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tv   Power Lunch  CNBC  January 7, 2014 1:00pm-2:01pm EST

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>> let's debate it. >> you still like that name? >> it's a lot of upside. >> final trades. josh? >> yeah. i like first solar on the dip from yesterday. >> doc? >> gds. worth the trade. >> joey? >> i shorted sears today. >> have a great rest of the day. "power lunch" starts now. "halftime" is over. "power lunch" and the second half of the trading day starts right now. >> good tuesday afternoon, everybody. welcome to "power lunch." rally time on wall street. our first big gain for 2014, up triple digits right now. let's take a look at the dow, up 118. the s&p 500, two-thirds of a percent. u.s. attorney going to hold a press conference in just a few minutes on the $2 billion settlement with jpmorgan in connection with the bernie madoff case. we will bring it to you live.
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and one big unknown risk. a big foreclosure auction is under way down in atlanta. buyers putting money down for homes that most won't see before they buy. we'll take you along for the ride, as those buyers see what they actually bought. first let's check in with sue on this rally day at the nyse. >> they know what they're buying down here today and it's stocks. let's get the trading action right now. the dow jones industrial average up about 116 points on the trading session and bob joins me on the floor of the new york stock exchange. a reprieve finally for the bulls. >> this is the first day it seems like the adults are kind of back. the volume's a little stronger, the trading action's a little more interesting. put up the dow, it's not like the range is necessarily bigger. we have been a very narrow trading range since the beginning of the year, about 140 points on the dow from top to bottom, but there's more activity around. i thought the volatility would go up, i have been wrong on that so far. >> eventually you will be right.
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>> if we stand here long enough. >> you'll be right. >> we'll be right on that. elsewhere, the big impact of this cold weather has been on some of the gas stocks. they have all been up on freezing cold temperatures. finally, the first hospital company to comment on obamacare and what it was going to do just came out with comments. while the revenue guidance they gave in 2014 is a little disappointing, by and large they gave positive comments about the impact of obamacare. better than people thought. that's why the hospital stocks are all on the upside. >> really decent percentage gains. tenet health care, for those of you living on radio, up 3 3/4%. let's bring in the director of o'neill securities. i come back after the holidays and you have run amok with the beards going on. >> it's a new year. i hadn't shaved for five days, i took some time off myself and said let's just see what it looks like. a little bit gray. >> how does the market feel to you? as bob said, it's the first time
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we get a feel there is some legs into this market. >> it just feels like it. yes, the volume is a little better but certainly no one's running away with it. we're coming right into earnings which start on thursday. i think there's some anticipation about that. i think it feels cautious still, right? people are not going to run right out and jump in front of it because they want to wait to see how they start to come in. i think we're in -- i think they test the high at 1850, then it takes a breather as we move through earnings season. >> very encouraging that some of the beaten-up groups, home builders, for example, are moving up today. biotech which got downgraded yesterday is moving up today. stuff that's been a little beaten up is coming back. >> we'll see how we end the week. we still have data to go. >> the adp numbers certainly going to be the ones people talk about. >> let's send it to dom for a market flash. >> shares of biopharmaceutical company biocyclics are at a high after it said a cancer drug
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showed positive test results in a late stage trial. the drug was being tested on patients with a rare form of blood cancer, a type of leukemia. the company is partnering with johnson & johnson on this drug. johnson & johnson is the partner on the venture. those shares up in trading today as well. back to you. >> thank you very much. well, they are blaming this cold weather snap on something called the polar vortex. it's brutal out there. water mains are breaking from midwest to the east coast, schools are closed from central new york all the way to chicago. check out the temperatures. we have minus 11 degrees in green bay, where my brother and sister-in-law live. stay warm, guys, i love you. minus four in chicago. eight in new york city. it feels much colder out there in new york city. 13 in boston. nine in annapolis and 20, 20 in atlanta. that's a 20-year low. the nation's flight schedule also a mess. 2500 flights are canceled today so far. there are 4500 delays but that number will probably grow as the
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problems snowball. joining us now to talk about the economic ramifications of all of this, and there are many, is jeff kilberg who trades wheat, nat gas and cattle, and dan litter joins us as well, a meteorologist from a firm who often deals with traders who trade weather-related products. jeff, i will turn it over to you. if you were a client, what kind of information do you want? >> we really want to know will this cold weather persist. obviously you don't want to see a snowstorm and go out and buy the snowboard on that day but obviously, we are seeing this weather. it is bone-chilling right now. i want to ask dan, what is the real forecast, because a lot of the weather people here in chicago have a very similar accuracy rate to that batting average of the chicago cubs. it's a little frightening on their predictability. >> million dollar question, obviously. everybody wants to know will this continue or not. obviously, it's been one of the coldest weeks or will be one of the coldest weeks since 1994.
