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tv   Power Lunch  CNBC  March 18, 2013 1:00pm-2:00pm EDT

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comparison. i would not want to be in the gap at these levels. >> you are making that face. that means you've got something to say. >> not petering out, i'm still long, the earnings are excellent. >> can i tell you, walking by their windows, for first time in years -- >> the color pant. >> no, but the fitted button tops. >> by the way, it's color blocking. >> what about if we can get a shot of this stock, you can see what color blocking is all about. >> i think they're a complete rip-off of the j. crew perfect shirt which is incredibly popular. >> you bought it? >> i didn't. >> final trades. >> 65% of the revenues is in the u.s. rental equipment market is certainly doing well. last week reported very good numbers. >> you're going to buy this one? >> i like it. >> joe, your final trade today. >> on semiconductor, onnn.
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>> why do you like it? >> price is 8 bucks. going to see a reacceleration in terms of revenue story. there's also a feeling on the street that potentially there are takeover targets. i think the stock on a value basis trade to ten with the knowledge that they are target. >> mike? >> i think board here is a great stock to buy. opened up week this morning. if you jumped in there, below 13 for a short amount of time. they raised the dividends. dividends up over 3% from current levels. we know there's negative news over europe. i think if you focus on the u.s., ford can go higher. >> stevesteven, you get the fin trade. >> gold, the move that we saw today it was a fear move, emotional trade as we saw the averages recover p. and we saw. even the euro start to recover and dollar trade back down. i think it's going to trade goal and get it back below 1600 and all the technical analysts out there that -- which i don't agree protecting the trade, the
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whole 1600, now capitulate. >> about to be short gold. what's amazing to me is we are 24 hours away from a meet that is pretty important and no one even mentioned it today. >> that's true. what do you think, close positive today? happened during the show, it went positive. >> just missed. >> watch "power lunch". >> encouraging we're not down 100. >> it's great. >> all right. that does it for us. don't forget to catch more "fast money" at 5:00 p.m. tonight. whoever just said watch "power lunch" is clearly an inintelligent individual. a is our cnbc euro alert graphics package. we don't want to scare you but we do want to get your attention because we have an important story today that of course we've been talking about all day here on cnbc. it has far reaching impact. we're going to explain it to you i hope in a way that everybody can understand, including most especially me. and then we're going to report on the impact.
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i'm tyler matt son, susan at the nyse. we'll check in with sue in a moment. that right there, let's show you, where is it? cyprus, a member of the european union since 2004. it's a little island -- i hear it's beautiful. i've never been there. i'd like to go some time, maybe not this week. the afms are out of money. roll the animation. west of lebanon. south of turkey. east of greece. a country really rather divided, greeks in the south, turks in the north. 1,138,000 people live on the island. that's the population of san diego. 77% of greek origin. 18% turkish. unemployment, %. not that high when compared with other countries in the eurozone like greece, like spain. gdp, $25.5 billion. that's good for 125th in the world. per sapt a gdp, $26,900. 71% of the economy service based.
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tourism big there. 20% is industry. 8.5% agriculture, mostly olives and citrus. in a nut shell, finance ministers are going to hold a conference call this evening to discuss a proposed bailout for the cypriot banks. the plan started this weekend included taking money from regular bank deposit, large and small, 6.75% to almost 10% if you've got more than 100,000 euros in an account over there. why are those banks in cyprus in trouble? they were heavily exposed to greek debt and we all know what happened there with the greek debt, both public and private. then the cypriot banks were national as ied to prevent an need colorado lapse. european regs, that's where the rest of europe comes in. instead of sending a bailout like it did in spain and greece, germany wants to raise money from actual people with deposits
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in those banks. here's how goldman sachs' paul o'neill summed it up on "squawk" this morning. >> i got off a plane from singapore saturday morning and i thought my jet lag was up but i was misleading the story. this has all sorts of possible consequences. the consequences of this are not going to put the genie back in the bottle even by erratic thund i of the past years. h is a biggie. >> it is a biggie because it calls into question the sanctity of bank deposits not just in cyprus but all across the eurozone. this is a line outside an atm in cyprus. the banks there closed until thursday. people rushing to pull out as many euro as they could. usually 400 per day. but many of those atms out of cash. this story also includes the russian mob, folks. more on that in a minute. but first, i've been talking long enough.
