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tv   Squawk on the Street  CNBC  December 3, 2013 9:00am-12:01pm EST

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cable ad rights, it's going to take a while. >> well, you've got great guests. you're a good interviewer. i'm not that worried. i'll switch jobs any time. >> i'm looking for a new career. >> greg maffei. make sure you ever join us. >> thanks for having me. >> thanks for being here. "squawk on the street" is next. good tuesday morning, here on "squawk on the street," i'm carl quintanilla, cripple jamjid david faber are here. europe having another day of struggles as well after a downgrade of some french equities and attention now
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turning to political strife in the ukraine. cyber reports driven by mobile and holiday data continues to trickle in. >> an upgrade in acquisition and reports in china mobile all amounting to a rise in apple shares. >> and shipments expected to fall by double digits this year, the most severe contraction on record. >> and some food for thought as news from yum brands and krispy disappoint. >> comscore says shoppers have already spent about $20 billion online this year, up 3%. ibm also saying some pretty eye popping figures saying both mobile traffic and mobile sales
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came in at more than 40% higher from a year ago. the data just continues to add up regarding the strn of mobien mobile, jim. >> i reiterate this is an apple holiday season. don't want to get too focused on apple. that's the metaphor. seems like people want to buy phones and buy tablets. the pc numbers are dreadful. on the hewlett packard conference call, they know they got to ramp up tablet. >> they know it but they're more focused on the commercial side where they think they can see an opening in the enterprise as opposed to the consumer. these mobile numbers go to everybody we talk about when it comes to such as a facebook or google to transfer successfully to that ecosystem. 37.7% of all online was mobile,
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people are using their smartphones and tablets to buy smartphones and tablets. >> and appleby's will have a tablet on every restaurant. >> these are restaurants that get it. it's the way that people -- people relate -- it's very strange. when you go to a restaurant now, they want tablets for the waiters. it is -- if you do not have your reservation system on a tablet, i'm aware of this because these are things i'm involved in personally, again you're a loser. i'm trying to get the tablet at the inn. >> are you really? >> yes, i am. moving to mobile at the inn. now if we'd just get some customers -- >> what do you want to have a tablet at the inn for? do you know how hard it is to be cool at my age? >> we're getting there. both of us are understanding
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lack of coolness. >> shares of apple are up in the premarket. ubs upgrading from buy to neutral, raising the target from 540 to 650. and saying he sees earnings upside for the country and the company is buying topsy, the price tag over $2 hoon milli00 now china mobile is taking orders for iphones. >> the rap against apple has about no social, not enough china. they're answering it. tim cook is not necessarily playing in the financial engineering world, icahn.
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>> though they're going to review that strategically come early next year. >> but this is one of these just listen, samsung, we're gunning for you, we're going to take you and this is just a time when apple is reasserting itself. i think the ubs upgrade is right, the stock is incredibly cheap, you're seeing an aversion away from expensive tech stocks and into the leader. >> it's constitutional names. >> stocks up, too. you're not going to have that big tax loss fear. a lot of people saying i can find inexpensive tech, i don't need to go into the cloud. although apple is saying this is about ibm being wrong and apple being right. >> there has been an expectation of a china mobile deal.
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>> yes. >> unbeknownst to most people who hold the stock. that being said, 740 million china mobile subscribers, there is a fairly large audience they could conceivably be addressing to try to buy smartphones. >> do you remember the conference call that was the open rebellion against tim cook? it was withone of these things e i thought it was 1948 where stillwell had just lost china and now he's making a move. he did not lose china. >> we'll see. that fortune story has a lot of people talking about whether china mobile makes a big move in this direction, having not carried their phones till now. >> maybe samsung -- don't hear a lot about samsung having a revolutionary new phone. >> no, although they've got a lot of new patents, they're going to do the curve thing or
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fold thing. >> maybe they have one you can leave in the washing machine. >> there is going to be a new product cycle with apple. >> don't look at me. i would even extend it to ups. i think ups is going to have a good holiday season because of apple. it happened two years ago. >> did it? >> yes. and ups is being very positive. sometimes ups has the negative mindset and they're not being negative. >> what's good for apple isn't necessarily good for pcs. personal computer shipments expected to fall nearly 10%, a bigger drop than previously thought and it would be the largest yearly contraction on record. they're expected to decline another 3.8% next year as computing done on mobile devices continues to grow. again, this is not something unexpected, it is simply about the amplitude of the declines i think is what we're talking about. we've spoken to meg whitman,
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hewlett packard's ceo, about this very fact many times when she has joined us on the show after each quarter. and they managed to step the decline in pcs of the personal systems group perhaps better than was anticipated, particularly on the commercial side. consumer revenues still were down i believe it was 10% if it -- >> before they were saying bankruptcy. that stock is a buy. the younger generation -- esound li -- i sound like i'm talking to my kids. >> youths. >> they like tablets. when you go and visit schools, it's tablets. you go to college, it's tablet. very interesting discussion on squawk about cutting the cord. everyone's watching on tablet. you're really left behind if you're not tablet. >> here what's whitman had to say last week when she did join
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us about potential sales of personal computers. >> we think the better opportunity is in the commercial pc business. we had a good quarter in our commercial business. people in companies still need to do work with work station, desktops or hybrids. weep also see an opportunity in tablets in the commercial area as well. >> which is an area they're going to focus on, seeing, again, as she said an opportunity. commercially you still need a pc. we still got them all sitting here in front of us. i don't see a tablet here, i see a lot of pcs. the emerging markets are limiting that step. when i looked at that quarter and you go over it with a fine tooth, they're doing so many things right with printers now. i think hewlett packard is going substantially higher. >> how would dell be doing now if it were a public company. >> how about the share take in that quarter?
