tv Power Lunch CNBC April 26, 2012 1:00pm-2:00pm EDT
>> new rubbermaid. long stock and options. >> pete. >> love starbucks. look at china and the pipeline, this stock's going higher. >> atlantics international. >> follow me on twitter. power begins right now. we begin "power lunch" with breaking news. eamon javers is live in washington with new information on two corporate bribery investigations. eamon. >> good afternoon, sue. as you say, dramatic new allegations of corporate bribery moving markets this afternoon. let's bring you up to speed on what's going on starting with bristol meyer squid. reading now from their filing saying in march 2012 the company received a subpoena from the s.e.c. this is new information. the subpoena issued in conjunction with an investigation under the fcpa or foreign corrupt practices act. primarily relates to sales in marketing practices in various countries. the company says it is cooperating now with this investigation. let's take a look at an intraday chart here.
you can see there's a real dramatic impact right there about 12:30. you can see the stock moves as this news came out. that was the impact there. moving onto avon. "the wall street journal" reporting just today that another avon products executive has left the company in connection with a probe into possible bribery overseas there. "the wall street journal" sourcing people familiar with the matter saying that carey kar despite scrutiny of the audit department. focused on a december 2005 internal audit report by the company that concluded avon employees may have been bribing employees and executives and officials in china. so take a look at the avon chart. you can see not a whole lot of movement in avon here this afternoon. but clearly, tyler, these allegations of bribery by american companies overseas getting a lot of attention by the federal government. we saw that walmart story on sunday in the "new york times." now other major companies as
well impacted, tyler. >> eamon javers, thank you very much. and beyond those investigations three big signs detailing the state of the american economy at this hour. jo job, the auto sector, we're talking chrysler, and housing in the usa. remember, no american president has ever been elected with 8% unemployment. and we are still over that mark with 193 days to go before election day. where does president obama stand on the economy? and how does mitt romney want to go at that? lots of questions. and some answers at this hour. we start though with those auto numbers and phil lebeau live in chicago. phil. >> tyler a blowout quarter for chrysler. not surprising given the strength we've seen in sales as they picked up 2% market share in the quarter.
net income $473 million. more than quadruple from a year ago. net revenue up 25%. operating profit up 55%. the company did say in a conference call it is unlikely to complete an ipo this year. sergio during the conference call said, listen, i have no complaints at all. chrysler's firing on all cylinders. the launch of the dodge dart next month is expected to drive q-2 earnings as they move into a segment of the car industry they were not in in the past year in the u.s. look at shares of fiat. clearly a company operating two levels. the fiat part struggling in europe, chrysler doing very well here in the u.s. other auto earnings to key in on, hyundai reporting an increase of 31%. the earnings jumping to $2.15 billion in the first quarter. also look at shares of vw. earnings in the first quarter up 10.2%. revenue up 26.3%. solid numbers for all of the automakers. but there is some bad news if you will in the auto industry
when you take a look at borg warner today. it missed by a penny, tyler -- or sue. record earnings, but it missed by a penny. as a result the stock has been whacked down substantially today anywhere between 3% and 5% for most of the trading session. sue, over to you. >> phil, thank you very much. tyler mentioned housing. and there's some new signs that housing might be turning a corner, at least on the earnings front. pulte posting a narrower lost meeting estimates. but revenue fell short despite new homeowners jumping 15%. the stock rallying today. it's up 7.5%. it's up 45% this year. here's the rest of the sector year-to-date. lennar above 35%. d.r. horton and kb homes up about 25%. toll brothers up 20% plus. on a broader front number of buyers going into contract is jumping to highest level in two years. diana olick is live in washington with that part of the story. >> hi, sue. you're right. it beat expectations chrks is
rare these days. the pending home sales index contracts signed, not closings, rose 4.1% in march from an upwardly revised february figure. it's up 12.8% from a year ago. but when you look at the raw numbers, it is the smallest monthly gain in march in three years. keep that in mind. so how valid is this number as a predictor since cancellations of these contracts have been running ab normally high around 30%? the realtors did not report cancellations last month. i asked them why and they said something interesting. they said we stopped tracking because sales have been holding up better than the fallout rate would imply. buyers have been staying in the market and offering yet another contract. we'll take that. now first quarter sales were at the highest level for that period in five years. of course everyone's crying weather and saying it was pulled forward demand, yet to see that. regionally the pending home sales index fell in the northeast and midwest but rose in the south and positively jumped out west with the bulk of distressed homes are. that's the key to this spring
market. how many foreclosures the banks process and get to the hungry investors. we have two posts on this on the blog. go to it. tyler. >> diana, thank you. let's move now to steve liesman. he's covering today's weekly jobs numbers. steve. >> yeah. a third disappointing jobless number causing one economist, tyler torks rethink the outlook for next week's all important april jobs report. isi lowering forecast for april jobs 150,000 from 200,000 after this number. there had been hope that the prior two-week increases were the result of seasonal distortions. that hope now fading. take a look at the numbers. up 388, that's down 1,000 but elevated from where we were. forward moving average moving up by 6k. still, when you put all of the claims in there, all the different programs, 6.6 million americans still collecting insurance forms. the question is are these claims likely to stay high. you can see the white line is the forward moving average. that's elevated. we've now kind of flatlined for two weeks in a row.