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here's sue. >> i was just checking the market. actually things are holding up pretty well. the white house says it is monitoring the cyprus situation closely despite those fierce, u.s. markets are indeed holding up. only down 14 points. the dow was done triple digits when trading began in the morning. quite a comeback as you can see from the chart. s&p 500 was down a full percent earlier on. right now the s&p is only down 4.60%. 4.60 points, i should say. nasdaq last trade down about 6 3/4 points on the trading session. the euro/dollar trade showing the euro trading at $129.6 and that is quite a change from earlier this morning. as four the gold market, it moved back above the 1600 level. it is holding that but it's at 1604.90 on the trading session. there's been an awful t lot of activity down here on the floor. bob pisani joins me. comeback in the market given the statements from jim o'neal earlier in the morning that this is a biggie and could have
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ripple effects over europe. i'm impressed that the market came back so much. >> the important thing is, let's put up the dow again. one of the reasons that we were moving up off of our lows is that money was coming out of europe and into the u.s. stock market. i'm sure some of it did. the important thing is after the market closed, europe closed around 12:30 eastern time. we held up very well. we're just off our highs. we were for a second positive just fractionally in the dow industrials. look at the major sector, sue, slightly more defensive. so telecom and utilities and consumer staples. look at the financials, sue. they were down more than 1% as a group but now only only fractionally if you look at the big banks, citi group has significant exposure to europe. the regional banks are all just down fractionally today. the dow stocks are up, big international names. caterpillar, for example, pfizer, all the major tech names, lieu hugh let, microsoft, intel, all positive. volume is on the light side, believe it or not.
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not the money flowing in or flowing out. at number two, well off our lows in the middle of the day. >> thank you, bob pisani. in your morning notes, you went, it's back. now everyone is focused not just on cyprus but the ripple effects. >> that's true. you saw that concern last night starting in asia and it went over into europe. rightly so because, as bob said, it brings in to trust, what are really the banks -- what's the purpose of the bank. we'll with their risk in the money in the bank you can only imagine what's going to happen when you think of italy and spain. >> a lot of people thought this was going to be the event that would trigger the 5% to 10% correction of the market or the beginning of it. >> right. >> it did initially. but -- >> it did initially but i think you still got the mario draghi comments. everyone calm down. this is not going to blow out of profession. and then the fed is going to come out on wednesday with the minutes. ben bernanke made it cleares he's not going anywhere.
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>> absolutely. >> it will protect us on the downside for sure. but i do think it feels a little bit tight still. i think we're going to churn. you might move lower. 1537, 1535 is the level we tested overnight and this morning. if that holds, that will good. >> see you later, as well. ty, up to you. cnbc has this story covered in europe. michelle caruso cabrera on the insides of that deal and reverberations. she's on her way soon to that part of the world. steve liesman on his way soon to westchester county. robert, who knows where he's going. what it might mean for russia's rich. >> nondisclosed location. >> tyler, i'm looking at the markets and the commentary coming in to my e-mail. i think knee-jerk contagion is now becoming contagion as some investors doubt that what's going on in cyprus is really raising concerns about the
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positive insurance worldwide. citi group in a report that just came out, contagion risks are over rated in our view. the risk of bank runs in other euro area countries has clearly risen but the unique features of the cypriot situation should limit the read through to other cases in the euro area. in case you didn't know this, issuing a strong statement the reassure american depositors. while the situation in cyprus is a real concern for the depositors in cypriot's banks, depositors in the u.s. banks are insured. the cyprus debacle is the sort of thing that has kept the fed on age and as gresive stance on monetary policy. fed would increase by 85 billion in additional mortgages because it's already on edge about that. the market is also on a no losers. if i want to give you a heads up on the cnbc fed chairman we're reporting tomorrow, we asked is the lack of crisis mentality a
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sign of real progress or only temporary? two-thirds view it as temporary. one other thing, i spoke with thrning to an official, he said there are big questions about the reported 10 billion euros. he said the number has been exaggerated by the communist government, the former communist government. the officials are saying the imf nor the ecb has independently verified this figure. tyler, i have a call in to the imf. i'm awaiting their response. 40% of the deposits in the cyprus banks belong to foreigners. many of whom are russian investors. robert frank here with the fallout on this. i guess it's easier for the cyprus officials to say let me take the money out rather than lay the whole cost of this bailout on cyprus' taxpayers. >> but the way they did it is surprising. cyprus is not just a tax haven for russia, it is the tax haven for russian millionaires and billionaires. russia has invested $119
