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tv   Street Signs  CNBC  April 30, 2012 2:00pm-3:00pm EDT

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others sell the same products that travelers does. i would put in facebook. i think it's a much better gauge of the economy when they ultimately list. >> you are a bold woman. that will do it for "power lunch," sue. >> "street signs" begins right now. see you back at the ranch, ty. welcome to "street signs," everybody. it is 2:00 p.m. on a very big week for wall street. and here are the stories that the street is talking about. now you just heard tyler and sue give their picks for a new dow. is now really the time to shake up the mother of all indices? and beer sales falling flat here in america. we're finding out why with the chairman of molton coors. and a sky high milestone in lower manhattan. in the meantime in just a few minutes time steel columns will be placed atop one world trade center also known as freedom
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tower, making it new york city's tallest building. you are looking at pictures from ground zero where terrorists attacked on 9/11. we will be back live when the towers rise 1250 feet, enough to top the empire state building. floors will still be added to freedom tower over the next year or so. and when completed it is expected to be the tallest building in the united states and the third tallest in the world. again, we will have live coverage of those beams going into place very shortly. in the meantime, outside of new york city my partner in crime, brian sullivan, is out in los angeles where he's set up shop. what do you have lined up for us, brian? >> we have a lot to do here from the milken conference. for those of you who don't know, one of the premier gatherings of business leaders in the world. they're all around us here. we have big guests in just a few minutes we'll chat with the former ceo now chairman emeritus and also former u.s. ambassador
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of uruguay, frank baxter. and the only man to start two fortune 500 companies, eli broad, a lot to talk about there. and you know the controversy over the transcanada pipeline? well, transcanada issuing another route option. will that get approved? will the pine line finally be built? we have the head of transcanada's pipeline division also coming up as well here from the milken conference. just absolutely horrible 75 degrees sunny weather, los angeles, california, mandy. >> i really weep for you brian. fantastic lineup by the way of guests. we're looking forward to it. in the mean it's the last day of april and stocks are lower. is this a sneak peek of the old sell in may and go away? the dow is just about break even for the month. a decline in april would snap the dow's six-month winning streak. the s&p 500 for its part on pace for the worst month since september and poised for its first down month since november. as for the nasdaq, currently
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looking at its first down month since december. and april is historically the third best month for the three major indices. so, how about a winner for you guys, barnes & noble up 60% today on news that microsoft is investing $300 million in barnes & noble's nook e-reader and textbook businesses. we'll have much more on that at 2:30 p.m. so in about half an hour's time from now. in the meantime, straight down to the trading floors on this monday and start with bob pisani at the nyse. bob, i know that you've got a couple things here on your mind. firstly, you're a bit worried about whether or not this soft patch we're seeing in economic data is anything more than just that. and number two, the incredibly light trading volume. >> yeah. well, the one be gets the other. the volume is light here, it's among the lightest of the year because nobody's sure about the economic data and where it's going. we had the chicago pmi, dallas pmi both below expectations. all regional numbers have been weak. tomorrow we'll getted ism, the big national number. that will help resolve things a little bit.