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so expect record draws next week from storage. i'm guessing at least 250 on the bcf coming out of storage next week. that will be a huge number. but as you mentioned, will it last. right now, it does not look that way. next week, way above normal temps so a lot of the cold that we had early this week, by this weekend and early next week, it's a distant memory. we're talking about 15 to 25 degrees above normal for most of the consuming region from the midwest to the east coast. so no, right now, it does not look like it lasts indefinitely. >> let me ask you. right now the pits behind me in chicago, since cattle futures started in 1964, we are seeing the highest traded prices due to this weather and also seeing nat gas spike a little. i want to specifically ask about the wheat context. we just saw it slip into negative territory. is the snow that's already on the ground going to protect this dormant winter wheat from the damage or is the weather already going to crush it? >> yeah. first thing, you're right about that. if there is a little bit of snow
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on the ground, that's good for wheat. it protects the root system. i think part of the reason for this pull-back is a lot of longer range maps and a lot of data that i just actually got a look at suggests that we will turn into a warmer trend not just next week but probably beyond. we'll have a little bit of cold shot that comes through the midwest again, oh, probably about later next week into next weekend, but the longer range maps all suggest we will turn warmer, day 15 and beyond. so maybe that's part of the reason why wheat is starting to pull back. it looks like maybe this damage will be limited to just this one cold outbreak. >> could that be why live cattle is pulling back as well? because initially when this cold hit, we started to lose some cattle that were out grazing and obviously, when that hits, basically a number of them died. that pushed the contract sharply higher as jeff indicated, but is the shorter duration, do you think, dan, responsible perhaps for some of the pull-back that we're seeing? >> oh, yeah, absolutely. the question on everybody's mind is, is this just a very limited event, is it a one to two day
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cold snap, then we start to warm things up, or do we get more of these big arctic outbreaks coming in the coming weeks. right now, we're leaning toward the warmer side of things. i think traders may be speculating that okay, it's a one and done type event, the damage is done and then moving forward here, there's not too many threats. >> all right. thanks, guys. appreciate it very much. i'm glad to hear that this is going to be a short-lived cold spike. thanks to both. ty, up to you. >> thank you very much. a developing story at this hour. we are awaiting u.s. attorney's news conference on the jpmorgan deal regarding that firm's involvement, such as it was, with bernie madoff. scott chone is live in new york. fill us in, what can we expect? >> reporter: well, the u.s. attorney is getting set to announce what's being billed as the largest fine ever for a bank secrecy act violations. this as jpmorgan tries to clean its slate of the various regulatory issues it's been dealing with. this is a big one. the bank of course was bernie
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madoff's primary bank for more than two decades and the cost to unwind all this, approaching $2.6 billion. we should point out that's a little less than two weeks' revenue for jpmorgan. nonetheless, $1.7 billion to the justice department, $350 million to the chief regulator of the office of the comptroller of the currency in the treasury and about $543 million to private litigants, chief among them irving picard, the bankruptcy trustee who sued jpmorgan back in 2010 alleging that the bank was at the very heart of the madoff fraud. the bank has denied that, but nonetheless, a lot of the allegations in picard's suit are central to the agreement that's being announced today. jpmorgan is saying that it did not knowingly aid the fraud but nonetheless, it's promising best in class compliance systems, saying we recognize we could have done a better job pulling together various pieces of information and concerns about madoff from different parts of the bank over time. those new compliance systems are
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not really a choice for jpmorgan. this is all part of what's known as a deferred prosecution agreement, so the bank is being charged with two counts of violating the bank secrecy act, but the prosecution of those charges will be deferred and will be put off indefinitely as long as jpmorgan implements those reforms and we should point out, virtually all of that $2.5 billion or so will go to madoff victims. >> scott cohn, thank you very much. we'll be back for more as it happens. another developing story, and another big case for the u.s. attorney's office. sac jury selection in the case against former sac trader matthew martoma begins today. kate kelly is live in new york. >> reporter: so we're on a break from jury selection right now at the courthouse behind me, 40 center street. this morning folks gathered in the morning and began filling out questionnaires to kind of weed out people that might not be appropriate for the jury. at 3:00 p.m. today, lawyers for both sides of the case will
