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tv   Street Signs  CNBC  March 22, 2013 2:00pm-3:00pm EDT

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some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. [ male announcer ] this is a reason to look twice. the stunning lexus es. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection. . 14,500 on the doug, where we are, up 79 point. watch before the end of the day that blackstone could counterbid for dell. it's only a possibly, but deadline is midnight. here are the main gainers. since you can see mike ron,
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nike, hp, time warner cable, and tiffany, tyler. >> look at that move in nike. to your point, if you look at the dell stock price, it is trading above and not by a small couple of pennies. the price that has been offered in that michael dell and the capital group offer. >> i think the feeling is they will still sweeten it very slightly even if it is michael dell and his cohorts. >> have a great weekend. that does it for "power lunch." >> indeed, "street signs" begins right now. >> down one year and up big the next. we are going to show you four companies who stunk it up 2012 only to smell like a rose this year. opportunity or take the money and run? we're going to find out. ethanol, some love it. to others it's a four-letter word. general wesley clark makes the case for the future. we'll debate it. and why this may be cyprus' last weekend in the euro, and could
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beaten up steel, coal and iron ore, the old stuff, mandy, be your best investment for the next decade? we'll find out. >> indeed we will. let's take a look at what the markets are doing. moving to the upside here at the end of the trading week, and indeed we are going to try and close positive for the entire week if the dow closes in the green. it will be the fifth consecutive week of gains. let's get straight down to bob pisani on the floor of the new york stock exchange. five weeks and counting. >> yeah. >> what do people say about what's going to happen next week? >> it's going to be a holiday-shortened week. easter and passover are coming but the momentum is still there and there's a belief that cyprus will get resolved. italy will have drama trying to form a government. 14,514, what we need to get positive on the week. 14 points short. believe it or not, the worst week all year. that's how strong we've been. the dow up 11% almost for the year. take a look at the media stocks. bill grifr it and i were talking, the ceo of hbo talked
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about unbundling it. guys make too much money keeping the bundles together. time warner is up, comcast is up and netflix down, a negative for them. this is a great idea but don't expect it to happen any time soon. steel stocks, could it get any worse? ak steel lowered their eps guidance, a ten-year low for ak steel. horrible for the steel companies overall. finally, good day for the earnings. mike ron, nike, good ones with tiffany as well, but remember, mandy, oracle and, of course, caterpillar and, of course, federal express. hard to get rid of those three earlier in the week. back to you. >> absolutely. by the way, you mentioned ak steel. we'll be talking about resources stocks later on in the show. >> well, to cyprus where things are starting to get real. cash is running low and tempers running hot and there's new concern that cash may not be the only thing in short supply. michelle caruso-cabrera is live
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in nicosia. are there rumors about things potentially about food supplies because suppliers aren't being paid? what are you hearing? >> reporter: well, we are hearing people concerned about whether or not within the next couple of days that perhaps we see shortages within the supermarkets because just like we're starting to see with gasoline, you have to pay in cash because suppliers are demanding cash, an if you're importing anything you have to pay everything up front. cash is in short supply because the banks aren't oh. you can do wire transfers. becoming increasingly difficult. 11 hours ago parliament was scheduled to vote on a law that would allow the central bank to restructure the country's banks. so far there has been no decision yet. we are still waiting. we have been waiting and watching all day the sausage get made here. parliamentarians running around and making statements, et cetera. one of the more surreal
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arrivals, take a look at,video, is whenever the bank workers, employees union president shows up. there are lots of ways to get to perreault, but he chooses to walk through the crowd, and then when he gets to the fence they literally pick him up and haul them over the fence. seen them do that twice now in the last 48 hours. i spoke with him as he was going into parliament, and his concern was if they restructure banks, he knows employees will lose jobs. he says it's not their fault. here is what we hear over an over again from all of these people. it's nobody's fault. nobody will take any blame for anything that's happened here, not bankers, not the politicians, no one and what someone doesn't seem to realize is someone somewhere will have to lose some money so this will work out and they can reopen the banks on tuesday. >> michelle, certainly nobody is blaming the people of cyprus, but at the same time if you live in silicon valley you know your economy is heavily technology, right? do the people of cyprus realize