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you can see today in the trading the meandering nature, very, very narrow trading range for the s&p 500 and the dow industrials. this is a 5-point trading range we're getting. rather unusual. and 40-point in the dow industrials. the major sectors, some of the big global growth areas like industrials and materials which had a good week last week are all very much to the weak side. you get this concern that we have a worst case scenario. modest 2% growth in the gdp, mandy, we need 3% to get job groit. we need 1% to get the fed involved or somewhere around there. right in the middle doesn't particularly help us. >> we don't want to be stuck in the middle in fact shade of grey. bob, join us later on for the dow debate. as we wrap up the final day of april trade, let's bring in managing director at wedbush securities. good to have you on the show today, steve. i'm going back to the old adage of sell in may and go away. it kind of came true, didn't it. the last couple of years when we hit the highs in april, are conditions different this time around? or are we going into a spring
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swoon all over again? >> well, i don't know that conditions are considerably different than they've been the last couple of years. i think a lot has depended on how things unfolded in europe. i think the u.s. economy has slowed down a little bit. i don't know if it's really going to be enough to impact what continues to be wonderful u.s. corporate earnings. you know, we just came out of earnings season where 75% of the companies reported beat analyst expectations. that's a very good number. and the big concern out there is still european debt markets. that's the one thing that hangs over this market like a pal and keeps it from rallying further. >> why can't we decouple? we have great earnings, as you say majority coming in better than expected. why can't we decouple from what's happening in europe? >> yeah. i think there's considerable concern at a significant debt contagion in europe would wash up on our shores. you know, al la, lehman in 2008, who knows what that impact could be if we saw significant
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debt-induced problems in europe, they could clearly have a significant impact here. it's difficult to predict exactly what it would be, but i think it's a significant enough danger that it would concern investors. if you start to see italian and spanish bonds exceed 6%, our markets are going to go down, people are going to be concerned about that. >> you know, we've got a couple of really big events in about a week's time from now. over in europe, you know, we've got the elections on may 6th both for the french, for the greeks. and here at home at the end of the week of course we have the jobs number, which has already seen paired back expectations. how do you trade going into those -- i guess it's three big events? >> well, i think everyone's looking for a weak jobs number at this point. so if there's a trading opportunity there, i think that might be on the long side because i think everybody's looking for disappointing number at this point given the slowdown we saw in the economy last month. i've seen estimates -- >> steve. >> i've seen estimates -- >> i'm sorry to butt in here. we have an important thing going on here down in lower manhattan.
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the beams are being put in place on the freedom tower making it the largest building in new york city. the new skyscraper is built on ground zero, the site of one of the 9/11 terrorist attacks. freedom tower is now 1,250 feet, which overtakes the empire state building here in the big apple. now, when complete freedom tower is expected to be the tallest building in the u.s.,ed third tallest in the world behind in dubai and mecca. history being made there, guys. in the meantime, why don't we get back out to los angeles and another perspective on the market and what's happening in the economy with my good friend and colleague, brian sullivan. >> thanks, mandy. that's a great sight in lower manhattan. great sight to finally see i might add. frank baxter, former ceo of jefferies, chairman emeritus of jefferies, former ambassador to uruguay and deeply involved in education and flan tlop pi.
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thank you very much. >> thank you, brian. >> i understand you're not involved in the day-to-day of jefferies right now. >> i'm not. i'm totally retired. i certainly follow the firm. i've worked there for 30 years. we have terrific management. i'm very pleased with. >> you may not want to answer some of these questions, but i'm going to ask them to you anyway because that's my job. >> fair enough. >> i'm sure you know, jefferies came under attack last year by rating agency and also the blogs. they fought back. they seemed to have won. do you feel the worst is behind the firm from a media perspective? >> i don't know about the media perspective, but i know the firm is run in a very, very conservative basis that assets, the leverage is extremely conservative. i have every confidence about the survivability and really the success of the firm. the firm has always done better in bad times. we've added really good people. we've added good businesses. so nobody likes bad times.
