Skip to main content

tv   Closing Bell With Maria Bartiromo  CNBC  July 8, 2013 4:00pm-5:01pm EDT

4:00 pm
we'll also talk with the ceo of rbc as we get ready for the second hour of the "closing bell." stay tuned. [ bell sounds ] 4:00 p.m. and the dow and the s&p 500 starting the week with pretty solid gains. the nasdaq lagging behind, though. i'm kelly evans in for maria bartiromo, and also joining me is bill back from the floor. here's how we're finishing the day on wall street. the dow adding 88 points, off the session highs but still a solid day considering we had a triple-digit gain on friday. the nasdaq is the weaker of the bunch. it added about 5 points. the s&p 500, bill, up about 8. >> okay. alcoa kicking off the earnings season moments from now. still waiting for the numbers to come our way here. we'll have those results as they come in. and then, an exclusive interview
4:01 pm
with the ceo klaus kleinfeld per tradition. joining us now to break down the day so far, doug sandler from riverfront investment group, ed, randy from huntington funds, joining us today. randy, what do you -- well, let's get the big picture first. we've had a pretty good gain again. the question i keep asking, the 5% pullback in june, was that enough? do you expect another pullback at some point? >> you know, i think you're going to see a lot of sticker shock when people open up their portfolios this week. their bonds are going to be hurt pretty badly. i used to think i was a good market timer in the past, but i'll have to pass that crown over to the chief financial officer at apple, because he nailed the exact bottom of interest rates, and if you look at the 30-year apple bond right now, it's down about 12%. so there's going to be a lot of people that will question their bond holdings, and i think they'll continue to move more money into the equity markets.
4:02 pm
>> doug, are your clients asking those questions? what are you telling them? >> well, we've been big proponents of stocks over bonds for several years. so it's -- that stuff started to play out exactly as we hoped it would. our view is, you know, in the end, interest rates are going back to where they should be, somewhere around 3%, 4%. we think that's just normal interest rates. in the end, that's low interest rates. it shouldn't be enough to slow the economy down. and the value proposition between stocks over bonds remains compelling. i think for those waiting for a pullback, i think you just saw one and saw how quickly it can come and how unannounced it can come, and i wouldn't be waiting a lot longer for another opportunity like that. >> ian weiner, we're noticing more strength in the financials, a lagging of the technology stocks. what's the message of the market right now? and what is it saying about the economy here? >> i think the market's saying that the economy's in big trouble.
4:03 pm
i think the semiconductor stocks are an early cyclical. alcoa is a very early cyclical. and alcoa is down over 20% this year. we'll see what they say in a few minutes. i think the early cyclical stocks are telling you that the economy is weak. earnings growth is de minimis. there is no revenue growth. looking at the market, it's a lead indicator as the semis usually are. >> ian, is the market telling us that china is in trouble, and so are makers -- so are the sort of traditional makers of technological equipment? >> i think the market's telling us that there's zero cap ex going on from any company out there at all, and that's the problem. everybody's very thrilled that the fed keeps printing money, but all you have now is financial engineering and that's where the stocks are where they are. there's little to no economic activity happening. >> i love that point. we're just getting alcoa earnings, guys. >> yeah, here they come. they were expecting 6 cents. they got 7 cents per share. they wanted 5.8 billion in
4:04 pm
revenue. they got 5.85 billion in revenue. that stock continues to rise here. it's up 1.6% now above $8. and joining us per tradition, as he does exclusively on "closing bell" before he even meets with the analysts, we're pleased to welcome back chairman and ceo klaus kleinfeld. good to see you again, klaus. welcome back. >> hello, bill. good to see you. hello. >> nice to have you with us, as always. we have a lot to get to. but give us your characterization of the quarter first. >> yeah, well, the strong operational performance you just mentioned it. we actually saw that on the top line side, even though we had a metal price decline by 8%. we've been able to capture that with growth, also in the valuation side. and on the profitability side, you see shining through the strong capabilities inside of the company to get profitability up as well as productivity is going, cash is good, $1.2 billion cash on hand, strong balance sheet, even
4:05 pm
though we paid down debt early of $566 million this quarter. so all in all, a good performance. and you saw some special items, special items mainly in regards to the restructuring pertaining to closing facilities and removing legacy and legal issues. >> okay. let's face it. you are beholden to the price of aluminum, and aluminum recently hit a three-year low. however, automakers like gm and ford feel that we are hitting a bottom right now in aluminum prices. what do you think? >> well, it's hard to speculate here, and what we are doing is we are rather concentrating on those things we can control. so what you see is what's happening inside of the company. we are building out our value add businesses, and you saw that for the time in this year, 57% off the total revenues already come from value add businesses and making up 80% of the profits. at the same time, on the commodity business, where we can control the metal price, we're
4:06 pm