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that was one of the big headlines? the share take was remarkable. it was a great quarter. >> we're getting data out of shopper track, putting the black weekend, as they put it, into review. brick and mortar retail sales up 1% but shopper retail traffic down 4%. it makes sense when you talk about people going online. >> people aren't crazy about the malls anymore. we had a scene on this morning, some people call him maurice puerto rico the steve mill are band, they had a good quarter. why? because that price point that makes it so that they're inexpensive. but you got to have some sort sort of really standout gimmick or we goline. i'm online every minute buying stuff. >> and not to make light of it, there's security concerns, reports of how they're triering to integrate security measures without putting shoppers at some
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unease. that's adding to the fact. >> et cetera etsi. you want small business -- i have used them -- all of my cuff links are bought on etzi but my kids. it's not just buying the mass brands. that interview was so instructive. it says you're pooling all these little people working at their homes and they are online. it's just a very powerful concept. >> can you say what et cy? >> small businesses, small mom and pop manufacturers, like a co-on in some ways and it distributes it is through one central online function. >> my daughter worked at a small three-man shop that made pillows had a huge etzi season last year. i'm pointing this out because
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it's not just big business, small business, the interest on it, it's fun, the sales are fun, go in and it is an adventure. people love adventures when they shop, david. >> yes, they do. >> i think that's the lesson of the day. >> that's what i hear. you always share wisdom with me and i'm deeply in debt. >> coming up, when it comes to food, seeing their share of red this year. and we'llin veil mccormick and company's favor forecast. we'll see if the market can rally but europe looks to be a little dicey. twins. i didn't see them coming.
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shares of yum brand lower in the premarket. sales of taco bell and kfc reporting short sales. meantime krispy kreme shares
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tumbling on a quarterly revenue miss, 15 earnings guidance below consensus, hurt by weakness in its internation business. seems like krispy kreme cannot move more than -- >> oh, my. the first iteration was about cannibalization. this was a confusing conference call. om t i'm trying to parse it. it shouldn't be that hard. you don't need to go to m.i.t. to figure out same-store sales. there was a deceleration. >> the yum numbers, they're saying there will be a rebound. >> they've had such a big run. novak came on "mad money" and say we're not out of the woods but things are better. this is more of a reiteration of
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what they've been saying but the stock has just been a rocket from 67 to 77. there's a little profit taking. i wouldn't take it too seriously, unless there's a new incident. i had this guy from zoetis on last night. they're after every infection of foods, chicken, pork. >> and they are a spinoff of pfizer. were you favorably impressed? >> i was blown away frankly. this morning there's talk about consolidation that could go on in that industry. what i loved about zoetis, there's no third party payer. and they have a drug on the market for itchy dogs.
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you know when your dog get it itchy, you have to put that lamp shade on their head. get rid of that thing. they walk around like they're drunk. >> i've heard of health insurance for puts but it's not common. >> people just pay. the emerging markets when they started getting middle class, they bought pets. 65% of zoetis, though. there's a big pig diarrhea problem. >> well, there goes my breakfast. >> thanks. >> the big mafioso in italy was fed to the pigs. >> i could call it the big swine upset stomach problem. >> i didn't realize pigs had anything but diarrhea. >> you have ever been in a pig sty? >> i have been in a pig sty.
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did you see the teaser pigs before the pigs get into action. if we're going to talk about diadi diarrhe diarrhea, i want to be all in. it's a remarkable thing. >> alibaba founder jack mah had a 15-minute closed door meeting. things apparently went pretty well. the prime minister tweeted this photo along with the message "jack ma took a selfie of us together, which i promised to share." >> the real estate is just -- the rest of the country hasn't had it. they're in a jam in that country because that economy is too strong. i know it sounds strange. the housing boom is the echos
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what we had in this country. >> he's just over there to get alibaba to feature some british companies because it's such a vital platform for sales. >> yes. but mark carney has that under control. >> you love carney. >> he's the greatest central -- he's the central casting central banker. what's, a new movie coming out about wall street, if they need a central banker, go for him. >> okay. >> been a tough start to december but cramer is going to get us back on track. his "mad dash" is next as we come up to the opening bell. look at futures, implied open down about 61. you're watching "squawk on the street." connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing.
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and exciting. and maybe, most remarkably, not that far away. we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here.
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♪ i like to move it, move it ♪ i like to move it, move it all right, we got seven minutes till the opening. time for "mad dash" on this tuesday. >> mongolease. >> this is the check -- >> it's up point 7 billion. this is a company under fire by nelson phelps. >> he think there is should be a deal with pepsico. i think these are the luck just guys in the world. that was some binding
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arbitration by starbucks. >> it was a very big award. at least they're returning it to shareholders. >> buy something -- >> buy something? they shrunk to grow. >> they're getting crushed by pepsico. >> where? >> lays. all over the world. lays is doing well. >> something else that's going to do well, tesla. >> holy cow. morgan stanley says tesla has moved to 20% overvalued to 20% undervalued in just two months! germany said they looked into the fire issue. no, there is no fire issue. a lot of people feel the national transportation safety board is going to say the same thing. tesla could be back, david. >> off its highs but still off
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193% this year. >> solar city, tesla, the three big printers, especially voxel jet, they are not bound by the four walls of the abstract canvas. those abstract paintings go for a lot of money. >> you love that damian hearse. you'll take it all day long. >> i had a printer rothko. >> what do i know? i'm not about modern art. >> what i am about is that opening bell and it's coming up. more "squawk on the street" after this. [ male announcer ] here's a question for you.
