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tv   Power Lunch  CNBC  March 10, 2014 1:00pm-2:01pm EDT

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it's not a level playing field but neither is brain surgery. it's for professionals. professionals should be investing. give your money to somebody who knows what they're doing. period. >> look at the quote from harvey pitt. i will go with plug for my final trade. >> that's it for us. "power lunch" starts now. "halftime" is over. "power lunch" and the second half of the trading day starts right now. >> an interesting hour just past as they just summed up the ackman matter. stocks off their lows. interesting hour ahead, but down for the day so far. if you think stocks are falling as many of our analysts are saying here on cnbc, how do you position yourself? we will talk about bonds, corporates, munis and treasuries. and the search. we are following the effort to find malaysia airlines flight 370. what a story this one is. we will talk live with a former top american transportation official and the ceo of a company that makes a kind of black box. and a man topping the u.s.
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government's most wanted list. you know who he is. edward snowden, speaking today from russia. we will hear from him in just a few minutes' time. first let's check in with sue down at the new york stock exchange. >> while we wait for those comments from mr. snowden, problems overseas, economic pressure in china, tension in the ukraine, certainly earlier on not very kind to this market, although we are significantly off of our lows of the trading session. the dow is down 57 points, the s&p is down just under three, about a six-point loss for the nasdaq and five-point loss for the russell. bob pisani joins me on the floor. yes, the overseas news has been influencing the market but i'm impressed by the fact that we have been able to come back so considerably off the lows of the trading session. >> there are other sectors of the market offsetting the weakness but the real story is still china. biggest drop in exports in four and a half years, biggest trade deficit, a trade deficit in china, who would have thought, in two years. this is -- >> it's the lunar new year.
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that's the excuse. >> i'm not too sure. bottom line is when china gets a sneeze, the rest of the world catches a cold. there's the fxi, the chinese etf exchange traded fund. brazil is weak, australia is weak, south africa is weak. these are all exchange traded funds. what do they have in common? they are countries heavily reliant on commodities. copper has dropped almost 6% in two days. that's remarkable. we are down about 13% for the last 12 months. we are sitting near a 12 month low here. that as well as the fact that iron ore is very weak is affecting all the mining stocks. they're down 2% or 3%. the concerns about china slowing a bit is also affecting big multi-industrial companies, companies that have operations all over the world, sell to a lot of different industries, like textron, regal beloit, all on the weak side. our market's holding up relatively well, we are off our
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lows, but global concerns are very much with us right now. >> and probably will be for the rest of the session. thank you very much. all right. let's get a market flash at our headquarters. dom? >> check out these battery related stocks. they will continue to soar in today's trade. plug power recently won a contract from walmart to provide batteries for warehouses and is seeing its stock increase 600% this year alone. the question is, is this too far, too fast for some of these battery companies. that's what has traders wondering if we are in a battery bubble. still, check out fuel, check out these types of names. very much in the news. tyler? >> thank you very much. the effort to find malaysia airlines flight 370 is nonstop at this hour and there seems very little to go on right now. search crews have moved into two more sectors in the hope of finding a debris field. our airline reporter phil lebeau is tracking the story live from out in california. phil? >> reporter: tyler, a third straight day with more questions than answers when it comes to
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malaysian airlines flight 370. let's bring people up to speed about what's been happening the last 24 hours. unfortunately, we don't have a lot of new information because investigators have not learned a whole lot more. 229 people missing since friday, nine countries participating in this search, two passengers on board, remember, had stolen passports so you've got law enforcement agencies around the world investigating what connection, if any, there is between those stolen passports and the fate of the plane. u.s. safety and boeing representatives are also in malaysia assisting with the investigation. again, we should point out, terrorism has not been ruled out. tyler, you mentioned the expanded search area. take a look at this area, as you take a look at malaysia as well as vietnam. they have expanded the search area in hopes of finding a debris field because so far, they have found no indication of this plane. oil slick that was spotted a couple days ago turns out they tested that oil, it had no connection with this flight, and they found no debris at all