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that their banking system was eight times larger than the economy? i'm sure they did reap some benefits from that at some point. >> reporter: they did, and they loved it. they were exceptionally proud of the fact. they think it's a wonderful thing. think it made them very wealthy and it did. the problem is now we realize it was built on a very, very weak base. you know what is surprising me, brian. when i arrived here, the big drama when this all started we asked how could they tax deposits below 100,000 euros, how could they violate that trust of insurance on deposits? when i got here, what i discovered is that a lot of people who were here were angry at any tax on deposits at all because they felt it was an affront to the entire country. this is our business model. this is the way our economy works. how do you tell us to run our business? they didn't want the millionaires and the billionaires taxed either so it's very much engrained in the society. >> and just proves once again that there's no such thing as a
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free lunch. great footage and great reporting. should investors here, for example, in the united states start to pay more attention to what's happening in cyprus? let's ask the chief investment strategist at raymond james. what do you think, jeff? you're a smart guy. >> the stock market is telling you the cyprus thing is going to be a non-event at least so far, that it's not going to have collateral damage into the rest of europe and that the earnings in this country are still going to come along pretty good, and we won't be pulled into a recession by what's going on in europe. >> what would you be doing then, just putting it aside as noise and just investing on other things, you know, like corporate profits and fundamentals in the economy? >> yeah. i think that's right, mandy. i think that the earnings are going to come in better than most people think, revenues increase better than most people thought at the last reporting period. you'll probably trim some positions here. we ended up purchasing cvs in the mid-20s which our
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fundamental analyst says it's a positive rating on the fact that obama care would drive more traffic into the stores. the stock has doubled and taken money out of that and put it into walgreens where there's a fundamental positive rating on that one. >> some earnings have come out have been a little less than exhilarating, fedex, caterpillar, big industrial, big global companies, earnings not great. that doesn't seem to be concerning you though. how come? >> well, if you look at the aggregate earnings of the s&p 1500, i believe 68% of them came in above the estimates for the fourth quarter of last year and something like 64% of the revenue estimates came in better than the analysts that estimate it on revenues. i think you're going to see the same thing going for a. i think these are one-off items. i think that the overall aggregate earnings, not just for the s&p 500 but the much broader s&p 1500 will continue to come in better than people expect. >> okay. i'm going to make you do a little bit of extrapolation here, jeff. if we took away the fed right here and were just being based
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on the earnings coming out and the data points that come out each day, do you think the market would be doing as well as it is? >> probably not. the liquidity that's been put into the system has not got a lot of other places to go other than into equities. looks to me like the bond market made its yield yelp low on the ten-year and 30 years, you're seeing a switch in into dividend paying stocks. i think that continues going forward. >> jeff, thanks so much for joining us today. >> a pleasure. how do you go from stock market zero to stock market hero? not a lot do, but some have. in fact, take a look at these companies, radioshack, supervalue, best buy among worst performers of last year, but when i ran a screen this morning, who came up as some of the best performers this year, yeah, those same names. look at those, folks, radioshack, supervalue, best buy, all soaring this year. why? we're going to find out coming
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up right now, the preponderance of woolsey asset management. listen, the only thing that i can see that's changed is the calendar. >> right. >> the number you write on the check, and yet the traders, and i don't even want to call them investors because it appears more like traders, are bidding these things up. how come? >> brian, you're so right on that. these are trading stocks. two of the three are not investments. one is investment. i'll get to that in a minute here. don't follow because the stock is up 60%. going to be up another 60%. that's not true and if we look at that closer, i'll pick on radioshack a little bit. radioshack, i liked this company about four years ago, about $7 a share and at its high of 20 i thought it was worth 15 and beyond that, that was a different time. the stock is up now 70% so far this year. gosh, look at the fundamentals of this company. sales down 3%. earnings, down 318%, projected to lose 44 cents this year. >> so what's pushing it up? what's been pushing it up then?
