tv Closing Bell With Maria Bartiromo CNBC March 29, 2012 4:00pm-5:00pm EDT
should be very interesting tomorrow. coming up, a complete recap of this day on wall street and one of the most astute investors on wall street coming up on the second hour of the "closing bell" with maria bartiromo. >> and it is 4:00 on wall street. do you know where your money is? hi, everybody. i'm maria bart bought. we have a lot of green to show you on the screen. we have big developments right now involving the largest company on the planet. the fair labor association just releasing a report on the conditions at plants in china used to manufacture iphone cards. greatest concern is excessive overtime and how that was calculated. health and safety risks are also major on this list and crucial communication gaps. take a look at how the stock is trading with the news coming across the hour. ahead of the report, tim cook visited the plant today in the
province, a new you're times article in january detailing conditions at a plant where dorms were packed and employees were made to work excessive hours to the point they could no longer stand up. we go inside with the details. a first on cnbc interview right now. also with us, our technology correspondent jon fortt. good to see you, sir. what was the extent of the violations and how do they differ from what your organization deems to be fair conditions? >> we did a full body scan. we interviewed 35,000 worker. we collected a tremendous amount of detail, 200 -- 2,200 debt and what you expect to find from a factory in china, working too many overtime hours in particular, there are issues of workers, engagement, workers
participation in the trade union and there are areas of health and safety which could be tightened up. >> so apple was also, you know, trying to commission this report, wanted this report to come out because apparently they have also been concerned. so what was apple's response to the findings and what have they told you they are doing to address them? >> apple and both agreed with this. they gave us access, talked to anybody, examine any records that we need to examine. when we presented the findings to them, they went beyond our expectations. we presented to them that they are working in excess of code limits 60 hours a week. they've said they will cut working time, including overtime to 49. that is a precedent-setting commitment. no one else has made that commitment publicly in china. if they can achieve that, they will reset the bar for working conditions in the electronic
sector. >> john, they have been very transparent about this, right? they have been posting updates on the working hours? >> they have, maria. this is my question. is there anything that you found that the fla found in this investigation that is inconsistent with what apple has said? because what investors really want to know is, is apple being an honest broker in the way it's deal with labor in china? >> they have. apple has been monitoring their factories, they have been conducting audits, monitoring working time particularly closely. i've seen their internal data. i know just how detailed it is and they have been pushing those factories to get down to code limits and it's trending in the right direction. >> one of the things thaw pointed out in here is overtime. in your surveys, and this is interesting, though the overtime is excessive by your standards and china standards, 48% of the
workers feel that their working hours are fair. another 33% say they want over r more overtime, less than 18% say they are overworked. how do you reconcile that? >> they make as much money as they can in a short period and they have ambitions and aspirations and they would like to get there. so we generally find that workers do want overtime and overtime hours are the most lucrative. we're also concerned about their health and safety. so we need to moderate their ambitions and make sure that they don't work to a point where they don't work there. >> we haven't been to the factories or the other electr
electronic brand. >> looking broadly, given apple's size, the largest corporation, china with manufactured goods, what do you believe this case will play in setting a standard for workers and conditions in china? >> i really believe this will be a very, very important precedent. because the combination of apple and fox con really causes them to align standards. and we could set off here and race to the top. >> i just got in a statement from apple and i want to be sure to read. it reads as follows. we appreciate the work the fla has done to assess conditions of fox con we help it's essential and improve conditions and make apple supply a model for the
industry which is why we ask the fla to improve lives and raising the bar for manufacturing companies everywhere. one of the things that you mentioned in the report also is that you feel that workers are not adequately represented as far as how the workplace is conducted. the members of the committee are nominated. is that common throughout china and if that is changed, will it have an impact on the broader market there? >> it is typical for union structures and committee structures in chinese factories. what we have conveyed to apple and fox con is that for these to be effective they have to enhance the workers nomination process in the elections and the decision making process. >> what else would you like to see done here? >> i would really like to see
apple and fox con become a model for the industry and we're well on our way to producing that model. if they have drive through the reduction with the protection of worker's pay, they get to the point where workers are working enough to make a good earning to have good take-home pay but to have enough time to spend it and enjoy it. >> okay. we are looking at the stock here above $610 a share. does it surprise you that the company and the stock has been so successful and yet we are looking at these workplace conditions and the implications of your study? >> it doesn't. >> sir, good to have you on the program. thank you so much. >> please, thank you very much. >> we'll see you soon. apple stock has had quite a run-up to the stratosphere and that's largely because of the steady stream of innovation. apple introduced the first
iphone in january of '07 when the stock was making its way to the $100 mark. apple survived the worse of the crisis thanks in part to the popularity of the iphone 3 g. when the stock hit $200, along came the unvailing of the first ipad in january 2010. subsequent versions of the game-changing tablet have led apple to where it is today. there are several target prices from analyst above $700 a share on apple. quite the success story. take a look at how we finished the day on wall street. dow jones industrial average reversing negative performance by the close finishing off about 20 points. volume about 800 million shares traded at the nyse, not so bad as has been the case. nasdaq both negative today although they, too, closing off the levels of the afternoon.