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who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being get live squawks right in your trading platform with think or swim from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about 90 seconds on a packed day, this upgrade of apple, tesla making some news, we got auto sales coming in. chrysler has already crushed it, 16% in november. >> gees, the money. the consumer is spending in
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places you don't think. maybe we're looking at the wrong -- the numbers seem to be so skewed down by the walmarts and targets. it's not the way to think of things. maybe we ought to go beyond. we have to think about what's happening at game stop, at the auto showroom. ford uses an incredibly sophisticated sales >> sony selling 2. 1 million units rear tolwe're told. >> you've got to include these things. these are discretionary items you don't need that being bought like mad. >> we haven't discussed what the ism told us yesterday. it did renew some taper fears. i wonder if that's what we're
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looking at again this morning. >> interest rates -- if you're a bull, you want them to stabilize here. there's a lot of chatter about china being strong and people forgot about it instantly when we turned yesterday. >> there's the opening bell. the&p top of your screen. down here at the big board this morning, cst brands and deckers outdoors celebrating ielts 40th anniversary at the nasdaq. >> it's good right now. >> phil lebeau. >> reporter: sales increasing 7.2%, which was better than the edmonds estimate, which was 3%. 770,000 vehicles, a 2% decline compared to the first quarter of last year. not enough that is going to get
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people worried but noteworthy. and when you talk about auto sales, you mentioned chrysler crushing it. black friday is where we'll hear huge sales numbers from all of the automakers, chrysler reporting sales up 16%, much better than out on the street. >> i want a piece of that one maybe, going public. >> what, chrysler? >> yeah. >> they see the industry run rate at 16.3. remember we were talking about would we ever get above 16? >> remember the cost of an auto to make it down dramatically. particularly if you're making them in mexico and shipping by union pacific. >> and on chrysler, i don't know if you've seen the dodge ads with will farrell -- >> on my right is my new dodge
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t durango. on my left is one horse power. look at you, you're worth it. there you have it, 360 times better than a horse. staring contest. go! i win. >> you can't say it's not inventive. >> if that man doesn't make you laugh, no matter what. >> it's a great campaign. great campaign. >> other things to keep our eye on, this amazon tax news happened yesterday, it's all over the front pages today and people talking about whether states are now open to start taxing it, as any other retailer, is showrooming over? >> amazon said over and over there's been no impact. amazon is just so teflon. it is incredible. i trust them when they say it's no impact. but look at the tape today.
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geez. we need a bounce. what happened yesterday, i call it the 3m factor, the downgrade from hold to sell by morgan stanley, people are saying it's all multiple expansion. watch 3m. >> did you talk about some of the dogs of the dow last night, the cats, the ibms. the only one you liked was exxon. >> exxon had a great quarter. they showed great production growth for the first time. warren buffett is dead right on this one but i think he's dead wrong on xbox. got to have revenue growth if i'm working on tech. doesn't have it. >> another legacy name, micron,
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finally getting beloved -- >> i know people are worried about flash prices. dram prices holding up. remember the 90s, remember that stock used to go up and up and up? it was dram -- >> it was j.r. -- >> the potato magnate. then it became dram shop like they got drunk and the stock got hammered. now it's mu, moo. >> very well done. mu, tricky spelling. >> i'm from philadelphia, it's easy. >> you'd want to go with two os. >> you've had your eye on bp for a while. >> claims have been bad and the
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fifth circuit, which is a very serious circuit has basically slapped down the district court that -- a leaf would blow in and bp would have to pay 200,000. bp has been a strong stock and i think it can go very much higher. >> apple shares are up almost 2%, again on a number of different news stories, the acquisition, small acquisition. they make a lot of smaller acquisitions. they tend to be under the radar, though given it's apple, we do notice them more than we would most 200 million deals. >> the social component. don't forget, aerns commonwealthing from bushry is very sessionly media oriented. this could be -- abercrombie again top of the list. yesterday i think it was janny that upped american eagle to say they were in the best position. but --
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>> there's a small accessible fund that has put a letter out essentially saying get rid of the ceo. seems as though they watch the show. >> i put the ceo on the wall of shame. >> i don't know. engagement is the name of the firm. small firm. the people behind it once worked at relational, which is one of the largest activist firms. >> if jefferies were to go -- listen to me, board, not that you care. an mf would be up 15% the minute the man said i don't want to renew my contract. you could have a terrific, terrific next career. >> it's not clear to me this funding in and of itself has the ability to chang anything but there is an expectation perhaps, jim, that you get one person saying it publicly and others perhaps with more power will follow and i can tell you boards listen more closely than they
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ever have. >> when you have 40,000 shares, that would be an embarrassment. evelyn davis, has a few shares, make a stink. >> gad fly, yes. >> you have 400,000 shares. come on, get your fund big, raise some money and then go after them. this is not dan lobe. >> no, it is far from that. but would i be curious to see the comparison of percentage of overall market cap, carl icahn, apple and this guy in anf, it may be somewhat similar, however, he is carl icahn. >> if icahn were to tweet it's time for jefferies to go, that would be the end. >> he wouldn't even need to own it. he could just tweet it. >> i tweeted here that, guy leaves there. >> bob pisani is on the floor with the dow down 65. hey, bob. >> hello, everybody. happy tuesday.
