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tv   Power Lunch  CNBC  December 14, 2012 1:00pm-2:00pm EST

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me? >> let's take a quick look at shares at apple. it's a story that we continue to follow here. the stock got dangerously close, down to that november low of 505. it's rebounded a bit. it's at 510 right now. check this out, ten of the past 12 weeks apple has closed that week lower and in the time from its september high until now apple has lost some $177 billion in market cap. the catalyst for the slide today perhaps a note from ubs analyst steve malonovich cutting the estimates and the price target. let's go to bert that coombs at the breaking news desk. >> thank you, scott. we have an update now on that shooting at the sandy hook elementary school in newtown, connecticut. nbc news is reporting as many as 27 people may be dead from that shooting which broke out this morning shortly after 9:30. that's when police were called.
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as many as 17 to 18 of the victims are children. 7 to 8 adults including the gunman who authorities described to nbc news as a 20-year-old connecticut man who was dressed in black and was carrying two handguns. connecticut state police are set to begin a briefing at this hour. danbury officials and hospital officials tell nbc news that at least three people have been transported to the hospital. again, to as many as 27 people killed. we will bring you more details as they become available. back to you. >> thank you very much, bertha. we'll keep checking back with you and monitoring the situation. obviously an incredibly tragic situation still unfolding in newtown, connecticut. we will keep you up to date as new information does become available, but right now we turn our attention to what we do here at cnbc. our focus is the markets. we will be following the other story that is unfolding in connecticut. we're going to look at the economy, the looming fiscal
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cliff. my partner, tyler mathisen kicks it off for us at the new york stock exchange. >> thank you very much. it is a quiet day down here at the new york stock exchange where the major averages are not really doing very much at this hour. let's take a look. the industrials are down 7 2/3 points at 13,163. nasdaq a little bit lower also in percentage terms. also a percentage at 29891.48. 2 3/4 right now at 1416.74. it would appear the markets are watchfully waiting to see what comes out of washington, if anything. of course, mr. boehner has gone back to his home in ohio for the weekend. the president is on duty at the white house. there are phones, as mr. boehner said, in southern ohio where he lives. if there are any developments, the two gentlemen certainly will be able to get in touch with one
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another. meantime, there are some individual stock stories of interest at this hour. and one of them concerns facebook. be a facebook lockup expires today and 150 million shares will open up on the market. the last time we had a lockup expiration many expected to see the stock drop. instead, it rallied. right now, no, not so much. facebook down about 89 cents so 3% at 2735. but it is up about 25% over the past three months. julia has the details for us from washington. >> tyler, this is the fourth of five lockup expiration periods. today's potential sellers could also sell in ipos. we shouldn't see any pent up demand to sell. facebook shares are dropping today, off about 3 percent percent as you mentioned. a bit of profit taking after the company's massive run since its last lockup expiration.
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during the last lockup expiration a month ago when 1.2 million shares became available to sell, the stock soared 12.5% that day. it's up a total of 36% since then. driving the upside, relief that insiders and employees haven't stolen confidence in facebook's quality. topeka capitol recommends investors buy on today's weakness saying ecommerce should become a meaningful method. he said facebook's ad exchange should drive revenue and profit. he also mentioned pro tensional inclusion in s&p 500 late next year which should create demand for shares. facebook's final lockup period comes in may when russian mayo dth ru group. >> thank you very much. julia. we're going to focus on wall street. joining me all week has been michael yoshokami as you know.