bob pisani, quite a reversal. >> we did. thanks heavens it was the material stocks and big energy stocks which have had a sign of slowing down. peabody, for example, today, this is an intraday chart. there you can see what is going on. coal stock moved up, energy stocks have had a tough time. they have been rolling over recently on low natural gas prices and declining oil prices as well. halliburton, for example, all of the oil service names had a great move to the upside. that's what i'm talking about. this is the last hour of trading and only big international material stocks, the iron ore stocks, for example, like cliff natural, that's an intraday chart that we're looking at. a real nice turn around and global growth names. >> we've been covering the ipo story. more ipos today. are we in a hot ipo market or what? >> i would say we're in a warm
market. it's not particularly hot. millenia media, it opened essentially at $25 and held right throughout the day. look at that. that's a straight line. that's a hit. that's a big hit there. and, of course, that's a mobile advertising company. we had an industrial company, that came out. they priced at $18 and opened essentially at 1905 and closed at 20. this is not cloud computing. two hits there. cafe press looked like a big hit today, priced at $19 and opened at 21.50 and closed right essentially at where it priced there. i would say a modest hit there. some people are hoping that would hold up better. >> once again, you saw strength in hmo stocks, health care has been breaking out recently.
>> i think the issue is sever ra built. the justices are considering whether they should take this individual mandate and everyone has to buy insurance and strip it away from the rest of the bill, the concern if they do that, it will be the worst of all possible worlds, if they try to separate it out. people think that they are going to vote up or down on it. it's so complicated that it's not going to be possible. either it's going to be a thumb's up, the whole thing passes, or a thumb's down and they declare the whole thing essentially null and void at this point. so either way, up or down, would be good news for companies like hmos. >> good news, thanks, bob pisani? jim grant is sounding alarms on the state's economy. that's straight ahead when we talk with james grant. and earnings out on research in motion as soon as they are released. more on the apple headlines as well. you're watching the "closing bell" on cnbc, first in business
worldwide. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone. from the canadian border, through the mid west, to the gulf coast. benefiting hundreds of thousands of families throughout the country. this is just what our economy needs right now.