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connected with malaysian air flight 370. take a look at shares of boeing, under pressure today, down 2.5%. hard to tell how much of that is because of the market, how much of that may be because of jitters people have about what happened with this particular flight, but this is really unusual. when you have an airplane completely vanish and no information for three straight days, i would venture to say there has not been a mystery like this in the airline industry ever. i have not been able to come across one similar to this. back to you. >> phil lebeau, we will ask that question right now to an investigator. thanks, phil. with us from washington, bob francis, former vice chairman of the national transportation safety board. one of his most notable investigations includes the 1996 crash of twa flight 800. that one off of long island. bob, let me get you to react to what phil lebeau just said. he said he's never heard of a crash like this where a plane literally goes missing for three solid days. what do you think? >> i think that clearly is the
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story now. it really is quite remarkable. we have never come close to having anything like this previously. there have been major accidents and a lot of far-away people and places in the world, and nothing like this. >> this one reminds me of two accidents, one was the air france disaster off of -- in the south atlantic about three or four years ago. the other, frankly i was talking to my wife as we drove out to long island over the weekend, was that twa flight. as i recall, in that case, it was an electrical spark that caught gas vapor in a largely empty gas tank in the plane. am i recalling that correctly, bob? >> you've got an excellent memory. next time, you can say it was the left fuel tank. >> the left fuel tank. okay. in that case, there was no distress warning. that aircraft basically just
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exploded, right? >> correct. >> and in this case, the fact that there was no warning would lead you to believe that there was some kind of similar catastrophic failure. i mean, in other words, they didn't even see the plane descending quickly, did they? >> no. but the problem is you don't have radar coverage out in areas like that. >> i see. >> so in long island it was very easy, had the transponder and everything else telling you where it was. in this case, you just -- >> how closely, if you were -- obviously they must parcel out the various points in the investigation. how closely would you be concerned with the idea that there were two individuals on that plane traveling with stolen passports, and how they would get through airport and immigration and the check-in security? would that be sort of top of your mind here, or not?
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>> that would be much closer to the bottom. >> really. why? >> because i think, you know, people getting on internationally on flights with someone else's passports is not exactly a rare occurrence. everyone doesn't have standards the way we do in the u.s. for border protection. >> where would you -- so if that's down at the bottom and i understand, it could just be a coincidence that these two individuals with stolen passports boarded the same flight with somewhat odd itineraries, routing through beijing to amsterdam and to points in europe, but if you were going to look at the things that you think are at the top of the list of potential causes, what would they be? >> you know, i'm not sure that -- i guess that number one would be something like twa or another accident where it was just truly an accident and failure in the aircraft.
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you know, i think the chances that somebody had a bomb put on that aircraft, you know, they're not as remote as the two guys with the passports. but i would say that was less likely. >> let me ask you another follow-up question here. does it perplex you that seemingly so far, we have seen neither any oil slick or fuel evidence, nor any kind of debris, whether it's aircraft parts or seat cushions or anything like that? what would that tell you, if anything? >> it tells me that this is so far out of our experience spectrum that we've got to just keep looking and hoping we're going to find some of that. but it is truly, truly remarkable. >> we haven't seen anything. let me bring sue in. go, sue. >> you've kind of given us what would be closer to the top of your list in terms of potential
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outcome for this situation, and you have told us what's on the bottom of the list. but given your experience, what does your gut tell you happened? what do you think really happened to this airplane? >> if i had to guess, and i'm not in that game, but if i had to guess, i would guess it would be something more like the twa accident on long island. >> phil lebeau is with us as well. phil? >> i want to bring in richard hayden, who is the director of a company that has done work developing black boxes that communicate in realtime for airlines around the world, not here in the united states, but over in china. richard is the director at flight aerospace solutions here in the united states. he joins us today. richard, give us some perspective as you are looking at this entire incident that's unfolded. what's your perspective about what likely happened with malaysia air 370?