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we certainly exploit them. we had a tremendous additions during the dotcom downturn in 2007 and in 2008 we've added many terrific businesses. i'm very confident. >> the firm came under attack from short sellers on the basis of some reports that were put out by reputable firm. what did you make of that? >> well, what i read about, i had a lot of skepticism because i just know how conservative the firm is. and it looks just from the outside i've been proved correct that the firm is run conservatively and customer focused. >> you didn't feel the firm was ever overleveraged as far as you knew? >> well, i didn't know it directly by basis of fact. but i know the people. i hired all the people. and i have total confidence in them. if anything, they're more conservative than i was when i was running the firm. >> from a macro perspective, we look at the european problems, the european banking problems,
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maybe for a firm like jefferies or just a general american investment bank, do you feel this is the time to get aggressive, go to europe, buy up assets and use the weakness that we're seeing around the world to expand and grow? >> i think that's just always a general principle is to be a buyer when other people are sellers. and whether i think that just from what i read from the outside, jefferies is more focusing on asia at the moment. but it's a very opportunistic firm. anything that they can buy at book value or below that has a good potential, they'll take advantage of it. for them, people is everything. for jefferies, the people is everything. leveraged of course by technology. and i've gotten so much involved in technology in the education sector, as i said i've been retired for ten years, but for me that k through 12 education in our country is our weakest point. it's weaker than defense or anything like that. we're not replacing our baby boomers. almost every social problem is related to technology,
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unemployment, crime, even health care. so i'm spending my time in that area. i know that rich handler is working on that as well. >> and you're hitting a personal area as well for me because i grew up close to here although certainly not close to where we are today. i'm a product of orange county public school systems as well. the more money we seem to throw at education, the lower a lot of test scores seem to go. it's clear that money isn't entirely the answer to our education ills. what is? >> we spend more money per school, we spend triple what we spent 50 years ago, we spend more than any oecd country with less results. the problem is you have a 19th century model that worked when we tried to convert a pas troll nation into an industrialized nation and hasn't changed since. there are better models now in our charter schools. we have 22 charter schools here in l.a., inner city l.a. areas that you probably wouldn't drive into at night where 8,500 students, the kids are spending two-thirds of their time online,
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they're all reduced lunch kids, one-third. with the teacher they're learning easily two or three times -- >> so you're saying the kids at the charter schools you're helping to back who are online more than they're being taught directly are showing greater results and higher test scores? >> yes. >> teachers are not obsolete. >> oh, no. teachers are important. $60 million has been spent on technology and education with nothing to show for it. what we're doing is integrating and leveraging the teacher with 21st century tools. >> yep. >> productivity is enough of the education industry. all we're doing is making the teacher more productive. we have virtually all of our kids graduate 85% go onto college. every child can learn. if we use 21st century tools. >> ambassador baxter taking private sector no-how into education. thank you very much for that. i appreciate meeting you and i appreciate the questions on
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jefferies even though you're not involved in the day-to-day. taking private sector know-how into the public sector school system. the ambassador is right, not sure i could go to those schools today. >> very controversial. thank you very much, brian. as we go to break, guys, look at the steel beam going up at freedom tower. it's making it the tallest building in new york city beating out the empire state building. there you go, folks. in the meantime out with the old, in with the new. why it could be time to shake up the world's most famous index. brian. that's right. and coming up after the break, one of the richest men in america, the only man to start two fortune 500 companies and a man also deeply involved in fi lan tlop pi and education, we'll ask him what he's doing to help, what he thinks we need to do. eli broad of the broad foundation, your special guest at the milken conference coming up after this short break.
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if you made a list of countries from around the world... ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.
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and welcome back to this bicoastal "street signs." we're here at the milken institute conference in lovely, los angeles, california. we're joined by a man you probably know well, eli broad, the only man alive to fund two fortune 500 companies. he now heads a foundation focuses on everything from grade school education to art to everything in between. joining us in a first on cnbc interview, the man himself who has a new book, by the way, called "the art of being unreasonable." notice how we put the book right here for you mr. broad. we appreciate you coming on.