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he rejoins me. we're on a friday trading session. things seem to be pretty quiet right now on wall street. what's the risk in the market? it's going into a weekend, no resolution to the fiscal cliff. mr. boehner is going home to ohio. is there risk putting in a trade on a day like today? >> yes. many investors pull money off the table going into the weekend simply because of how volatile the news is. of course we have a ticking time bomb in terms of the amount of time until we actually get to a fiscal deal. >> right. what would you be doing on a day like today? are you allocating new capital or are you sitting tight? >> sitting tight. we have some positions we're looking at moving into the portfolio strategy. we can buy them but we're going to wait and see how it plays out. >> what are your favorite areas of the market right now. >> i think certainly technology. even though you see soloffs in apple, you have qualcomm which has sold off. i still think technology is
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going to be a huge tail wind industry. i think that's going to result in higher stock prices. >> michael is going to be with us for the whole hour. it's been a great week with you. let's check in with ty. >> a colorful analogy on "squawk box" this morning for the fed's new easing in interest rate strategy. the dow's fed richard fisher comparing it to the eagle's "hotel california" saying you can check out any time you want but you can never leave. jeffrey lacker also making comments today. our senior economics reporter steve leaseman joins us with more. what exactly did the fed president mean, mr. fisher, when he said that, steve? >> once you start going with qe, that you cannot stop because of the effect on the market. and fisher was just one of two hawks that took to the airways to voice his opposition with the change in fed policy which, as you remember, boosted quantitative easing by a trillion dollars this year. fisher and president jeffrey lacker are among call them two
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serial dissenters. lacker has dissented at every meeting. fisher on "squawk box" this morning, i want to show you the quote that tyler is talking about and what surely is a first comparing fed policy to a rock and roll song. >> i've argued that basically we were at risk of what i call a hotel california monetary policy going back to the eagles song which is you can check out any time you want but you can never leave. >> fisher went on to say that liquidity is not the problem. he doesn't know any business who has trouble getting loans and it won't help jobs. quote, we can print all the money imaginable, no one is going to deploy it. for his part, lacker says monetary policy only has limited ability to reduce unemployment. he disagreed with using that unemployment target to trigger feds fund rate. a single number doesn't complete a policy. the committee will consider
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other information including other labor market indicators. on qe lacker repeating his concerns that it could cause inflation and his object tifs to the fed buying mortgage-backed securities saying it distorlts markets and has the fed picking win sners and losers. >> so he absolutely does not think it's a stairway to heaven, does he, steve? >> no, definitely want. if you want to quiz me on the chords and lyrics, go ahead. are there others who would like to join him in dissent? >> that's excellent, tyler. that's the reason you follow the serial dissenters. you understand their argument, see where they are and kind of gauge whether or not it's becoming an argument that others might join. there were three people who dissented. i guess it was two years ago there was fisher and foster and it seems like the chairman has the board at least for now. i don't think there's going to be more than one dissenter coming up. so i think he's got the board
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but we've got to follow it, tom. sometimes the dissent can lead the way. >> all right. steve, thank you very much. ty, 17 days and counting until america goes off that fiscal cliff. a lot of frank talk certainly, but few signs of progress following president obama's meeting with house speaker boehner late yesterday at the white house. our chief political correspondent, john harwood is here with the very latest. it's the weekend. they're going home, john. >> they are going home. of course everyone's attention as you indicated at the top of the show on the terrible tragedy going on in connecticut. that dominated the early part of jay carney's briefing, the white house press secretary a few moments ago saying that the president was expressing enormous sympathy. we may hear from him later today. waiting to get further reports before commenting any further, but the fiscal cliff sort of took a back seat, at least for a while this afternoon. but we remain in this stalemate that we've been in for some
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time, sue. we talked with nick mulvaney earlier on cnbc. a republican member of congress from south carolina. it's not the case that they won't deal at all on taxes. president obama has to give us specifics on spending cuts. then we'll play ball. here's nick. >> there's a lot of us in the house who will vote for something if it fixes the problem. it's not just this little problem dealing with the fiscal cliff but the overall spending problems. they get something that fixes that, i think you'd be surprised with what the republicans would be willing to do. >> of course we are still stuck on all of the main points at contention between democrats and republicans. tax rates, republicans have not conceded tax rates have to go up. they have conceded that tax revenues should rise. entitlement spending, neither party wants to detail particular spending cuts in social security and medicare because the so unpopular. the debt limit would cause a
