tv Power Lunch CNBC December 2, 2014 1:00pm-2:01pm EST
>> deere going higher. >> i already made the case for toll. it is down 6%. we know what the good numbers are. we wait for the report. they have good margin upside activity. >> you guys have a great rest of the day and "power lunch" starts right now. >> several breaking stories including some sort of massive power outage in detroit. we have breaking news from two tech giants, a trial for apple and jeff bezos giving a rare interview. we start with the breaking story unfolding in detroit. >> detroit officials have been dealing with a power outage that began around 10:30 this morning effecting about 100 buildings including courthouses and firehouses. traffic lights stopped working and joe lewis arena plunged into
darkness. schools are letting students out early. this is a live picture of the area seen by our affiliate news helicopter. the problem was apparently caused by a major cable failure. officials at dte edison are working on the problem and the power is slowly coming back on. detroit's mayor will give an update later this afternoon. general motors, one of the only big three auto makers located in downtown detroit says there has been no impact at the renaissance center headquarters. now to courtney reagan with breaking news on amazon ceo jeff bezos. >> amazon ceo rarely speaks out not at quarterly earnings calls and conferences except for today. he just wrapped up at the website's ignition conference expecting topics as drones and websites to what he is like as a
dad. here is what he had to say after the last disappointing report. >> you have been a shareholder for a long, long time. happy, rode it up in the bubble. very much believer in the long term, investment cycle and big bets. even i last quarter had a little bit of a gulp when i saw the fact that you were not just breaking even anymore but losing a boat load of money and way more than you said you were going to lose which i thought was sand bagging they said they are going to lose and come in with a profit and stocks are going to soar. it was worst than you said. when do you begin to say we have to rein it in a little bit? >> where is the part where you are extra nice -- >> i am asking as a shareholder. >> we would love our numbers to be smooth lines up and to the right. that would be terrific. that is not how it works.
those numbers are output measures. i guess you could try to manage your quarterly earnings very precisely but i think personally that would be a mistake. >> one of the most talked about programs that amazon has is the drone delivery concept. he discussed it on 60 minutes and said he met with the team. you saw the tenth or 11th generation of drones but is not so optimistic that drone delivery will be a reality here in the u.s. anytime soon. >> i think it is sad but possible that the u.s. could be late. it's highly likely that other countries will do it first. >> we'll see. maybe i'm wrong. >> it was really interesting all the different thoughts that he had even talking about being a dad. he said his son was the second to last kid or last kid to get a smart phone in his class. when the second to last kid got
one he said and then there was one. the shares of amazon, by the way, down 17% in the year. no wonder henry gulped there. there you see them down $2.06 at 323.94 up to the minute. to another developing story involving a billion dollar class action lawsuit over apple's ipod music players. the key witness will be none other than the late steve jobs. josh lipton is live in oakland, california. >> reporter: well, tyler, apple is back in court here in oakland, california. this time it is fighting allegations that it violated antitrust laws between 2006 and 2009. i can tell you it is a crowded courtroom in there today. a lot of interest in this case. now, plaintiffs lawyers delivering opening statements. here is their take that this case in their opinion is about apple trying to maintain and expand its monopoly that it had
over the portable digital media market that in 2004 with the ipod apple controlled about 70% of that market and apple's executives were going to do everything they could to maintain that market share. so in 2006 when there was an upgrade to that ipod apple might have billed that, plaintiff's lawyers say, as an improvement to the product but they say that was not the case. the only point of the upgrade to the ipod was to stifle competition that after the upgrade music from other companies couldn't play on the apple devices and that, plaintiff's say was the real intention of apple's executives. we will hear from some of the executives this week. we will see apple's head of marketing take the stand. and yes a video deposition from the late steve jobs. what is on the hook here? just in terms of dollars and cents? plaintiffs estimate damages at 350 million.