statement in response to an audit finding that its supplier fox con was in violation of labor laws. the company saying we appreciate the fact that they have done and fully support their recommendations. empowering workers and helping them understand their rights is essential. our team has been working for years to educate workers, improving conditions, and make apple supply chain a model for the industry which is why we asked the fla to conduct these audits. the audit found that research in motion as we are waiting for those earnings. apple bouncing back just slightly after hours. back to you. >> kayla, thank you. now, jim grant has been known as the monetary policies and taking aim at treasuries and china's
economic policies. grant's call the central bank highly manipulative, criticize for lacking value and the savings alone crisis of the 1980s. what's on jim grant's mind right now? we bring him back. in an exclusive interview. nice to see you. >> hello, maria. >> everybody would love to give ben bernanke a piece of their mind. you actually got a chance to do so. >> he wasn't there but i did give a talk at the new york fed. >> got to give them credit for that. >> how was the speech? >> i was wonderful. it was a great occasion, i thought. i told them that they were all wrong, that they had nothing to do with what the founders of the fed had done and i said that when i was named chairman, my
first move is going to be to open the office of unintended consequences and it was desperately needed. >> what are you curious about what the federal has done? banking business several years ago. so the fed's relationship with the stock market resembles that of freddie the fixer at the track. freddie the fixer one day was at the racetrack and before the running of the miracle mile they say, freddie, who is going to win the mile? freddie says, i haven't decided yet. that's the fit. >> throwing money into the market and that's obviously pushed people to go invest in stocks. >> well, that's the theory. the idea is that the fed, through these frosted glass phrases and quaint taint tif
easing and will lead us into so-called risk assets. the purchase of these things will raise up asset values, prices, rather, and by this round about way the economy will improve because we will all lend and borrow more and because the financial system will be well-lubricated. that is a theory. notice the theory says nothing about the true function of a marketplace, which is to -- which discovers value, the price, the fed systematically overrides the price mechanism and is not what the founders intended. >> what would you like to see now? do you think they will fix this? >> i think the fed ought to get out of the manipulation business and normalize interest rates and out to foreswear the invention in markets with the eye to improving the macro economy. it ought to let prices tell us something about the nature of
value and stop imposing itself between buyers and sellers in the marketplace. >> of course, all of this has impacted so many asset classes. not just stocks -- >> absolutely. they all learn the same line of work. the ecb is seriously printing, even more so, the barvnk of jap is going to do a hail mary. >> what's the implication here? the economy bumps along. what are you expecting in terms of inflation and downside risk? >> well, all of us investors live and work in a hall of mirrors. what we see is not what we think we see. it's what is distorted through centr central bank manipulation. so we all must be guarded. one can't be dogmatic. we have been looking, for
example, at single family housing on courthouse steps. we are finding terrific value and that's one thing that we're looking at. >> this has been the issue for the market, china is slowing down so much. it's going to have reverb ragss slowing down around the world. >> we have for a while. >> right. >> we think that china is in the throws of a terrific real estate and the credit system, the banking system is wholly corrupt and corrupting of values and pricing in china. we that i that china will continue to lead the world and the long china trade is
certainly over. >> and does that cut into the u.s. performance? >> yes, it will. there are so many other things that are happening in this country. i would say my own political position, i would say that the republican victory in november would be hugely bullish and it would be a step in the restoration of something like capitalism. this is my subjective view but because china is at the rocks, therefore, we are in trouble. certainly it's not helpful to the world economy. >> you make very good points in terms of the election being a catalyst for actually bullish performance. >> it could be powerful for things that we see. >> real quick, on gold, better than 16 cents for the past year. >> gold is the resip pri cal therefore i say gold has more upside. gold mining shares and silver mining shares have been hard hit
for a while. >> yeah, they really haven't kept up with that. >> they have not at all. >> always so nice to have you on the program. good to see you. jim grant joining us. it has been called the next facebook. now a fast-growing startup is facing growing pains. >> pintrest is said to be the fastest growing start-up. now it's hitting speed bumps. what is really happening at the company and how it's tackling a legal firestorm. later on the "closing bell." also ahead, research in motion earnings are due out any moment. back in a moment on "closing bell."
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continuing to weigh on prices and the technical selloff, breaking below the $50 moving average. now oil is at the key level to support. keep in mind, the natural gas data much bigger than expected and where we see natural gas prices. you heard it on the "closing bell" yesterday that $1.36 to be the low target there for natural gas. back to you guys. >> sharon, thanks so much. now for a look at red hat. it's coming on the heels of a business offer of the upbeat guidance for 2013 as well as better than expected fourth
quarter earnings release. movado at a three-year high. x items in the fourth quarter due to growth all across the plans. and slumping today after the saba provider announced a delay in fourth quarter results. the stock is down 18%. wrapping up what has been a very strong quarter since 1998, despite the pullback since tuesday, stocks are ready to take off again. our guest is on next. and then we're watching research in motion in the midst of declining market share. we'll have reaction to the results as the company reports earnings momentarily.