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reconvene to start going through those questionnaires. but the selection process will really begin in earnest tomorrow morning starting at 9:30, i'm told. we're unlikely to see opening arguments in this case until probably midday or afternoon on tuesday at the earliest. meanwhile, matthew martoma and his wife rosemary arriving in court earlier today, looking stoic, looking prepared for this battle. it's a very tough case against him that's been laid out here. he stands accused by the u.s. attorney's office of engaging in the largest set of ill-gotten gains in insider trading history that they know of, $276 million. he's accused of either making or averting in losses in the trading of two pharmaceutical stocks in the summer of 2008. for that, he's facing three separate counts, one of conspiracy and two of securities fraud. the u.s. attorney's office in this case is facing a very good track record, really. they have won 78 of these insider trading cases, haven't lost a single one although some others are pending. last month, they secured a
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conviction of michael steinberg, a veteran sac trader who was convicted on five different counts essentially of insider trading on two tech stocks during a similar period to the one we're facing with martoma here. >> all right. thank you very much. stay warm down there. we'll check back in as needed. big sweep separately in the new york area today. dozens of people were arrested for filing false disability claims related to the september 11th terror attacks. many of those arrested were former new york city police officers and firefighters. several doctors and attorneys are accused of helping in the scam. to dominic chu for a market flash. >> so check out shares of netflix, morgan stanley downgraded this stock, under weight from equal weight rating due to increasing competition from hulu. this stock is up nearly 250% over the course of the past year so yes, some profit taking and a
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go downgrade but a star performer for the s&p last year. >> dom, thank you very much. angry goodyear workers in france take their bosses hostage, burning tires as you just saw on the side. we'll tell you what they wanted, next. and diana olick in a very chilly atlanta at a foreclosure auction. >> reporter: they are buying tens of millions of dollars of foreclosed properties they can only see from the outside. is it a great gamble or dangerous risk? we will show you what they see inside, coming up next on "power lunch." [ male announcer ] this is the story
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comcastnbcuniversal. welcome back to "power lunch." check out those gaming stocks. the 12-month price targets raised for all of them radios the board. the reason it says, chinese will continue to roll into macau because they love it and it's turning into more of an entertainment hub kind of like las vegas is. all three are up nicely on this report with las vegas sands, mgm and wynn in focus. sue? two goodyear managers are now free and under french police protection. that after being held captive for two days by angry workers. those workers want bigger severance payouts, having failed to get guarantees to keep the factory in northern france open. it's just the latest incident in a string of protests by union members. goodyear which is based in
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akron, ohio, has been trying to shut that plant for several years, but it's been entangled in legal proceedings with the french unions. ty? call it super tuesday for housing. the first major foreclosure auction for 2014 gets under way today. a lot of investor money all ready and set to make some big real estate bets. diana olick is live outside of chilly atlanta. >> reporter: that's right, tyler. $180 million could change hands today across the atlanta area as auctions take place at county courthouses like this one. they started setting up the tents, it was seven degrees this morning. we're talking major investors from american homes for rent, key properties and of course, the big player here down at the end, blackstone's invitation homes. the bidding started at 10:00 this morning. properties ranging anywhere from $20,000 to $300,000. if you think about it, 3,000 properties were set for auction
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today. only about perhaps 1800 of those will actually be sold, and these bidders cannot see the inside of these houses, only the outside. now, some have said this investor rental trade is dead but others say it is going strong. it's just moving. >> the way that this industry has progressed, it's progressed from california and the west to the east coast, and atlanta is still one of the very early movers in home price appreciation and in distressed asset acquisition. we think there are a lot of states, especially the judicial states, that will start releasing stock over the next couple years and we want to be there when they do. >> reporter: as you can see, there are several auctions taking place as we speak. they will go on throughout the day, not just here, but across the atlanta area. they call it super tuesday, of course, the first tuesday of every month. atlanta's a very hot market right now. in fact, cora logic just put out a study showing the top markets for investor returns in single
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family rentals, chicago was number one. tampa, orlando, right here in atlanta and indianapolis rounding out the fifth. again, they say the trade will continue through 2014. rental demand still very strong even though home prices are up 11.8% year over year according to the last reading. they are not deterred by these rising home prices. again, they are just moving the trade east. unfortunately, to colder climates. but again, they see 2014 and '15 as still a great investor trade and tomorrow, we will take you inside some of the houses that these folks are buying. back to you, tyler and sue. >> can't wait. thanks so much. diana olick in atlanta. stocks breaking their losing streak, pretty decidedly, today. but the nasdaq is the biggest winner on a percentage basis. a number of stocks hitting new all-time highs there. the biggest movers coming up next. plus, live to the world's biggest consumer electronics show in las vegas.