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>> we really don't speculate. there are a number of possibilities and i think it's just speculation at this point. our contribution to this would be to have been able to provide precise location of the airplane and data that would provide some insight into what happened to the airplane. >> richard, bring us up to speed regarding black boxes because i don't think our audience is fully understanding what happens with black boxes. a lot of people think it's giving constant data back to systems here on the land in terms of what's happening with a particular flight but that's not the case with many black boxes and how your system is a little bit different. >> that's correct. the black box which is actually orange is a mandated system that records position data and voice data and other data from the
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aircraft, and it's designed to survive impact and fire and submersion. these boxes do not communicate during flight. the system that our company developed, flight aerospace solutions, connects with the satellite network and the internet and provides continuous information on the position of the aircraft and in the case of a situation that's abnormal, all that data would be communicated in realtime. >> richard, one of the criticisms we have heard from people when you bring up the idea of having a system like yours for all airlines is two things. one, there's not enough band width and it would be too expensive for airlines to retrofit their planes. what do you say when you hear that? >> our system is purchased by airlines and other kinds of operators not for emergencies
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but for improving routine operations, fuel savings and communications where there are otherwise gaps in high frequency communication. the system works, it's certified by transport canada, the faa, and caac in china, and it's operating on roughly 40 airlines and other kinds of operators, and we simply -- all i can say is we've proven that the system can launch the kind of position data and flight data that's required across the radium where there's more than adequate band width if the data is handled correctly. >> richard hayden, the director of flight aerospace solutions. tyler, that's an interesting perspective. you guys might want to keep in mind, all of us should keep in mind as we continue to look into what happened with malaysia air 370. >> thank you very much.
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let me follow up with bob francis, if i might. bob, two questions. what do you think of the practicality of installing those kinds of realtime satellite monitoring flight data systems on all aircraft across the world, number one, could it be done, would it be too expensive. and number two, i assume the black box that this plane would have been equipped has some sort of pinger device and how long would that last at the bottom of the ocean? >> the kind of system that was just described, there are a lot of people working on that same kind of thing, so i think it's inevitable, whether his system will turn out to be the system, or it will be more widespread, we'll have to see. the pinger, i think they go for two or three days. >> just two or three days. >> yeah. >> so it could be dead by now, the battery on that thing could be dead. >> that's my recollection. so i would stand to be corrected
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but it seems to me that it's two or three days. >> i thought it was a little longer than that but you have done these investigations so we will let it stand there. bob, thank you very much. >> you're welcome. >> sue? >> meantime, in intelligence circles, the name edward snowden will live forever in infamy. today he is speaking to a very select high tech audience from russia to texas. josh lipton is live in austin at the south by southwest digital conference with details on that. josh, over to you. >> reporter: yes, sue, edward snowden, the former nsa contractor, speaking at south by southwest today via video conference, speaking with the backdrop of the u.s. constitution. he was greeted warmly by those in attendance in the auditorium and he started out by asking why decide to speak at south by southwest, why decide to address technologists in particular. here's what he had to say. >> the nsa, the sort of global
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mass surveillance that is prying in all these countries, not just the u.s., it's important to remember this is a global issue, they are setting fire to the future of the internet. and the people who are in this room now, you guys are all the firefighters. we need you to help us fix this. >> reporter: so snowden clearly looking to technologists, engineers, computer scientists both in the room and those who are listening, for help. he also discussed how companies in silicon valley and throughout the country collect data. he said his issue wasn't so much that they collect data but the period in which they hold that data, the fact that some choose to hold that data indefinitely. here's what he had to say about that issue. >> it's not that you can't collect any data. it's that you should only collect the data and hold it for as long as necessary for the operation of the business. whether you're google or facebook, you can do these things in a responsible way. >> reporter: finally, snowden
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was asked about these nsa methods, in general their mass surveillance programs. he was asked listen, are they in fact effective, do they work. in snowden's opinion, he says they do not. they do not work and in fact, he described them as really programs that don't use resources appropriately. i can tell you that when you talk to people here at south by southwest, technologists, i'm hearing a lot of support for snowden. i hear words like brave, bold, one person describing him as a patriot. they say he put his life at risk and that's important, in the way they tell me he jump-started at least a broader conversation. back to you. >> josh, thank you very much. let's talk about stocks. they are making some investors very nervous these days. here on cnbc, many of our regulars have hinted that they think the market may be getting a little topee. if they're right, what do you do? one answer could be bonds but there are a lot to pick from. we will talk to one of the best in the business on the fixed income side in a couple minutes. e it services like multi-layered