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>> thank you, brian. >> before we get into education as we spoke with ambassador baxter. you and i have talked often about the california housing market to be the most important in the united states. >> that's true. >> have we bottomed in the california housing market? >> i think we're bottoming right now. >> why do you say that? >> fewer foreclosures. the number of foreclosed homes being bought. we have less supply out there. and i think we see home market turn around in the next six months. >> we've seen the home builders do very well from a stock market perspective. do you think that's justified? >> i think people are looking at future and looking beyond the present situation. i think it is justified. >> what about the u.s. economy in general? do you feel the u.s. economy has finally turned a real corner? 2.2% gdp growth not the greatest growth we need to recreate the jobs to reduce the deficit through revenue generation not
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just expense cutting. >> well, i think we are bottoming out. i think there's some good signs out there. consumer confidence and some job creation not as fast as we'd like, but i think we're going uphill, not downhill. >> what do you worry about the most from an economic point of view right now? >> i worry a lot about europe and how it's going to affect us. i think they're going to be in for a double dip. and how that's going to play out -- >> how do you see it playing out, mr. broad? >> i think it's going to effect our trade. it's going to affect a lot of economies, a lot of companies. >> will it drag us into recession? >> no. i don't think so. i think we're going to muddle out of all this. >> your book is called "the art of being unreasonable." some of the lessons, the importance of being second, not first. when i look at washington, i would like more people on
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capitol hill to be reasonable. what lessons from the private sector would you give, if you could sit all of congress down and maybe the president too and say here's what we should do, i'm one of the most successful men in american business history, what would be the one or two things congress needs to do and can learn from you? >> well, they need to face the realities of the deficit we have. they need to become far more do things together and have our economy moving forward. >> sounds good. but how would they do that? how can they be unreasonable but work together to get this done? >> i think we need coleej yalty. we need the american people to say we've had it with all this bickering and partisanship. and we demand changes. >> can i ask you about art? >> sure. >> because you're about ready to open up a fantastic contemporary museum in what, mid to late 2013? >> end of 2013. >> okay. >> there's a painting coming up
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called "the scream" by edvard munch, are you going to bid on that painting? >> i am not. >> why not? >> our collection's contemporary. >> so you're not interested -- so sotherby's can writeoff one of the most successful art investors in the world from "the scream"? >> that's correct. >> finally, to talk about education you just heard our conversation with a man you know, ambassador baxter, you've done great work here and around the country and in your home state of michigan, there seems to be a standoff here between sometimes the school districts and the unions and the brains that the private sector can impart on and the lessons it can learn, what one or two changes would you make so we can end the fact that a million plus kids drop out of high school every year costing the economy hundreds of billions over their lifetime? >> we've got a broken system. we've got to get more money to classrooms to support our great
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teachers. we've got to cut down all these bureaucracies and central offices. and a budget that belongs in the classroom. longer school day, longer school year, our kids are not getting enough academic hours that kids in other countries are doing. >> you can do that in the charter school level, can you do that in the public school level? >> i think you can. >> you can get the unions to agree to a longer school day? >> we hope so. >> eli broad, it's a pleasure to speak with you, sir. the book is called "the art of being unreasonable." mandy, this is sort of how i live my life at the office. >> i was going to say. >> it hasn't worked for me, but it worked for him. >> i mastered the art of being unreasonable. thanks very much for that, brian. coming up on "closing bell," in other words the show after this show, david faber sits down for an exclusive interview with carl icahn. that's today at 4:15 p.m. just ahead on this show, "street signs," the worst idea we've ever heard period. plus it's 5:00 somewhere right? we're going to belly up to the
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bar for a closer look at america's brewing battle. a first on cnbc interview with the chairman of molson coors coming up next. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the spef hertz. ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550
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well, check out shares of
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bud. anheuser-busch flat right now. saying the new product lines set to offset shrinking sales of budweiser in the united states. bud's overall margins improved but made weak comments about q-2 which seems to be pulling the stock down at this stage by just over 1%. and check out bud's biggest craft beer competitor. that one's moving to the upside by nearly 3% after a maintained buy rating and a $100 price target. sitting there at 102. well, we're going to keep it at the bar. darren rovell is here with us. and i believe you've also got a very special guest. >> thank you, mandy. i do. pete coors, sharm of molson coors is joining us from new york where he's going around the country on a caravan tour of sorts. pete, tell me about the tour. >> well, my son david and i took off from denver seven days ago. and we've been in six cities promoting the coors banquet brand and bringing a lot of fun to our distributors, retailers and consumers. >> pete, i have to ask you to
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start with craft beer in general. you obviously have something like a blue moon and budweiser has something like shock top. and it seems like these are growing at a tremendous rate to the point where you almost don't want people to know that a coors makes a blue moon. what is it about craft beer now? is it the taste? is it the artisan quality of it? why is craft beer so popular while the big beers aren't necessarily growing with the same pace? >> i think it's a combination of things. certainly people have become more interested in different flavors, different styles of beer. i think it's been really good for the industry in total. and the reason that companies like miller coors are involved in craft beers is because it's the growth engine of the market at this point in time. still relatively small, but we've got to participate. blue moon's the biggest craft beer in america. >> is part of that not saying that it's made by coors?