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welcome back to "power lunch." shares of google are at a record high. they hit that earlier, 1136 .59 was the record high. remember, sue, august 2004 is when google went public, $85 a share. now up to where it is today.
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back over to you. >> dom, thank you. nat gas demand hitting another record today in the northeast in residential and commercial demand, of course it's very cold, but that demand jumped 30% just from yesterday. a lack of pipeline capacity is leading to a big jump in wholesale nat gas prices in the region. thanks to sharon epperson for that information, as always. we have a pretty decent percentage gain over a one month period of time. nat gas up better than 4%. let's check the other market that's moving today. that's the bond market. we had a weak three year note auction. the bid to cover came in at 3.25%, but that is just a tad below the recent average which was 3.26. we had a high yield of .799% and indirect bids were a little bit weak as well. the recent indirect bid average was 31.2%. the direct -- indirect bid this time around was 28%. so that will tell you where we are. ten year note, the yield at
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2.94%. you're up to date on the bond market today. so let's go to gold prices. they are closing right now and sharon epperson is also tracking the action for us. hey, sharon. >> reporter: lot of commodity action to watch today in terms of the gold market. we're looking at gold dipping a bit, down about $9 or so. we're seeing gold prices below 1230 an ounce. looks like we will close right around here, as the dollar has made some gains and as equities have rallied a little bit as well. that has put some pressure on gold. this is the first time in about five sessions that we have seen gold prices lower. you will recall that on december 31st, we had a low of 1181 an ounce for gold, so we have seen the steady climb from there. looking at the rest of the metals, it's pretty much lower except for palladium. that's the standout in the sector. back to you. let's head up town to the nasdaq. seema mody is there. >> reporter: there's a slightly defensive tone to this market.
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when you look at the nasdaq 100, it's the large cap tech stocks that are leading today while the high-flying names are lagging. netflix down 4% on a morgan stanley downgrade, the worst performing stock on the nasdaq 100, as well as the s&p 500. despite the big moves, there are some pockets of strength. yes, we spoke about large cap tech but there are some other big movers. 3d printing, for example, 3d systems announcing a collaboration with intel to make 3d printing and scanning more mainstream. that's been a big goal of the overall industry is to make 3d printing marketable to consumers. the consumer division of stratasys unveiling a couple products at the consumer electronics show. they're in the green. lastly, bullish comments from morgan stanley on casino players that have exposure to macau. more high rollers expected to cash in their wins this 2014. >> seema, thank you very much.
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great expectations, wall street ramping up growth estimates for the u.s. economy following, we will tell you how optimistic the economists are getting right now. and 2013 was a good year for sony stock. what's ahead for 2014? the ceo will join us live from the consumer electronics show in las vegas to lay out his game plan. plus, giant waves force beach goers to flee and a great driving lesson from the state of massachusetts. ask me what it's like
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streets. as people ran, several people were hurt. a lesson from massachusetts. always pay attention, never stop. a man driving into a gas station hit the pedal instead of the brake pedal and he hit an attendant, then ran over the pump, starting a fire. believe it or not, there were no serious injuries. the attendant suffered bumps and bruises, no broken bones but i don't know, be hard to go back to work after something like that happened. >> yeah. cash or credit. all right. >> exactly. the u.s. trade deficit falling to its lowest level in more than four years. that is now making wall street ramp up its expectations for growth. steve liesman here with the details. >> this is a big move to the upside. wall street is paying attention. thanks to the surprise improvement in the trade numbers. we look to be on track for our two best quarters of growth since the beginning of 2012. here's a cnbc wrap it update. we talked to 12 forecasters, look at their surveys, threw it all together. they upped their fourth quarter
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growth outlook by half a point to stand at 3.1%. together with the strong 4.1% growth number from the third quarter, remember, that was supposed to be given back in the fourth. it's not happening. put second half average growth at 3.6%, with a first half of 1.8%. a tale of two halves. after a string of better than expected fourth quarter numbers, the growth pessimists are perplexed. the optimists have turned giddy. stephen stanley was one of those who was a little more pessimistic. he says q-4 is shaping up as a perfect storm of positive factors for gdp. the question is whether q-4 strength is an indicator of a dramatically improving underlying economy or one-off in which case we should be braced for a q-1 hangover. here are the numbers. 34.3 compared to an estimate of $40 billion. the petroleum trade deficit improved by $1.4 billion. they take that out and the non-petroleum deficit unchanged. exports up nearly a percent, imports down 1.5%.