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crisis. in 2011 the two parties were hung up over that. president obama says he's not going to negotiate with republicans. they see that as their strongest hold card in this fight, especially if they give ground on the top end tax rates at the end of the year when if we go over the fiscal cliff everybody's taxes go up, tyler. >> john harwood, thank you very much. doesn't look like much is going to happen this weekend, but what are the chances that a deal does get done by the end of the year? to tell us and handicap us -- handicap it is andy friedman, principal with the washington update and one of america's top business lawyers. andy, welcome back. good to have you with us. >> thank you. >> in my reading this morning, there were some indications that what may happen is that the house will take up the already passed senate bill that puts in place those lower -- extends those lower tax rates for the sub 250,000 income cohort and also boosts investment taxes to
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20% plus the surcharge on dividends. is that now a leading possibility or something less than that? >> i don't know that it's a leading possibility, but i think it shows us where things may end up. i still remain optimistic that we're going to see a deal here. we're going to continue the eagles lyrics. i'm not sure i have a peaceful easy feeling, but i think we'll get there. those will be part of the deal i think. a raise on capital gaps and did i have dents. >> do you think it must involve as the president has clearly said a rise in the rates on the top income earners? >> i think there will be some rise in rates, but maybe not all the way to the top at 39.6%. they'll probably be able to combine that with some disallowance of deductions which will get the president the revenue he needs. >> it feels to me that both sides in effect are saying to the other, you go first and make me happy and then i'll tell you
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what i'll do to make you happy. >> right. right. >> fair? >> yes. i think that is fair, but you have to remember, we feel like the cliff is coming at us fast, but we still have a number of days. i think this is the normal ebb and flow of washington negotiations. congress acts when there's a forcing event, when they have to act because the consequences are too drastic. we have two major forcing events, going over the cliff and congress's desire to get home for christmas. i think this could go to christmas eve but we'll get there. >> let me ask you one other question about the spending cuts. the president -- the republicans challenged the president to be specific on spending cuts, but the republicans themselves haven't been terribly specific. >> not at all. >> have they about what they would cut in spending? >> i think that's absolutely right. i kind of feel the republicans haven't been specific because they don't know. they can't agree on exactly what spending cuts they want. so they keep pumping it over to
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the president, but they're the ones asking for spending cuts. it seems to me it's incumbent on them to say what exactly they mean. >> so you're still in the camp that believes that we will have some sort of resolution to the short-term fiscal cliff before the end of the year? >> i believe it. i'm not saying that it's guaranteed, but it's more than 50%. i'm not sure we'll get the debt ceiling in there. if i'm the republicans, that's my debt card. i'll wait until next year to get that. >> i can't imagine that the republicans would come along with the idea of giving the white house really a carte blanche to raise the debt ceiling. mr. boehner yesterday, i thought rightly, said, well, do you think back in the day when george w. bush was president, if he had made a similar request of congress, that harry reid and ms. pelosi would have gone along with it? i've really got to think that they never would have. >> i agree. there's an interim position. you don't have to give him that power but you can agree to raise
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the debt ceiling now to get us through the next hurdle. i don't even think they'll do that. >> andy friedman, thank you very much. may your prediction come true. >> take care, tyler. >> indeed. i'll second that. a major exclusive with bank of america ceo brian moynihan. find out what he told diana olick with the future of america and the impact of the fiscal cliff. we're back in 2:00. try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning,
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one of the big stocks to watch today, best buy. the shares are really tanking right now, down $2.12. the struggling electronics retailer is giving richard schultz more time to put together a buyout proposal. the move removes any hopes that an offer was imminent. the stock has lost half its value this yer alone. sue. >> ty, let's see how major home builders are trading at this hour. they're mixed, mostly to the down side. hovnanian is up half a percent. brian moynihan spoke exclusively with diana olick. she joins us from washington with more on that big interview. high, diana. >> hey, sue. that's right. the c of bank of america says he
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does not believe everyone should own a home, that's what he told a panel at the brookings institute today. as the economy and housing recovery face the possibility of going over the fiscal cliff, brian moynihan told me going back to the summer of last year that businesses like his were already affected by the fiscal cliff and they have acted less aggressively as such. as for consumers, however, he does not believe that the mortgage interest deduction will fall victim to the cliff, at least not yet. >> i don't know if it's on the table or not. i think from person -- from general consumers you'd rather have that come up as a discussion of what to do long term to change the way, broaden the base, change deductions, things like that. >> and he told me that he just doesn't think lawmakers want to change the mortgage interest deduction now given how tenuous the housing market is. some of that recovery is thanks to the major mortgage settlements forcing principal reductions and short sales. bank of america has so far wiped out $7 billion in mortgage principal balance.