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question to both of you. david, start with you. are u.s. stocks and more broadly, global stocks, too high-priced for your taste? >> not right now. u.s. earnings are about 30% above where they were in '07. stock prices about 20% above where they were. we see a lot of favorable trends in the u.s. from our booming energy supplies to really productivity that are going to drive the market we think higher. and i think there are fewer risks because households have deleveraged and we see a recovery post this weather crisis which has put unusual situations in our data. we really like the way the u.s. is shaping up. we like that. >> you like that. jeremy, you heard what david just said. you agree, disagree, agree in part, disagree in part? >> probably agree. i think the gains over the last five years have largely been justified by stronger corporate earnings fundamentals. earnings are 20% above their prior peak, s&p 500 is roughly 20% above its prior peak as well. i think the most important dynamic for the outlook for 2014
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for the u.s. equity market isn't valuation but it's really about cyclical and corporate profit momentum. from that perspective i'm optimistic. i think corporate profits grow roughly 8% to 10% this year and markets can grind higher along with the pace of corporate earnings growth. >> that suggests about an 8% gain for the market this year. so jeremy, if i buy that argument, which sectors would you be putting fresh capital into now and then david, i will come back to you with the same question. >> from my perspective, this reacceleration of growth we're seeing in 2014 where last year, the u.s. economy grew a shade under 2%, this year we are looking for closer to 3%, that should imply you will get faster earnings growth from some of the cyclical sectors. i think one nuance this year that's different from the past few years is that we're seeing a rotation into the beneficiaries of turning capital spending. capital spending has been lagging during this recovery. i think we are seeing greater signs that capital spending is on the precipice of picking up in a more meaningful way in 2014
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and 2015. that means technology and industrials are well positioned and some of the other cyclical sectors that have led so far to date during this recovery, specifically the consumer discretionary sector, is likely to lag those others. >> quick answer, i assume you like small and midcaps because they are more broadly exposed to the u.s. economic growth scenario you predict? >> that's right. if you look at small midcaps, they tend to outperform in rising markets so just the beta effect. they do have more exposure. >> david, if i buy your argument and you think stocks can move a little up from here, where would you be putting money? would it necessarily be in the u.s.? might it be overseas? >> in the u.s., we particularly like the energy sector for the reasons i mentioned which is increased transport and it's going to affect positively the production of energy and all of that. but we love the markets overseas that are much cheaper. for example, taiwan, korea and mexico are three emerging market picks and we like those countries because their positive dynamics. they are getting more foreign
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direct investment and selling at very low p.e. multiples. lastly, we love europe. we think it's the only market in the world that is likely to do as well as it did last year, up 20%. we think it's really well positioned to do so. you are seeing it in the strength of the currency and the stock markets as well. >> gentlemen, thank you very much. there's the case. a couple very creative ideas for where to put your money, sue. >> indeed. very much so. thank you. let's take a look at the other side of the coin. if stocks are falling as some experts think, do you move into treasuries? corporates or munis? even in this asset class, it's still hard to find money to be made. our next guest, though, says part of the silver lining here is to start thinking about what he calls the belly of the yield curve. joining us now is rick reader, overseeing $700 billion in various bond portfolios. welcome back to "power lunch." great to see you, as always. >> thanks, sue. thank you for having me. >> tell me, for those who don't know, what the belly of the
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curve is. >> you think about where we are in fixed income versus where we were last year, the thing i think that's fascinating is we'll have a dynamic this year could be almost the exact opposite of what happened last year. last year, the fed was through their qe program distorting interest rates outside the ten year interest rates. tremendous bond purchase program, $85 billion a month. that's where your distortion was. you actually have almost the exact opposite this year. they're moving out of the quantitative easing program and now what janet yellen and the fed is going to do is make sure forward guidance, interest rates stay low in the front end of the curve. what happens is then the middle, the belly, is going to be volatile and that's the part of the curve i think will lead interest rates higher because people will question how long can janet yellen, how long can the fed maintain their vigilance with regard to the front end of the curve. we think very different than last year, the belly is where you could have a rate rise move from. >> you also liked -- let's go through some of the asset