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what we know is not a one-off, are the energy numbers. the boom in u.s. oil production keeping dollars at home. that helps the u.s. economy. what seems pretty clear is the third quarter's 4.1% also not a one-off. now it looks to be followed by a pretty decent fourth quarter. >> is that mostly petroleum driven? >> it's all petroleum driven. you see $269 million is not a big change, it's pretty much flat. what happens is the inventory is offset by what's happening on -- >> you said kind of like florida state last night, a bad first half for the economy, a good second half for the economy. >> great analogy. do i win the heisman? >> you win the heisman. get that contract. sue, down to you. the titans of tech showing off their latest and hottest gadget at the world's biggest consumer electronics show in las vegas. we will head there live to speak to sony's ceo, next. usinesses. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality.
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on the dow. the nasdaq is also stronger as is the s&p 500. as bob pisani mentioned earlier, we have a little more volume in the market, a little more trading activity in the market and that comes despite the fact that we had a weak three year note auction so the market's on better footing for the bulls today. a quick reminder that we are waiting for that news conference to start with preet bharara about that jpmorgan settlement. as you look at the podium and the live picture, mr. bharara often goes through different parts of the case using the graphs you see right there to the left of your screen. we are awaiting his comments in just a few moments. we will take a quick break and "power lunch" is back in two.
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[woman]ask me about the lumbar button. [man]she's got her side...and i've got my side. [announcer] tempur-pedic.the most highly recommended bed in america. [woman]don't touch my side! coming up on the very fine show we call "street signs" at the top of this hour, you might have noticed especially if you live here in the northeast, it is freezing out there. we will take a look at the ongoing havoc that all that is wreaking on the airlines, on crops and various other sectors and what it means for you. we have a couple ceos on the show, the ceo of clear channel and bioscience which is soaring today. and what's happening with momentum stocks? are they losing momentum in
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2014? all that and lots more coming up top of the hour. in the meantime, back to you. dom, see you on "street signs" as well. >> now for this market flash. check out what's happening. it will book a $25 million payment after a potential leukemia treatment reached an early milestone. that's sending the company's shares rocketing higher. the drug developer which has no products on the market has u.s. rights to an experimental drug in early stage testing for patients with genetically defined acute leukemia. it will also get $4 million in payments from glaxo smithkline for a separate collaboration. waiting for u.s. attorney preet bharara. keep it right here. [ bagpipes play ]
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today's charges have been filed because in this regard, jpmorgan as an institution failed and failed miserably. in part because of that failure, for decades, bernie madoff was able to launder billions of dollars in ponzi proceeds, essentially through a single set of accounts at jpmorgan. he was able to do that for a lot of reasons, and to be sure, there were failures by lots of people in lots of places outside the bank. but one reason among others that madoff was able to get away with his crime for so long was that jpmorgan had an inadequate and ineffective anti-money laundering program. set forth in the statement of facts for years, the bank repeatedly ignored warning signs, allowed suspicious round trip transactions through
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madoff's account, finally grew concerned enough to file a report in the uk and ultimately decided to reduce its own exposure to madoff because of suspicions of fraud. but all the while, jpmorgan never filed a single suspicious activity report in the united states and never raised a concern to the bank's anti-money laundering department in the u.s. in other words, the bank connected the dots when it mattered to its own profit, but was not so diligent when it came to its legal obligations. so all of this is why today, we are filing criminal bsa charges against jpmorgan and it is why the bank is admitting responsibility for its conduct and agreeing to forfeit $1.7 billion to help make bernie madoff's victims closer to whole. that penalty of $1.7 billion, by the way, is the largest ever r
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forfe forfeiture from the bank, the largest penalty imposed by the u.s. department of justice under the bsa and the second largest forfeiture overall behind another forfeiture by this office earlier in the madoff investigation relating to the estate of jeffrey pickour. we intend for every penny of that $1.7 billion forfeiture to go to victims of madoff's massive fraud. so today, all told, this office has now collected and will distribute more than $4 billion to those victims on top of what the madoff trustee has collected. we are also announcing today the resolution of these criminal charges through a deferred prosecution agreement. that agreement requires the bank to one, admit and accept responsibility for its conduct through a detailed statement of facts. two, continue reforms of its compliance and anti-money laundering practices with regular reporting to this office. three, cooperate for a two year period and refrain from committing any crimes and four,