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>> the speculation that people think that something could happen, and if you're going to get into a radioshack, i think you're best off buying the bonds because they have a book value of 64%, so this company is not will it file bankruptcy? i think it's when so if you want to invest in the company, don't buy the stock, buy the bonds, and everybody says oh, a $3 stock, a $4 stock and bid it up thinking they are making a big deal. don't be the last one to close the door because you'll be holding the bag. >> and supervalue is up 107% year to date. last year it was down about 70%. i believe you said this is so scary it could be a halloween pick. >> exactly, mandy. i mean, this company is so scary. when i lock at this company here, our earnings per share up 8.3%, that's okay. let's look at what the company has going forward. goodwill of 847 million and tangible assets of 703 million and the debt is 6.4 billion. that's billion with a "b" and
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the equity in the company is 7 million. that's down from 745 million last year and while stock is going up, the company is just falling apart at seams. another company, i can't tell you why, going to file bankruptcy. >> went to the headquarters in minneapolis, did a huge deal, loaded the company up with debt. the interest rates are sky high. best buy though, brent, best buy down 50% last year. it is up almost 90% this year. in other words, almost climbed all the way back. a lot of talk about a buyout, but that seemed to have waned. why does this company continue to accelerate in 2013? people were leaving it for dead last year. >> and, brian, this is a company that's different than the other two. got to look at fundamentals and what best buy does. everybody is concerned about amson. amazon this, amazon that and you might get a cheaper product there, but i think there's a lot of guys out there like me that i buy something from amazon. it will sit in the box because i have no clue how to hook it up. >> me, too, so i need somebody.
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i think what best buy is selling, is not just a product but relationships. when i go to best buy, i feel good about that, and on top that have they have good fundamentals. the earnings per share up 77%. the debt-to-equities only 77%. don't forget there's a 3% dividend while you're waiting for the stock to move and the cash flow last year was 1.6 billion, and that dividend only cost them 226 million so looking out. i think the stock is worth somewhere around $35 a share which would be another 60% gain there. >> i was going to say. my stock draft pick. the stocks draft is over, but i'm officially in the money on best buy, and if brent is right, i would have won the doggone thing. >> if only we had the crystal ball that could look backwards as well as forwards. meantime, let's chesend it over josh lipton. >> take a look at groupon which is rallying. i checked in with katie stockton
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of mkt partners and points out that groupon is testing its 200-day moving average. at 572 so traders might think there's a breakout above the 200. stocks also saying even after today's move still not looking overbought. groupon up nearly 5% right here. back to you guys. >> thank you. >> all right. on deck, a mixed bag of food head lives. first, will the switch to lighter, leaner menu items be a healthy pop for fast food stocks, plus, the baco -- a taco made of bacon, folks. we have it here. baco. whatever it's called. it's delicious. >> that's all that matters. later on as well, we'll be sitting down with former nato commander general wesley clark. he's going to go after big oil with a big bet on ethanol. is it really the answer though? ♪ [ indistinct shouting ]
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[ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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olive garden parent darden touching estimates for the third quarter. you can see that and third-quarter net income dropped nearly 20%. darden restaurant, liked olive garden, red lobster and longhorn steak house losing market share to restaurants like chipotle and panera. >> check out some of the new items on their menus. at mcdonald's, an egg white breakfast sandwich and burger king has veggie and turkey burgers on their menu.