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10,000. what's ahead for the second quarter. s&p 500, it's the only 11th time that the market has double digit returns since 1928. as for the do you, it's the best quarter since 1928 and the nasdaq composite is having the best quarter in over 20 years. can the markets keep up this pace of momentum and performance? managing director and portfolio with director financial and and higher oil prices and debt crisis in europe, best quarter in decades. what do you think is behind this? >> i think the fact that we didn't freeze from a credit perspective, that was a real concern in the back half of 2011. the secondary concern is the recession. the fact that we skirted that and growing comfortably and it didn't cause a credit freeze, that allowed us to get back to where we were from a valuation
standpoint when this all started in may and june of last year. it's basically a recovery if you want to look at it that way. >> and valuations still look attractive. >> yes. the big issue is can they expand from here? that's why we might see a consolidation because the issues that you started with are still out there. >> ed, what about that? have we seen the best for 2012 or are there more gains ahead? >> i think the first quarter we get paid for the earnings growth last year but because of the fears coming out of europe and china, we basically had valuations go down and stock prices went nowhere over the course of the entire year. and the gains we'll see for the rest of the year will be roughly equal to the 5 to 8% growth of earnings in 2012. >> so do you think earnings estimates are going to come down or are they appropriately priced?
>> estimates are usually too high and they are coming down slowly but not as fast as they normally do if you look over the last 25 years. it's not surprising that. >> what might be the catalyst for that? >> the fed is still god. the fed is still our friend. it's pretty much a global easing going on right now and 2.7% gdp growth for 2012 is our forecast. that's pretty good. that's a trend-like growth and allows earnings to go up in the single digits. >> where is the growth? where would be the sectors that may outperform in terms of earnings and growth and should you be exposed to that from the stock perspective? >> we think that the capital is going to be driven by the
spending. it's a restraining factor. capital spending in this kind of an economy is more technology spending. so we think technology will do well. basic industrials will do well as well and there's a rebound in financial services that should help drive the markets. >> ed, what do you think? you're looking for further gains. where would you be exposed? >> if you like the market, you want to buy the higher beta sectors. that includes the sectors and industrials that are going to gain from what i think is going to be a little better than expected growth for the u.s. at least over the course of this year. >> are there areas that you want to avoid, ed? >> defensive sectors that did so good, i think they will lag the s&p 500. >> what about some of those worries? the china economy slowing down? doesn't that have an implication for the whole world given the fact that that's been a factor of economic be growth? >> there is no doubt, it's
slowing down in india, still a lot of concerns about europe. there's plenty of things to worry about. so i think there is still a lot of things that can go wrong. ecb action helped to kick the can down the road last year but i think at the end of the day we've made progress of the financial crisis. >> so you would put new capital to work here at these levels? >> yes. we've been slight net sellers over the past week or so because we've been overweight stocks and with the market action we've gotten higher. >> even though we're talking about the best quarter since 1998, you know, this week was iffy. we saw some decliners. what did you say to me about the commercial break? the fact that we didn't roll over was not a positive. >> what you're seeing is every day it starts down. the last hour there is buying and in the bear market you see the exact opposite.