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i asked if that would continue once the bank's obligations under the settlement were completed which could be as soon as this coming march. >> the programs then going forward will provide for similar relief but i think we have offered principal reduction to all of our borrowers. it's been done. so that is largely done. after that it will be more of the modifications that have gone on under harp. >> he does not expect them to rise much if at all. he does expect private investors to get back into the mortgage business. he calls that, quote, a certainty. sue? >> diana, did he give you any sense of where he thought we were in the housing cycle? you know, a lot of people feel better about the housing market right now yet yesterday or the day before i think you were talking about the rise in foreclosures. it's kind of a mixed bag. i know it's all local. did you get any sense from him as to whether he thinks we are in recovery. >> he absolutely does think that the housing market will recover. it's on the right track. so much of that as we talked
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about is dependent on getting rid of the distress in the market. the foreclosures, getting the short sales through. bank of america has been at the forefront of that because they've had the biggest obligation under the mortgage servicing settlement. they had so much distress on their books from countrywide. he does believe housing is recovering. home pricing is going up. he's bullish on that. he says we have to be very careful when it comes to mortgage lending given what happened in the past. >> indeed. diana, thanks so much. ty, down to you. >> thank you, sue. wall street out with calls on oracle, exxon, wynn resorts. there are the three stocks. did they get them right? we're going to analyze the analysts when we return from this short break. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes
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tdd# 1-800-345-2550 call 1-877-656-8765 tdd# 1-800-345-2550 and open an account, tdd# 1-800-345-2550 now with no trade minimums. i'm bertha. we want to update you on the tragic elementary shooting in new town, connecticut. 26 victims have been killed in that shooting. 18 of them are children and another 8 adults. one gunman was killed and nbc news now reporting that a second person involved apparently is in custody. president obama was made aware of the shooting as john harwood reported earlier today. he has spoken with the fbi director and may make a statement later today, but at this point the president has been in touch with the governor in connecticut. sue, we're still awaiting an
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update from connecticut law enforcement officials. back to you. >> yes. we expect that to happen within the hour. thank you very much. we will bring you that news when it does materialize. as you can imagine, it's an incredibly tragic situation in connecticut and they're taking their time to get exactly the right numbers before they go to the press and give us more information. so you can stay with cnbc. we will follow that story. we're also following the market for you, and as i mentioned, michael yoshikomi has been with us all week. we're going to do some analysis. there were some very bold calls on the street. good to see you again, michael. >> good to see you. >> going to start out with jan nghi capitol. starting with oracle. their notes say we believe oracle is the best way to play the current cloud computing trend. what do you think, do you agree? >> i agree with the general call to buy oracle. i think it makes a lot of sense. cloud, there are other ways you can play cloud besides oracle. you can play enc, you can play amazon. i like oracle in terms of a good
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global name. i think it has great cash flow. >> it's up 7% year to date. better than a full percent. you would still step into it? >> i would. i would. >> let's move on with goldman sachs downgrading exxon mobil to neutral to buy noting as we tip back towards higher beta energy they look for equities over exxon. i think you disagree a little bit with this call? >> i do. i think exxon, it depends why you're buying it. if you're buying it for capital appreciation, yes. exxon has a nice dividend. it's going to participate in any commodities insulation and that is in fact coming. i think it's one of best in breed in the entire oil space. i like exxon. you have to buy it for more capital appreciation and income. if you're just buying a capital appreciation, you move out of the name. if the income piece is there, a lot of investors are looking for that. >> it's down 4.5% in the period. decent entry point at 8812,