coming down on the cost curve. we have a lot of things going on. closing down high-cost facilities, bringing new lower-cost ones like the saudi arabia one online. and then removing legacy issues. that's what we can control, and that's what we do. >> but at some point, you're going to cut so much capacity that do you fear you'd get caught in a squeeze in the price does go back up again and the business improves? how much more cost-cutting can you do at this point, klaus? >> well, as we've seen, there's a lot of capability inside of the company to do the restructuring in a smart way, so that it's cash sensitive. so we always look at how easily we can bring capacity back up again, so those are things -- those are capabilities that we can -- by the way, on your earlier point, why do the gms and the fords and the boeings of this world talk about aluminum, even the apples of this world? because we see that the aluminum
4:07 pm
fundamentals are very strong. we expect a growth for this year, and of 7%. we see this happening. on the automotive side, very exciting things are going on. the automotive market in general here in north america is strong. and at the same time, for aluminum, we see that -- we see demand on auto sheet quadrupling in the next three years, and then another the next ten year, another 2 1/2 times growth. that alone will bring another 1 million metal demand inside of the u.s. so those are things that are exciting. >> right. >> although, as i said, i can't predict where the metal prices will go. i tend to believe we're seeing the low end at this point, also. >> thank goodness for the recovery in the auto industry, that's for sure. what about china? you have the unique ability to give us a sense, what we've heard is a slowdown is under way there in china, and they're trying to deal with inflationary issues still. what's your sense of the chinese economy right now? >> well, just look at the -- their own view and then the
4:08 pm
experts' view, those that really look at china deeply. and the experts' view kind of range from the low end, 7.5% growth this year to the higher end, 8% growth, which is the imf number. i cannot believe that's going to be somewhere in the middle, 7.7%, 7.8% gdp growth. bear in mind, we're talking about 7%, 7.7%, 7.8% growth, on an economy that's much, much bigger on what it used to. and what accounts for everybody that's in that market is the absolute growth. so i'm really not concerned about china. i believe that some of the tightening that we supposedly have seen is actually positive. it's a move by the new leadership, trying to reduce the overbuild activities and go more for quality growth, which is important for our business. we see there they are curtailing and shutting down high-cost capacity, and that's really positive. >> you became ceo of alcoa back in may 2008.
4:09 pm
as it happens, that was precisely at the time it peaked, at a price of $45 a share. it's nowhere near that today. in fact, just last wednesday, jpmorgan put out a research report on your company saying that they see your stock only going to $9 by the end of next year. you have to be disappointed in your stock performance over the five-year tenure. and i ask this with a great deal of respect, klaus, but are you surprised you still have a job at this point as ceo of a company that has seen its stock performance like that? >> no. first of all, we've come through the worst crisis that the world has seen . in our industry, it's been worse than what most people have seen. you have to keep that in mind. at the same time, we used the crisis to change our portfolio, and we used the crisis, also, to raise additional equity so you have to compare apples to apples. so you see that there was some
4:10 pm
delusion dilution in the stock anyway. what we do is concentrate on the things we can control that create shareholder value. that for us means building the value add business and we are really well under way, as i told you earlier. there are some exciting opportunities in the auto, aerospa aerospace, consumer electronics are some of those. and we come down on the upstream business, which we can't control the aluminum price, but we can control the price curve. we're coming down, curtailing the high costs, bringing saudi arabia online, the lowest cost facility on this planet. and on top, legacy issues like the one we are removing this quarter, or trying to remove this quarter. that's what we're doing and that's what all alcoas, all 61,000 are committed to, and you see there's very strong performance there. you see it in the operating numbers. you see it on the revenues. you see it on the bottom line, in the cash performance. >> every ceo i have ever -- >> and eventually, i believe the
4:11 pm
market is going to come. >> every ceo i've interviewed say they don't pay attention to the stock. i get that. you can't live day to day watching the stock price. but the board of directors, i would think, has to do something about that. have you guys had conversations about that? i mean, you say you only do what you can control. but clearly that hasn't been enough for the price of alcoa these last five years. what kind of conversations are you having with your board right now? >> well, you cannot -- you cannot ignore the fact, again, that the aluminum industry has gone through a substantial crisis. we look at our structure and discuss this with the board all the time, you know, and evaluate that in light of what creates the best shareholder value. when you look at the performance again in this quarter, as well as in the other quarters, and you look at the operational side of things, you actually see that the performance is very, very good. and we're making progress on removing legacy issues. so for the time being, currently
4:12 pm
we believe the structure is the right structure. >> klaus kleinfeld, we always appreciate your time, sir. we'll let you get to the analysts' conference call, as you detail more about what happened this last quarter. thanks for joining us, as always. >> thank you. and now breaking news and jane joins us. >> another win for steve wynn in the long battle between him and his former partner. the company is reporting that an s.e.c. investigation into a donation to the university has, quote, been completed, and the office is not intending to recommend any enforcement action against wynn resorts. this involved $135 million donation to macau university that they called suspicious at the time, suggesting it was perhaps a form of bribery. the two men, of course, had been in court. the company, he's been kicked off the board, they revoked the 20% ownership in wynn resorts. the legal battle continues.