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fairly broad weakness in the overall markets. let's talk about cyber monday. we all talked about the sales is up 20%. the bad news is online it's the same as in the stores. did you see some of the promotions online. american eagle, abercrombie, cheap owes, all of these companies had 50% off sales yesterday. so the bottom lien in retail is the sales are still on but it's at the expense of profits, whether you're on line or in the store overall. i think -- let's move on and talk about the stock market today. we're done across the board. isn't it time we had a down week? how many were there? i counted eight straight weeks of gains for the s&p 500. eight straight weeks of gains. the rally still in an uptrend but it looks tired.
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it's been looking tired for about a week and a half ago. there's no immediate cat list for a major decline. the bad news is every time we get a little good news in the common, like we did yesterday, interest rates go um and the stock market starts having problems with it. we've had a great year, s&p is up 29%, the estimates are for 1,900 for 2014. our friend at morgan stanley had an estimate of 2014 for 2014. i thought that was rather cute for yesterday. did you see the ininto floeses for mutual funds this year? compare that to last year. 138 billion in inflows. is that big? there was 116 billion in outflows last year at this time. 118 billion in inflows compared to 116 billion in outflows. and meantime, you seep what's
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going on with gold? you talk about taper. taper is the gift that keeps on giving if you're talking gold stocks. this is what everybody buys around these golds. it's now sitting -- it's just off fractionally. in the morning it was low. it's a five-year low. that's one down side of all the taper talk. japan six-year high in the nikkei. the big winner in the etfs has been the japan hedge equity, and you basically have a pure play on japanese stocks. unquestionably it would be the number one etf of 2013, now has 9 billion under imagine andment. >> right now we're down right across the board.
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i only had. >> thanks very much, bob. there you heard it. stocks are bonds. let's head to the bond pits and join rick santelli from the cme. rick? >> reporter: good morning, david. interest rates have come off a little bit. can you look at a two-day chart of 10s and clearly see we pierced the 280 level briefly. remember, bob was talking about is it time for a correction in equities. maybe we should all submit a memo to the federal reserve, if they could orchestrate such a big rally, every once in a while to keep it on the straight and narrow, maybe they should orchestrate a correction. but the correction will most likely be driven by interest rates. it still seems as though retail redemptions is having an influence. let look at some of the global ten-years and which are breaking out and which are more con it
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and -- contained. let's look at the gild. there have been some possible aspects of what's going on in the u.k. next in line would be our 10-year, still a little bit on the right side. and last place in terms of horse power on the up side is the bund. on foreign exchange, this one's really easy. it's the yen against everything, whether you look at the dollar yen, year to date or the euro yen, i could put up the pound yen. the yen is under pressure by design. carl, back to you. >> thank you so much rick santelli. when we come back this morning, a crucial court ruling is due out today voungi.
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welcome back. i'm sharon epperson at the nymex. we're looking at oil prices up slightly as we await opec's meeting in vienna tomorrow. the expectation is opec will likely leave numbers unchanged. saudi saying growth is continuing here, it's improving and we're in the best situation we can be for the oil prices. brent crude prices near a three-month high after the surge we saw yesterday and that on positive manufacturing data on the u.s. and china. and we're looking at a nice pop in u.s. oil prices be expecting
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to see the first drop in weekly inventories that we've seen in 11 weeks time when the american petroleum institute reports its numbers this afternoon and we'll get the energy department's report on wednesday morning. >> thank you, sharon. >> at the top of the hour, a federal bankruptcy court judge is expected to issue his decision on whether detroit is eligible for chapter 9 protection. our senior correspondent scott kohn is in the motor city with more. good morning, scott. >> good morning, carl. >> reporter: there's a sizable number of protesters, demonstrators primarily from unions and retirees who want to see this bankruptcy dropped. there's also stepped up security here as well. judge steven rose, who has been pro siding over this case, is going to rule around the top of the hour on whether detroit is eligible for chapter 9 bankruptcy protection. if he approves it, the city will be able to go forward and do a sweeping restructuring of its
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financing, including big cuts in the pension plans and retiree health benefits. now there is a possibility he could carve those out, still allow the bankruptcy to proceed. that's the best that the unions can hope for at this point because they want to protect those benefits and they want to see the state come in and perhaps bail out the city. but there's been no end case that they will -- indication they will do that. the largest city union is accusing the state, who has taken over this bankruptcy process, of a political agenda. >> the retirees worked hard. they put their time in at detroit. they're anxious, they're not certain as to what is going to happen here, $19,000 down to potentially $9,000, it's already cold outside. >> the union says it is likely
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to appeal. just to give you a sense of hough things are likely to play out at the top of the hour, the judge is going to read his opinion from the bench. that could take quite a while because it's likely to be a lengthy opinion. we'll bring the information to you as we get it and a written opinion will come out on the court docket after that and then we expect lots of reaction to follow. stay with us. at the top of the hour, we'll get you the decision as soon as we get it. bear in mind it's going to take a little time to play out and there's likely to be a fair amount of nuance in this. whatever happens, either side is likely to appeal. >> we all know the challenges of trying to read a judicial decision on the fly. we'll look for that at the top of the hour. scott cohn doing yeoman's work in detroit. >> illinois has this really incredible, very tense situation with their bonds. >> trying to reform pension costs in the state.