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correct? >> yes. >> all right. ubs downgrading wynn resorts from neutral to buy. >> we believe it could be range bound given less visible growth due to no new capacity in the next two to three years. >> that's a fairly significant time period. >> what does that mean? wynn is in the midst of international expansion. they have a casino in the process of being built but it's taking more time than they expect. what they're saying is that earnings stream from emerging market international growth is going to take some time before it comes online. so this is a stock that is probably going to be rage bound. remember, long term if you look at emerging market growth, if you look at the numbers in all the casino space, that's where the growth comes from. wynn is already positioning themselves. >> that could be an emerging marketplace, separate from las vegas? >> absolutely. many of these calls are three months, six months, nine months. >> true. >> if you have a long-term investment strategy, many people
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watching cnbc are saying, what's the asset i can buy for the next five years, that's the name you put in. that's not necessarily a bad thing when it hits for china markets. in all likelihood you'll see a rally. >> if you don't want emerging market debt, you can buy this and get the exposure? >> that's absolutely correct. you don't have the same accounting concerns. you buy multi-national u.s. global companies with better accounting control. >> michael, thank you very much. gold prices are on the down side for this week. it's been kind of a brutal week for the precious metals. final floor trades in metals being made right now. live coverage of the close is coming up on "power." >> announcer: cnbc program is sponsored by mercedes benz. ♪ ♪ [ male announcer ] the mercedes-benz winter event is back, with the perfect vehicle that's just right for you,
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let's turn our attention to the trading action here at the new york stock exchange. mary thompson is with us on the floor today. hi, mary. >> tyler, the story has basically been another special. the dow has been held in the 48 point range, the s&p as well. apple set to be down for the tenth week out of the last 12. also the weakness that we are seeing in energy stocks despite the gains that we are seeing in oil energy stocks went lower by
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a warning from the oil services company on concerns about weakness in north america. this comes on a day when we had beat the news on inflation here in the u.s. as well as factory output and decent news from china where manufacturing rose to its highest level. that is given a lift to steel as well as metal. airlines are also stronger. they are hitting the fal, the index of the airlines hitting a 52-week high for the fourth straight session. one of the reasons, the strength in southwest air linings. the company seeking to raise another over $1 billion in added fees. the stock hitting the middle of the lift on that news. we want to point out that verifone. it generates a fifth of its revenue. the service provider says it's getting out of the market for providing these services to small businesses saying it's
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just not profitable at this point. so, once again, tyler, investors await headlines on the fiscal cliff. a lack of progress gets the markets range bound. >> we will have more on southwest in just a few moments by the way when we check in with phil lebeau. kayla is on duty at the nasdaq. hi, kayla. >> hi, taylor. the nasdaq has been range bound as well. currently down 15 points. it means it's just wiped out its gains for the week hovering at the flat line. you need to go to 13 points to be positive territory. triggers are finding some respite in a adobe systems. they have a cloud product that's hitting a three-year high there. let's take a look at some of the other movers here at the nasdaq. sales, another high for crm. we are seeing weakness in facebook with the lockup coming.
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150 shares. that is obviously a big story as far as apple. that's dragging down the overall tech factor. >> let's go out to chicago and check on the bond market now. rick santelli is tracking the action. hi, rick. >> hi, tyler. we're up 8 basis points on the week even though we're down three basis points from yesterday. if you look at a 30 year bond, on the week it's up five basis points. on the day it's down five. but open the chart up going to early october and briefly this week before the fed meeting and right after we're touching five-week high yields but that has turned around. one of the big winners this week on foreign exchange was the dollar against the yen. look at this chart going back to early march. you can see we touched levels we haven't seen since march. last week the dollar yen was 82.5. currently 83.43. that's why the dollar index is mostly sideways. tyler, back to you.