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billion, that's with a "brks" in cyprus in 2011 alone. that's by far the largest recipient of russian investments in the world. equal amount of investment came back to russia from cyprus. funny how that works. russian investment is five times the total economic output for cyprus. russians account for $20 billion of total bank deposits or, tyler, as you mentioned, more than a third among the top russians in cyprus is the fert cider magnet now the biggest shareholder in the bank of cyprus. he has a lot of money in u.s. real estate as well. he brought donald trump's mansion and his daughter bout an apartment in sandy well. and alexander bought avraz steel. the mystery to me is why these wealthy russians kept so much money in cyprus when they knew the banks were in trouble. one reason is that there are fewer choices.
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if you look around the world, governments arie cracking down n tax evasion and money laundering. they're all complying with global capitalist. even with this 10% tax, cyprus may be the most attractive options for the russian rich. >> very interesting. and we'll follow that obviously going forward. michelle, the other shoe to drop according to some sources is potentially china, not that it is directly related to what's going on so much in cyprus, but because some of the things that are going on in china's economy are similar to the things that have hurt europe and the u.s. >> yes. they say they see thee things happening in china, which preceded what happened here in the united states when it came to the financial crisis. elevated property prices. we know all about that. that is certainly happening in china. the second one is, falling local government tax refrigerator knew. in other words, not bringing in as much money which is problematic because a lot of
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local governments are inat the timed over there. and then declining potential growth rates. they've already said that this year they're only going to grow 7 1/2% over in china. that's at least the gold. but far lower than what we've been used to from that economy. note from nomura to keep an eye on. >> the cyprus story comes back to the question of bail or fail. why not let the banks go? i feel story for them. >> i don't, either, actually. >> i'm kidding. >> if you let the banks collapse, you have to bail out the economy anyways, right? the money is going to come from somewhere. i think one way to look at there is to say, are you going to win austerity on the entire country and just go after taxpayers within it. if you do this way, you can go after individuals who don't live in your country. >> that's what we were saying with robert. with the appeal of this tax on deposits, is it, in effect, people who are not merely cyprus
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tax voters and payers. >> why doesn't russia come and bail them out because essentially russia is just putting money back into its own pocket. the challenge comes again when these voters, voters get in the way. would they pallet giving taxpayer money in russia to them because that's who has the deposits. >> you're assuming a level of democracy in russia that may not exist. seems to me that the putin government could do anything that it wants. >> or half the parliament doesn't have its money in cyprus as well. >> you didn't say politicians. >> we should say that rich russians have been keeping money in cyprus for decades. even during communism. so there's a huge tradition there deep into politics. deep in politicians. that's part of the why. >> why is the u.s. interest and the interest of the imf when it comes to this issue? are they happen p by to so the these guys who have been seeking a tax haven lose money because
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as you point out they've been going after what happened in switzerland. if the russians take a hit here, that would seem to be in the interest of the united states and some of the other developed nations in terms of stopping some of thisses taxes. >> let me get one final thought. jump ball here. if you will start talking money out of deposit accounts, doesn't that call into question the sanctity of deposit accounts all over the world? and most especially in europe? >> in sure deposits, absolutely. the violation here was to go after insured deposits. they have 100,000 euros and i agree. >> i think this is a specific situation where happened in cyprus, really what it does is raises questions about deposits in countries that do not have strong financial systems and strong judicial systems and strong will of wall. i don't think it raises questions about the united states or major countries in europe. >> i think it does. whether or not you can believe
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your insured deposit. >> if i was a depositor in spain, i would worry about this. >> i have no sympathy for people with above 100,000 in cyprus. >> i did. but every wealthy family in the world that has $100,000 or more in overseas accounts, they're asking themselves that question. tie another blow for boeing company. it's losing out on the biggest aviation deal in history and to his arch rival. phil lebeau is here. >> hear the lion war, places a huge order with airbus. why did they choose airbus over bowing? that story is coming up next on canth power lunch."