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you know, people seem to like the small town, small production versus -- there seems to be a negative stigma with the big beer. >> well, you know, blue moon brewing company is what's on the label, but it's totally owned by miller coors. and we're actually proud that we have the kind of brewers that can make beers that can compete in that segment. so we're very proud of it. we're not trying to keep it a secret. i think it's still a lot -- a mystery to a lot of people. it seems to be working just fine. >> would you care to give us some guidance in terms of what you're facing with commodity prices and whether or not you can pass that on to the customer, whether or not you can raise your prices in that environment? >> well, at some point in time i think you reach the point in the curve where you have to be a little bit more careful on pricing. i think we're getting -- maybe bumping the edge of that at this point in time. but clearly commodity prices, some commodity prices are going up and some are declining as we
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see inflation building a bit. maybe in the future it will be a bit more tricky. >> pete, a lot of this is about value. and, you know, bud platinum is now they say the fastest growing brew since 2005. do you think people want more alcohol for their money? and that's the version of perceived value in this marketplace? >> well, we've seen a little bit of the shift from beer to spirits and wine and perhaps that's part of the equation. each generation, the my len yals now have a different taste trait profile. may be looking for alcohol level, more what you call bang for the buck if you will. we've been a little careful not to step too much into the contest for alcohol for a number of reasons. look, premium light bill still 50% of the market. they're what drive the economy through the beer business. i don't think that's going to change any time soon. >> anheuser-busch inbev expects
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brazil to be an area for big volumes growing for beer consumption. is this an area you find, brazil and other emerging markets, to be a big growth engine in the future for you? >> we just purchased a very large business, star bev, in nine countries headquarters in the czech republic. so obviously we think that's an important place to go with the competition in brazil, it's not really high on our radar screen at this point in time. very, very tough market to get into. but their population trends are such that clearly beer's going to be very important to brazil and other latin american countries. >> absolutely. very large growing middle class and very thirsty middle class as well. thank you for joining us today, sir. >> thank you. >> darren rovell, thank you as well. coming up next on "street signs," idow, is it time to shake up the dow and add apple or google? we'll debate that next. and later on, will the most controversial pipeline in the world ever get built? brian will talk to the president
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of energy and oil pipelines in transcanada. meantime a market flash with bertha coombs before we go to break. bertha. >> hey, mandy. we're watching the close here on oil. and it is on par to at least be flat for the day. had been down. oil, wti nymex went up four days in a row. we'll see if it can actually even up and close up just by that penny. we were just above 105 a little bit fractional few minutes ago. still a strong month for oil up nearly 2% on the month. we'll be right back here with "street signs." [ male announcer ] this is corporate caterers, miami, florida.
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happy monday. welcome back to "street signs." it is time now for today's street talk. let's take a look at what's happening in the market because we really are kicking off the week on a down note here. the dow, nasdaq and s&p all trading in the red right now. we found monday movers for you. shares of kraft, at&t and our parent company, comcast all trading at new 52-week highs. comcast has come off its highs and slightly lower as we speak. now, as we mentioned earlier, shares of barnes & noble really on the move today in a big way up by about 60%. microsoft announcing plans to
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pump $300 million into barnes & noble's textbook and digital businesses including the nook e-reader. james, to what extent was this a necessary deal for both parties? >> you know, both parties are staring at a world where apple and amazon are poised to take the whole world over. and they said, look, we can't sit back and watch this happen. but we can't do this on our own. so it's time to join forces. >> but even with this deal, is it fair to say that it's not going to be able to catch up to, for example, apple's dominance in the tablet space? and it's not going to be able to catch up to amazon's dominance in the e-book space. >> right. both of these companies are juggernauts. there's no way anyone -- anyone, can compete with the ipad success at 60 million units sold around the world in just two years. microsoft is coming in late, but rather than give up, they thought let's see if we can introduce ourselves in a way that doesn't make us run afoul
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of samsung and other vendors we work with in our traditional pc business. they have a lot of territory to navigate. feels like barnes & noble is a safe way to do that. and barnes & noble needs this because they're reaching that natural limit of people they can convert from their stores. they have to get outside of their stores to keep growing the base of nook users. so it's kind of a match made in heaven. >> would it allow barnes & noble to shut more bricks and mortar stores without losing traction in the space? >> well, that's the likely outcome is that the brick and mortar business is dpoing to start to diminish and eventually dry up quite rapidly. they need to be positioned to say, you know, we don't care about the physical book space getting smaller. even if there's a book space down the road that's still going to be around, the digital customer relationship is the relationship that matters. and they need that relationship to be bigger than today's barnes & noble customer base. and that's what this is about. >> uh-huh. speculating on the next step after this initial deal that we're talking about, james, what is the likelihood that the college and the digital books