the concern is that we're going to get the economic deja vu all over again. claims rose last spring ahead of a week ending payroll. some of the bulls are willing to give the claims number another week just to adjust before giving up hope. they point out other jobs data, for example some of the regional fed surveys, have contradicted the weakness in claims. thanks. to the politics of all this right now. some industries getting better, but housing and jobs, still as steve and diana pointed out a slit l sluggish. john harwood is in washington. john, i know the president worries about everything, but does he really need to start worrying again about the economy? >> absolutely he does, tyler. the jobs numbers that steve liesman alluded to a moment ago are exactly the reason why. i talked yesterday to the former chairman of the president's council of economic advisors. he said he thinks there's at least a 50/50 chance that growth slows to the 2% range in which case austin said you can kiss job market improvements good-bye
all yearlong as political conditions have been improving for president obama, his team has been cognizant. but what could beat them? adverse developments in the economy. and we saw it yesterday that the united kingdom's in recession, the eurozone's in recession. they've got a big problem on their hands. there really isn't, tyler, a lot they can do about it. >> how does this change the way mitt romney might play the game? >> well, mitt romney has been facing an improving economy over the last several months. he's had to try to alter his message to account for some of the improvements and make the case it would be much more robust if our policies had been followed or would be followed in the future from the president's. to the extent we perceive another springtime or summer disappointment in the economy, we saw it in 2010/2011 because of europe, japan, high gas prices now, that strengthens mitt romney's argument to say i'm the businessman in this race. i'm somebody who knows how to get this going. he keeps saying the president is
in over his head. tim geithner told me yesterday that's just politics, but it's politics we're going to be in for the next several months. >> john, thank you very much. over to you, sue. >> thanks, ty. we have breaking news now from the chicago bond pits where $29 billion in 7-year notes were just auctioned off. rick santelli is tracking the action. and of course we're going to get ricky's grade from the cme. hi, rick. >> hi. well, the yield at auction on those $29 billion 7-years was 1.347. historic low yield at an auction for that maturity. the wi market around 135.50 offered at 135. lower yield, higher price. so i'm giving this a b as the auction. let's go through the internals. 2.83 very close to the 10-auction average. 38% plus on the indirects also very close. where we did see acceleration, 17.7 directs and that is much higher than the 13%. dealers took down 44%, which the lower the dealers maybe means of
course more investor demand. that's a good thing. so a solid b auction. the last of the three in terms of the $99 billion this week. sue, back to you. >> we will take it, rick. thank you very much. several key quarterly reports though are out today. first on our radar is ups. profit was up 6%. that wasn't enough to meet expectations and shares are down better than 3% right now. last trade 77.23. u.p.s. says customers were picking slower delivery options. they also said the asian market was weak. we are long profit forecasts however are on track. shares are up a total of 3% the past year. ty, back to you. you have more earnings for us. >> all righty. we can't say it enough. we can't emphasize how big a day this is for earnings. we're going to run you through three key sectors with short hills capital partners steven weiss cnbc contributor and our resident stock guru. look first at consumer, altria,
colgate, but pepsi's numbers better than expected. take me through them. which one of these four would you buy here? >> so here's my thing. so altria, the old philip-morris. >> it's a big target. >> it is. who cares. aside from the smokers, they don't have a big vote in congress anymore. plus demand is coming down. it's more of an international story. big yield, that's not good enough for me. colgate, good story, very steady. not a high grower. the issue there is it's too expensive for me at a significant premium to the market. kellogg's, they're strangled by commodity costs. >> input costs. >> exactly. they have no control over them. so it's going to continue to squeeze them. so i come to pepsi. now, coke versus pepsi -- coke's not up there. great quarter. pepsi not as well run. they've also got the branded snack product. they're good brands.