the fact that buying on the dips mentality, people aring looking to get back in? >> long term that shows you that this market is in tact? >> yes. >> and even though he's been the net seller for this week because of the market act, you're expecting gains here? >> well, i don't want to take equities down but to increase the weighting, i'd rather buy at lower prices than these levels right now. that's sort of what we're waiting for. we're slightly overweight stocks. >> so you just pick it in your spots? >> yes. >> ed, good to have you on the program as well. good to see you both. instant analysis and investor reaction. the company reports earnings momentarily. why pintrest may be facing some problems on the horizon. also, why investors should
not be concerned about a selloff. >> i know earnings are slowing down but we don't need much growth because earnings are so good compared to prices in this extremely low interest rate environment. it's the alternative that investors will turn to. >> overall what we're seeing is improving momentum and improving u.s. confidence. if you look at the numbers from the daily survey and consumer sentiment, it is improving. it's going to be a very important factor this year. >> however, as crude has rally, you have not seen leadership from the front end of the market. that tells you that refiners are not going up and taking the front end supply. they are saying, listen, i'm going to pay and store this and use it later. >> we are seeing this tenure, there's more pain to come at the pump until the june expiration
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launch. news that we got in today, a vast majority went through a two-stage approach, pre and post. weight loss makers should consider the heart makers of that risk even when signs point to no cardiovascular harm. many times they follow what they say. humexa, at one point we were saying around 3:30 p.m. that this drug would not be impacted, that they would still be able to launch on april 17th. sources saying that still what the fda -- what the advisory panel told the fda does not apply but we're still unsure there. a lot of speculation. maria? >> seema, thank you very much. we have breaking news on r.i.m.m. the company missed estimates both on revenue and earnings. the company reporting a fourth quarter profit of 80 cents a
share. the estimate called for a profit of 81 cents a share. the revenue coming in at $4.2 billion. that versus an estimate of $4.5 billion. the stock is trading up in the extended hours. take a look at this chart here with research in motion about 2.75%. our jon fortt is following the results and we have jmp security. jon, r.i.m.m. is releasing this number here under their new ceo. >> well, i'm interested in pointing out the stock was halted earlier, up before it was halted. it was probably up on rumors out there that it's cutting a the lo of senior managers at r.i.m.m. so cost savings perhaps expected there, at least the idea that he's cleaning house.
the results are disappointed on the top and bottom lines. >> and interesting to see the stock trade. what's your take on these numbers? >> i think it was better than feared. everybody expected a big miss and it looks like they actually did okay. they only missed by a penny. frankly, we're not surprised that the stock is trading up. >> you're not surprised that it's trading up? why? >> just in the near term. everyone is expecting a big disaster and it's not as big of a disaster. >> alex, your thoughts? >> i think it's definitely a weak result. and then you have to remember that there are 60 million shares short. it's almost up 200% at the same time last year. so maybe a little bit of short covering on the print can be expected if you -- like was said, it missed a complete train wreck but there's still a lot of problems facing this company. >> let me ask you about that. you see the success of apple and of android and google.
of course, market share really deteriorating at r.i.m.m. >> the answer is no. i think you talked about the odds of being struck by lightning. i'd say this year, the odds of r.i.m.m. turning it around are about there. you know, what that means for the stock, if the strategic partner comes in, it's trading about one times tangible but you've got this outrageous short interest out there on it right now. the stock can do perhaps a bit up. they don't have the scale or the apps. they can't turn it around. >> what do you think? are they going to be able to turn it around? >> i agree with alex. i think the thing we're hearing from the channel in terms of carriers is they don't have the
and it's pretty washed out and we wouldn't be surprised that it's sideways in the near term. >> maria? >> yeah. >> a few more details for you. the handset number is just over 11 billion. 11 million handset units. that is at the low side of the guidance. they did move 500,000 playbook be tablets. but they are expecting to move less than that in the future. they have stopped guidance because of weakness in the u.s. market and a couple of top executives are in fact leaving. the global operations chief and cto is also leaving. so a number of different things to digest. perhaps the most significant for investors, they are no longer going to give quantitative
guidance because of the weakness that they see and they are going to continue to see pressure on earnings through fiscal year 2013 which is beginning this quarter, maria. >> the stock is trading higher even with those challenges. >> that was halted earlier. so i'm not aware -- >> okay. so we're still waiting. >> right. before the quarter results came out. >> the stock was up right before the halt and now we are looking at the stock still halted as the numbers continue to flow out. more details on the quarter. shaw, let me ask you who you like, if in fact you're looking at a challenge for research in motion. alex, is there another player that you would be accumulating? >> well, sure, maria. what we've been directing investors towards are the chip companies that are a diversified play on the smartphone and tablet-lining trend. we really like qualcomm here. it's a diversified apple and android. a leader in the 4g rf space.