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splitting its stocks. jarden splitting three for two. coleman, oyster. shares of jarden over 60%. today down just a fraction on the trading session. franklin electric manufacturers and distributes. the stock splitting 2 for 1. it's up pomore than 30%.
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a big win for airbus over boeing. securing a $24 billion order from indonesian carrier lionar air. phil lebeau has this for us in chicago. >> this is a big deal because lion air is a long time boeing customer. today it has decided it is going to place a big order with airbus. this order comes to $24 billion, 234 planes. a good chunk of them being a new a320 fuel-efficient narrow bodies. it was announced in france. there you see the president of france along with the ceo of lion air and executives from airbus. huge deal for airbus because they are winning over a boeing customer. but in terms of recent big orders look at this list here. lion air has two of the three largest orders. 2013 for 230 planes. 230 boeing planes for 230 -- or
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$23 billion. so the question now becomes, what is the reason for airbus placing this order or lion air placing it on airbus instead of boeing. they need these as quickly as possible and the a320 neo, some are going to be built in alabama. meanwhile, they are trying to keep up with demand for lion air and the others looking for more fuel-efficient narrow body planes. you can see airbus has a bit of a head start with the a320 neo and that's why they have 2,000 orders. look at this chart. i can't get overlooking at this. a huge gain for parent of airbus over the last two years compared to boeing. up 118%, tyler and sue. that's the kind of return people will look at and say, wow, over two years you were better served being with aeds as compared to bowing.
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>> thanks, phil, very much. big day for upgrades and down grades on wall street p. should you buy verizon or hewlett-packard or kimberly clark? and look at the markets as we head out. it was a down day on wall street. but we're only down nine points now compared to a triple digit loss this morning. pretty resilient mark. [ male announcer ] i've seen incredible things.
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[ male announcer ] e-trade. investing unleashed. a hairline fracture to the mandible and contusions to the metacarpus. what do you see? um, i see a duck. be more specific. i see the aflac duck. i see the aflac duck out of work and not making any money. i see him moving in with his parents and selling bootleg dvds out of the back of a van. dude, that's your life. remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. i see lunch. [ monitor beeping ] let's move on.
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[ male announcer ] find out what a hospital stay could really cost you at time to analyze there because mondays are a huge day on wall street for equity analysts. a lot of reports come out on monday. cnbc contributor is at the cme. let's break down some of the calls. shall we, jim? >> sure. >> let's go with citi. upgrading verizon to buy from neutral. noting that shares haven't yet priced in, quote, the accretion prospects from possible leveraged buyout of vodafone ownership. price target up to 54. over two months verizon run up 14% over the past two months. what do you think, jimmy? >> i had to look up what
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accretion meant. normally that should flash caution. when they start talking about buyout, that can be a powerful price driver. i looked at the chart. to me, if it settles two days ago, higher. it could have a leg higher. i like this call. >> let's move on to morgan stanley, upgrading hewle hewlett-packa hewlett-packard. we see further upside to at least 7x. that's seven times. that's up, big move, jimmy. >> i think we should say shares have doubled in four months twice because that is a powerful move. i'm long hp. i have been long. we talked about this show a couple months ago. free cash flow and the potential for a nice dividend is good but i can't green light something that's rallied 100% in four months. i trimmed back my longs. i'm going to stay long. >> goldman sachs downgrading kimberly clark to sell. throwing out the tissues here to neutral following a meaningful positive rerating stock and
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ahead of projected rerating growth. stock year over year is up 25%. there you see it. tissues out or in? >> it's still the goeld cold and flu season in chicago. tissues are still in. it seemed like they were saying some of the stocks had rallied so much from an evaluation standpoint they don't like it anymore. kimberly-clark put in a high over a month ago, trading si sideways since. that 3.5% yield compared to the 1.9% in the ten-year looks good. looks like that yield might not be rising as quick as we thought in the ten-year. >> jim, see you later, buddy. the market flash, josh? >> hey there, tyler. check out jacobs engineering. ticker jec. in the green today, hitting a 52-week high. now up some 27% this year. sue, over to you. >> thank you very much. europe's bailout plan for cyprus sparking fears.