it could exceed 1 billion if it is proven by plaintiffs. apple will say this was a legitimate improvement to the ipod and no evidence of any kind of harm to consumers and that they did not exert monopoly power over this market. we will be covering this trial all week and bring you news as it comes. >> it is only tuesday and already as you probably know it has been a huge news week for apple. there is the trial and yesterday's stock drop followed by a comeback. alex is a managing director and has a buy rating on apple. good to have you with us. what do you make of this trial since we just got josh's report on it? and how damaging it could be to apple? >> it's exceptionally difficult to opine on how a trial like this will turn out. it's very clear to jmp
securities that apple is an innovative company, arguably the most innovative electronics company in the world. i personally believe the company was just pushing the technology forward as fast as it could to deliver better products to consumers. i would expect the trial to take some time. what is really important is that we are going to have blockbuster holiday season for apple not just in north america but around the globe. >> you just answered the question i was going to ask. this quarter you think will be extremely strong for them fuelled by the iphone 6? >> that's right. what appears to be on the table is a resurgeance in share gains for apple in some of our store checks we are seeing stock outs. we are seeing strong demand for the iphone 6 and iphone 6 plus that remains in short supply. i do believe going to be a very
strong holiday cycle for apple. >> it sits at $115 a share right now. let's go to dominic chu for a quick "market flash." >> to defect by promising to slash wireless bills in half. this, if they switch to sprint beginning on friday. sprint says it will provide unlimited talk and text to anywhere in the u.s. while on the sprint network. sprint will also offer a gift card of up to $350 to those who switch to cover early termination fees from other carriers. here is how all three are trading. interesting news these wireless wars heating up well for the holiday season. shares of biogen idec soaring on the trading session.
the company's experimental drug for alzheimer's showing promise in early trials. meg terrell is here with more. some encouragement. >> biogen surprised a lot of investors when it said experimental drug for alzheimer's showed signs of efficacy. it reduced buildup in plaques in the brain associated with alzheimer's. the drug showed a benefit on cognition compared to placebo meaning it could potentially stem declines. a drug aiming to do the same thing from pfizer and johnson & johnson although in a slightly different way. bigensays it plans to move aggressively into final trades of clinical trials. the company said it will continue exploring additional
doses. there is cautious optimism and potentially good news for more than 5 million americans with alzheimer's. a big market means a big business opportunity. deutsche bank estimates success in alzheimer's could mean up to $5 billion in annual revenue for bio gen. >> thank you so much. the stock up about 6%. the count down to christmas, only 22 days, 10 hours, 51 minutes and 36 seconds, dominic chu, for you to get my gift. >> i know what i'm getting you. >> that's good. >> get ready to be surprised. >> you did a screen looking at which stocks of the retail companies that are part of the etf do best between thanksgiving and christmas. tell us how and who? >> we talked to partners. we said let's take a look at these stocks. there is about 100 stocks in the
retail universe in this particular etf. 100 components of the xrt, we looked at the 20 trading days between thanksgiving and christmasish over the last ten years and the stocks that are positive in that universe at least 80% of the time. among top performers in this particular group nutrisystem. i could use help there. a lot of other people can, too, because we eat so much maybe there is anticipation of better gains down the line here. up an average of 8% 80% of the time. sonic automotive on car retailing up an average of 10% up 90% of the time. our best performer is orbits up an average of 24% over the last seven years. it's been up 7 of the last 7 years. overall is this idea that the
holiday shopping season can be good for retailers and also a strong time for the stock market overall. >> one way to play the probabilities. dominic chu, thank you very much. to the weather now. there is rain in the valley, rain in the mountains, rain in the city and traffic basically everywhere. this is video now of just outside los angeles this morning. sherman oaks, california right on the 101 freeway. with more here is the weather channel's carl parker. >> let's begin with the modeling and where we are now. you see all of that wet weather across the state. as we step forward in time we expect it will thin out a little bit this afternoon. still coming down there especially in the mountainous areas of central california, southern california getting a really good dose this afternoon. we will find another round into tomorrow morning in the bay area and more on the way for southern california as well. so easily a couple of days of wet weather here. overall it's going to be about one to two inches with pockets
of three to five in central california and in the higher elevations there in southern california. and this is good news. it's not nearly what we need to end the drought. we need about six to nine inches generally and about 9 to 12 in the central valley there in the central part of the state. thank you very much. chrysler firing up sales, ford stalling out. the auto brands and the models that will sell the best this holiday season. developing news involving safety of millions of air bags in cars on american roads. and just 22 days left until christmas. the major shipping companies getting ready for a very busy few weeks. morgan brennan is live inside fed ex. >> 1.3 billion packages are supposed to be shipped out this holiday season between fed ex, ups and postal service. some coming from wine.com.