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>> illinois's got -- it's been one of the places where the bond guys are saying don't you dare. i think they're fine but you need -- resolutions are very difficult. you have to crunch somebody. someone loses. >> is it city services, is it the pensions, is it the creditors overall? these are incredibly complex decisions. >> i don't want to be too bearish for the people who own bonds, i think the creditors take hits here. i'm watching the puerto rican situation. i think this is about to burst. >> over $70 billion in debt there. they've been doing a number of things to ameliorate the situation. >> a lot of people are talking about -- a lot of rich guys saying january, february they're going to do restructuring. >> and questioning the doetroit bankruptcy about the gos. we'll see. they may not be allowed to. it would be an unexpected ruling
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but -- >> i know people out there hate when i say this but i never sold a revenue bond when i was at goldman sachs and never bought anything other than a g.o. a lot of people said you're missing the boat but not in this environment. >> in the meantime, here's what's coming up next on "squawk on the street." coming up, we follow the beat of the drums and the one beating them is jim cramer, playing the song "six stocks in 60 seconds." "squawk on the street" will be right back. ya know, with new fedex one rate
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let's get "six in 60" with jim. start with holly frontier. >> the incredible glut in the united states oil because of production has made it so refiners make a lot of money. >> jpm, goldman. capital plans. >> this means jpmorgan can return money. stock goes higher.
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>> you say acena delivered. >> continental research. >> if you believe there is a glut, buy it, otherwise stay away. >> chipotle, a little nose bleed. >> and when celgene makes a deal with you, your stock flies. >> what's tonight? you said charter. >> this is one of the most controversial companies. if you're going to liquify natural gas, you need their tanks, you need their infrastructure. but they're a huge player in china and they lowered the boom last time they were on. this has been we call them investor business daily stock,
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one of those momentum plays. i liked it from the 20s and 30s. it got really overheated, they slashed their guidance, the stock got hammered and morgan stanley upgraded it. is this the beginning of another cycle? i don't know. i have to find out myself because i was let down myself, the quarter was not good. >> we're looking at potentially our third day down on the dow. we haven't done that since late september. what do you tell people who sat out the year? >> i'm looking for those buyers. just watch bonds. if bonds can stay -- the 10-year can stay at 2.75, then you have to come in and buy. if it goes to 2.6, buy aggressively. otherwise you'll get a better opportunity. watch this. this is everything right now. carl, this is everything. if this goes and the fed comes in and buy the bonds and get
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them at 2.6, the market is coming right back. but this has to happen. this will not happen if we go to 3. >> we'll see you tonight, 6:00 and 1 11:00 eastern time. simon is here to tell us what's going on. >> we're minutes away on the bankruptcy ruling in detroit. >> and a 210-inch television and mccormick's ceo will be here to tell us what's hot for food. hour two of "squawk on the street." ♪ [ engine revs ] ♪ ♪ [ male announcer ] the mercedes-benz winter event is back, with the perfect vehicle that's just right for you, no matter which list you're on.
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the street." you are looking at a live shot of detroit, michigan. a federal judge to rule on whether the city is eligible for bankruptcy in the next few minutes. it's a crucial step in the city being able to pay off its debt. the decision will be made by judge steven rhodes. we'll bring it to you as soon as it's available. >> it is negative territory for
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the dow for the third session. the data, the strong ism that we got yesterday has spooked some in the market on the event risk for friday's report. art cashin is director of floor operations with ubs. good morning. >> good morning. >> is that a fair reflection of where we are? >> first of all, it looks like the buy the dippers have come in already. we'll see how much they move in. what's disturbing is for four out of the last five days, late in the session we've had some pretty sharp last-hour selloffs. the last hour of the day is kind of an important time, saas is t openi opening. >> why is the last hour important? there's a myth that's when the smart person sits around watching and finally executes its trade. >> you portray anything you like. in the final hour, it's put up
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or shut up because the bell is about to ring. >> you were clear to us the last time we spoke the market had not factored in a near-term taper at all as far as you were concerned. i saw a survey that astounded me and said only 15% of people believe we can have a december taper. is that about the probability of a december taper or is it more than that? >> i think it's improbable opini. yellen doesn't want to disrupt things. i'd be surprised, bordering shocked, if there were a taper. it could take till june. the bond market has begun to move without them. >> if the bond market holds, what is the line? >> 2.85. if you go above that i think the market begins to sell off.