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>> rick, thank you very much. we're going to do one of two things. we're either going to go to -- we're going to mr. grasso right here. steve grasso is with us. governor grasso. i didn't realize that. it feels to me over the past few days that investors in equities are positioned kind of the way they want, for the year end, for the fiscal cliff, and they're not doing very much. >> i would agree with that. i think money managers, either you had your year and you're flat on the s&p and you're down or up fractionally but no one is trying to hit the ball out of the park. why would you be swinging from the fences knowing that in the next two weeks or so either we're going to get a deal and the market's going to rip higher. >> right. >> or we're not going to get a deal and the market is going to plunge. >> muddle at best. >> right. then what i think, dougie cass has been great in pointing this out. we've been enamored with the fiscal cliffs issues, we're not talking about margins
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compressing or earnings peaking. once we get by the fiscal cliff there is a chance that we start to focus on things that aren't so rosie either. so i'm not sure you should be buying the dip after the cliff. >> let's go up to sue. >> i was just going to follow up on that. what i'm hearing from people also, steve, is the fact that they're trying to reprice the risk but they're not sure exactly how to do it because of those very fundamentals that you just mentioned. we now have apple that's selling off on a regular basis. that's difficult for the market. earnings may have peaked indeed, and there are some fundamentals in some of these companies that don't look as good as they used to. how do you price risk in this market? what's riskier, the fundamentals or the fiscal cliff? >> yeah, it's terrible. that's the position a lot of these fund managers are in. but, sue, if you look at 57le, you brought it up. no one wants to buy apple here at $510. you'd rather miss apple for the first 20 or $30. it sounds silly, but you'd rather miss that momentum one way or another until it proves itself. but the money has to go
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someplace so you start to look at a stock like google which i'm personally along, as apple sinks you wind up having google above $700 again. it stands to reason a lot of these high flyers, these fund managers have to be invested someplace. >> there isn't a lot of selling pressure and there's certainly not right now a lot of buying enthusiasm. >> right. >> are there areas of the market that you think ought to be sold right here or individual company names? >> it depends. if you think that growth is going to be sluggish and we're just going to muddle along here, you want to be selling the manufacturing space. you want to be probably selling the energy space. there's been a bid in energy that we haven't seen in some time. if you look at the refiners. the refiners are making new annual highs in some parts of that sector. yahoo has been on fire along that one. a lot of these stocks that weren't winners, hewlett-pack d hewlett-packard, people have heard me talk about this one. not been a winner. thrown out by a lot of fund
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managers. >> rim. talk about the living dead. >> right. >> rim has come back a lot. >> now are you guys rim guys or are you apple guys? >> well, i have a blackberry and i have a droid phone. i don't have an apple. >> i have both. i have an apple iphone and i have rim blackberry for work, but for work we're blackberry. >> android gives you a whole host of choices versus apple you have to fit their scenario. now people that were apple for the ecosystem, you're starting to get that ecosystem out of google. that's why i became a google bole. they're getting involved in fiber. they're delivering cable. they're doing a test pattern in kansas city. i spoke about it on the 5:00 p.m. show. you'll see more on google than apple. >> you'll be back later. >> if you'll have me. >> i want to ask you about interest rates when we come back. >> perfect. my strong suit. >> there you go.
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gold prices closing right now. it's been a tough week for the gold bulls. brian shackman is tracking the action. >> i feel like everyone is saying, i'm brian shackman, blackberry for work, apple for fun. gold has to go somewhere. gold is potentially flat and it's holding below $1700 right now. if you expand it out to the week, you see what happened post the fed. it sort of fell off the table. over a seven-day span, again, flat. volatility and the options market, this is going to stay this way maybe for a little while. i want to look at the whole flex because basically it's the same story. you see copper and palladium up, especially palladium. copper is a proxy for chinese growth. a little bit of optimism out of that. in terms of where the money flow here, folks, basically it seems that trading outside of huge news might be kind of done for the year if you've booked your profits or your loss, why trade
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now is what some guys say to me. also, i don't like to expand the conversation a lot. honestly on a day like today what's going on in connecticut, it's a strange tenor on the floor here. not only the friday going into a weekend but just the news is just tough for a lot of parents on the floor to take. >> it is, indeed. it really is. >> thank you, brian. we'll take a quick break. "pow j "power lunch" is back in two. >> announcer: the bond report is sponsored by pimco, your global investment authority. oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more.