they can absorb price increases in their input costs more so than kellogg. so i like pepsi. >> in that quartet. >> in that group. >> move onto defense contractors. lockheed martin. >> both high quality companies. consistent performers. the issue with the companies is that they're defense companies. when you talk about a really inflated budget that we have and trying to balance it, they're a natural target. they have been a target. they'll continue to be a target even if romney gets in. i don't see him reversing it. lockheed has a better yield. i think it's slightly better managed. i like their exposure -- >> and the differentiator here for you is that yield. one is a little above 4 and the other is 3.8. >> we're a return environment. you have to go for yield when you can. >> all things being equalled go for the yield. >> that will bring us to these. >> the story today was exxon mobil's miss, which was fairly significant if you can say making $9.3 billion is a miss.
>> excuse me, steve, i'm sorry to interrupt. we're going to brian shactman right now with some stock news. >> yeah. we've got liz claiborne here, tyler, thank you very much at the highs of the day up more than 7.5%. they could close at a 3.5-year high. they reported strong numbers. kate spade up 20%. lucky brand up, big move for liz which will at some point be changing that name because that shed that brand to jc penney. 7.5% at the highs of the day. >> sorry to interrupt you there. exxon mobil, it was a miss, but a $9 billion miss plus. >> here's a mistake a lot of investors or traders make. they go and look at the price of commodity and crude and say that price is high. i'm going to buy the stock. this is reflecting earnings. that's rarely the case because there's so many things going on in addition to hedging different parts of the world. they're good companies. everybody also makes oxi as much a chemical company as oil, it's
not. their quarter was okay. i like royal dutch shell. 4.4% yield. to me that's big. it's also very well-run. they had a good quarter. and, frankly, if i just want to buy exxon or chevron, i might as well buy the s&p because they have very little variance for how the market performs. >> and shell roughly the same size in revenues as exxon. >> yes. but it's more international of course. >> steve, thank you very much. let's go to sue now. >> ty, an earnings report about one of your favorite beverages. i'm not talking bourbon. a quick earnings story about dunkin donuts beating wall street's expectations. the stock on duncan last traded up 2.25%. it's up almost 30% year-to-date. dunkin raising full year growth forecast for the same store sales from 4.5% to 5%. earnings for the quarter up to $26 million, 21 cents a share. that's not all. starbucks reports after the break flt we'll give you the big buzz ahead of those numbers coming up.
and also ahead ty and i, jon fortt breaking up one of -- breaking up the talk about amazon scandal. is this thing catching fire? or is it going to go up in smoke? more power in two minute's time. thor's couture gets the most rewards of any small business credit card. [ garth ] thor's small business earns double miles on every purchase, every day! here's my spark card. and here's your wool. why settle for less? great businesses deserve the most rewards! the spiked heels are working. wow! who are you wearing? uhhh, his cousin. [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! wait! your boa. what's in your wallet? guys. come here, come here. [ telephone ringing ] i'm calling my old dealership. [ man ] may ford. hi, yeah. do you guys have any crossovers that offer better highway fuel economy than the chevy equinox? no, sorry, sir. we don't. oh, well, that's too bad.