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as i already mentioned, pay a $1.7 billion penalty through a parallel civil forfeiture action none of which, incidentally, is tax deductible. before i go any further, i want to introduce the partners in this investigation and prosecution. i'm joined by our partner in this case and so many important cases, the fbi led by the assistant director in charge of the new york field office. i want to thank george for all the work that he and his team have done in this case. fbi special agents have worked incredibly hard for a lot of years to bring us to this point in this case. i'm also joined by some folks from regulators' offices, the office of the comptroller of the currency represented by deputy chief counsel, dan stapano and the treasury department's financial crimes enforcement network. i also want to of course, as always, acknowledge and thank
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the career prosecutors from my own office. they are arlo brown and matthew schwartz, the asas handling the prosecutions and their chief. let me now take a moment to talk about the particulars of today's case. since 1986, jpmorgan and its predecessor institutions was the primary bank through which madoff ran his ponzi scheme. he did so through a series of linked accounts that i mentioned that we refer to collectivelyly as the 703 account. early on, and throughout the banking relationship, jpmorgan because of its vantage point as madoff's banker, had plenty of reasons to be uniquely suspicious about him. warning signs abounded. first, as the statement of facts recites, in the mid-1990s, the bank learned that madoff and a prominent client of jpmorgan's private bank were engaged in what looked like round trip or check-kiting transactions. large sums of money were being
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transferred back and forth between accounts for no apparent legitimate business purpose. these transactions were sufficiently suspicious that another bank involved in those transactions filed a suspicious activity report or s.a.r., and closed madoff's account at the bank. but jpmorgan, far from closing madoff's account, let the transactions continue for close to a decade more, never filing a single s.a.r. or even notifying its own anti-money laundering compliance group. second, the sheer volume, movement and use of the funds in madoff's account were suspicious as well. between 1986 and 2008, an astounding $150 billion went in and out of that account. notably, none of it was used for the purchase and sale of securities, even though that was madoff's stated business. the responsible jpmorgan official thought that the account probably had only tens
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of millions of dollars in it, so as for know your customer, he was only off by several zeros. as the madoff account, in fact, had billions of dollars. third, as further detailed in the statement of facts, investment officers and asset managers at jpmorgan had serious questions about how madoff could generate his consistent annual returns of between 20% to 30% year after year after year. a jpmorgan banker later concluded that madoff quote, might have been smoothing out returns, close quote. in internal bank documents also, one such officer questioned how madoff was able to generate such consistent quarterly returns, despite so much historical volatility in the market. as early and as far back as 1998, a bank fund manager concluded that madoff's returns were quote, possibly too good to be true, close quote. and that there were too many red
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flags. despite all of these alarm bells, jpmorgan never closed or even seriously questioned madoff's ponzi scheme enabling 703 account. on the other hand, when it came to its own money, jpmorgan knew how to connect the dots and take action to protect itself against risk. let me explain. in 2006, in a different part of the bank, a derivatives trading desk located in the london branch of jpmorgan's investment bank decided, that part of the bank decided to offer derivative products linked to madoff's performance and as part of that, a hedging strategy actually invested its own money in madoff's feeder funds. in 2007, there were continuing concerns that madoff was a wholesale and systemic fraud and had a well-known cloud over his head, and that his returns were open quote, speculated to be a ponzi scheme, close quote. the concerns heightened in 2008
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and jpmorgan decided to dramatically reduce the exposure of its own london trading desk to madoff's funds. that made perfect business sense. why? because in october 2008, internal jpmorgan memo described jpmorgan's inability to validate madoff's trading activity or custody of accounts, questioned madoff's quote unquote, odd choice of a one-man accounting firm. that internal memorandum concluded quote, there are various elements of this story that could make us nervous, close quote. including the lack of proof that madoff's quote, assets actually existed, close quote. within two weeks of that memo, jpmorgan filed a report with uk regulators noting that madoff's returns were probably too good to be true, and that as a result, of these suspicions, jpmorgan planned to withdraw much of its own money invested