4:13 pm
once again, the legal desiegss and the investigations have gone, steve wynn's way as they have before. wynn, when contacted by the a.p. on his boat off abiza, he said, quote, we were sanguine, we never paid any attention to it. we had no exposure. it was a nonevent except for the damn newspapers, steve wynn said. back to you guys. >> quote/unquote. >> yeah. >> yeah. just confirming that. because you don't talk like that. thank you, jane wells. >> by the way, have i mentioned i got the new blackberry finally? >> the z -- >> the q-10, it has the real keyboard. >> oh, yes. >> look at that. fancy. who knew? >> i like the keyboard, though. it's what i've been waiting for. >> and i do, too. i think we're in the minority at this point. >> sadly. >> blackberry has been struggling. we're talking about the new q-10, paired with the z-10, which came out before the q-10 did, for some reason. i can't figure out why.
4:14 pm
and after last week's earnings for blackberry, the results and 30% stock drop, we're guessing that tomorrow's shareholder meeting will not be a pretty one. a current shareholder says that the sound you hear is the death nail ringing for blackberry. we'll have that shareholder coming up next. and as the saying goes, only in new york. word today that the former governor of new york, who resigned in the wake of a prostitution scandal, is mounting a political comeback. eliot spitzer, once known as the sheriff of wall street, is eyeing an office in new york city, and wall street could be in his cross hairs again. that story is coming up. you're watching cnbc, first in business worldwide. what if you didn't know that it's smart to replace washing-machine hoses every five years? what if you didn't know that you might need extra coverage for more expensive items? and what if you didn't know that teen drivers are four times more likely to get into an accident? 'sup the more you know, the better you can plan for what's ahead.
4:15 pm
talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum -bum ♪ (announcer) scottrade knows our and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."
4:16 pm
4:17 pm
as shareholder meetings go, remember walmart's recent meeting with justin timberlake, celebrities? blackberry's gathering may not be much of a party for the ceo. seema joins us with a preview of the event. >> that's right. the ceo will be in the hot seat answering questions from shareholders. many of which are expected to be frustrated given the recent drop in shares of blackberry and how that's impacted their pension funds. william blair expect s heins to
4:18 pm
reiterate a message he made on the earnings call, quote, turnarounds take time. the lack of success has tarnished the brand, and that's why we may start to see blackberry try to reposition its priorities by promoting the mobile device platform, b.e.s. the blackberry webcast starts at 10:00 a.m. eastern. guys, i'll be on it and we'll report back on anything interesting we see. back to you. >> all right, seema, thank you very much. >> the stock is down, disappointing sales on the hail mary phone they've been coming out with. what message can blackberry executives send to shareholders tomorrow? that's a big question now. >> let's ask him, joined by john goldsmith, who says we're in the beginning of the end for the company, and donald from yakman
4:19 pm
asset management. saying it's too early to make any calls. john, if you think it's the beginning of the end, why are you still a shareholder? >> it's a great question. we're a fundamental bottom-up asset manager. we actually run one fund in particular, and the fund basically works off price momentum. we started or initiate our position back in september, so after the stock had a nice little pop. but obviously, we're re-evaluating the position now. we sold the bulk back in september 2010, at over $46 a share. i mean, the right -- >> john, john, while that's interesting, why now do you have a position in the company if you think it's the beginning of the end? >> right. this is -- like i said, it's not necessarily going to happen overnight, and with regards to the other viewer that you have, or the other speaker you have on, this isn't going to be something that will happen within the next two weeks. i think the issue right now, more than anything else, is as long as they can prevent the cash burn from eating up into that almost $5.80 a share worth
4:20 pm