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ton of big names reporting numbers after the bell today. amazon leading the pack. investors are going to be looking closely at how sales of the kindle are doing against apple's ipad. and comscore is out with new numbers on that. and jon fortt who is in the house has them exclusively. jon. >> i want to point out all of this is u.s. data. all of it is from february before the new ipad. comscore saying first of all for every kindle fire in use there are ten ipads. let's take a look at these stats. page views by size. it turns out the ipad gets 39% more page views because the screen is bigger. ten inches versus seven. now, i also talked to the president about this data. kindle's dominance. here's what he had to say -- kindle's dominance in android tablets. let's listen. >> this one seems to be doing significantly better in terms of share. like i mentioned just in february it's at 54% share.
the others from the ace is to the zooms and all that are still doing well, but nowhere as close as the android kindle fire. >> i want to show you a couple more stats. gender, android kindle fire tends to skew a little more towards women whereas ipad is even. that chart's a little confusioning. isn't what we meant to show you. also together income ipad users are a bit richer than kindle fire users. overall this means amazon's already taken over the android tablet market. good for amazon. not so good for google. but ipad still far ahead in usage and everything. back to you. >> sue, take it away. >> thanks a million, ty. all right. chesapeake energy in the news. it's ending a program allowing its ceo aubrey mcclendon to own a stake in the company. that deal was set to go another three years. the changes come after reports showed he borrowed about $1
billion against his 2.5% interest in wells that he had a stake in. the nation's second largest nat gas producer says its board will also review the ceo's financing arrangement. the shares have been tumbling. they are lower right now by 1.75%. they have fallen more than 25% in a one-month period. when ty and i come back on "power lunch," an exclusive look inside costco. a retailer with $93 billion in sales each year from cereal to diamonds. they sell it all. that includes 82 million soft drinks in their food courts last year. we're also picking stocks in this sector in just two minute's time. more on "power lunch." standard keyless access,
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the big big box story is still walmart. and that unfolding scandal in mexico. authorities in mexico are investigating those reported bribes. and shares of walmart are down 7% in a week. now, one of walmart's biggest competitors of course is costco. many retailers took it on the chin during the recession. costco faired much better than most. in a documentary tonight at 9:00, we go inside costco. >> want waffles? here's 60 of them. like eggs? how about 90.
mayonnaise? here's a tub. >> it's part of the american psychology that more and bigger is better. >> marketing consultant studies what stores do and why they do it. >> what costco does is it really understands their consumer. understanding what's going to excite them. >> three quarters of what costco sells are what it calls triggers, staples such as cereal, detergent and paper towels. but it's the remaining 25%, what costco calls treasures, that makes shopping here. the handbags could be here today and gone tomorrow. >> the more you touch, you feel, the more you taste, all of those things, feed into keeping people in the store creating these opportunities to spend money. >> 9:00 p.m. tonight. now, here are some staggering
facts about costco. it sold 55 million roasted chickens last year. and it's not just about food. you can also buy your engagement ring there. more than a 100,000 carats of diamond rings bought there -- probably not 100,000 karat by the way. watch the costco craze tonight at 9:00 eastern. it's one of those stores, stephen weiss, where i go in and invariably come out with more than i expected. let's look at some of the big boxes. we're going to put a side-by-side, target, best buy, costco. >> i love costco. i always buy stuff i already have, but you can't resist. that's the way the store's set up. it's expensive as a stock. i would rather we pull back. target, i think they're also an excellent operator, i just don't think it was about the management that's left over the years. it's an institution. great shopping experience.
i prefer to go to target. best buy, they're just going the way of netflix in my view, the way of rimm possibly. they're just old school and haven't adapted. too much internet traffic for best buy to survive. >> and ceo in transition underway there. >> that won't help. >> thanks very much. uk up in arms over abercrombie & fitch. see why next. and the metals market's about to close. we'll hit the nymex when we come back with more on "power lunch." that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.