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sharon epperson at the nymex, worries over cyprus, gold prices settling right now above the 1600. now it's level. this is the first thyme this has happened in nearly three weeks' time. there are, of course, many factors that traders are watching but they're also watching whether or not there will be more momentum to be up 150 side if we see prices go above 16.10 an ounce. 1700 for this year. we're looking at copper prices that are telling a far different story. weakness in copper as we are seeing housing data in the u.s. worse than effected as well. metals market, mixed. sue, back to you. >> thank you very much, sharon. women, let's get the trazing action here. we are now down only 24 points.
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>> we were higher for a nanosecond. by and large, that hasn't happened. we're off of our highs briefly. the dow is positive during the day. if you take a look and that was just after 12:00, if you look at the sectors, a little bit more on the defensive 150id but even the financials, i would note that we're on the weak side here. look at this. bank of america is positive. citi group is the most exposed than any of the big banks. as for the rest of the market, very contained damage. so caterpillar and pfizer and all the big tech names in the dow has been on the upside throughout most of the day. china has been weak again. not just on follow over worries of cyprus but property rises have been a real issues in china. over the weekend, we got more property data. big increase in property prices. beijing went up 2% month over month. from one month to the next month. huge move. shanghai was up. that plays into the -- we've got
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to slow the markets down in china crowd who is arcing inplace is getting out of control. that's one of the reasons we're seeing voter countries weaker. copper plays into that whole china slowdown. >> absolutely. i think china is key. kenny is back with us, as well. you know, i'm i'm priszed with the market's resilience. a little bit worried about it, as well. we have the fed tomorrow. >> tomorrow and wednesday. i don't think you will get anything new out of the fed. if anything, i think you get more support out of fed in light of what's going on in europe. the cypriot banks are now closed in until thursday. >> the vote might not even be tomorrow. >> the atms are out of money. >> the best way to get people to want to get their money out of the bank is to close the bank. >> absolutely. >> everyone says, you know, cyprus is small, don't worry about it. but nervousness will start to permeate. rightly so. >> sets a precedent. >> it does set p press sent.
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light rightly so. there's more volatility to come. i wouldn't be surprised if the us under a little bit more pressure. >> once again, the markets have convinced themselves that this is a often off event. even the -- >> greece was supposed to be a one off event. >> i agree with your point. i thought it was shocking that they would confiscate the deposits. >> insured deposits. >> now the argument is that this is one one-off event because of the unusual status of cyprus and if thakt that it's used as a haven to hide money or offshore money. i think that's abuse. it's true. >> putin came out yesterday and went, oh, no, we don't like this idea. they're going to be going -- you're going to go this thursday morning and be down 10% in your bank account. i'm not sure that that's going to go very well with a lot of these russian billionaires. >> does it put the whole eurozone crisis above domestic
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concerns, in your opinion? >> i think it does at the moment. it kind of elevates it to the top of the line. you could feel the nervousness. last night the minute asia opened you could feel the nervousness. rose right to the top of the line again. people are not convinced yet. >> yet, there are plenty of programs to keep the banks in line and protected. bond buying programs, ltros. all sorts of things. there's no lines out in front of the italian atms today. >> not yet. not yet. >> we'll see. thanks, gentlemen. a preesh yeah it. let's head uptown to the nasdaq where seema is following. >> weighing on tech but not as much as you would think. apple out performing the pack. rising optimism that apple will up the give vend. that's helping the shares move higher today. last week we spoke about how some traders see apple as a safe haven trade. it typically gets a bid when the market is lower. that's what we're seeing today.