of cash that they have on the balance sheet, it can prevent the company from kind of going under/over, or in the short while. the issue right now, more than anything else, repositioning the company to try to maximize the value type of products they have, the higher-margin products, as opposed to the lower margin ones. >> donald, i've known you a long time. you're one of the patient value investors, you're willing to wait for a company's stock to realize its value. is that why you're holding on to blackberry? and why don't you think this company's in a death spiral here? >> well, remember ultimately this business boils down to what you buy and what you pay for it. we made a large investment in this company below 7, and we sold all of that and then some, at 13, roughly 14, in the low teens area. so this is a highly unpredictable situation. the 52-week range on this stock
4:21 pm
is from 6 and a fraction to 18 and a fraction. so think of it as like you're drilling for a wildcat oil well. you want to spread your risks. we have a very small position in this company. >> you sound like you've been day trading this stock, don. i'm surprised at you. >> oh, no, no. no. but when you -- >> let me ask you that question again, though. why don't you think -- or do you think that this company's in a potential death spiral here? >> well, i think it's a matter of probability, bill. it's a matter of, what is the probability of things happening? i mean, i could walk outside and find an elephant, but i wouldn't put a high probability on it. so what's the probability of this happening? >> yeah, i got it. >> okay. >> and the timing. i think at this point in time, you know, what you do is you watch and see how it evolves. >> so, donald -- >> because there are a lot of assets in this company. >> i guess why then should
4:22 pm
blackberry not go private and try to reorganize itself or focus on its turnaround outside of the public glare, which is the argument that dell is currently making? >> yeah, i think it -- i think it's difficult for most technology businesses to go private because of the capital needs and the way in which they operate. it's a lot different if you have a consumable product or service than it is if you have a capital good like this. >> okay. john, just a quick question to you. at what level do you bail out of these shares? at what point do you say, i've had enough? >> i think if you look at the underlying, like, base value, like i said, $5.80 a share, you probably are in the -- in the range of around $8 where that's probably the maximum price point or gain point that you can probably take. but i think they're going to try to do their best to more in terms of getting a good foot forward and try to get as much value and to basically highlight the points that are working.
4:23 pm
this stock could have a little bit of a pop. i think ultimately it goes down the same bath that boston scientific albeit in a completely different industry, but when you're a monopolous, and you have competitors, you have double whammies. the boston scientific was at 45 bucks, now at $10. blackberry over $150, now up $10 as well. once again, i'm not saying this stock is going to go to zero tomorrow. but i think, you know, the cards are on the table right now. >> i've got to go, but show me a two box if you can. either of you own a blackberry? >> i think i'm the last person in toronto to actually own one. >> you got one. don, you don't. >> i don't. >> no, you probably don't even have a computer if i know you well. >> but jason does. jason does. >> okay. all right. so somebody in the office does. thank you both for joining us today. appreciate it very much. all right. let's go over to josh lipton. you have a market flash. you mentioned dell. josh, what do you have?
4:24 pm
>> reporter: some headlines on dell. this is richard, the firm owns about 13,000 shares, talking to our own scott wapner. saying he will vote against the michael dell silver lake bid. he calls that offer, quote, unreasonable. he said it sets a bad precedent that exploits a weak share price for the personal benefit of the ceo. instead, he's calling the icahn proposal a reasonable way to exit at a better price for those who want to sell. bill, back to you. >> thank you, wash. see you later. lazarus, rocky balboa, ben affleck, after "gigli," remember that one? there are great comebacks, but they could take a backseat to what appears to be happening in new york city politic, and we're not talking about mr. wiener. >> eliot spitzer, known as the sheriff of wall street, before he became the empire state's disgraced governor. setting out to prove all those who said he couldn't be elected dog catcher very wrong. that story when we come back.
4:25 pm
looking at covered call strategies to generate income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. she's still the one for you -
4:26 pm
you know it even after all these years. but your erectile dysfunction - you know,that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure.