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metals prices will be closing in a few moments. gold has been one of the standouts in today's trading session. it was whipsawed yesterday after the fed decision. found its footing again this morning certainly. a lot of people saying that's a good hedge against some of the global slowdowns out there. sharon epperson has been tracking the action for us at the nymex. how does it look going into the close, sharon? >> it looks like we're going to top last week's high here. gold at 1660 an ounce right now. a lot of traders still interpreting what the fed had to say or what chairman bernanke had to say yesterday. and trader john nettle making an
interesting point here talking about the fact that while we are looking at a rather hawkish fed, the controlling faction of the fomc is more dovish. the market's understanding that. weakness in the dollar another factor perhaps helping gold prices. we're also looking at some key technical levels in the silver market. don pointing out he was on with me yesterday we are looking at technical levels bullish for gold but also silver not being able to stay below that $30 level. in fact, when you look longer term and you look at what's happened to silver, we're still down more than we are in gold. the gold to silver ratio is another thing traders are pointing out. they're saying there's more of an up trend likely in the gold market. some supportive factors, our friend bill o kneel reporting out central bank gold sales have been very strong, the buying we're seeing has been very strong and that is supportive. also the downside we've seen in industrial commodities, maybe
that won't last too much longer either. he's looking for more upside bias in the third quarter. >> i'm kind of surprised at the strength in copper given the whole scenario about asian weakness recently. maybe it was just oversold and that's a little bounce. >> i think that's true. i think it's an overall reflection of what we're seeing. today these metals are trading as a group and we're seeing the lift across the board. >> sharon, thank you very much. >> sure. >> appreciate it. let's get the action here on the nyse floor with bob pisani. hello, my dear. >> you know my old role, don't yell at the stock market. don't tell it it should be doing something because it doesn't care what you think, but that said, why are we up? i keep saying this today. >> especially with some of the earnings misses we've gotten. granted we've got a lot of good earnings. >> this is the first day -- i'm not talking just about exxon mobil. >> u.p.s. >> in the commodity space we had misses as well and disappointing jobless claims and we had a weak euro. thank mr. bernanke for most of this. i want to show you what's going on in the commodity space because we had a sales miss from
dow chemical, cliffs natural, iron ore producer, missed potash, that doesn't happen. exxon mobil, you know about that. look at this. we haven't had this in a while. these are big high profile companies that have missed. u.p.s. and higher oil today is effecting the transport. and here's a real warning. you know about dow theory. look at the dow industrials up and the dow transports down. that's a very, very large divergence you're seeing and very unusual. i think that's a warning sign from the market. another warning sign from the market is the fact that bond yields, sue, are moving to the downside. prices are moving to the upside. highest levels in a couple months. why you might see the stock market's up, happy the dow's up 80, there's a little bit of divergence on a warning sign. on a normal day i think we would be down today. >> i think you're right. thanks, bob, we're going to talk about that with our next guest. let's check in with the nasdaq for its best weekly gain in some
six weeks. seema mody is tracking the big movers. >> hi, sue. after yesterday's staggering move in tech, today some of our tech heavyweights are taking a breather. profit taking in shares of apple. research in motion outperforming. some talk that the company could be unveiling a new blackberry phone towards the end of summer. that's why shares are up. dig deeper in the space. the chipmaker reported first quarter earnings beat analyst estimates. it's one of the few companies that makes chips that can be reprogrammed after being put in a device. kind of cool. lastly, the best performing stock on the nasdaq 100 today is citrix systems. a strong beat on the company's top line. fbr securities writing the company is clearly firing on all cylinders. they also lifted their full year guidance. back to you, tyler. >> seema, thank you. markets not just dissecting earnings today but also trying to figure out what is going on with the fed.