one of them we follow overnight delivery over the next 24 hours and tell you all about that when "power lunch" returns. there's a difference when you trade with fidelity. one you won't find anywhere else. one-second trade execution. guaranteed. did you see it? in one second, he made a trade, we looked for the best price, and the trade went through. do the other guys guarantee that? didn't think so. open an account and find more of the expertise you need to be a better investor. e financial noise financial noise financial noise
royal dutch shell. both companies refusing comments to cnbc. same goes with royal dutch shell. some takeover chatter and both companies have declined comment. keep us posted. price line plunging in today's trading session. that website downgraded from market perform from outperform. it is down almost 2%. goldman sachs adding medical device maker stryker to buy list. the stock is up 1.5%. and blackstone selling industrial real estate unit to singapore wealth fund. that is good enough for a better than 1% gain. just over 20 days until christmas and last year 2 million express packages never made it to their final destinations on time. a third of those were being moved by fed ex. what is the company doing differently this year to avoid a
repeat? morgan brennan has that story for us. >> reporter: this is the distribution center for wine.com. it is about 1 million bottles of wine shipped via fed ex. this is one of many e commerce companies contributing to an expected record peak for the shippers this season. fed ex and ups have invested hundreds of millions of dollars into network upgrades and more operating days. this season ups expects to ship 585 million packages with 34 million on the busiest day. and fed ex 290 million packages with nearly 23 million on its busiest day december 15. for both of those shippers that means double the number of packages versus an average day. so what does it take to get your last minute purchases on time? fed ex is giving us a behind the
scenes look at its express shipping service. over the next 24 hours we will track a wine.com shipment across the country from here in california via fed ex overnight to washington, d.c. there is going to be six stops including this one where it is getting packed a little later today. five cities, final delivery tomorrow morning. i got to tell you i'm taking requests. they have 4,000 different types of wine here and 6,000 different types available on their website. i hear the napa valley 2002 which retails for more than $200 a bottle is very nice. >> excellent. that would look lovely under tyler's tree i think. good luck with that. that's a great story. she should bring some back for us. >> she sure should. >> i think she probably will. developing news in the battle over the air bag recalls here in the united states. phil lebeau with details. hi, phil. >> this is a real mess including people saying is there a national recall? not a national recall? here is the latest when it
involves takata. today is the deadline for the company to issue a nationwide recall. acti ing administrator saying w think there should be a national recall. there is a congressional hearing tomorrow. we will hear from takata administrators tomorrow. today issued call for independent industry wide test of air bag inflaters manufactured by takata. this is increasingly a case where if you take a look at shares of takata you have manufacturers of vehicles saying somebody needs to check on air bag inflaters. ntsa calling for nationwide recall. auto makers out with latest sales figures. chrysler doing very well. ford stumbling a bit. i think i know why. why don't you explain?
>> ford is because they don't have as many f series in the show rooms as they transition to the new alum income. their sales were negative last month. chrysler has a lot of people talking. the sales gain up 20.1% way better than most people were expecting. most people were expecting increase of about 15%. gm did better than expected as did toyota. hot sellers here are a few that stands out. you have to talk about jeep. this brand has been on a roll. the cherokee sales up 67%. the nissan leaf surprisingly with gas prices falling up 34%. the chevy silverado up 24%. a big month for pickup trucks. take a look at what we are expecting when it comes to annual sales pace back to the beginning of this year. the big spike in august is when we went over 17 million. now we have several auto makers saying we think the november
sales pace will top 17 million. we will find out within the next couple of hours. >> and when you cite that 17 million figure that is from all auto makers and trucks and cars in u.s. sales. >> that's the pace of sales. they didn't sell 17 million in november. the pace of sales. we add it up at the end of the year it is 16.5 million. despite weak numbers from ford car and truck sales are up as you pointed out for the month of november. low gas prices, black friday promotions, consumer confidence giving autos a boost. we will talk to an auto analyst to find out what consumers are buying and why. which u.s. auto brand tops your list right now? ford, chrysler or gm. log on to cnbc.com/vote and let us know what you think. joining us now is jessica call
well of edmonds.com. phil lebeau stays with us. what is selling hottest this december and whattypically does best during the month of december? >> well, i think if you look at a lot of the results today from the sales of auto companies if you have a compact suv you are doing well. phil mentioned jeep. honda crv outsold civic and accord. if you look at crv sales for 2014 it is outselling civic. in certain years was the top selling car. i think if you have a compact suv that is well known you are doing really well and i expect that to continue in december with trucks in general and also luxury vehicles do really well at the end of the year, too. sdpl you see a lot of those luxury brands being heavily advertised this month, mercedes, audi, lexus and others. phil, jump in. >> i think it is true. we are in the sweet spot of the
market from this perspective. you have a healthy economy, low interest rates. the number of zero percent finance rates out there. maybe not the lowest. i'm there. you add that along with the promotion and the fact that we have more models in more categories for sale than ever before, if you were a shopper of a new vehicle a lot of choices out there for you right now. >> very quick thought here. what do lower gasoline prices mean for hybrids and big cars? >> i think for big trucks more people are looking at them and also people that were perhaps thinking about a car purchase may move to an suv or something larger. i think for some of the smaller more fuel efficient vehicles it hurts sales. auto makers car sales are hurting while utility sales are doing well. a few exceptions out there a lot of times have to do with incentives.