4:27 pm
do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial. well, the sheriff of wall street is back. but this time, he's looking to be more like a deputy for now at least. >> at least now. >> five years after resigning as new york governor, after his involvement in a prostitution scandal, eliot spitzer is running for new york city comptroller. he told "the new york times" it's a position he feels he can make more powerful and influential, so should wall street be worried? >> let's talk with katherine ward, who says wall street
4:28 pm
should fear a return by eliot spitzer, but andrew says the day of spitzer striking fear into the hearts of bankers, they are over. thank you both for joining us. katherine, he's watched the poll results for anthony wiener here in new york, who himself was disgraced, had to leave congress, and is now running for mayor and leading the pack here. nothing's lost on eliot spitzer, right? >> i guess not. i mean, personally, i think wall street and maybe new yorkers in general should be afraid of anybody who finds the private sector so awful, so unappealing that even after this incredible disgrace, even after, you know, he's sort of a punchline nationally, he still wants to try again for office. you know, boy have rather seen him kind of take his talents into the private sector and leave the rest of us alone, but i think it's not to be. >> yeah, katherine, it would almost seem notoriety these days is one way to ensure your name recognition stays out there.
4:29 pm
it gives you an advantage over lesser-known rivals. >> spitzer was famous, especially during his attorney general days for trial by press release. you would think in that court he's been convicted. but, you know, the personal, he wants us to set aside the personal and just see him as an able and competent person and politician. he certainly wasn't able to do that with the ceos that he went after as a.g. i'm not sure new yorkers should do it either. >> andrew, eliot spitzer did almost re-create the position of new york attorney general to give it the respect, to some degree power, that schneiderman continues to exercise today. do you think he'll do the same if he's given this position by voters? >> well, look, let me say, i'm a fan of spitzer. he did something when he was the a.g. -- the attorney general that the s.e.c. was unwill to do. he went after the biggest crooks on wall street. he went after some people who weren't crooks on wall street. i don't think he'll be able to take his new office, assuming he gets elected, and turn it into
4:30 pm
another a.g. office. he won't have the power, he won't have the ability to indict like he did when he was the attorney general. he's not going to have the power of the martin act. so i think we are going to see a very neutered eliot spitzer, and you jeff won't see him as effective as he used to be, and i don't think wall street has anything to fear from the new eliot spitzer. >> but he has already said in interviews that, for example, he would go after jamie dimond's position as both chair and ceo of jpmorgan chase. >> yeah, you know, he can say that all he wants, but without having the ability to really indict and the power of the martin act, i just don't think he'll be able to do what he did so effectively back when he was the attorney general. look, i give him credit for being aggressive. we know he's going to be the aggressive eliot spitzer. he just doesn't have the infrastructure behind him, the investigators, the attorneys, all of the fun stuff that he had when he was the attorney gene l general. he won't have that assuming he gets elected. >> katherine, i can't imagine that eliot spitzer, should he win this position, is going to retire as comptroller of new york.
4:31 pm
this has got to be a stepping stone, don't you think? >> it certainly is. and i would say, you know, with regard to the martin act, that's a law from 1921, and spitzer and many of his predecessors, took it, found it for their own purposes, found the law on the book and expanded their powers within it. there's no reason to think he won't do that again. there's a lot of old laws on the books. >> give me ten seconds on the martin act. i read about it this morning and i've forgotten. >> it gives guys like eliot spitzer tremendous power to get information from companies and not go through the traditional court system. >> it's a fishing license. >> it's a fishing license. >> got it. thank you both. >> yeah, or something like that, andrew. see you later. >> thanks. >> a controversy that's raging on both sides of our northern border, and that's ceo bank pay. gordon nixon of the royal bank of canada has taken his share of shots on the subject, but his position on the subject may actually surprise you.
4:32 pm
he'll join us next and we'll ask him for his take on, yes, the return of eliot spitzer. >> lucky him. later in the program, after the aftermath of the crash in san francisco, how do you know if a good pilot is flying your plane? or even an experienced pilot? >> exactly. >> get that story ahead. ♪ ♪ [ male announcer ] some things are designed to draw crowds. ♪ ♪ others are designed to leave them behind. ♪ the all-new 2014 lexus is. it's your move. the all-new 2014 lexus is. (announcer) at scottrade, our cexactly how they want.t with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to.