is what ben bernanke saying in public match what's going on behind the scenes? steve liesman is back with us. steve, we seem to know a lot more about the fis sures within the fed. >> i think we're a little more confused in one respect and more clarity in another. i think the big deal was the fed stuck to the late 2014 guidance. but what we're seeing when we look inside the numbers using that new tool the fed has given us, which is an individual forecasts, we're learning there's a little more debate about what's going to happen in 2014. 2012 and 2013 i think are pretty well sit right now. if we continue on this forecast that the fed has, which is 3% growth in '12 and '13, then i think we're going to remain on hold. but take a look at this chart here. what you'll see is it's one of those things like in the sunday comics how is this chart different. notice there's no blue bar on 16. so nobody's predicting the first fed rake hike will happen in
2016. what happened is it moved towards 2014. when we looked more into what people were saying in 2014, take a look at the next chart, tyler. what you see is the average date for the first hike is now march instead of june. you can't see that -- the next one right there. there's the old and the new. and the average funds rate in 2014 is now about 30 bips higher than where we thought it was. >> from january -- >> this is january to march. that's a pretty significant change. it's not one that would cause -- you and i were puzzling why is the market up today on that data. i think maybe the market sold off big time. when we started to learn it wasn't going to be qe imminently. you know what, they're not going to change policy imminently, we're just not going to get additional easing. >> steve liesman, thank you very much. >> my pleasure. >> sue. >> let's recap the headlines. exxon missing the mark. the world's biggest oil company
falling short of earnings estimates. oil and natural gas production slumped more than 5%. and deutsche bank under pressure today. profits falling by a third from record levels set a year ago. the european banking giant taking a hit from charges and it's investment banking unit lagged behind its rivals. and colgate trading at all-time high levels back to its first listing on the nyse back in 1930. the tooth paste maker meeting street profit estimates there. well, elton john said it best. sometimes sorry is the hardest word. rupert murdoch in the hot seat in london. and he said something that corporate giants and media moguls don't say very often. we'll hear it straight from rupert's lips coming up next on "power lunch." [ male announcer ] you are a business pro.
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coming up, we have white house economic advisor in a first cnbc. that is big. what else is big is the first annual cnbc stocks draft 2012, 21 stocks, seven traders, i'm yelling in his ear. pete najarian. is anybody going to trade? he's trading up. he's trying to move up his draft pick. it's going to be a great time. 2012 cnbc stock draft coming up at 2:00 p.m. on "street signs." >> and i just want rg 3 for the redskins. let's go to brian shactman now for a stock flash. >> be a shocker if netflix went in the first round. look at lumber liquidators. great numbers yesterday. hit a new high basically doubling their 52-week low and up 53% on a year-to-date basis. beat by 4 cents and by about $12
million on revenue, but the stock just on fire today. i wish we could put it up for you. and then we have an intraday chart there for you. about 53% year-to-date, tyler. >> we'll take your word for it. power rundown time. there you see lumber liquidators. rupert murdoch apologizes for the hacking scandal for clearing the buck stops with me. before we get to the countdown, let's get to the sound of the day. >> it was against the law. quite apart from the ethical side it was totally wrong. and i regret it. and i've said it's going to be blood on my reputation for the rest of my life. >> characterized in today's "new york times" as resembling mr. magoo. no love lost there. steve, do you think that news corp.'s chief and his global empire can recover from this scandal? >> i think the stock can.
as far as rupert murdoch, here's my solution. there was a movie called the truman show about a decade ago where this guy lived essentially in a movie that was being filmed live. he should do that. that's his way to pay penance. he bugged people's phones. let him live on a web cam and see how he likes it. >> sue. >> how do you like that? >> well, i think probably the empire will survive, but i think it's damaged. and i think there's a credibility and a trust factor that some people may be able to overlook but others can't. because as you mentioned, the buck does stop with him. but the culture that was created at news corp ultimately is reflected of the corner office. and i think long-term that's going to be quite damaging. >> this magnifies the criticisms of news corp. i see it this way, i see as rupert murdoch has used politicians as props throughout his career. his newspaper has and he has. and now the politicians in europe n britain most especially are using rupert murdoch. >> absolutely.
you reap what you sew. >> turn to another story. what would america look like if gas prices hit not $5 a gallon but $9 a gallon? steve, interior secretary ken salazar shrugged and said he couldn't rule it out. where it all ends? nobody knows. >> first of all $9 a gallon, if he doesn't know where it's going and he's our energy guy, who knows. i think he's got to do a little more homework before he talks. that was just incredible. secondly, my commute would get a lot, lot better. i could make it in half the time. problem is i have nowhere to go because we'd be in such a deep recession, a depression, i don't see it ever getting there. >> i remember the gas lines in the '70s although i was extremely young as i know you were, ty, i think the economy would in essence shut down or
certainly take a big hit. that's just unthinkable here in the u.s. although we should note they are paying those prices in italy. they paid those prices in italy last week for gas. and the secretary mentioned greece as well. it's not unthinkable certainly, probably, but i would hope it wouldn't come to that because i would think the economic damage would be catastrophic. >> my two cents here, guys, is that, number one, if it does happen, mr. salazar won't be the energy secretary anymore. the other thing i would say is i'll be driving my prius a heck of a lot more than my chevy traverse and its gas mileage. i think it's almost implausible that this could happen in the short-term. but you never know. remember as i do and i think you guys do when gas was like 35 cents a gallon. >> yep. >> so let's go back to london now with another story. the world's best dressed flash mob marched to protest the opening of an abercrombie & fitch store. they have not asked me yet to be
their model. seems these self-proclaimed chaps don't want cargo pants and t-shirts. there they are. give free peace a chance. fitch off. should they be allowed to be there, steve? >> you know, i just want to say i'm backing these people. as a james bond fan, i just can't see him in a hoody and cargo pants. i sort of like clothes myself. >> is nothing sacred? i mean, really. abercrombie & fitch should not be next to clothiers. i think if you're going to pay those prices and look as dapper as though gentlemen do and you two gentlemen do, then, you know, it's an experience. shopping there at saville road is an experience.