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are consumers and investors and you chomping at bit for these so-called healthier items, and just how healthy are they? >> joining us from north coast research is bob darrington and nicole miller from piper jaffrey. bob, i'm going to pick up on that idea that maybe they say it's healthy but it isn't really as healthy as they say. >> well, you know, to be fair, i'm not even sure consumers really know what the term healthy means. the usda and the fda don't generally agree on the exact same definition, and i think broadly consumers think healthy means lower calorie which sometimes that's right and sometimes it's not. >> do you think that people are going for this so-called healthy stuff, because i don't know about you, but when i go to mcdonald's, i can get as many free refills of a soda but i have to keep paying for more orange juice. more expensive to go healthy. >> there's something to that, and one of the main things that the restaurant industry chains are doing today is they are trying to evolve their menu to
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be more responsive, you know, to shifting consumer demands and especially as affordable care act or the food police essentially mandate that they come on by the end of this year. >> nicole also, it help or hurt sales? >> bottom line it will help, but while it's a sincere concern in terms of the nutritional aspects of the menus today, at the end of the day it is about menu engineering, filling in the gap and making sure you have tiers as it relates to price point and all the new items really are hitting the margin targets to fit that profile. >> but to brian's point, whose sales will it help? whose sales might it even hinder, nicole? >> well, it's going to help mcdonald's and burger king from a variety perspective. customization perspective. i mean, let's be honest. food brings people in and service sometimes sends them right out the door so this food thing that we're talking about, the nutritional aspect, that's
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one piece of the value proposition. >> bob, what's your investment play on this move? is there an investment play on this sort of push to quote, unquote, and i take your point very seriously and healthy in quotes? >> yeah. you know, to be fair, when we look at some of these fast food chains and we even reviewed the -- the menu of chipotle, a quality meal at a reasonable price and they are getting a fair amount of protein for the dollar they pay. >> what about you, nicole? what recommendation would you have from an investment point of view? >> burger king remains one of our top picks, very contrarian. from a stock perfespective it's undervalued and underappreciated. what the company is doing is filling the menu gaps and that's where the turkey burger and
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veggie burger come in. they are filling in the gaps with salads and chicken and ice cream as well which they have never had, so they are doing both healthy and not so much. >> not so much. >> that's the key, right? >> bob, nicole, thank you so much for joining us today. still ahead on the topic of healthy, by the way, you know, actually not healthy, but delicious. the great bacon taco taste test. >> and the one airline out with a new perk for anybody who does not take a carry-on bag, but will it be enough to get people to pay the bag check fee? that story is coming up. >> time now for today's return on retirement. some wealthy workers could be in for a big shock when it comes to their return on retirement. charl charles can schwab asked its clients how much they would like to live on each year when no longer working. that magic number and why it could be an issue coming right
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...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. back now with today's return on retirement. 66,000, that's what charles
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schaub investors with more than $250,000 in assets think they could live on each year in retirement. the problem, the same investors are making about $115,000 on average right now from their jobs. so they are going to need to start saving more or spending less to make up the difference. >> who was that voice? >> i don't know where that voice was coming from. >> who was that? what is that? >> i have no other. the other australian anchor who works here at cnbc. >> like three octaves deeper or hello, i'm mandy -- >> not much oxygen in that little recording booth. >> there you go, that's it. >> hey folks, check out the airline index, high. pulling back a bit after touching its highest level since 2007 yesterday and check out some of the best performing airlines of the week. spirit, delta, u.s. airways and united which names all of them.
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>> well, american airlines is testing out a new boarding procedure that would allow you, the passenger, without carry-ons to board first. >> that's genius. people don't check their bags because they say it takes too long. want to carry them on. if you didn't carry on any bags, would you probably end up getting out of the airport faster because you would get off the plane in about 30 seconds, right, and would you take off faster because it's always the three people left who don't have room for their carry-oncarry-on. got to gate check it. been flying a lot lately. good job, american. using a little brains in the airline industry, it's shocking. >> i wonder whether it will make more money from doing this as well, because i don't know about you because i've always got stuff with me so instead of taking it on board as a carry-on i'll check it and what do you do when you check it, you have to
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pay. >> purse, right? women are going to carry purses, do they mean overhead carry-on or any bag at all? >> i would say it's an overhead because every woman needs a purse and i can't imagine that they would put that in a category. >> paying for premium boarding status by checking your bag. encouraging you to check your bag. >> sounds like they would make more money from this. it's a win-win. we win, they win. well done, american airlines. they will roll it out i believe in four cities. >> compensates for your crummy new paint job. coming up next, street talk with a big energy drink warning and an under-the-radar bye tech stock that is soaring. >> what could end up being inside the world's most essencive divorce and "street signs" will be back in just a moment. scottrade. i can always call or stop by my local office.