4:33 pm
plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. hooking up the country whelping business run ♪ ♪ build! we're investing big to keep our country in the lead. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all around the globe. cars and parts, fuel and steel, peas and rice, hey that's nice! ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪
4:34 pm
4:35 pm
bank stocks were under pressure after midday, just after cnbc's kate kelly reported that the fdic will announce new, higher capital requirements on the industry. we'll talk about that more in a moment. first, josh has a look at how the banks reacted. >> reporter: bill, this afternoon, a noticeable tick down in some financials and bulls can blame our own kate kelly. kate reporting that the fdic's stricter leverage rules will be announced tomorrow. the fdic expected to raise the key leverage ratio for banks to 5% from 3%. banks did move lower as the headlines crossed, but did manage to move off the lows. in the s&p, financials do remain one of the top-h performer sectors. back to you. >> let's get reaction. joining us is rbc president and ceo gordon nixon here on the set with us. welcome. >> great to be with you both.
4:36 pm
>> it's great to hear from you. and just before we get into the business, i just want your reaction to the latest news about the potential 3% ratio. >> you know, i think it's not a bad thing. we've always operated with leverage ratios in canada, i think it was one of the things that served canada well going into the financial crisis. we have a 20 times leverage ratio, which is the same as a 5% equity ratio. and i have actually argued often and internationally that, you know, higher capital levels is not necessarily the be all and end all, and having leverage caps is a good thing. >> why now? is it needed? we keep hearing that you guys are making progress, that things are improving. >> they have improved a lot. but you know the problem with capital is capital assumes risk-adjusted assets are probably risk adjusted. the crash in 2008 proved otherwise. lehman brothers could have had 20% capital ratios, and they still would have gone under, but if they had a leverage limit,
4:37 pm
they wouldn't have had the balance sheet expand to the same degree, because they were buying low-capital assets. and so, leverage ratio is just another governor, and i don't think it's a bad thing. as i said, we've lived with it in canada for, you know, years. >> right. >> and it's certainly served the banks well. >> as canadian banks navigated through the worst of the financial crisis, better than american ones, a lot of people have been saying, yeah, yeah, wait for their shoe to drop. look at the home prices. look what's happening there. and we get evidence today that the housing market is still going relatively strong. is it your view here this isn't the case of a shoe to drop? it's actually that this is sustainable? >> i think it's sustainable. firstly, i think there's a real misconception about the housing market in canada. you know, there's been some increased pricing, particularly in the condo markets, in cities like vancouver and toronto. still very low compared to a set like new york, i can assure you. but if you look at most ratios, other than debt-to-income, they are very much in their normalized levels.
4:38 pm
i think the biggest differentiator is the structure of the mortgage market in canada. mortgages stay on the banks' balance sheets, so we care whether they are paid. there's no mortgage deductibility. high leveraged mortgages are insured. term mortgages are five year, no reset mechanisms. >> have you sent this list down to washington lately? >> well, they've certainly looked at the canadian structure. i think it's very difficult to take what has been provided to consumers in the u.s. away from them, but, you know, the statistic that i like the best is that homeownership levels in canada are higher than they are in the u.s. >> wow. >> so it goes to show, you know, making it easier for people to access debt to buy houses doesn't necessarily generate the result that's intended. >> did we read correctly, we talk about high-frequency trading, the impact on the markets, you slow some of the customers' orders down? >> yes, we have a new system -- not a new system, but a system called thor.
4:39 pm
it's really designed to ensure there is equality in terms of trade execution. and it does something that some people would say is unusual for investment banks, which is it actually focuses on the customers as opposed to internal dark pools. >> imagine that. >> yeah. so it sits -- it's very consistent with how we try to run the business, which is putting the customer first. it is a little bit different from what you traditionally see in terms of order execution. >> well, it's interesting to watch, because your tenure at rbc is what is going on what now? >> on my 13th year. >> 13th year. i think 13 quarters at this point seems a long stretch for some of the u.s. banks' ceos here. you're now canada's biggest bank by assets, one of the biggest players in the world, 44 countries. you have a presence in. so what's next? where do you want to be in two to five years? >> you know, i think one of the things we're very proud of is we've tried to maintain a consistent strategy, and it's served us well pre-crisis,
4:40 pm
during the crisis, and post-crisis. we have a diversified business model. we have five businesses. we invest in all of the businesses. we've grown our earnings at 10%, compounded over the last 20 year, which means the earnings have doubled every six or seven years. and we've been able to do that even since 2007, which is unusual for global banks. >> so you are worth your pay package? >> well, that might be debatable, depends who you ask. >> you are on record saying you feel a lot of ceos are overpaid. >> yeah, i think that -- i'd start by saying if you look at the compensation in canada compared to the u.s., it's lower and the banks have performed better. on a relative basis, you might make that argument. you know, i think that one of the problems with compensation is it tends to move everybody up to the same level. yet there's a very -- there's a big difference in relative performance. and i think that the new compensation rules that have really been graduating over the last couple of years have done a pretty good job in terms of ensuring that there's a correlation between not just
4:41 pm
performance but relative performance, and consistent performance, and future performance, and compensation. so, hopefully, we'll have a better, you know, a better relationship in the future than we've had in the past. >> well, fingers crossed, gordon nixon. thank you so much for joining us down here. great to see you again. he is president and ceo of rbc. now, millions of tourists are saying, i love new york, but do businesses feel the same way? new york city may be the financial capital of the world, but the state? one of the best places for business? our own scott cohn is hitting the road again to find out the best states for american business. his preview and his first clue are straight ahead. also, questions about possible pilot error are being raised in the wake of the san francisco air crash. so how good are today's pilots, and how much experience do they have? how can you find out how experienced your pilot is? we'll answer these important questions when we come back. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪
4:42 pm
[ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant,
4:43 pm
we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve.
