quality number rather than numbers which are reflecting inflation distortions. that's a very big distinction for the stock market. >> the other thing i think you want to look at is when these guys talked about margin you want to listen very carefully to the sources of that margin and whether or not those are sustainable sources. you can only cut so far.
4:40 pm
you get a good quarter because you cut way back on costs one quarter but in fact you can't repeat that the next quarter to maintain the margin. >> that's sort of how it always starts off with companies doing a lot of cost cutting you get a big plunge in hours worked and job losses and then companies being lean and mean see a big rampup in operating leverage when the economy starts to come back, which is i think where we'll be in a few quarters. on your first point, though, we do know what kills p/e multip s multiples. and high levels of inflation or high levels of deflation, as we had in 2021 and the early '30s or in the 1970s, early '80s destroyed p/e multiples. but something more modest for inflation, certainly you can't look at modest rates of inflation and find some perfect relationship to any specific multiple on the market. the business cycle i think is the key. >> i love this discussion. it feels very highbrow. but is it a huge problem right now, deflation? it feels like we're kind of at
4:41 pm
the end of the deflation cycle. >> melissa, david kotok, in fact if prices are stable and the fed has the cover to keep the short-term interest rate very low, which it will do for a long time, you will get very good bullish responses in the prices of assets. very low short-term interest rates. near zero. mean stocks go higher and bonds are attractive. >> i don't think it's a huge problem. i think it's something people need to be very, very aware of when they're picking stocks and picking industries because right now the environment is changing. it is a disinflationary environment. we showed that chart. it is coming down, melissa. it changes the metrics you use to pick your investment. people need to be aware of those. >> excellent discussion, guys. thanks for joining us. >> thanks a lot. >> a new threat may be emerging to nielsen's rating empire. oh-g. detai details when we come back.
4:42 pm
4:43 pm
4:44 pm
media giants like disney and nbc universal along with major advertisers like procter & gamble and at&t plus ad agencies
4:45 pm
like wpp's m group and star com media vests are all in talks about forming a new media measurement consortium. the media industry is under pressure as consumers watch an increasing amount of video online and on their mobile phones where advertisers are anxious to reach them. traditional broadcast tv revenue is dropping and new media revenue isn't growing fast enough to compensate for the decline. all of this pushing content creators, ad buyers, and sellers to rush to figure out where and how viewers are watching and to turn that knowledge into profits. the new consortium in the works would take on nielsen's ratings monopoly that sets tv ad prices. and though nielsen does measure online video viewing, those stats aren't incorporated into its main ratings. some sources say the new resources if added to nielsen's would help focus on how people interact with content and ads online and mobile devices, but one source close to the discussion said this reflects dissatisfaction clients have with nielsen's monopoly.
4:46 pm
>> advertisers are concerned that their right demo is not necessarily watching the advertisement on the television. so i think what they are trying to do is reach the right audience. but at the same time advertisers also wants to have their advertisement next to the right context. >> media conglomerate ceos say the ad market is stabilizing and they expect it to pick up this fall. but melissa, it really seems like the future is online, giving these rivals good reason to team up to better understand and monetize this new market. back over to you. >> i love that video that you use on the mobile device. it looks like i was really giving john harwood a hard time there. i love it. thank you, julia boorstin. convicted felon michael vick returning to the nfl. and that's got many fans upset. but will it hurt the image of the most valuable sport property in the world, or is the nfl doing enough to protect its brand? we're going to have some answers when we come back. 
4:47 pm
4:48 pm
4:49 pm
welcome back to "closing bell." i'm mary thompson at the breaking news december wk an
4:50 pm
update on the changes to george soros's portfolio in the second quarter, making some changes here. let me run through them for you. first of all, he cut his walmart stake to just about 90,000 shares from 1.8 million. new stakes were taken in cisco, 210,000 shares. as well as autozone, 523,000 shares. he completely shed his holdings in conoco phillips, the oil giant, and added to his -- or actually i should say decreased his holdings in potash to 2 million shares from 5.7. so again, new stakes in cisco as well as autozone, cutting his stakes in walmart as well as potash and completely eliminating his stake in conoco phillips. melissa, back to you. >> all right. thanks so much, mary. there has been an outpouring of criticism regarding the recent punishment and return of michael vick to the nfl. the same goes for the year suspension of donte' stallworth after a dui crash that killed a man in march. so what does the nfl need to do to protect its brand, especially after sports pro magazine has dubbed it the most valuable
4:51 pm
sports property in the world? here to talk about it is patrick mcgee, ceo of pro ventures group and one of the former reps at octagon. also mark ganis president of sports corp. along with cnbc sports business reporter darren rovell. thanks to all of you guys for joining us. patrick, i sort of feel like fans have a pretty short memory and even though they are outraged by things when they happen, when a player comes back and performs in the sport that's kind of all they care about. is that a misperception? >> i think for sure performance and winning is a big part of the league and being a fan of the league. but sure, i mean, i think the fans also look a little bit at character as well and they want their players to have character on a team. but i think also at the end of the day winning is paramount for all teams. >> the way i see it is it's also about, you know, we're having this brand discussion. we discuss the brand of major league baseball for seven years about steroids. we're on cnbc. what is it worth in the end? and in the end this might be
4:52 pm