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they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience." a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is,
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tgif friday edition of street talk. one stock you really must know a lot about, lulu lemon continuing to drop. >> now down 6 bucks from a few sessions ago. the stock down more than 4% today. the ceo saying they could lose
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as much as 40 million bucks in what we call see-through gate. pulling defective pants from the shelves. customers can get renowned. downgraded from a sell to an underperform. >> target cut to 55 from 79. >> also, monster beverage. those shares down as well. there was a front page "new york times" story about the potential risks of energy drinks that they could increase blood pressure and cause erratic heartbeats. the research analyzed seven previously publicized studies at the annual heart association meeting. so far monster has not commented but investors have setting a stock down 4%. >> picked all the negative ones and the tanking stop sto ining tibco. >> they expect adjusted gps 17 to 19 cents. 26 the estimate. revenue also seen light. folks, not only is it bad, this is a $34 stock last april, and
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outsourcing basically software firm. >> down 33% over one year. mike ron technology, however, is a big gainer today despite the fact that it posted a quarterly loss. what's pushing it up? >> it's pushing it up because they said the outlook for memory chip prices is getting better. the memory in your computer prices have been whacked. starting to come up. rbc raising their target from 12 to 10. the rating though on mike ron says outperform. >> and this is the answer to that teaser that we gave you before the break. halozyme therapeutics soaring. >> this is a stock you need to know about and the stock big enough for us to talk about. they said that them and baxter said that a european medical agency has granted a positive opinion to baxter for the use of one of halo's drugs for immunodeficiency disorder. basically here's the thing. positive street trials.
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baxter getting a positive opinion ruling from europe. it's the little things that seem obscure,ton to be honest hard to understand. >> biby the way, just as were you speaking there, year to date is up by 1%, up by zero%. >> they can go the other way. you've got to be careful with biotext. >> absolutely. all about pipeline, pipeline, pipeline. make or break time for the company formerly known as research in motion. the blackberry z-10 hitting at&t stores jon fortt, just how is demand? >> not hearing anything about z-10 lines, wouldn't expect it out here because iphone and android country in silicon valley, but even there in no, once the crackberry capital of the world, still no lines. jackie d'angelis said they sold just a dozen in one new york store through the lunch hour. folks on twitter report there aren't any lines around capitol hill in d.c., either. at&t did open pre-orders back on march 12, to be fair, but it's
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unclear how well those went. blackberry never said they ran out and jeff johnston, analyst at detweiler fenton showed his pre-order orders were light. overseas where the blackberry originally launched, things might be cooling off, too. deutsche bank checked 60 stores in the uk and canada. none has sold out and two had cut prices so maybe that's what's been weighing on blackberry's stock this afternoon trading. it popped at the open to a high of $16.82, now down, whoa, more than 4%. dropping a lot just in the past few minutes. where do we go from here? blackberry will report earnings next thursday, and from that we should start to get an idea of how pre-orders went and how demand is holding up for its older blackberry 7 devices which are really important to profitability. the most important number in the report, going to be the subscriber number. blackberry 10 phones won't bring subscription revenues that older phones do and because they started losing share precipitously two years ago, i