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if you get up to 3%, the selloff probably accelerates. we'll have to watch that carefully. the remarkable thing for all of this is this year the market's been relatively stable. we haven't had swings of 1% probably less than 25 times at all this year and that's very low. >> do you still believe in a santa claus rally, art? >> i believe in santa claus, yes. it looks like we won't have to worry about putting his face on a milk carton. heali'll be around this year. >> good to see you, art. phil lebeau joining us with gm's vice president of sales. >> thank you very much. >> reporter: let's bring in kurt mcallister from the gm headquarters in detroit. your sales were up 13.7% for the month. you along with other automakers reporting better than expected sales. what was driving it last month? >> well, phil, you know, there are a lot of good activities,
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the economic fundamentals are still pretty strong. you know, fuel prices remain pretty low and, you know, with our great new lineup of products, we're more than willing and capable to take advantage of that growth. >> kurt, you have it coming in at 16 million and so do others. do we look at this as a one-month anomaly or do we look at it as a trajectory heading into early next year? >> we think it's been up and down, but if you look at over the last four months or so, phil, it's, you know, it's continuing to improve. and we see that slow, steady growth continuing to improve through the end of the year and into next year. >> reporter: is that why your inventory at 96 days is as high as it is, you're building up that inventory? frankly a lot of people would like to see that a little bit
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lower than 96 days. >> we're about 770, 780,000 units. a lot of our competitive set are pretty high going back to '06, '07. but if you look at our inventory, it's down about 10,000 units year over year. december's a low production month and with that industry continuing to improve, we feel like we're in a pretty good place. we're not concerned about our inventory levels. >> reporter: kurt, black friday, how big was it for gm as well as for the industry? there was massive marketing across the board for the industry. has that turned into a day that it becomes one of the top sales days of the year for the industry? >> i definitely believe it's the entire economy is out there, you know, entrenched in an event. and we think that we did a very nice job of executing. we didn't get crazy but we
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definitely were very focused. our dealers were focused, some very specific vehicles. and we saw some real good business as a result of it. >> reporter: kurt mcneil, the vp of sales for general motors, in a month where gm and other automakers did better than expected. >> we are again waiting for the ruling out of detroit, the judge in the detroit bankruptcy case as to whether the city is eligible for bankruptcy protection. when that decision comes out and we've all made some sense of it, of course, we'll bring it to you as soon as we can. >> in the meantime, let's take a quick break. after that, department stores spend months preparing for black friday sales, but can the same be said for the luxury names? the chairman of neiman marcus
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welcome back to "squawk on the street." abercrombie and finch shares are going higher. a letter to the board of directors called on the retailer to replace ceo mike jefferies after his contract expires. he has been ceo for 16 years. these shares are down about 25%
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so far this year. least somebody out there calling for a change-up, if you will, in the executive ranks. >> thank you very much, dom. >> retailer shopper traffic decreased 4% during the black friday weekend according to shopper track. apparel was a bright spot in store traffic, at least increase big 9.4%. so how is neiman marcus combatting the luxury retail sales period? karen katz is the president and ceo of neiman marcus. how are things at the moment? what's working? >> well, gifts at all ranges in terms of price are doing well at neiman marcus and bergdorf goodman and of course we then sell things at the highest end of the range because that's what we're known for. >> i'm fascinated how you position the brand coming into
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the holiday season, particularly with the fantasy catalogue and a 201-inch outdoor tv system. >> bigger is better we think. >> sells for $2 million. what is the thinking of hough you approach this very high end customer? >> originally when the fantasy gifts were first envisioned back in the 1950s, it was really done as a marketing idea by stanley marcus. today it is also about presenting great unique items into the market, but in fact we sell about half of the gifts that we present each year in the christmas book the asten martin, all ten sold out for $365,000. >> you were telling me in the break the tv is in vienna. >> have you told any yet? >> no, we have one and we're waiting for the perfect buyer.
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>> i read as far as men were concern concerned, they didn't want all the glass cases anymore, they wanted everything stripped out, the walls stripped out, to be much more as women have shopped for a long time. how do you sell to the new millionaires on the west coast in particular? >> i do think that the new generation of shoppers is intensely focused on shopping between channels. so the store experience is still very important to them, but they start their journey online first and they do a lot of research online, try to understand kind of what the landscape looks like and then either buy online or come into our store. we've done a recent survey with our customers and 70% of our customers go online to do research before they come into a neiman marcus store. the same is true for the male customer. he's gotten much more engaged these last couple of years. we used to talk about our
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customers in female terms but i'm proud of you guys because you're upping your game in terms of fashion and gift giving. >> it's not us. >> they say traffic is down by 4%. what is the information to go if you have the information on your phone or tablet? >> it's about recreating an experience that candida't be do mean -- can't be duplicated online. >> what about the business moving forward? we did think at one point this year you might ipo, but you haven't. you were bought for $6 billion by aris management and the canada pension fund. >> right. >> what is the plan for the future? more outlets? >> in some ways it's strange but
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we view being bought by new private equity owners as a better long-term play for us. i think that they think long term better than being a public company and we're actually very enthusiastic about it. they're going to give us the capital that we need to invest in the business to continue to grow and i think we have a multi-prong strategy in terms of our growth over the next few years. >> i open you have a great holiday. karen katz is the ceo of neiman marcus. >> toyota is out with their sales numbers. phil lebeau has been working hard. >> reporter: theme of the day, better than expected numbers, toyota joining everyone else reporting sales better than expected, the edmonds increase is 7.5%. toyota makes a point in its sales announcement to say they saw a surge in traffic during the holiday weekend contributing to the best sales pace of the year. so this is what we're seeing. black friday was strong in some
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cases stronger than others for certain auto makers but that contributed to the better-than-expected sales for the month of november. back to you. >> thank you so much. toyota numbers there. >> we are still waiting on this bankruptcy decision in detroit. let's get to scott cohn for an update on what's happening. >> reporter: judge stephen rhodes is reading a stummary wht he said is a $140 page decision. he said the city's accounting problems is accurate. one of the things he has to consider is whether detroit is solvent. he also has to decide whether the city negotiated in good faith with the union and with the creditors. he hasn't gotten to that. and the decision on whether the city is refinance their charges