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hewlett-packard on that morgan stanley upgrade. the analysts writing that ceo meg wittman is affecting a structural change and employee morale is improving. other tech names are getting a big microsoft intel. up on the day. on the losing side, online travel stocks like expedia, price line are trading in negative territory. both stocks trade at a premium through the s&p 500. sue, back to you. >> thank you. to chicago where the bond market saw a flow. rick santelli is tracking the action for us over at the cme. hi, rick. >> hi, sue. indeed i think those that study history are more bugged by what's going on in cyprus than those that study charts or trade financials or any other market is evidence by how well they've come back. look at a two-day chart of tens. certainly rates are lower but many thought we would see a little bit more flights to safety. look at a year to date.
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lows of the year. if you look at the trench, the oats, their ten-year, pretty much the same pattern. the stock market, the dax in germany and the cac in france, their patterns are very similar to the dow. on the foreign exchange side, the euro chart going back to december says it all. this made a difference in the foreign exchange market. low slow since november. we are well off those lows. tyler, back to you. >> all right, thank you very much. let's get back now to the mediterranean and the story putting the fear in the heart of anyone with a bank account, certainly over there. michelle caruso cabrera back here talking about how and why depositors may have to foot this bill this time. >> the headlines for cyprus is the following. they got a bailout. we've seen a lot before. what's different about this bailout is they actually are talking about taking deposits from bank accounts, everybody insured deposits, and that's made people extremely nervous.
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>> imagine if you did that here during the t.a.r.p. program it. >> would have been armageddon. it's led to a lot of fear across europe. we haven't seen as huge a falloff as some expected in the markets but because we're waiting to see if they are going to make changes. let's show everybody where cyprus is. it's a small island close to greece and turkey. thank gosh we have google maps to show you what's going on. it's become a haven for money. this is a country that despite it wanted to be a financial center so it tried to attract deposits in very large scale with low corporate tax rates and discretion. in other words, they would look the other way when it comes to monte laundering, tax evasion, et cetera. they bought a lot of greek debt if banks in cyprus. and they went bust because of it. now they need a bailout. here's are where things stand. over the weekend they said, this bailout, we're going to start taxing depositor, even insured
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deposit depositors. now we are wait for another another plan to emerge where perhaps the small insured depositor doesn't get hit but we haven't seen the details yet. a waiting game there. we are told that perhaps when they finally have a plan, parliament might vote tomorrow. parliament was supposed to vote sunday, today and now saying that maybe parliament votes tomorrow. we are still waiting for the banks to reopen. atms, i am told, are being topped off and providing cash. however, they've already removed the amount of the tax that had originally been proposed on saturday. we are still waiting for the banks to reopen. again, they said it would happen on tuesday and they said it would happen on wednesday. now they're saying the banks will reopen on thursday. we will have to wait and see. the size of cyprus' banking sector is huge. it's just incredible to grasp. the u.s. banking sector, to be as big, equivalent to the size of our gdp as cyprus' gdp we
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would need 45 more jpmorgans in the united states. that's how big cyprus' banking sector is. so, what do we have here? this is from barclays. this is important. what it tells you is how much money has been needed to bailout the banking sectors of various countries based on the size of their gdp? this is cyprus. a country with about a million people. the biggest, 60% of gdp, and the reason part of that is in light pink is because the first time they're going after depositors. the dark pink has been official money, taxpayers from other parts of the european union. see how much smaller the bank bailouts have been in other parts of europe? this is why, tyler, they've been able to argue this is unique case, not a contagion. >> it's a banking haven and attracted all of those foreign deposits. and the other part is, capital, sovereign capital? >> german. yeah, that's the rest of the european union. the european union is going to give them $10 billion but they