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suspect while subscribers were down 1 million last quarter, they could be down more this time. >> jon, thank you so much for that. you were making an excellent point. with blackberry it's not like you or i, you go in and buy one at the store. this is something that enterprises drives. >> you're given a blackberry. you join cnbc, here, mandy, thanks for using at us. use this blackberry so you're connected 24/7. >> got to be careful not to overanalyze jon, most people were given a blackberry by their employer, right? >> not most. blackberry's shift a couple years back, really pushed hard into the consumer market so while the enterprise is their core, the big pop in volume that they have gotten i guess is over now, over the couple years of their run-up was consumers, so they really need to have some foothold in that market. >> we'll see if blackberry can enjoy the fruit of its labor. >> stick around, because guess what? blackberry shares are up this year. apple stock down nearly 14% this
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year and our next guest says apple may introduce a cheaper iphone which could add 50 bucks to its share primpt joining us on the cnbc "newsline" is an analyst at rbc capital markets. why do you believe that apple would introduce a cheaper iphone and also if they did it may jump sales, but would it also crush margins? >> yeah. good afternoon, guys. the reason that we are, you know, talking to clients about this event is, you know, our supply chain checks that apple is ramping up not just to launch an iphone 5s which is fairly well expected but also a lower form in the july time frame i would peg it out, and the reason you would want to do this is really simplistic. apple is fairly well saturated. a 40% plus share in the premium smartphone market. kind of the parts of the world where they are really struggling and don't have a presence, i would say is emerging markets where, you know, units are in the 350 million range and
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growing out at 35%. i think china and india and so on. a low end form with a plastic casing, probably no display, call it a 250, $300 asp could go out and target that market very well. >> is there any case at all to only target emerging markets with a lower-pricedin phone? you know what, a lot of developed markets, a lot of saturation but there's kind of a cache, kind of an apple product with a much higher quality product than some of the other competitors. >> you could actually have a potential market in developed parts of the world. some could use a lower end product because they don't want to subsidize and maybe a high end could be a better looking phone, better quality but also a 4g-lt enabled and another 3g with minimal memory.
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when we did the teardown on the margin fronts, we thought you could still do 38%, 40% margins so not as great as the blackberry flat rate. >> okay. we have to leave it there. thank you very much for joining us. microsoft and apple and adobe are really on the hot seat in australia because the parliament wants to know why all things tick cost so much more in australia than anywhere else. a microsoft office suite. that costs 2,300 here in the united states and costs 4,100 in australia, and i have my ideas on why this is. what do you reckon, brian? >> got to ship them and when they get to the port have to put them on seven backs of the kangaroo and hop across the great gobi desert. >> you read microsoft's press release. that's exactly what they said. microsoft basically said, you know what? we don't have a global price, not one standard price for every single country. we look at each individual market. we work out whether it's highly
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competitive and less competitive and put a price that's appropriate. >> here's my real answer, why do they charge more? because they k.because if it sells, that's the appropriate price. >> yeah. >> why government shouldn't mettle in free markets. if it was too expensive nobody would buy it and microsoft would cut the place. >> supply and demand. >> and i will discover next week, everything is damned expensive. >> very excited to be going home to australia. >> what could be the world's most expensive divorce. >> and who is is the real enemy, ethanol or big oil? a heated debate with general wesley clark, but first bill griffith, what's coming on "closing bell"? >> mandy, you're from australia. no idea. >> coming up, top of the hour, all the winners and losers in the last hour of the last day of the trading week, plus new fracing standards could be a game-changer for natural gas plays. former nfl quarterback drew bledsoe joins us to talk about his new team that's looking to
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score with clean wastewater from hydraulic fracing, and we'll looking at some zombie stocks today, very excited around here. look at the zombie craze with "walking dead" creator robert kirkman. all that and more on the "closing bell" after "street signs" continues. after this.