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them, sue. it's a bit of a misnomer saying that southwest has never had fees in the past. it has had fees. what they've marketed has been not charging a fee for those first two bags, and that's really the biggest fee that's out there in the industry. what they've announced today is starting january 1st they're going to add on a couple of fees that they hope will both raise revenue and change the behavior of passengers. first of all, they're going to be charging for premium boreding. you want to be one of the first once on the plane, you have to pay more, whether it's $5 or $10. if you have a flight and you have a reserve ticket but you miss that flight and you don't cancel the ticket, that's an empty seat. they're going to charge you for not canceling that reserve ticket. those are the two new fees. they hope to raise about $300 million. sue, this is all about ancillary revenue. >> obviously they think they have pricing power then though that they can pass these fees along. >> right. >> so does that mean that that's going to give the other carriers
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the green light that already has fees to help increase them a bit? >> they already have the green light and they're already doing that, sue. >> somehow i knew that was going to be the answer. somehow i knew. >> they made $22 billion last year when it comes to these ancillary fees. it is likely going to be about $23 billion this year and continue moving up. what a change this is, sue. back in 2009 they only made $13 billion when it came to these ancillary fees. people will pay to get on board early, to have a certain seat, to have certain services on board. >> i'm sure. >> that's proven. the industry will continue raising those until they get into some resistance levels. that's when things will pull back a bit. they haven't found that yet. >> thanks, phil. appreciate it. ty, down to you. >> sue, united technology expects to have its profits rise about 13% next year even if the economy goes over the fiscal cliff. the company says growing demand for building products, elevators, air conditioners offsetting the lower u.s. defense spending. united tech's ceo says he's
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hopeful congress can reach a budget deal by the 31st. he's cautious the company has held off on some spending because of that uncertainty. there you see the shares down a nickel at $80.32. up 10% or so for the year. meanwhile, rival general electric raising its quarterly did i have have i dent 12% to 19 cents a share. ge did not exceaccelerate imtex payment ahead. it will be due on january 25th of next year. ge stock, ge a minority owner of cnbc and nbc universal up 21%. >> ty, we're going to take a quick break. we'll have an update on the tragic situation in connecticut. they're just wrapping up a news conference now. we'll have the late breaking news for you when we come back on "power lunch." fortunately we've got ink.
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i'm bertha coombs. connecticut state police just concluding a briefing on that tragic elementary school shooting in newtown, connecticut. it's left as many as 27 people dead. authorities would not confirm the number of fatalities. they say they are still talking
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with families, trying to provide notification. what they did say is that the shooter in the case was deceased inside the building and there is very much an active investigation going on with regard to that. nbc news has been told by officials that 18 children were killed in that shooting, 8 adults, and the shooter as well. and some officials are telling nbc news that a second person is in custody for questioning perhaps in connection with this case. back to you. >> thank you very much, bertha. very tragic situation and one that continues to evolve. we will follow the story for you throughout the day on cnbc. we will bring you any news as it becomes available to us. they obviously are still working to notify the next of kin of those victims. we are going to focus on the markets. there are a lot of cross current in the market these days. it's been a fascinating week on many front. joining us is michael and steve grasso.
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right now the dow jones industrial average is off 6 points and the nasdaq composite is off 13.75. it was a fascinating week. i think mid week probably was the highlight for traders who were wondering what the fed chief was going to say. now we have the fact that he's linking the move on interest rates to the jobless figures. we've got a big move in the bond market. >> right. >> i'm surprised we didn't see more follow through on that. >> well, you know, we're still talking about the bond market or the interest rates possibly moving up in a year or two. i think it was an initial reaction to a target. i think what's really critical here, that investors need to listen to the very, very clear hints that ben bernanke is giving about what the exit strategy is going to look like and what type of assets you want to invest in and, frankly, what the timing is. i don't see how you can listen to what bernanke is saying and not say to yourself you should be -- i don't know how you can hold on to long-term bonds for