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in the maff feeder funds and that is exactly what jpmorgan did. between october and december of 2008, as part of a broader re-evaluation of the bank's exposure to hedge fund risk, jpmorgan successfully pulled out more than $275 million of its money from the madoff feeder funds before madoff's fraud was exposed to the whole rest of the world on december 11th, 2008, when he was arrested. much of what i've discussed is shown on this timeline on the chart to my right. as i said earlier in my remarks, starting back in 1994, there was questionable conduct that the bank had discovered in one part of it relating to round trip transactions. >> that's preet bharara giving the timeline, really, of jpmorgan's relationship with madoff and -- bernie madoff, and why he has been able to reach the settlement with jpmorgan. we will continue to monitor the
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comments and we will bring them to you as they warrant. meantime, we will go to ces out in las vegas and our tech reporter joins us live from ces. he is join with sony's ceo. over to you, john. >> reporter: thanks, sue. here with kaz hirai first on cnbc interview. you just got done with the keynote. thanks for joining us. a thing that surprised people, an internet tv service you plan to roll out in the u.s. at the end of this year. didn't intel just sort of back away from this sort of plan? why are you going toward with it? >> i think that at sony we want to offer the convenience of accessing of a wide variety of content including live television, including streaming network content as well, all in a very simple and intuitive easy way to use. that's the service we want to bring out here into the united states this year. >> is this going to compete with cable companies, which i should mention, comcast is one, comcast of course owns a number of
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networks including cnbc. do you view yourself as competing in that arena? >> i think it's actually additive in that we are combining really live television with other network enabled content that's streaming to people's homes and it's all about offering another choice and convenience. so i think it's really complementary to the cable services that people are accustomed to. >> reporter: sony of course is a content creation machine as well. you have shows, you have movies, and i believe that's a -- >> this is a 4k kcamcorder. it will retail for about $2,000. you will be able to really take home video now in ultra high definition which is something that's great for the industry as a whole. >> reporter: $2,000 is a pro-sumer price point we look for, a price for somebody who is really an enthusiast will buy something. but 3d didn't really catch on with tvs.
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the ecosystem doesn't really seem to have pushed tvs forward. is 4k going to be able to achieve what 3d could not, spurring this new wave of technology? >> interesting you say that, because i think 3d continues to be in the forefront of a lot of content creation in the motion picture industry. "gravity" was certainly done in 3d. a lot of our own pictures will be done in 3d as well. so it's more of a functionality that we have in all of our televisions and more content will come forward. 4k obviously, with four times the resolution of high definition, i think bodes well for a lot of, you know, new business and new opportunities as consumers go into, buy their new tv sets and consider 4k. >> reporter: fair to say that hd was pretty revolutionary for tvs. 3d is incremental. does 4k still have a shot at being revolutionary is really sparking a big round of spending, or is it going to be incremental? >> i think the most important thing for 4k is for everybody to
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actually experience the 4k resolution and for the industry to really make sure that obviously with the television sets that we have 4k, but at the same time, as an industry, that we provide a lot of native 4k content so that the consumers can enjoy true 4k. >> reporter: you held off for awhile in pushing into the u.s. market with your smartphones. last year you said you were going to take a more cautious approach. now you're going with t-mobile coming into this market. you happen to have the phone on you? >> funny you mention that. this is our experia z-1s that we are launching here in the united states through t-mobile. it really combines the best of sony's technologies, especially with regard to the digital imageing capabilities. we have our best digital imaging engineers really corroborate with the engineers that created this smartphone to make sure the imaging quality is on par with the best of digital cameras you see in the market today. >> kaz, is it too late, because