we upgraded nvidia with a lot of interesting near-term catalyst. it has competitive issues but certainly in the near term i like all of these chip vendors over research in motion. >> r.i.m.m. is saying that it will not provide guidance in the future. what about the same question, is there another player that you're gravitating towards? >> we still like it here. we have a $740 price target. so we think that's still the best play in the space and we also recommend sysco. they provide all of the infrastructure, routing and that's not surprising that they
stop giving it because they don't really have a clue what is going on. so in the near term, that's probably the best move. that's exactly what dell did. they don't really know what they are. >> uh-huh. uh-huh. >> maria? >> yeah. >> i point out, when torst and hines came in to talk to us, he was pretty direct that r.i.m.m. was not a turn around case. he just said they needed to get their stories out there more. executives leaving no longer doing quantitative guidance throughout fiscal 2013, it's starting to sound like a turn around case to me. it's going to be interesting to see what he has to say on the call, whether he's changed his tone about what r.i.m.m.'s challenges r. maria? >> and as we mentioned, the stock was halted and up before the numbers came out. it was up before the numbers
came out it's been halted and we have not seen any trade to the upside after the numbers were released.that, and the stock wi resume trade at ten after 5:00 p.m. eastern time. what do you want to hear from management when they do the call? what's your biggest issue in terms of getting some guidance and some clarity from management? >> i think, you know, what i mentioned earlier, what we're hearing from the carriers and customers, it's really around the apps, the ecosystem. i mean, that's how the world is moving towards. you know, apple really started this trend. they are very weak there, you know, compared to, you know, apple and android. >> right. we'll leave it there. gentlemen, thank you very much. great conversation. we appreciate it, and we will watch the stock once it reopens. of course, we'll have this on "fast money" at 510:00 p.m. eastern. stocks have ice cold -- been
ice cold since tuesday but ipos are certainly red hot. up next, we'll recap what has turned out to be one of the best performing ipos of the year and why the fastest new growing startup ever may be about to face some troubling growing pains. stay with us. es fast. we're often so busy dealing with what's in front of us that we lose sight of the big picture. that's why it's good, every now and then, to pause, take a new look at your financial plan and make sure you're headed in the right direction. for more than 140 years, pacific life has been offering integrated solutions that help to create a secure financial future. ask a financial professional about pacific life - the power to help you succeed.
welcome back. millennium medium, one of the hottestineos at the new york stock exchange, certainly take a look at this. the stock nearly doubling its $13 a share offering price, and the baltimore company is offering 10.2 million shares, raising more than $132 million. and millennial is the second largest mobile display advertising platform in the united states. its developer base including "new york times," zynga and pandora. very much a familiar and accessible group. their platform determines what ads to deliver through mobile applications, when to add to and to whom actually to do it. the company actually lost money last year to the tune of $5.3 million. however, according to s&p capital iq, since 2008 nine of the top ten first-day ipo gapers have been priced in the first year.
millennial's ipo came in number two with a 94% gain and annie's came in third and you know how well that did yesterday, 80% on the session. it's been called the next facebook, another one we're focused on, a startup called pinterest. its high-profile user president obama has used it. already has over 9,000 followers for the eight boards he launched tuesday but now the high-flying company, the website is facing some challenges. julia boorstin joins me now looking at those challenges. over to you. >> reporter: well, maria, pinterest 10,000 monthly users, faster than any other website ever. users with allowed to share pictures across the web in virtual scrap books has returned back to earth. growth is slowing. march users will grow just 12% from february to about 20 million after growing 50% in the prior month.
now the startup, which hasn't -- which hasn't started to generate revenue, is scrambling to address legal issues. it had enurged users to not use their own photos or avoid self-promotion, but many pictures shared from the wednesday are copyrighted opening up users to lawsuits. websites have to pull down offending content when alerted does produce interest itself. on friday new policies were introduced telling users to pin content that they create or have permission to use. limiting images could make the site less compelling, but lawsuits would be a bigger problem. >> the success of the business is its popularity among users, and if users become liable, if users start to see lawsuits brought against them, then certainly pinterest's popularity will decline. >> now, we haven't seen any lawsuits yet because if you're just dealing with one user at a time it's not really worth it for content and copyright
holders, but one lawsuit would be all it takes to create a big problem for pinterest. >> thanks so much. julia boorstin with the latest. we'll be watching that developing story. that does it for us on "closing bell." remember to follow me on twitter and google plus. stay with cnbc as "fast money" begins right now. waiting on the opening of research. their stock was up and then halted. the halt comes off at 510:00. stay with cnbc on the very latest on the trade. back in a moment after this break.
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