4:44 pm
yes, it's almost that time. we're getting ready for our seventh annual countdown of america's top states for business tomorrow, right here on "closing bell." we will be here for this. >> wow, that's true. >> looking forward to that. >> i get to sit in for it. >> we'll reveal the number-one state. >> cnbc correspondent scott cohn is in that state. we won't tell where you are, but we would love a little hint. >> reporter: can't you tell from the iconic view here where i am? of course, you can't. >> down the street, yes. >> reporter: right.
4:45 pm
i am going to give you a hint in just a moment. but as bill said, this is the seventh year we've done this, and it started as a conversation in the newsroom about why is it that different companies choose different states to do business, and what followed we think is the most comprehensive look at there at business competitiveness, at state competitiveness, rankings that involved 55 metrics in 10 categories. let's take a look at what our study is all about. every state claims to be tops for business. [ engine revving ] but we put those claims to the test. and the more the states make of claim, the more weight it carries in our study. >> the new new york works for business. ♪ new york find out how it can work for yours. >> reporter: at stake, 510 points in 10 categories. we look at the cost of doing business and the strength of the state economy. the quality of the state's infrastructure.
4:46 pm
its workforce and the quality of life. we measured technology and innovation, business friendliness, education, the cost of living, and access to capital. so we did all of that and it led us here to america's top state for business. so where are we? well, here is your first hint. big mouths. big mouths. no, washington, d.c., is not a state, so it can't possibly be that. big mouths is your first hint. we'll have a lot more hints throughout the day tomorrow, as we count down the top five states for business, and a lot more about all of this on twitter. follow me @scottcohn, tell us what you think and go to the special website, already running, topstates.cnbc.com. and tomorrow, when we reveal the top state tomorrow, you'll be able to go to the site to see the entire study and see how your state stacks up. >> great stuff. and i don't know, the car that just pulled up behind you, we
4:47 pm
saw the license plate. maybe that gave it away. could be wrong. oh, made you look! >> oh, kidding. i will say, though, i successfully identified virginia when it won, the home state. >> did you win something for that? >> no, just personal pride and glory. scott, thank you very much. bill, if you had to guess right now, what do you -- >> i'm not even going to go there. i don't want to skew anybody. >> i think it's one of the carolinas. i'm getting a southern vibe. >> that didn't look like the carolinas. >> florida maybe? >> mm, just a short while ago, the national transportation and safety board held a briefing on the crash of that -- at the san francisco airport. we'll go live, phil is live at sfo, with the latest on the investigation and two experts will join us to talk about what you can and cannot know about your pilot before you literally put your life in their hand. that's coming up. ♪ ♪
4:48 pm
♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end july 31st. going on now at your authorized mercedes-benz dealer. everng on now at your authorized mercedes-benz dealer. ybody has different ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. a lot can happen in a second. with fidelity's guaranteed one-second trade execution,
4:49 pm
we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
4:50 pm
>> the ntsb is just revealing a more detailed time line now to the events leading up to saturday's crash of asiana
4:51 pm
flight 214 into san francisco. phil, what can you tell us. >> look how quickly it was slowing down, almost stalling as it was coming in to land. the auto pilot was disengaged. 500 feet the air speed was 134 knots. 137 is the minimum target speed for landing. three seconds before impact, the air speed was all the way down to 103. they should have been at 137. they were down at 103 nots. here's the chairman talking about what they're looking to find from the pilot's interviews. >> we want to make sure we understand what was happening but we also want to talk to them about whether they were hand flying the airplane, the whether the auto pilot was on, what reliance they had within the
4:52 pm
cockpit and how well they understood the automation and what it was supposed to do. >> they are looking into the training and the experience of the pilot in charge of the controls. interviews of those pilots will happen later today. the pilot under question had just 43 hours of flying with the 777. he does have, however, almost 10,000 flight hours overall in commercial aircraft. that's the latest from here in san francisco. bill, back to you. >> thank you very much. >> let's talk to a couple of licensed pilots. michael is an aviation attorney and denny james principle at kelly james and associates. guys, thanks for joining us. michael, how can people find out how qualified their pilot is and is that something they should be making a decision about? >> first i'd like to express my thoughts about the families and the injured people. our hearts and prayers go out to them.