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businesses will be able to be completely separated and, i don't know, result in either a sale or a spin-off or some kind of stock deal, something that will get the market really talking? >> yeah, the business happening here right now is less about the college vertical or even some international expaengs as the company has talked about. the business unit that's forming here is going to be device based. it has to be otherwise no one would have valued it at $1.7 billion. that's the device based speculation that's driving the market right now as people are saying, wait a minute, is microsoft going to push nook to create maybe a 10-inch version of the nook tablet? you can see some kind of real alternative to the existing apple and amazon threats. who knows if that's what they're going to do, but that's really what they need to do. >> yeah. it's all about necessary as opposed to want these days. james, thank you so much for that. brian, i know you were doing reporting yourself on barnes & noble last week. just remind us what you dug up. >> well, you know, listen, mandy, i don't want to toot my own horn, but remember monday on our new stocks flash desk we dug
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into barnes & noble. the stock was up a couple percent, found that there was a filing that janna partners had taken a 12% stake in barnes & noble. david faber interviewed the head of janney partners on cnbc earlier today. the stock moved up a bit on the 23rd, but now look at the move today. it doesn't mean you want to always just invest on the back of some of these investor activist funds like bill ackman or others, but i think what it does say if some of these hedge funds that have a history of being successful are investing and if we can dig it up and bring it in the news, those are the stocks to keep on your radar. your point from the guest about we can't do it on our own between barnes & noble and microsoft is a good one. look what we have here. the cnbc app. i don't know if you've ever used the cnbc app. it's free download at the itunes music store. this is ipad. we don't have the nook. look at that stock move. >> look at that stock move. there you go.
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>> or if you do it like this, that's bad. >> that's bad news. turn it upside down gives a completely different read. stick around, brian, because does the dow desperately need a makeover? we've been talking about it a lot here on cnbc today after barrens published a story over the weekend calling the index irrelevant if it doesn't start including names like apple and google. so is it time for a shake-up? let's bring in michael farr. our very own bob pisani. brian, if you want to jump in, please do. michael, why do you say the dow does not need a shake-up? >> it doesn't need a shake-up, mandy. i really disagreed with a lot that went on in this article. it seems to me that there's this suggestion that we should chase performance, just sort of because what we have is kind of boring now, it's kind of out of step, it's not the hottest dot in town, so we should change the dow. i think the dow is a great collection of very stable well-capitalized companies that serves a purpose. if you want sizzle, go to a different restaurant. this one serves just a fine
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purpose and should be left alone. >> the dow quite often has that kind of starch but reliable bellwether kind of status, doesn't it? so you're saying we want nice sort of companies that have their if i think ners a lot of pies in the economy as oppose today hot shots with big growth prospects? >> yes, basically. but every dog has its day too. that's the thing we can't forget about investing. yesterday's dog is tomorrow's hero. and today's hero can be tomorrow's dog. so, you know, johnson & johnson hasn't done anything for years, should we throw it out of dow industrial average? coca-cola has come under pressure at times and it's still one of warren buffett's largest holdings. so i think that, you know, ibm, great, great company. we have to watch what happens to its stock price. you have to remember the dow is a price weighted index. and so they have to watch those higher prices. but an apple and a google might have a fit. i don't even know apple and google would want to go in the dow. it's a starchy place for
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companies that are considered growthier. >> what about you, bob, what would you take out if anything? >> this is a little bit much adieu about nothing. there's a couple ways you can spruce up the dow. number one, i would replace bank of america as $8 with wells fargo at $33. here's a company much more dynamic growing huge part of the mortgage portfolio business, 30% of all the mortgages. that's idea one. number two, i would probably replace hewlett packard. it's not a tech bellwether anymore. i would not replace it with apple. it's not going to go in at $600. there's no way they're going to allow that to happen, or google even if they split to $300. i would argue something closer to amazon. i would prefer if it was $100 than $200, but you could make an argument that amazon might have a more appropriate place. >> hey, guys, let me get in here for a second because i want to go to michael's point about restaurants. the dow is serviceable, the dow is baked chicken and mashed potatoes. >> absolutely. >> it will fill you up. it's not exciting. you just kind of have it.