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we see google, no shortage of resources there, trying to push in with motorola and not succeeding right off the bat, making a dent in the smartphone market. i was just talking to their ceo dennis woodside yesterday and he said apple and samsung are entrenched, it will take a long time to make any ground. are you going to be able to make ground with this phone? >> i think it's not going to be one particular phone model that is going to make or break. but it's making sure that we continue to bring innovative cutting edge sony-esque, if i may say it, smartphones to the market, whether it's in the united states or japan or anywhere else, to make sure we are gaining market shares as we go along. it's important to really stay in the business. sony takes the best of what we have in terms of technology, in terms of the application, in terms of software services, and really makes sure we bring it all together in the smartphone. >> reporter: tell me, how is the tv turnaround going? that's the linchpin of your strategy, being able to get that
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business reorganized correctly. the yen has been helping you a bit. where do you think you are in the progress of getting that done and what grade do you give yourself and sony so far? >> i think that for many, many years, the tv business has not made a profit for sony, and it is a very competitive and challenging environment. but i think that we have made strides in improving the bottom line, although at a loss for the past several years, and so obviously, we have to see how the holiday season went this year in territories across the world and we'll have to see. >> reporter: are you halfway there? >> i think we're making steady progress towards turning into a profitable business. >> reporter: are you making misfmi mistakes or getting it right so far? >> especially with regard to the products and we certainly focus them right here at ces, i think the products are very appealing to our customers around the world. we put in a lot of effort and technology into it so from a product perspective, we are
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definitely on the right track. i firmly believe that if we have the right products, we are ultimately going to make the business turn around as well. >> reporter: we have to send it back. just a one word answer, if you can. wearables or smart home? which is the next big trend? >> wearables. >> reporter: wearables. you heard it from the man here, kaz hirai, ceo of sony. back to you guys. >> i would have gone with the smart home. he knows a lot better than i do. thanks, guys. appreciate it very much. >> reporter: he's the ceo of sony. >> exactly. i will defer to him on every aspect of that. thank you. there's a new series called "shark tank" that begins on our network tonight at 8:00 p.m. eastern time only on cnbc. tough self-made multi-millionaire and billionaire tycoons, give budding entrepreneurs the chance to make their dreams come true and potentially secure business deals that could make them millionaires. this is a former winner, todd
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wilson of mr. todd's pie factory. he got out of his bakery and is getting into his mobile bakery truck to head to cnbc with dreams of becoming an fbi agent or a lawyer. he quickly turned his hand to the kitchen, serving up a host of pies from buttermilk to coconut pie -- buttermilk coconut pie, i should say, oreo cheesecake to good old-fashioned apple pie. hard to beat that. and here they are together. >> you were the first guy in the "shark tank" on the very first show. >> what do you call it, sacrificial lamb? >> how did it go? what did it mean to your business? >> amazing. that's probably why i'm here talking to you today. that was back in 2009, as you know. just phenomenal. leaps and bounds since that day back in august 2009. >> describe the stress that you went through as you were making that pitch to the panel of folks who were either going to put
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money in, take a stake in your company or -- >> well, it might sound cliched but it was life-changing. i traveled 3,000 miles to get the opportunity to pitch to barbara, damon and kevin and so forth, so it was the game we were talking about. we got a chance to win it, this is your opportunity, this is what you asked for, it's here. >> did you serve them some pie? >> i did. sure did. pecan. >> look at these beautiful -- they don't need refrigeration today. >> no, man. >> if this was july, we would be melting. >> absolutely. >> can i have some hot chocolate? >> absolutely. absolutely. >> all right. great. congratulations on your success. the business is going well? >> very well. i appreciate that. >> you have a retail location, mobile location and online as well. that's in the new york/new jersey area. i will have hot chocolate here, maybe a slice of pie or muffin. see you when you get back. >> thanks so much. good luck, tod. >> thank you very much. we have plenty for you.
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>> oh, thanks. you're a sweetheart. all right. right now we're up 104 points on the dow jones industrial average. the s&p is up nine and the nasdaq composite is up 32 points on the trading session. that does it for ty and myself on "power lunch." he's busy eating pie. "street signs" begins right now. have a great afternoon. all right. seems like an appropriate song. they say cold hands, warm heart. how about freezing cold day but hot stocks. the dow putting in a nice pop when most of the country feels more like a popsicle. hi, everybody. why analysts think some of the hottest stocks may be going cold. think netflix. a disability fraud story that may leave you too ill to work. you will be shocked at how big the program has gotten. maybe bad news for apple. one man's heartwarming return back tont


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