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insisted is cypriots come up with $7 billion as well to get it to a total of $17 billion. >> hope to see from cyprus tomorrow. good luck. >> i love the word cypriot, don't you? one of my favorites. >> have a good time over there. >> thanks. >> take plenty of cash with you. while the european union tries to contain the debt crisis over there in cyprus and elsewhere, the u.s. is trying to prevent one. our chief washington correspondent john harwood has the latest on the possible deficit reduction deal. hi, john. >> it's an interesting blend of confrontation and cooperation. call it a controlled battle because you've got the u.s. senate today taking up a bill to avert a government shutdown by sustaining government funding beyond march 27th. the house has already passed the bill. there are differences between the two chambers and the two parties on what they want to do to the effects of the the bill. it smoothed out some things. made it easier for the pentagon to adjust. the senate has other departments
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which it's trying to help. still some disagreements there. but they expect to be worked out by the end of the week. at the same time, there's a huge gap between the two long-term budget plans that the two parties are pushing. and john boehner over the weekend said, we're done with tax increases. he was repeating that position. the house white house responded, the senior adviser, saying no deal is possible as long as john boehner is in that place. so that's where we are, sue. you've got on the one hand the two parties working together. they are like my to avoid a government shutdown. still fighting and will be for months over the long-term situation. >> wow, john, thank you so much. let's recap the day's other big headlines driving today's session. united technology upgraded to a buy at citi. the firm siting attracting situation. extended delay involving the $21.1 billion to buy mexico. anheuser-busch said they made
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substantial progress in resolving the doj's concerns. constellation brands want to buy them under the same deal. walt disney films "oz, the great and powerful" coming in number one for the second week in a row taking in $42 million in north america ticket sales. ibm out performing the tech sector over the past year but can the global tech giant avoid big terms. from former ceo. we have that part of story. amman? >> sue, it turns out a it pays to be the former ceo of ibm. when we come back, i'll bring us some surprising details inside the retirement package of the former ceo and chairman of big blue.
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this is the kind of retirement most americans would love to have but it may end up triggering investor outrage.
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sam palmisano retired in december but still getting major perks. we are in washington with some of the details of the perks. >> that's right. in a proxy statement filed last week and written up on the blog's, ibm said it will pay $1.03 billion for administrative support including space renovation for retired chairman samuel palmisano. on top of that he's entitled to a consulting fee of $20,000 per day if he's asked to do work for ibm. he has to work four hours. less than four hours and he will be paid $10,000 per day. ibm spokesman confirmed the expenditures but would not provide detail on where the office is other than to say it's off the ibm campus. one long-time compensation critic calls those perks outrageous and horrifying. he says if anybody can pay for his own office spait space, it's the former ceo of ibm.
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what's the return on investment for that? it's nothing. palmisano was a highly regarded corporate leader. driving profitability and share price growth. palmisano ran ibm until 2012. the stocks doubled in that time period. the market cap jumped 30%. says the total value of his compensation could be nearly $271 million, but a spokesman for ibm said that calculation will not necessarily prove correct over time. it's based on in substantial part on a number of assumptions and speculations on the ibm's stock value and performance well into the future. sue, ibm said the proxy statement contains a full explanation of how they're linked to the company's performance over time. >> nice work if you can get it,
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i guess. >> that's right. good to be retired. >> yes, it is. the cyprus bailout backlash. they could be taxed in exchange for a $13 billion bailout. do you think that's the right move? plus, blackberry ceo calls the iphone old and dusty. does apple's most popular product need a makeover? we'll talk about that when we we'll talk about that when we come back.