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so is it the best representative index of what this country is capable of? i think it's representative of what we have been capable of, not what we're capable of down the road. it's grandma's home cooking. >> michael will tell you -- michael, tell him, professionals use the s&p 500 and have for years. the dow is the people's index. >> sure. have to use it. and everybody used to look at the dow 30. when i first started in the business, the only stock you had to watch was at&t because it made up such a huge percentage of the dow. if you knew what at&t had done, you knew what the dow had done. the dow is still kind of relevant for a lot of people and one of those american home grown indices. but, yeah, the s&p 500 is the professionals choice. it's much more representative. it's a market cap weighted index. 500 different stocks. so it has its place. i think it's a big mistake -- >> by the way, they track each other. michael, you know the s&p and dow are pretty closely tracked. >> about 90% correlated.
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michael, is this a purely academic debate? i mean, is there any likelihood at all that there is actually going to be a shake-up? considering the last time they did movements was in 2009 when travelers and cisco came in, gm and citi were out. that was quite a few years ago now. is there any likelihood it's going to happen? >> you know, viewers of cnbc should really listen closely to bob pisani. i'm halfway there with him. i mean, the hp is probably due for a turnover, and, yes, for that role they're probably due to make a decision to keep their index more relevant and to make sure that the strategy of their index that that hp piece does actually represent real technology. i wouldn't make the switch to a wells fargo because i think you're tinkering too much. it's still doing what it should be doing still serving a purpose. and i think there are other places to go for sizzle if you want it. >> yeah. you know, michael, you've just been awarded quote of the day, everyone should always listen to bob pisani. >> listen to bob pisani. >> my mother will call you and
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thank you. where should she send the check? >> michael, brian, bob, good to see you. still ahead, man down. one of our top stock draft picks on the disaster du jour. brian. >> i can't wait to hear that one, mandy. also coming up after the break, transcanada, the pipeline getting a new suggested route. we're talking thousands of jobs. and we are going to talk to the man who runs the pipeline division for transcanada. will the new route get the pipeline, the xl, the keystone, will it get approved? we're going to ask the man from the milken institute in lovely los angeles right after this break. ♪ i'm making my money do more. i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money.
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coming up on "closing bell," maria is at the milken conference and she has some big interviews over the next two hours. pimco's thinks qe-3 is not off the table. boone pickens gives us his oil and nat gas prices. and the ceo of simon property
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group. and don't miss an exclusive interview with billionaire activist investor carl icahn. that's all ahead in just a few on "closing bell," guys. all right. last pick of the cnbc stocks draft, last pick. >> brian, can i call you brian? facebook is going to stay on the board. with the seventh and final pick i'm going to ft. worth, texas. >> no way. >> yes, it is. and it's radio shack. >> oh, sorry, guy adami. we love you. but your draft pick is our disaster du jour. radio shack, ticker rsh, is not looking so hot today. in fact, it's looking particularly low. 3.6% to the downside to be exact. so why don't we add in some sunshine with shares of dollar tree. that stock was actually left unpicked in our stocks draft. and today trading at an all-time high. dollar tree saw a round of upgrades last week which may be carrying over into today's trade. although as we speak it's down about 0.6%. still hitting a new high in trade today.