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hangs on that. for decades he said the city of detroit has experienced dwindling population, employment and revenues, the city no longer has the resources to provide residents with basic place, fire and emergency services and the city needs help. whether it will come in a reorganization basis or he sends them back to the bargaining table, we'll get that to you as soon as we know. >> when we come back, apple getting a pop today, the firm saying they are the poster child for the better before cheaper companies. ♪
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shares of apple up this morning on this upgrade of ubs, analyst raising his price target from 540 to 650 on expectations institutional money will move back and give more up side. steve, it's good to have you back. good morning. >> good morning. >> let me ask you first about the china mobile deal. you have fortune saying they're ordering some 5 ss and 5 cs. do you know anything we don't? >> no. we did take our iphone number up 5 million units due to this. i wouldn't go crazy with that because china mobile still has a limit to how much it can subsidize but there's a lot of room for growth for apple in china. >> that's just one element. you talk about margin
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stabilization, the highiring of this new retail chief. you see a lot of up side for multiples, that's for sure. >> we have more confidence that margins will be flat to up, which were down last year so that was a imagine concern. the 5s seems to be making up for weakness in the 5c and there are qualitative issues like hiring angela airons for burberry is good. and we've written ibeakons. >> what are ibeakons? >> they are read by your iphone. it could mean you would prefer their phone over a competitors. >> central to a lot of people at
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the moment is cloud computing and i think today is the day that google is going to make a big announcement it is going to up the ante for big and small businesses for what it offers them online for a cloud service and slash prices and better complete with amazon. the cloud is also central to this call you've got on apple. it's the flip side of why you've downgraded acensure and ibm. can you explain? >> going to public cloud is a loss of revenue for many of the traditional computing vendors. we expect continued macro weakness and concern about the cloud will keep them under pressure. money flow will tend to shift toward apple over the next 10 to 12 months. institutional ownership of apple is still at its lows. we think apple is going to look
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more increasingly, relatively attractive as we go into 2014. >> one owner out there is carl icahn. what is your opinion about an apple return? >> apple said they would review it. i'm not expecting a change at this point. the amount of cash that apple has available for repurchase is not increasing. on the other hand, the company has more flexibility thanner in other tech companies. they clearly have a a low debt to cap ratio. they could buy more stock back. apple has lot of flexibility. >> finally, we got prime sense not too long ago, top seed today, not the biggest deals in the world but what do you make of them being at least a little more inquisitive these days. >> it's looking for new technologies and perhaps technologies like the topsy turvy analytics that helps the
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services side. i think they are looking to monetize services. some of those acquisitions fit into that. the other acquisition is more about gesturing. that could play into more of a game box, tv-type product. i think it suggests innovation is not dead at apple. we don't know what they're going to introduce over the next 12 months but we think you'll see some new products that will get investors excited again. >> 1.7% more excited as of this morning. it's good to see you as always, steve. thanks. >> it's worth pointing out 236 companies have filed for ipos this year and 49 are expected to go public this month, notably of course with the big hilton ipo next week. are people rushing for the exits for fear of what's to come or will the ipo market stay hot? more on that after the break. i have low testosterone. there, i said it.
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>> reporter: i'm scott cohn at the federal courthouse in detroit where judge stephen rhodes is detailing what is likely to be the largest city bankruptcy in history. he's already ruled that the city is insolvent. he's accepted the city's accounting, which shows some $18.5 billion in unfund
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liabilities, but that's only partly what he has to decide. he's now going through the controversial nature of how this all came about, how the state essentially took over detroit's finances, appointing an emergency manager, the unions and a lot of others have contested the state law that allowed that, call it basically a bald faced takeover of the city's finances and the city's democracy, but that he says is not necessarily an issue in the case. the issue is that of good faith bargaining. that's the key, that's coming up, and we're monitoring it. back to you. >> scott, we'll come back to you as the minutes unfold. >> it's a well known fact that december or at least the last week of december is on positive for equities. but what is ahead for ipos for the rest of the year. >> reporter: simon, 2013 has been a strong year for the ipo
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market. according to renaissance capital, 209 deals have price thundershower yepriced this year. from now to year end nine ipos are expected to price in december seeking $4.6 billion in total proceeds. this would put 2013 on track for the most ipos in six years. some of the notable companies expected to ipo this month include catch mark, timber trust, aeromark holdings and hilton world wide. hilton is expected to be the biggest ipo raising 2.2 to $2.4 billion, expected to go public under the sticker symbol hlt. there are plenty of head winds
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that could result in delayed filings, including delay in washington. and also low interest rates have been a big boone for private companies. a rise in rates could mean private companies wouldn't be able to invest as much in growth. that's something to watch out for. carl? >> thank you so much. customers looking for a good bargain could find themselves paying extra on the tablet or tv. the supreme court declined hearing from amazon on a march decision that requires out of state internet sellers to collect sale taxes on deliveries there. while the taxes could affect customers differently from state to state, what might this mean for e-commerce going forward? we bring john in. is this a loss for them. >> you already have many, many states that are required to
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collect tax. they talked about how they had color coded maps years ago to tell people what states they could travel to or not travel to. in new york and 16 others states were already collecting sales tax. >> i heard some people suggest it's the end of showrooming, the end of that edge that amazon had for the last several years. >> and the edge is also getting more and more distribution facilities closer and closer to consumers. they're going to have to lose that tack loop as well. >> is it always going to be cheaper to be an online retailer? you don't have the bricks and mortar and staff and heating and wash rooms. >> well, you have a delivery cost. someone who is willing to cut margins, last week on "60 minutes" he was saving how low he was willing to go.