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classes you like in terms of the bond market. you like long dated munis, why? >> so it gets to the same theme about how different this year is than last year and people talk about when they turn the calendar that things change. this year, it dramatically changed. think about what was hit last year and what came under pressure. it was everything just avoid what was interest rate risk. the long of the municipal market was the poster child for too much duration. take a look at where we are today, even if rates move moderately higher which is we think where they will, you are looking at muni ratios of 100%, very high quality aaa assets where if you take a little credit risk down the long end, you are talking about yields on a tax adjusted basis that given that long in interest rates are so much higher because the fed's out of the qe business or getting out, you actually can, if you were a long term holder, even if rates move moderately higher, the tax affected rates are very attractive in long dated munis. >> you also like tips, investment grade debt in the
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long end, cmbs as well. i wanted to skip down to emerging markets. in some spaces you say it's cheap. you talk about emerging market debt, i assume, and what areas look attractive to you there? >> yeah. we have seen a tremendous amount of people move into unconstrained funds, where you can be flexible. pretty hard to make money in fixed income these days where rates -- especially if you think rates will drift higher. emerging markets is the perfect example of that. em will still go through a long structural dynamic with growth being slower, with current account deficits in some parts of the world. that being said, you have taken the baby out with the bath water in much of the emerging markets, places like indonesia, parts of india we think are attractive, mexico, even brazil despite the fact that you have some adjustment that will take place, you have an election coming up. we think there is value. but you have to be tactical because generally, emerging markets isn't a long but how do
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you tactically find the places where you can deal with current account deficits. >> you have given us some great ideas. nice to see you. see you again soon. to the bond market, the treasury curve in particular and also currencies. rick santelli tracks the action in all of that and is at the cme. hey, rick. >> reporter: hi. to pick up on mr. reader's topic if you look at an intraday of tens, we are down a basis point settling at 2.79. if you look at the range from the beginning of the year, the key level on 38% was 1.75. we are three basis points above it. if you do the same thing for the belly of the curve that mr. reader is referring to to the five years, that number was 1.55. we are 2.62, seven basis points. the curve continues to flatten because the street was long fives that they are now selling. open the chart up, you can see where at six and a half week high yields on the ten, and if you look at the currency
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markets, the euro/dollar seems to be the one people are paying attention to today, hovering at a 28-month high on the dollar. if you look at how many points the dax has shed, now overlay from february, the dax with the euro versus the dollar, you can see not only did they flip but they die verged. this is important. the higher the euro goes, the more talk you about hear about things like quantitative easing u.s. style in the european markets. tyler? >> actually, i will take it because we will do the gold closing right now. metals prices are starting to close. interesting performance in the gold market today based on that weak china trade data, up $3 on the trading session right now. the silver market is down a fraction, platinum and palladium, palladium giving back a little bit. there was a big bid in palladium on ukraine tensions last week. all right. let's go down to eamon javers in washington right now. eamon, what have you got for us? >> reporter: well, invest carl icahn called in to "fast money" halftime report within the past
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45 minutes or so to talk about his long-running feud over ebay but he also took some time to talk about another long-running feud he's participating in, the battle over herbalife and his feud with investor bill ackman. in this one, we had carl icahn involved talking a little bit about what he thinks about the investors who are going short herbalife. take a listen to this sound bite. >> what ackman has been doing makes you really wonder why he's doing this. it's gotten to a point that i think is almost bordering on the insane. i don't understand where he's going and what is happening here. he's just on some kind of crusade. >> reporter: herbalife back in the news today. the "new york times" running a lengthy story looking into bill ackman's involvement with washington folks, congressmen, members of hispanic organization and whether or not they are all trying to put pressure on
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herbalife. herbalife had a response today to that story, saying ackman has out of desperation shifted his focus from wall street to washington and key states across the country. ackman's unprecedented campaign to destroy herbalife has now been exposed for what it is, a cynical self-serving attempt to manipulate the market and i should tell you that we called ackman, we did not get any comment back from them on the record. >> eamon, thank you very much. thank you for the update. appreciate it. ty? >> let's switch over to dominic chu for a quick market flash. >> we have heard about it for weeks but now it's official. green mountain coffee roasters has officially changed its name to kuerig green mountain. the name change was approved at the shareholder meeting last week. the ticker will remain gncr. the stock continues to reside on the nasdaq stock exchange. interesting formalized name change. fears about china pushing u.s. markets into the red.
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now goldman sachs sounding the alarm on certain kinds of stocks. seema mody, what's going on? >> goldman sachs says clients continue to ask when does the party end for these high growth stocks. we will get you that report when "power lunch" returns. ♪ for tapping into a wealth of experience. ♪ for access to one of the top wealth management firms in the country. ♪ for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more.