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well, do check out streetsigns for the rest of the stocks drafted by our seven all-star traders. and comment ri and analysis from herb and cramer. this one is something we thought might be considered the worth idea ever depending on how it goes. an aussie billionaire clive palmer with plans to build an exact replica of the titanic. he's going to name it the titanic ii. the maiden voyage is set for late 2016 and will be from england to new york exactly like the original ship's itinerary. it will be built with the same dimensions, nine decks, 840 rooms. when asked whether it would sink, he implied, orveg it will sink if you put a hole in it. i love that, brian, a typical aussie answer. ask a dumb question, get a dumb answer. >> you know, is kate winslet going to be there?
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will she degrade herself, dance with a bunch of third-class passengers? hang out with leonardo in the back of a model-t and survive the whole voyage? >> why not. >> that's all i'm concerned about. >> well, what i was concerned about is what kind of safety procedures they have in place considering what happened the first titanic, but i did note in the press release it will have the latest navigation and safety systems. glad to hear. >> and have -- i have a feeling that the standards are a little different now and he can probably get the thing built. i'll tell you what, mandy, i'm not kidding, if he builds it, if i could afford it, i would do. >> absolutely i would do it. and by the way palmer did not provide a cost estimate. but when you're a billionaire, why do you need to do anything? i've got $1 billion. >> exactly. >> coming up next, can oil halt its march higher? and back to brian live at the milken conference. we're going to the source of the most controversial pipeline that's a political hot potato. big issue here on cnbc as well.
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this is in anticipation of that proposed keystone excel pipeline we will hear from transcanada shortly as well as the reversal of the sea wave pipeline that's skpaekt expected for mid ney and that will take from cushing to the texas coast. say hi to brian with a very special guest, brian? >> president of nerg and oil pipe lines as transcanada joins us from the conference. there is pressure from the white house. any indication if that revised path will be accepted and approved? >> you know, at time the
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president indicated he was denying the permit, he said it was expressly because he did not believe there was enough time to review the alternate roud route that he with we were going to take in nebraska around the sand hills. we have submitted that proposed route around the sand hills. we have the support of the governor, the legislative initiative, so i believe we are on the path. >> you think you can get this built? >> absolutely. a hundred percent. >> what would be the timing then? >> we believe we can get this in service bit first quarter of 2015. because we have committed to go on the southern portion immediately, we have the opportunity to get it in service by late 2014. >> some critics argue that you're kind of using america. you're coming through the united states from canada, down where it is going to be exported out. what benefit does the united states get out of a pipeline that's literally just crossing our land? >> first of all, this suggestion that this is an export pipeline is just a ridiculous statement.
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the u.s. is the largest importer of oil on the planet. you import close to 10 million barrels a day and canada, with its third largest reserves on the planet, sit right on top of the u.s. it is absolutely ridiculous to suggest that that oil is going to go all the way through the u.s., bypass a huge demand and go off to china. it doesn't make any sense whatsoever. this oil is intended to the u.s. have our shippers have said that. >> a lot of debate about the actual number of jobs created. others say so what, it it's only for a couple of months. what's the real story? >> we said this from day one. 20,000 jobs. 13,000 jobs in the pipeline sector. 7,000 manufacturing jobs in the u.s. we're building a pipeline that is 1700 miles long. $8 billion. it boggles the mind to think that pipeline is going to employ a huge portion of the -- >> if you can't get it done, will you scrap it, build another pipeline in vancouver, then send
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it to china? >> ever since the president denied the permit, there's been a growing concern in canada that if the u.s. doesn't want the soil, it's got to go to the pacific rim our perspective is the best market for the canadian crude is the u.s., and we're going to get the pipeline built. >> thank you. mandy, i'm sending it back to you. >> thank you very much for that, brian. okay, we want it take a look at what is happening in the world of bacon. we always have a little special tidbit when it comes to bacon here. we're going for a quick break. i went to a small high school.
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it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz. as promised, bacon news. the price of bacon lost its sizzle. pork belly prices are $160 per hundred pounds. it is off last summer's $150. so you will have to pay around $3 '04 a pound. it makes the freedom tower, the tallest building in new york city, freedom tower of course built on the original ground zero, the place of the terrorist attacks on 9/11. at the beginning of the trading week we are moving to the down side. lots of people talking about


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