4:53 pm
to answer your question, it's my opinion that there is really no practical way for the average passenger to learn enough information and to be able to assess that information about the crew. we really must alrely on the system. if you take one pilot who has 5,000 hours but has been flying in low altitudes making many takeoffs and landings, how does that compare with a 10,000 hour pilot monitoring the altitude. >> the pilot had 43 hours. >> that's very low time. >> that's very low. i know you have to land at plane at some point but did he belong landing at that time? >> obviously there is a problem here. there's another thing to consider along the lines of what you're asking. there's also perhaps a cultural problem there, too. the co-pilot had alolt of
4:54 pm
appearance. was he reluctant to say, captain, add a little more thrust or to call the go around sooner? there is a reluctance there and this is not a cognitive process. this must be done intuitively. >> denny, what are the lessons from this? what have we learned for the industry but for passengers in this as well? anything? >> first of all, my name is denny kelly. it's not denny james. >> sorry. >> what we have learned is that most likely you have pilot error. it's not necessarily how many hours that a pilot has accumulated. it's how those hours have been accumulated. everybody starts out when they have a new airplane, everybody starts out at zero experience. this guy went through a training program. he got rated on the airline. he was doing what we in the states call a line check. he should have been perfectly
4:55 pm
capable of landing that airplane visually. he should never have gotten as low and slow as he did. you have to wonder why if he didn't notice it why one of the other three pilots didn't speak up and say go around. >> that's what we would love to have that question answered. michael and denny kelly, sorry we skewed it up. great speaking with both of you this afternoon. >> a good start to the week as earning season gets under way. >> tomorrow will they keep it in the green or fed jitters in advance of wednesday's release of meeting minutes three of our pros will size up that day next. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good.
4:56 pm
♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives.
4:57 pm
they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure
4:58 pm
and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. >> could tomorrow be yet another day of gains for the stock market. with 30 secon$30 seconds on the our guest here to tell us what to watch for tomorrow. mark howard and marino mayoren. 30 seconds on the clock. first to you. >> tomorrow we're watching the small business optimism indez and try to gain insight into the economic and sales expectation for small business.
4:59 pm
although it's been rising for the past two months the consensus is for a small gain tomorrow the absence of hiring plans by small business has been troubling and the bulls have moved past the s&p. they need to keep it there and keep the rally alive. >> mark, your turn. >> the results that just came out are going to be reviewed closely overnight. the call has started and we'll be looking at the details around the markets that they serve such as automotive, aerospace. they are looking for continuing to expand in the aluminum industry. the fomc minutes are coming out, chairman bernanke's speech and a ten year bond option. all those things will give a clear indicator as to the tone of the fixed income markets going forward. >> mr. marino over to you. >> we're watching tomorrow ten
5:00 pm
years yield. it's going down a little bit. we're looking at yield stocks coming back. we're watching some volatility in the oil market in general and we think that silver and gold will come back. also, we're waiting for wednesday and friday. >> wow. >> gentlemen, thank you all for joining us today. >> he only used ten seconds for that one. >> that's it for us on closing bell. thank you. we'll both be here tomorrow. >> keep your guesses coming on the top state. "fast money" starts right now. >> welcome to the nasdaq market site in new york city's times square. i'm scott wapner in for melissa lee this evening. pete gentleman jar yan. earnings kicking off alcoa out with results on the bell.

128 Views

info Stream Only

Uploaded by TV Archive on