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seema mody with more on what's worrying goldman these days. hi, seema. >> that's right. you may want to think twice about investing in high growth stocks. goldman sachs warning clients that companies with super high earnings growth estimates tend to underperform the market on a one year, three year and five year basis. it's a widely followed phenomenon analysts say companies with high expectations often disappoint the street while those with low expectations tend to outperform. which stocks may be at risk? goldman sachs points out some of the high flying tech names like netflix and facebook as well as biotech star gilead. we also found companies that are expected to see a 100% or higher jump in q-1 earnings, names that made the list, forest labs, castle and cabot oil. on whether any of these stocks are due for a correction, analysts say you have to look at their forward looking price to earnings ratio out of which netflix is trading at the highest multiple. tyler? the crisis in ukraine has been escalating. russian forces tightening their
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grip on crimea. our chief international correspondent michelle caruso-cabrera with the latest on the tensions. >> we want to ask a key question. what if ukraine falls into what military experts call the georgia trap, as in the country. what if there's a real war between ukraine and russia? as this key referendum comes along, it could trigger fighting. one of the best minds in defense is here next to tell us if ukraine stands a chance. stick around. why are house republicans "cooling," "retreating," and privately saying they'd rather do "nothing" on immigration reform this year? doing nothing puts jobs on ice... forces us to lose out on revenue for roads and schools. and sends a message to millions of dreamers,
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it took a lot of juggling to keep it all together.k. for some low-income families, having broadband internet is a faraway dream. so we created internet essentials, america's largest low-cost internet adoption program. having the internet at home means she has to go no further than the kitchen table to do her homework. now, more than one million americans have been connected at home. it makes it so much better to do homework, when you're at home. welcome to what's next. comcastnbcuniversal. tensions mounting now over in ukraine. our chief international correspondent michelle caruso-cabrera joins us now with the latest developments. >> we are getting more and more indications that russia is tightening its grip on crimea as we get reports of an increasing number of troops and take-overs of key military facilities. this despite intense diplomatic efforts over the weekend, now even involving the leaders of germany and china. german chancellor angela merkel
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stated that an upcoming referendum on whether crimea should rejoin russia is illegal and against the ukrainian constitution. as as the prime minister makes his way to the united states to meet with president obama. international observers are being blocked from crimea so it's tough to know what's going on. now china's president has weighed in, got involved over the weekend with president obama and merkel calling for a political and diplomatic solution. what fif it all fails, though? the next question is on the military front. if ukraine falls into what is called the georgia trap, as in the country, and engages the russian army, what will happen? peter felsteed is the editor of jane's defense, a real standard on military reporting, and joins us now. russia and ukraine have a lot of similar military technology from airplanes to ground equipment, training. you have gamed some of this out. if ukraine goes up against russia, what's going to happen? >> it's really no contest.
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the difference in size of the forces would simply be too much for the ukrainians and they must know that. >> can you give me some numbers for context? >> okay. if we look at what's going on in the crimen region, the ukrainians have a navy of about 19 major service combatants. the russians have double that in the black sea fleet alone and ten times that in terms of their overall navy. in terms of a defense budget, ukraine spends almost $2 billion annually on defense. the russians, it's more like $70 billion. >> even just the number of planes which is something very intuitive for a viewer to understand, we showed that up on the screen now, ukraine, 247, russia, more than 1,000. >> yeah. yeah. those proportions are probably about right. depends what you count but yeah, that's roughly the kind of proportions we are talking
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about. >> what can you tell us about the troops we see on the ground in crimea? president vladimir putin says that they are not russian. everyone assumes that they are, of course, even though they have uniforms that are unmarked. what skill set do they have? where do they come from? >> i would say that these are elite russian forces. they are not standard line troops. they are highly motivated troops. they will be used to conducting this kind of mission. >> who is trained better if you had a ukrainian pilot go up against a russian pilot? averaging it out, who would win? >> well, it would be the russians again because they have more money that they can put into training. so for example, their pilots fly more flight hours and that does make a difference. it's not just the kit. >> yeah. this has got to be all very clear to ukrainian leaders as they try to figure out some kind of diplomatic solution because clearly a military solution isn't going to be the answer necessarily for them. thanks so much for joining us.