>> show me your technique. >> get it right in there. put a bird underneath it. keeps it up there. >> you go to the wardrobe room and they do it for you. >> all right. guys, thanks very much. next, starbucks leading the list of big names reporting earnings after the bell. a caffeinated jane wells at a starbucks in burbank, california. >> what's funny is they always have a starbucks and right in the grocery store next door they have a licensed starbucks. up next, dunkin beat the street thanks in part to this. we'll talk about what it means for starbucks and we're going blond after the break. people will have doubts about taking aspirin for pain. that's why we developed bayer advanced aspirin with micro particles. now we're challenging you to put it to the test. visit fastreliefchallenge.com today for a special trial offer.
welcome to the world leader in derivatives. welcome to superderivatives. folks, you do not want to miss the next hour here on cnbc. a special edition of "street signs," the first annual cnbc stock market draft 2012. seven traders, 21 stocks, one winner. brian sullivan, mandy drury, herb greenberg, darren rovell and the mad man, jim cramer. they're making trades now. who's moving up? who's moving down in the draft? sue. >> excellent, ty. hopefully i'll get back to home
base while that's still going on. all right, time now to continue with leading money man chief investment officer of litman, gregory's new masters alternative strategies fund which is a new multi-manager multi-strategy fund with an all-star lineup that includes doubleline's jeff gun blatche and fpa's steve ro mack. great to have you here, gentlemen. >> thanks. >> you say it's all about risk management. which may seem pretty intuitive to most investors, but it's not always that easy to achieve in a market environment like this. >> right. always you need to think about risk and managing risk, but particularly with this macro environment, with the huge amount of debt as we all know in developed economies, we're focused first on managing the downside risk for our client portfolios. and we have selected managers for this fund that we're talking about today that are specifically great risk managers. >> and you have a lot of managers involved. >> right. >> versus the theory that perhaps you get one or two good stock pickers, good risk managers, why did you go against
that traditional thinking and bring more noses into the tent? >> well, we believe in diversification as well. so we have four different managers on this alternative strategies fund. each of them focus first and foremost on managing downside risk. but they have different investment objectives. some of them are focused on fixed income, such as jeffrey. some have a broader opportunity set. so you're getting diversification across different investment approaches which is another form of risk management. >> you say you don't think the equity market or fixed income are all that attractive now. >> right. >> which doesn't -- there are a lot of alternatives, but you do have to invest. so look at the mix you have. 28% cash, 34% long equity, little under 5% short equity. what's the strategy though? what are you trying to achieve? and are there specific sectors that you managers see as attractive right now? >> well, the cash position is, again, driven by in the large part steve romac who is
primarily an equity investor. he doesn't find absolute value opportunities, he will hold cash until stocks become cheaper. the cash is a by-product of his investment approach there. within his portfolio he finds more opportunities in the larger cap than multinational blue chip names. he has some microsoft, some cisco, some walmart in there. but by and large he's not finding great opportunities among equities. so that's where the cash position is coming from. and there's a small short position in equities as well to hedge some of that. >> what about the fixed income side of things? how is jeffrey handling that? >> sure. >> is it corporates? i know you're saying don't hunker down in treasuries. >> yeah. two of the managers neither of them want to really take on interest risk right now. so -- >> especially after yesterday. >> that's right. and try to find returns from the mortgage side and jeffrey's portfolio and on loom is they're finding specific corporate credits that are attractive. but, again, trying to hedge your exposure to the overall high yield markets.