worth nothing. steroids really didn't affect baseball. the affected baseball. i just spoke to someone at stubhub, and they told me that tickets had tripled for the falcons/eagles game in terms of the people buying tickets. there you go right away. so, my question is -- what does it mean to the brand? what does it mean financially? i think maybe there's more to gain. we at least have not seen anything from sponsors pulling back yet. and you could say this is the worst, not unless something happens further. >> mark, what do you think about that? do you think that sponsors are going to pull back in philadelphia? >> not the way things are right now. if michael vick continues to approach in a very contrite manner, very apologetic manner, if the team continues to do all its great works in the community -- and that's been very important. they've built up a lot of goodwill under jeff lurie as the owner, i don't think there will be any pullback of sponsors or even a boycott against the
4:53 pm
sponsors. but to what darren was saying, i think there's a significant distinction between players that behave badly with off-field activities that have nothing to do with their onfield performance and those that are involved in bad behavior that affects their onfield performance. there's i think a very broad line between the two of those, and the fans don't forget, the media doesn't forget, and my goodness, i'd love to see where baseball would be today with all of its great advances if it didn't have this albatross, this anchor around its neck, of the steroid era. >> do you mean bad performance in the game in terms of bad sportsmanship, acting out on the field, or do you mean if they play well on the field, it doesn't matter? >> i mean if they use performance-enhancing drugs or bad sportsmanship or if it affects the sportsmanship and what fans are looking at in the game, then i think it is different than the nightclub or strip club or something like
4:54 pm
that. >> it's a bad commentary that they care more about being bad on the field or driving drunk off the field or dogfighting or getting arrested, that it's more important how bad they behave when they're a bad sport when they score. >> on the field they are representing the town and the team. and michael vick and a town like philadelphia which is one of the more rabid sports towns in america and they love their eagles and representing that team is going to be, you know, big. i still think, though, it's a big deal of what they do off the field as well. i don't think that people just say, hey, that's okay that he performed well on the field and had a dui or, you know, hit somebody in a car or involved in dogfighting. i mean, that's a problem. and that's not going to be something that's going to be accepted, i think, by a town, an organization or the fans going forward so -- >> patrick, you worked with michael vick obviously. you do a whole lot of sponsorship work. any chance for michael vick to ever get sponsors again?
4:55 pm
we know, you know, powerade dropped him. that was an individual deal. nike dropped perhaps. perhaps they've never dropped an athlete before. any chance for individual endorsement deals do you think now and how long would it take? >> when i worked with michael, as you said he had nike, mcdonald's, ea, microsoft. now he really has, you know, when we evaluate as in a corporation looking to sign talent, you're going to be basing it on performance and imaging. what -- you know, what he can do in the future, what upside there is. and right now he has none of that. >> yeah. >> and i think it's very unlikely that he's going to come back. really what matters for him does he have any credibility on the field? >> yeah. >> i mean, can he come back from two years of playing and actually play in this league? >> even still, isn't the bottom line really, mark, that you're never going to wear a michael vick jersey again because what will people say if you're walking down the street. but if you're a philly fan and he wins, you don't care. >> if the team wins, he has
4:56 pm
played a major role in the team winning. let's say donovan mcnabb goes down and he leads the team to a super bowl victory. >> yeah. >> people in philadelphia will take to him. they will wear michael vick jerseys, especially if he continues to act contrite and apologetic to what he's had bad actions for. >> i think michael vick's versesy is in the top 20 best selling jerseys in the next three weeks. i really do think that, you know, that's just one of those things. just like the ticket sales, i think that michael vick's jersey is going to be a popular jersey even if he's not, you know, on the field and not replacing donovan mcnabb at number one, i think there are going to be people it's not going to be an embarrassment, so we'll have to see. >> that's a good bet. guys, thanks so much for joining us. we'll bet $5 on it. let's head over to the nasdaq market site and melissa lee. >> we'll do whale watching. you talked about the 13-s filings and we'll look at the trades the investors are looking
4:57 pm
or watching and following into the trade. a first on cnbc interview, the ceo of devevry, and we'll b making tv history. brace yourself, options action meets "fast money," as it moves to 8:30 tonight. >> first regis and now this. i got to tune in. thanks so much. coming up on the "closing bell," microsoft's zoom music player has had trouble taking on apple's ipod, but now microsoft has a new model and a new strategy. we'll have details. [ engine revving ]
4:58 pm
[ engine powers down ] gentlemen, you booked your hotels on orbitz. well, the price went down, so you're all getting a check thanks. for the difference. except for you -- you didn't book with orbitz, so you're not getting a check. well, i think we've all learned a valuable lesson today. good day, gentlemen. thanks a lot. thank you. introducing hotel price assurance, where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically.
4:59 pm
imagine... one scooter or power chair that could improve your mobility and your life. one medicare benefit that, with private insurance, may entitle you to pay little to nothing to own it. one company that can make it all happen... your power chair will be paid in full. the scooter store. hi i'm dan weston. we're experts at getting you the scooter or power chair you need. in fact, if we pre-qualify you for medicare reimbursement and medicare denies your claim, we'll give you your new power chair or scooter free. i didn't pay a penny out of pocket for my power chair. with help from the scooter store, medicare and my insurance covered it all. call the scooter store for free information today. call the number on your screen for free information.

211 Views

info Stream Only

Uploaded by TV Archive on