there is definitely a shift in the market we are seeing now. >> thank you very much. lock in the vote now. which u.s. car brand tops your list right now? i can't read it there. 48% for ford. 17% for gm. i'm an old man here. 35% for chrysler. that's what the people say, sue. >> got to move that monitor a little closer. yesterday's big oil rally fading today. prices dropping as you can see by a pretty hefty percentage and down 30% since june. the plunge now raising questions about the banks that have exposure to oil companies in terms of debt and loans. talk about that coming up next on "power lunch." who do you work for? your boss? yourself? your parents? your family? at baird, what matters most to you... matters most to us. as an employee owned firm, our financial advisors have the freedom and resources
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for your free copy of jon and pete's new book. that's... (see the number on your screen) call now. welcome back to "power lunch." check out shares of eli lilly on news it entered agreement to the microneedle system to treat severe osteoporosis. valued up to $440 million up by about 2%. thank you very much. some stunning video from ukraine. this is amateur footage posted on social media and obtained by reuters. reportedly it shows pro-russian separatists. ukrainian officials reported
cease fire negotiations with rebels but for the moment the fighting is still on. prices are moving sharply lower today. falling prices putting a big dent in russia's economy. the russian finance minister forecasting recession next year with gdp contracting by 0.8% way down from an earlier forecast. and russia's move to influence europe suffering a big setback scrapping a massive new pipeline intended to take russian gas to the balkans. instead russia will expand an existing pipeline to turkey. >> oil prices die oil companies are feeling the squeeze. that is raising questions about banks that may superexposure to these oil companies. mary thompson here with the details. i assume we are talking about loans. >> we are speaking mostly about
the regional banks. the energy -- right now analysts think the first risk is it could hurt loan growth. the other issue would nonperforming loans increase. banks are familiar with big f c fluctuati fluctuations. still among the universities of regionals covered by raymond james 20% of mid sized portfolio energy firms and much to the riskier oil service companies, over 18% of tulsa based financial portfolios and stock lower this week. the company's chief credit officer down playing the impact of oil slide and said portfolio split 60/40 and most loans are to enp firms secured by proven preserves that can fund loans using hedges to protect
themselves. san antonio based is down as well. the bank's 15% exposure relatively high but ceo dick evans maintaining lenders protected by diverse group of loans conservative under writing and the fact that the bank has only lent about 15% of its commitment. the greatest risk is said to be loans made to oil services firms because they are going to be hit hardest and first if lower prices prompt companies to cut back on production then you are concerned if you have lower oil price what does it do to local economies. the upside is you have lower gas prices to help local businesses like retailers. >> and lay people off then that hates. >> and some others, as well. >> very interesting story there. i guess it also depends which of those oil companies are you loaning to. >> keep in mind at least with the firms a lot of these are
syndicated. one company won't have all of the exposure to one other firm. they have to do these club deals in order to get the deals done. many of them have learned a lot because they have been through a lot of these booms and busts. not to say that there aren't risks out there. >> sue, over to you. let's take a look at the gold market because it is time to close that market right now. as you know so far we have had a lot of volatility. comexgold down $19. in terms of silver, copper and platinum for palladium all in the red with pretty significant percentage moves. to the bond market where we find rick santelli. >> many of you are surprised it held up as well as it has. look at the two-day chart of tens. yesterday we touched a bit below