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two years, three years, four years. you have to have a transition strategy or else you're going to lose capital loss. >> steve, that was why i was quite surprised we didn't see more staying power in the move to the upside of the market. you don't want to be the last person out of the bond market door. you want to be somewhere near the top. the feds trying to push people out on the risk curve a little bit. >> they've been doing that. we've seen credit suisse put out a report about diminishing report. when they came out with qe 3 the market was pretty much where it is now. we've seen that dissipate really quick, lose its air in the marketplace. now you didn't get a pop, as you said, for anything extended more than a couple of minutes after he announced it. >> don't you think, steve, that what's happening right now is it really is in a state of suspended animation waiting for the fiscal cliff deeal. reverting back to the economic numbers. then that's when that part of
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the equation takes over? don't you think that's what's happening. >> 100%. at that point we're going to start to focus on earnings again. >> exactly. >> and i would guess, you know, if you do a little thing for our viewers at home, if you google right now foster's peak, people are focused on apple. apple has been the proxy for the market for so long. so if you think profits have peaked for apple and apple is out of gas, whether or not you do or don't, but if you think that's the case, you're going to be more apt to sell this market once fiscal cliff gets out of the way. you know, i would say that you would probably agree with that. >> it feels to me, michael jump ball here if it feels the same to you, it feels like the market is saying fiscal cliff, so what? >> right. >> eventually whether we go over it on december 31st or not, event actuee actually -- eventually there
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will be a fix. >> absolutely. >> we heard s&p say this a couple of weeks ago. they said if it's a short-term patch they will downgrade u.s. again, the u.s. debt again. we're not kidding ourselves to think that there's going to be a long-term fix here. we all know the truth is the real problem that this country faces is entitlement. i don't think anyone is going to face that head on. we don't have the stomach yet. unfortunately you get the stomach and moxie when it's too late. we don't have it just yet. >> tyler, you and i were talking a couple of days ago that this deficit really, we're all talking about entitlement cuts and revenue increase, what about inflating the debt. what about paying off the debt by letting inflation run? we certainly have a federal reserve that is setting the groundwork for that. we might all have lower standard of living, but the deficits paid off, hooray, right? >> yeah. >> meanwhile your living standard goes down, your dollar's worth less, your purchasing power goes to hell.
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>> based on that perspective, you have to invest and you have a more frugal environment. >> have you seen the stats on for every rise we get in interest rates it costs us another 100 billion to finance the debt. >> yeah. >> talk about threading a needle. that's why everyone is looking at this, look at it through the prism of the feds. unfortunately i don't think anybody would have the talent to this read th thread this needle. >> let's talk about a couple of individual stocks. facebook is in the news of course today. the stocks have a nice run up but the expiration on some of those insiders is expiring. what do you do with facebook shares, steve? >> well, facebook we actually flagged, dan nas son and myself flagged it on the 5:00 p.m. show simply because we saw that short interest was basically starting to cover those positions at around $19 or so. i would say that facebook is probably a little bit
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overextended at these levels and truth be told if you're late to the game, maybe you want to squeeze out a little bit because if the macro market sells off, nobody is bullet proof on this thing. nobody is going to have any type of shield. we know that 2/3 of all stocks trade with the overall market. if you're lucky enough to grab some profits in facebook, i would probably exit the trade a little bit -- at least a little. >> i wouldn't agree with that. i think facebook at this point is really an unproven stock in terms of how they can monetize mobile. the stock is trading like a true momentum stock. i don't know that true momentum stock is what you want in a market like this. >> if you have a long, long term perspective, would you add it to your portfolio, michael? >> not at the moment. i'm not a believer in their name. they can prove me wrong. the new marketplace could prove me wrong. they could compete against amazon. the search can prove me wrong. i need to see some evidence.
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>> plus you see a lot of the younger kids that i've talked to about a lot of these different social media stocks and they're more interested in twitter right now. so i think it's going to be -- >> that's absolutely true. >> a lot more curious about twitter. >> i hear that too that facebook's day of sort of being the hot toy may have passed a little bit and twitter has come on. steve, thank you for helping us out. >> thanks, stevie. good to see you. >> we'll take a final look at the markets after this short break. ♪ [ male announcer ] how could switchgrass in argentina,
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as we give you a market check on this new york stock exchange. a lot of the monitors are on news channels covering the shooting in connecticut, the industrials down 4.5% at 13,166. the s&p 500 basically flat at 1416. the nasdaq composite down 14 points as apple continues to slide just a little bit. there's some of the new york stock exchange activities including one stock of great note today. best buy, david favor reporting that the company has given


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