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well, messy expensive divorces make for great tabloid for the record but if a company's ceo is involved, do they hurt a company's stock price as well? robert frank joins us with more. what do you reckon, robert? >> hey, mandy. that's the question. when does a private divorce become a public shareholder issue after that initial report. continental resources issued a statement saying, quote, harold hamm has announced that a petition for divorce is pending in the district court of oklahoma county. this is a private matter and has not and is not anticipated to have any impact or effect on the company's business or operations. now, notice the careful wording. they are saying no impact on business and operations but not shares. we have seen recently how big divorces can result in big share soles or changes in the board. here's why a couple's wealth, especially when it comes from public shares, those shares could be split when they divorce
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and when the wife or spouse gets those shares they are typically sold. take the care of wynn resorts. as part of the egrain elaine wynn got 10% of the shares or 10% of the company. the deal said she couldn't vote or share her shares without steve's permission but she south last year to void that agreement and she sued for the right to sell them. another example is google. google's chairman reportedly splitting from his wife and recently filing to sell millions of shares in google as part of any possible settlement and news corp where rupert murdoch split with his wife resulting in a very complex deal that created a trust for his kid, changed the voting rights and board seats so while divorce is ugly for corporate founders, it can also be very disruptive for shareholders and that's, of course, we've seen such trading in the shares. down today in continental
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resources. >> thank you very much. robert frank, still ahead on essigns, the mining mess. what is behind the disconnect and the resources trade right now? we're going to dig in on that one. >> but, first, he's a retired four-star general and served as nato supreme allied commander and is betting big on ethanol. we're very pleased to have general wesley clark in the house. get ready to talk ethanol. watch that seat. seat.ess, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. at tyco integrated security, we consider ourselves business optihow?rs.
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earlier on in this show we told you how last year's worst performer in the market is some of this year's top dogs so that got us thinking and scratching our heads who are this year's worst performers. among them interestingly cliff's natural resources. and peabody coal, all resources we would think they would be surging, but it really does look like they are having a real hard time digging themselves out of this worst performing haul. joining us is david lipchitz.
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>> cutting supply, cutting off costs instead of value. china slowed and we've gott caught up on the supply story and the story is over. >> the story is over, like done, seriously? would you really put your neck out and say the china story is over and not just having a bit of a soft patch? >> it's not over that china is falling apart but from a commodity perspective. done a lot of the infrastructure. the growth is slowing from steel demand, 3% to 5% and with the supply coming on line in iron ore, nice a price of marginal costs rather than trying to catch up every year. so at end of the day these stocks will be in trouble over the next 12 to 18 months. >> david, thank you very much for giving us your two cents worth on that. >> let's drill down now on energy. there's fierce debate that ethanol requirements may be driving up gas prices. from the investor perspective, is there real opportunity in ethanol, or is ethanol maybe the
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enemy? here to debate, retired four star general wesley clark with a big bet on ethanol and dan dicker from who wrote an article saying ethanol is the energy. general, thanks very much for coming on. >> good to be here. >> you've been a big backer of ethanol for a long time. it's taken the heat. i know you know the heat. how do you defend ethanol today? >> 70 cents a gallon cheaper than gasoline. burns cleaner. helps make america energy independent. it's a win, win, win for the consumer. by the way, there's no subsidy for et no. standing on its own in the marketplace, and this year we're looking at, according to the department of the agriculture, $4 a bushel corn so there's no issue with this. the only issue is that we can't put more ethanol in gasoline because of the so-called blend wall which limits refiners to --
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distributors to putting 10% in. now, for four years we've been in an effort to raise this to e-15. >> from 10% to 15%. >> the most studied fuel in the history of the world. it's been through test after test after test after test. everybody agrees it's fine for cars since 2001. it's ready it's ready to go, but, of course, this is a threat to the largest industry in the world. because it goes after their market share. >> so you believe it's an arbitrary rule, probably put in place or helped to be put in place by the backing of one big oil? >> well, big oil is fighting against getting e-15 to the mark place. that's their gain. because, look at it, there's 133 billion gallons a year of liquid fuel. 10% of that is ethanol, so 13 billion gallons. move it to 15%. that's another 6.5, 7.5 billion gallons that the big oil companies don't get to sell to the american consumer.