2.15. here we are at 2.27. if you open up to the 28th of october all is pretty much in front of you there. we had 28 sessions between 2.30 and 2.38. you will find yield resistance at that level. if you look at a two-day of the spread it narrowed rather dramatically yesterday and that contraction gave a signal it is about watching that spread. the last chart as we get closer to thursday's ecb meeting seems the euro is running out of gas. let's go to dominic chu. he has a market flash for us at this hour. >> let's call on the gold conversation. that drop in gold prices is weighing on the gold mining stocks. we always talk about the major ones out there as they move lower as they are more levered to the price of gold. as gold prices start to hover gold minors are taking a bigger
hit than gold itself. >> thank you. move over batman. you are going to look at the new high tech way to maybe deter crime. microsoft has tried them out on their campus. we will speak with the company behind the surprisingly affordable form of defense and patrol in places like parking lots. plus will the disgraced football player ray rice get a second chance? should he? should an nfl team offer him a contract this year? go to cnbc.com/vote. we will discuss that and more when "power lunch" returns. e financial noise financial noise financial noise
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we're for net neutrality protection. now, here's some news you may find even more surprising. we're comcast. the only isp legally bound by full net neutrality rules. the dow is near its session highs up by about 90 points leading higher two big oil companies chevron and exxon mobil. we got some big movers here especially in the oil side of things. now to the new york stock exchange where bob pisani is standing by. want to talk about china. did you see what happened overnight? up 3%. that is a big move. we are talking 15-month highs. the chinese domestic market. in the middle of the year they started moving up.
two things going on. chinese real estate dropping so investors taking money out of real estate and into the stock market and people's bank of china talking stimulus. the shanghai stock exchange 31% up this year. that's hong kong 1.5. look how crazy the difference is. that is because of what is going on in domestic china. mainland china getting easier to invest there. large cap etf the biggest and easiest way to invest in china 30 stocks that trade on hong kong and other places up 3%. the shares that invest in domestic china up 19%. you have to be careful what you are investing in. hopefully these crazy price discrepancies will go away as people make it easier to start investing in mainland china. we have been talking about this for a while now and now able to invest in mainland china if you can have a hong kong office that has a brokerage license. hopefully it will get a lot
easier to start investing in china. >> i think you will see a lot of companies put an office in hong kong in order to access that market. stocks have been rebounding but oil prices resume decline with brent crude and wti down more than 1%. how do you play energy? joining us are scott clemons and curt custard, head of global investment solutions at ubs. thanks for joining us. scott, i'm going to start with you. first of all, how much of a tail wind do you think the drop in oil prices is going to be to the u.s. economy and how do you invest against it? let's take a look at how you would do that? >> it's a big tail wind just at the right time. economically a cut in oil prices which feeds to have cut in gasoline procts is more money in consumer's pockets. consumer is 70% of gdp going into 2015. it increases expectation -- and
oil stocks creating opportunities there. we put money to work -- you take it from a slightly different standpoint. because if they have to import oil they are importing it at a much lower price. >> absolutely. >> we are looking at japan and growing increasingly concerned with places like venezuela or russia where the low oil --
>> given the fact as you pointed out if you are a value investor there are a lot of stocks that are fairly valued or slightly overvalued. how do you feel about the market overall? >> i think it all comes down to earnings. it is interesting to look at what the market has done this week. the s&p up 11%. earnings up about 9% if you compare the first nine months to this year. we have not had to rely much on multiple expansion. >> what about you? >> i largely agree. as we move to the middle of next ye year. >> that's the $95 million
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>> there are the outliars who have done very, very well this year generally speaking. supreme court talking about facebook weighing the free speech recogniights of people w violent language on the website. this after a pennsylvania man ranted rap lyrics about killing his wife on facebook. the man was convicted for making a threat. the question woznias is it a re threat?