they may earn individual securities and hedge that by shorting a high yield index. so, again, you're getting some downside risk management and hopefully adding value from the stock specific or security specific selection. >> what about a mandate in terms of domestic versus international? do any of these managers invest outside of the united states? >> sure. >> and do they find one or the other more or less attractive? >> again, the team and the fpa team can invest globally. loomis is concerned about currency risk right now. they're taking no currency risk in their bond exposure. steve is finding some opportunities overseas as well. >> excellent. nice to see you. thanks so much for coming in. >> thank you. >> ty, back to you. >> the earnings parade marching on. this is a big day. a ton of big names reporting after the bell today. among them amazon, starbucks, zynga. and we have full team coverage on all three. jane wells at a starbucks in burbank. julia boorstin with the buzz
ahead of zynga's results. we begin with jon fortt on amazon. jon, what do investors need to know about this one? >> tyler, they're looking for $12.9 billion. eps amazon actually guided to $50 million operating loss at the midpoint. so some optimism there. for guidance the street wants $12.8 billion q-2 and 20 cents eps. given amazon said building distribution centers more aggressively and what seemed to be strong kindle numbers we talked about earlier, that could be a little aggressive. we'll see what happens. jane. >> jon, the street is looking for 14% top line growth at starbucks just shy of $3.1 billion. 15% bottom line growth, 39 cents a share. one of the growth drivers, these k-cups. goldman sachs says over the last four weeks sales grew 9% giving them a new high market share of 16%. and in january they started selling blond. and buckingham says in grocery stores more than 70% of the coffee sold is light or medium
roast. and we have to see with price margins. we're going to get all those answers when the cfo of starbucks joins us on "closing bell." julia, over to you. >> thanks so much, jane. zynga expected to report higher results than a year ago. $318 million. the stock is trading higher today but still down about 7% from its december ipo price. concerns about how fast the social and mobile game maker can grow. in today's earnings report, investors will be focusing in on zynga's bookings which is an indication of future user spending as well as the percentage of revenue that comes from facebook. zynga has been trying to diversify away from its reliance on the social network with more apps and its own gaming platform. tyler, over to you. >> julia, thank you very much. to brian shactman now with a market flash. >> let's take a look at walmart, tyler. thank you very much. at its highs of the day. and the best in the dow. of course earlier in the day ubs
said shares selloff may be overdone. >> you got the low down on those big three names after the bell. after the break how you should trade them ahead of the results. zynga, amazon and starbucks. and as football fans gear up for the nfl draft tonight, we are counting down to cnbc's first annual stock draft. it's football in englewood cliffs. seven traders, 21 stocks, one winner, the cnbc stock draft coming up on "street signs." they're going to be all on the clock starting at 2:00. 00.we ar♪ ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪
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visit celebrex.com and ask your doctor about celebrex. for a body in motion. well, one of the best known and iconic paintings in the history of art, edvar's "the scream" could fetch $80 million or more when it hits the auction block. watch cnbc tomorrow where under a heavily armed guard you will get the very first live on the air sneak peek of that painting which could shatter world records for the most expensive artwork ever sold. ty. >> greatest artist of all time.
before the break we need to know about the reports after the bell. amazon, starbucks. >> too expensive. he doesn't care about the public stock price, i care. >> zynga. >> it's a fad. i don't know when the fad ends. take it. >> could be yours. don't like it. how about starbucks though? >> high quality company. and what i like about them is they're expanding their product line. if i were to trade for the first time, i may buy a little in front of the earnings, see what they do in the quarter. and i like the fact cfo is coming on after 4:00 probably not to embarrass himself. >> so take that as a signal there. and expanding big time in china. >> big time in china. it's a destination place. i love that. they're unique. >> sue, you want to wrap up the market for us at this hour? >> we have a decent gain on the dow jones industrial average. we're up about 96 points on the dow right now. now 102. it's jumped. we have triple digit advance there. the nasdaq is up about 18 points. ths&