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coming up, everybody, the top of this buy now you, the cnbc viewers, shawn well acquainted with what is going on over in that island in the m mediterranean cyprus. however, we're going to take the tack of whether those whoas are good for us. they make our banks look more attractive, markets look more attractive. even our dollar more attractive. we're going to look at the good things that could come out of that for the good old united states of america. cramer says apparel is not the place to be right now. is he right, is he wrong? expert on to talk about that. and all the stocks that could be effected by that statement. all those things coming up top of the hours. guys, see you on "street signs." >> all righty. our time for the power run down part one. with us today, bob pisani. cyprus, verge of collapse. finance ministers from 17
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eurozone nations are holing a conference call tonight. talking about a bailout. what will the terms be. is this a one off or are the possible reverberations more global and severe than this? bob? >> i notice there are no lines in front of the atm machines or no bank runs. that wasn't my worry. i have two worries. this is going to strengthen the anti-us aausterity crowd. in italy, it will be tougher to form a political organization in europe or government in europe because the anti. austerity people will have their day. secondly, there's been talk about a banking union in europe. one of the aspects of a banking union is common deposit insurance team. how are going to do that? even if they say it's. >> do you agree with bob that this strengthens the hand of the anti-us a terrority people? they could say look what's going to happen here if you go with
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them? >> absolutely, deficitly, certainly. bob is right about that and totally strengthening them. i also want to think about for a moment what this means to domestic u.s. investors. it's one of these things that was on almost no one's radar screen. it's another black swan event. >> absolutely. thanks very much. maybe it's a tiny black swan. we're going to talk about a goldman raising the target. will the rest of wall street follow and up theirs as well. the march of the banks. much, much more on today's power rundown.
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power run down with bob
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pisani, john carney. let's talk about goldman sachs. raising the year end s&p target to 1675. that's 100 points higher. like the annual march of the penguins now, folks, will other wall street banks start to follow goldman's lead and take it right off the cliff? what do you say, john? >> i think absolutely. we're in a situation where the economy is improving. earnings are going to do better than people pecked. remember shs we had a lot of negativity about what was going to happen this year. we're in a situation where if the economy doesn't do better than we get more qe. if it does improve, then the economy sim proves. earnings are better. everything goes up no matter what. >> bob, goldman is not the only one who has done it. other analyst, independents and others have done the same thing. >> key thing is gdp numbers were raised. retail sales numbers were better than expected. i think john's right. they'll do that with s&p numbers, although i haven't seen a lot.
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the only other one is isi. they had 1668 and now at 1690. they raised it. >> this is very healthy thing. we want the s&p to be going up based on stronger earnings. not just based on financial magic. that's what seems to be happening. great. >> mayor bloomberg is good for a topic here. he's decided he's going to ban cigarette advertising in the city establishments, keep all tobacco products complete out out of sight behind car turtain. i have to say the quality of life in new york is much better since he has banned smoking in bars and restaurants. >> yeah. i generally support the mayor. i think he made the wrong move on the beverage thing. and unfortunately he's sort of becoming an exemplar of people who are worried about the endless nanny state. last week beverages didn't work. this week we're going to ban advertising and may be a legal basis but it's never going to end. beef is going to be next. we're going to reduce the size
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of our hamburgers next month. >> i think we need to let people live their lives. let them alone. stop the entire wrens and the busy bodies trying to decide how to run everybody's lives. i don't think that many kids are really being drawn into smoking just because you can see, you know, a pack of parliament lights behind the counter. i don't think that's the issue here. >> moving on to the pot meat kettle department. blackberry has claimed the apple iphone is, quote, old and dusty. john? >> well, hold on. okay. i blew the dust off my iphone. good point. the fundamental technology has not been updated. the way you interact with your phone has t not changed very much. apple needs something new but it's not clear that what's new is going to come from apple. >> is this the guy -- is this the company that stock went from $125 to $6? and now they're at $15 and they think they're innovators. are you serious?
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of all people. yeah, maybe it could use a little spruce up. this is serious. it's going to get better and better and it's going to talk to you. in five years 20% of apple users are going to name siri as their best friend. >> i think apple is going -- >> it works fine, the iphone. >> working fine isn't good enough. it needs to work better. i think apple asked the people, they may be able to do it. i don't think the new technology is going to come from blackberry though. but it could dprom someone we've never even heard of yet. >> guys, thanks very much. terrific. we'll be back in just a minute with a final check on the markets. they are holding in pretty well. down just 22 on the dow right now.
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