>> so it becomes the way we communicate. it is not quite as clear cut as a lot of people think. >> my concern is how quickly the government or lawmakers or regulators really get around to justing the laws or the interpretation of the law and evolve them to what is happening with technology. social media is huge whether me saying i'm going to hurt you in some way that remains to be seen. it is a tough argument. >> it is a very interesting decision. >> obviously we stick with a theme here of threats of violence and actual violence as we move to ray rice. can he play again? the arbitrator said yes. but will an nfl team take a chance on him? the former ravens running back spoke exclusively with matt
lauer. >> i take fool responsibility for everything i did. the only thing i hope for and wish for is a second chance. >> go to cnbc.com/vote and weigh in. what do you think here? should he get a second chance? do you think he will? >> i am a huge football fan and i was appalled in what happened with the ray rice/janay situation there. i don't think there will be a lasting impact. if he does perform on the field there is a sense maybe x years from now people will forget this happened. that is tragic. what the question is can you afford the pr swirl that comes with bringing a guy like ray rice into your ranks? does it become a locker room distraction? that is a real issue for any team. >> i think it is difficult for an nfl team to pick him up given the fact that the nfl is facing so much criticism and especially mr. goodell facing so much criticism right now. whether he should be given a
second chance. i was appalled, as well. i would say right now no not in my opinion. >> most people agree with you. should an nfl team offer ray rice a contract this season? that may be part of the thing here, you get into next year and a little more time involved. 69%, 31% in favor of it. that is the vote. let's go to a lighter subject here. silicon valley's way to fight crime. look at that cute guy. it is a robot. we will tell you about this surprisingly affordable form of defense and who is behind it when "power lunch" comes back. just take a closer look. it works how you want to work. with a fidelity investment professional...
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power the s&p 500 today. >> you mentioned biogen idec. we spot lighted the company as the stock popped on promising results. amazon's jeff bezos defending performance bp shares higher on rumors. sue, this law enforcer is really a bot. meet silicon valley's newest crime fighters. let's see what is coming up on "street signs." >> we have a lot of strong auto sales coming in today. we will be talking to the ceo of true car, a company that only ipoed this year. what do the phony documents really reveal? it is quite surprising and shocking in some respects. we will talk about that and lots of other things. make sure you join us on the show at the top of the hour.
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the rail companies all moving to the upside. thank you, dom. this is silicon valley's newest crime fighter. they are being deployed at high tech campuses like this one at microsoft. at $6.25 an hour the price is hard to beat. let's meet the man behind the bot. >> good to be here. >> tell me about this. you founded this company and came up with this product in response to the sandy hook massacre and boston marathon bombing. i found it interesting that these robots proactively seek out anomalies. they are designed basically to predict and prevent crimes. >> these are autonomous robots, 300 pounds. they roam around on their own not remote control. they can see, feel, hear and smell. think about as smart eyes and ears to help private security guards and law enforcement
officers do their jobs. >> what kind of data do they collect that would tell them perhaps that a crime might be going to be committed or that would make them quote/unquote suspicious. >> it is a lot of data. about 90 terabytes of data. it could be anything from running a license plate and seeing if a felon might be tagged to that to suspicious movements that we might detect in a video or something that might be out of the norm. noise levels are rather high for this time of day and day of week versus the weekend. over time the machines also learn. >> how do you -- it's imposing certainly in terms of its size but everybody thought it was pretty cute. i don't know whether that works for it because people would like to be around it or whether it works against it. why did you make it look like a
cute guy? >> we have the same challenge as an officer does. an officer has to have a commanding presence. fine line how to get the human machine interface to really work in the benefit of trying to reduce crime. crime has $1 trillion negative impact on the economy. we believe we can cut it in half using our hardware and software. >> 50% cut in crime. when it detects there is a crime being committed what does it do? how does it notify authorities? >> so humans aren't all that great at reviewing raw data, raw data footage, video footage. we like to have the machines do the dangerous and computational heavy work. what we have is a night scope security operation center where
a security guard or our clients would be monitoring that and events would be put forth or alarms and alerts. >> best of luck. thank you for joining us. >> thanks for having us. >> and that will do it for "power lunch." >> what if it tips over? "street signs" begins right now. stocks up, oil down, monster truck madness, shark tank, coleslaw and a huge drop in microsoft. we are glad you are here. another crazy day for stocks and oil. >> welcome back. a little warmer here in new jersey. oil may be down today but the energy sector is not out. it is one of the leading sectors. the dow trading above the all-time closing high and the nasdaq is up for the seventh time in eight sessions. that is a good reason to stick ar