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and when you put in there cafe standards. so rather than seeing this as an ever-growing market, it might be a flat or even shrinking market, pick oil is concerned. that's what the fight is back. >> dan dicker, do you dare to argue with a four-star general on this topic? >> i wouldn't dare to argue with him on nato, but on this i think i'll try. maybe the department of agriculture says there's $4 corn on the horizon, but we're dealing with upwards of $7 a bushel corn. that's number one. number two, there's a shrinking market in gasoline, so there's less and less gasoline, but the rfs requires more and more ethanol to be blended in. the general would probably like to see e-15, e-20, e-25, e-85 in fact is a product that's being pushed right now, but the aaa doesn't like it, none of the automakers don't like it, forget about the refiners who obviously don't like it, because they don't make ethanol, so they wouldn't want to have it.
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in fact, some of the rsf standards aren't even helping out the corn industry, as they're getting to more biofuels, it's helping out the brazilian sugar cane growers. so, in fact, moving forward, as they continue to ask for more and more ethanol and less and less gasoline, that will more and more come from people outside of this country. so it's not even helping american businesses, besides -- >> it has. and i don't want to take completely your side, general, but it has built industries. >> a whole industry. >> and it's made a lot of people a lot of money. >> it's also lost money, to be fair. >> there's no government subsidy to corn-based ethanol. now, for advanced biofuels, there's still some support there through tax credits. and that's what the brazilian ethanol is getting right now. but we're now developing home-grown advanced biofuels. those advanced biofuels will
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come to the market. but we've got to give them space in the market. so we need to move this. as far as the automobile designers are concerned, you can't get to 40 mills a gallon, 50 miles a gallon without a higher octane fuel. and that higher octane comes from ethanol. and so we're working now with the big three automakers. what they want is, they want a stabilized fuel. they'll take e-30. e-30 works great. they say, just give us a fuel, we'll design the engine for it. on e-30, you can design a smaller, more powerful, cleaner burning, and more efficient engine. >> i would also like to pick up on the point about the ethanol industry creating jobs here in america. because i've been reading recently about, like, maybe two dozen or more ethanol plants that have been sitting idle and part of this is because of the extended drought that has really hurt corn-dependent communities. as those ethanol plants sit idle, what's happening to those jobs? what's happening to those communities that rely --
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>> effective ecofuels that the general would like to see happen, as i would. weapon want to use wood chips or switch grasses or things for fuel -- >> why isn't it moving faster than. >> we don't mind using corn for fuel. we're taking the starch out of the corn, but putting the rest of the corn kernel back into the food chain. it's a big export item. and livestock producers -- >> but planting the corn ethanol, i understand, feed corn and corn can be very different things, that it's taking acreage, therefore, for corn for our consumption will be fewer acres planted -- >> actually, it has very, very little impact on that. what it actually does is it stabilizes the market. when corn drops to $4 a bushel, these ethanol plants will buy a lot more corn, when corn is $7 a bushel, they don't buy as much. so you've got a stabilizing factor in the corn market. the real rise in the price of corn was a function of the drought and increased demand for meat in asia. >> well, i could make a markets point here. now, i could put a chart of corn
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over the last four or five years and a chart of oil right next to each other. you'd be hard-pressed to tell the difference. now, that may be has to do with speculative activity, it may have to do with ethanol, but the point of the matter is, when the price of gas goes up, it's corn that goes up with it, and your corn flakes with it. now, whether this is the right program to make sure that continues to happen or not, that's really the question that's on the table. they're connected entirely through the market place. >> and they just made reference to that, and there it is. so is the ethanol future bleak or bright? >> it should be bright. because this is america's homegrown fuel, and we started with ethanol, but what we're actually building is a biorefinery capability in america. so there'll be lots of things other than fuel that come out of dealing with plants and agriculture. i think the last word on corn and food for fuel is, wouldn't you rather grow something that could be both food and fuel than simply grow something that you
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can only use for fuel? >> i would rather grow something that was here and not imported. >> exactly. and that's why i'm so proud of these men and women in the ethanol business. >> general clark, pleasure, thank you very much. >> thanks, brian. and still ahead, the ultimate taste test, so good i can already smell it. but bacon taco, the baco. it's waiting for you, brian. it's beckoning. >> no, baco. >> the baco is beckoning. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪
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