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it was really insightful. >> sure. >> tyler? >> we will go down to sue. sue? well, it's been a tough winter. i don't have to tell you that, for the u.s. and the economy as well. spring, believe it or not, really is right around the corner. what can we expect? steve liesman has a couple clues for us. >> yeah, spring is in the air but it's also in the forecast. i have a monday morning upgrade not to a stock or a sector but to the u.s. economy when "power lunch" comes back. ere are tradis tdd#: 1-888-648-6021 just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 tdd#: 1-888-648-6021 or go to schwab.com/trading to learn how.
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so our business can be on at&t's network for $175 a month? yup. all 5 of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line, anytime, for $15 a month. low dues, great terms. let's close! new at&t mobile share value plans our best value plans ever for business. coming up at the top of the hour on "street signs," united states and cash, how cold hard cash is really talking these days. also, the golden arches and other fast food restaurants out there. when you want to invest in cars, we have a really surprising place to look. all that and lots more. join us in about 15 minutes time from now on "street signs." back to "power lunch." >> thank you, mandy. see you at 2:00. this brutal winter, believe
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it or not, is almost over. some on wall street are expecting some good things from the economy as we gear up for spring. cnbc's senior economics reporter steve liesman is looking at kind of what's behind this optimism. little bit of spring fever out there. >> we have been looking at a lot of maps over the winter, lot of weather maps. now we can look at the economic forecast. right along with pushing the clocks ahead this weekend, economists are pushing ahead their forecast for growth come the spring. oxford economics says winter blues should lead to a jazzy spring. here are the numbers to back that up. we looked at the forecast of seven economists on wall street. 2.4 was the actual for the fourth quarter, 2.1, you can see it coming down in the first quarter, but then it inches back up, 3, 3.1, ending the year at 3.2. harvard economist marty feldstein noted by the time spring rolls around, the brutal winter weather and inventory adjustment should be a cold story of the past.
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>> it is weather and inventory adjustment. so the first quarter is not going to be a good number but i think we will see much better numbers in the next three quarters after that. >> he is encouraged by the $10 trillion rise in household wealth in 2013 and what it could mean for consumer spending this year along with an end to fiscal drag. one other point economists are looking at is the labor force. it's been up three of the past four months, attracting people into the labor force, a sign perhaps of a stronger job market. goldman sachs in a report over the weekend says the weather effect should turn positive in the spring, we therefore continue to expect growth of 3% plus starting in the second quarter. ubs are the high side of everybody on the street, boosted q-2 to a 3.8% annual rate allowing for weather related snap-backs. the risk to the forecast, mostly global. if china's slow-down is worse than expected, if europe slips back into slow growth or recession, obviously there is potential as michelle said for negative shock that could come from a worsening of the situation in ukraine but right
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now, guys, the consensus is that there's a thaw coming and it should heat up the u.s. economy. >> we should hope for that. thank you very much. nike reportedly set to strike a $1 billion record sponsorship deal but what exactly will they get out of it? why america's love affair with the car may be ending. and where bill ackman really should have spent his money. why are house repu"retreating," ng," and privately saying they'd rather do "nothing"
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check out shares of nike and manchester united, the english football club. nike reportedly set to sign a record-breaking $1 billion sponsorship deal with that soccer giant but what does nike really get from the deal? dominic chu has been taking a look. >> so soccer or football, whatever you want to call it, is the world's most popular sport. nike will be making that big splash here. it's going to reportedly ink a kit or equipment deal with english premier league team manchester united for $1 billion over ten years for about $100 million a year. if a deal that size were formalized it would be the biggest kit deal in all of sports history, coming at a time when soccer takes center stage with the world cup in brazil this summer. nike has made a huge, huge impact in the sport in a relatively short amount of time.
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it's putting a dent in a market really held by more traditional international names like adidas and puma, both german companies but with nike outfitting gear for many of the world cup teams this year, including host team brazil, the arms race for soccer gear is going nuclear with nike and this particular deal if it comes to fruition. >> very interesting. man united, one of the most valuable sports franchises in the world. stay right there. let's bring in bob pisani. nike reportedly ready to do that record-breaking sponsorship with man u. bob, you think it can pay off? >> well, i know it sounds an absurd amount of money but look how big nike is. $25 billion in revenue last year, $2.4 billion in profits. let's just say they spend $100 million a year on doing this deal, that's 4% of their profits last year. is that a lot? i think -- i do think that's a lot but it's not a ridiculous amount of money. from their point of view, obviously they have done the math and think they can pull it
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off. >> man united had been one of the top teams for basically two decades under alex ferguson. he retired, they have had a rough year this year. >> they have had a rough year but it's still one of the most identifiable brands in the world. it was one of the reasons why they went public to capitalize on that brand awareness from investors all over the place. with man u, though, it really is about having an iconic presence, the swoosh on your chest, the cleats, the socks, everything else. that's the reason nike is doing this. >> there is a lot in place that companies spend too much money on ceos that we have heard about for a long time. you never hear any complaints the companies are spending ridiculous amounts of money for essentially advertising. you don't hear outrage about it. that's amazing to me. >> let's move on. more americans use buses, trains and subways last year than in any year since 1956. that according to the american public transportation association. we ask you to check out today's yahoo! finance question. we asked if the government should be prioritizing mass transit more.
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52% say yes. 33% say no. they should be spending more on roads. 15% say i think it's fine the way it is right now. bob, what do you think about this? should we be putting more money into mass transit? >> yes, but wisely. i don't know about high speed rail. in california that may not work. but buses, for example, absolutely. tell you what's encouraging, the fact that it's gone up when gas prices haven't gone up. normally, they go up when gas prices go up. that's not the case here. more people are riding and i think it's terrific. >> i think the case is that people are so tired of sitting in traffic. >> the vast majority of those public riderships are happening just in the new york area. it's very much skewed towards the new york metro region. you got to wonder whether or not you can take that model and put it elsewhere. >> the tolls have gone up significantly in new york. last topic, ackman spending $264,000 last year on lobbying against herbalife, a fraction of the nearly $2 million herbalife spent on lobbying. herbalife just released a statement, a comment on the story first reported by the "new york times." here's the quote.
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ackman's unprecedented campaign to destroy herbalife has now been exposed for whats. a cynical self-serving attempt to manipulate the market by buying his way into an investigation to cover his own reckless $1 billion bet. bob? >> look, the guy's got a $1.1 billion bet against the company. it's not shocking to me that he spent $260,000 to try to get attention for it. they spent $2 million, was the number, their earnings were $577 million. i'm talking about herbalife. that's not a huge amount of anybody's money. there's a lot at stake here. i'm not shocked that these people are spending money. whether they should be allowed to try to influence the discussion, another matter. >> we have to leave it there. as we go to breaking news now with michelle caruso-cabrera. >> looks like puerto rico is finally going to borrow some money, as much as $3 billion, from the commonwealth. it's in the middle of a debt crisis and was being pressured by the ratings agencies to raise a lot of cash in order to deal with short term funding issues and to avoid any liquidity squeezes.
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right now, looks like they will try to price tomorrow. they have been actively shopping it with hedge funds today. yieldses are the big news. we are waiting to see how much they would pay to borrow money. they are pricing at roughly 8% with yields expected to reach somewhere between 8.6% and 8.8% suggesting that maybe there will be a discount to mask the coupon a little bit. there has been talk that prices as high as 10% so actively shopping the puerto rico deal to stem off a liquidity crisis. a yield of more than 8%. better than expected for considering what many folks originally anticipated and we expect heavy, heavy interest from hedge funds, because this is a very high yield in a low yield market. back to you guys. >> absolutely. you are completely right. thank you very much. the biggest winners in the down day on wall street. do not miss "mad money" tonight. jim cramer will have a special show from the gulf of mexico. that region symbolizes how the domestic energy boom has brought
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with the dow down about 76 points, here are three winners. mfc, fmc and n 2 holdings. >> that's it for "power lunch." >> see you tomorrow. america the bountiful. the cash cup runeth over. some stats you will not believe on how much money is still floating around out there and what you can still do about it. hello, everybody. ukraine aside, the real reason stocks are down today. professor jeremy siegel has the reason he thinks stocks go up from here. forget ferraris. why the next great investment in cars may be a datsun. not so happy monday for u.s. stocks. let's take a look at the board. the dow cut its earlier losses

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