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>> he brilliantly manipulated the media over the last 48 hours. >> i would say the drone was a bit much. >> everybody picked it up. i mean everybody. >> if you show somebody a drone delivers a package, people are going to say even if this could happen in a number of years, let's get excited about it now. >> he did says his company will be disrupted. do you believe that? >> i do believe that. he said i hope amazon is around at least until i die. we're constantly disrupting and we've disrupted a lot of incumbents in a short period of time. >> you have. >> i hope it's decades and no years. >> the business you're in, jon, things are moving so rapidly i would expect you to be looking over your shoulder already. >> a lot of the trends are changing. last year at this time, we saw internet traffic take a dip relative to weekends.
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we were actually 20% higher on thursday and friday relative to weekends. people are online basically all the time, especially during thanksgiving when they can't stand their families, they're on line more as well. but we're seeing a change. comps were flat but then you see amazon and ebay putting up numbers for black weekend that are 30%, 40% higher. >> finally, you had great traffic for november. >> yeah. >> you beat out some very powerful competitors. >> yeah. >> a lot of it is facebook driven, which you brought to our attention a few weeks ago. >> facebook giveth, facebook take away. i don't think that's accurate. people share content to one another. we created content that people want to pass to one another.
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that's what's driving things at this point. if you write stuff people want to be able to send to other people, people are going to get it. >> jonsteinberg at buzzfeed, it's good to be the king, man. >> well, i work hard, like you guys. >> thanks for being on the show. >> thanks so much. >> this restaurant kicked somebody out for wearing google glasses. we're back after a quick break on cnbc. have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach.
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let's get to the cme group and check in with rick santelli. >> reporter: good morning, carl. many people agonize or contemplate not only how obama care will eventually be phased in or whether it will be phased
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in at all, but what i'm interested in as a market guy is we're talking about 1/6 of the economy. whether you're for it or against it or you believe it's going to work or not going to work, in the end it's 1/6 of the economy, we're the world's leading business channel and it's in our wheelhouse. but one thing that seems to be going on today in it can that is not getting a lot of air time that i find rather fascinating is that the house judiciary committee is holding hearings and they're holding hearings on something rather, i don't know, maybe call it esoteric, maybe call it extreme but let's get to the crux of the matter and i'll get there through an analogy. let's say when we saw at the end of last year that the payroll walked out in january and said basically, listen, i'm going to take a swath of those people whose taxes are going to go up on the payroll tax and i'm
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going to delay that for a year, would that fly? i don't know that it would fly. we have a constitution and checks and balances. but let's get to the long and short of it. a article 2, section 3 says the president shall take care that the laws be faithfully executed. we have seen there have been delays in various mandates of obama care. further we see various funds as reported by "the washington post" earlier in the year that may have been part of prevention have been moved to help other parts of obama care. so what this judiciary committee hearing is about is is there a breach that the president, this president or future presidents can't by executive order say can congress pass the law, here's the law, here's the deadline, here's the funding issues but we're going to delay it or change it. you know, i remember at the end of last year or at the beginning of the government shutdown that
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the extreme republicans offered the president a delay but he didn't take the delay. that would have been sanctioned by congress. i think this hearing is not only crucially important, i think it comes at a time where there is so much fuzziness as to the original simplicity of the constitution on checks and balances. remember, it wasn't supposed to be about writing checks, it was supposed to be about check one branch versus the other. so i'm definitely going to give you updates on how this hearing goes and eventual lawsuits that may be filed. >> thank you. up next, what flavor will dominate our paletts in 2014? they'll reveal their predictions after the break. in 1982.
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>> reporter: i'm scott cohn at u.s. district court where the judge seems to be laying the
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groundwork for this bankruptcy. the judge said nothing in federal law distinguishes pension debt from other debt. the unions have challenged the bankruptcy under a number of different grounds, one of them that there's a provision in the michigan constitution that prevents impairment of pension obligations, but the judge says that there's no difference under federal bankruptcy law between pension debt and any other debt. he also has said that chapter 9 of the bankruptcy code, which the unions had challenged outright is constitution an under the federal constitution. the one issue that seems to be remaining, did the city and the state-appointed emergency manager negotiate in good faith with the unions before the july 18th bankruptcy filing. he has yet to rule on that. that, though, could be the final nail in the coffin for the unions, who are trying to prevent this. but regardless, judge rhodes has pretty much acknowledged that whatever he rules is bound to be
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appealed. >> with the pension of the 23,000 retirees at stake. >> while analysts try to predict whether the years will be hot or cold for investors, a different analyst is predicting whether it will be spicy or sweet. here is mccormick's ceo, alan wilson. if anybody should know what flavors are going to work next year with the turnover $4 billion a year, you should be able to do that. you actually forecast that chipotle would be as big as it was. >> about ten years ago. we've done the flavor forecast since year 2000. we mine data, we talk to chefs and talk to customers in our industrial business and try to identify the flavor trends developing over the next couple of years. we identified chipotle as one that would become popular. now you find it in sandwich
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sauces, you have a restaurant chain named for it. it's been one that we nailed. >> what's the big one for 2014? >> as we're looking ahead, we see bohean spice from brazil, our flavor forecast talks about things like indian spices and we're launching products to able to take those, mexican products and different chiles and also a trend to compact cooking, which is people because of the urbanization around the world, people are living in smaller spaces so they need things that are more compact so they're using things like slow cookers, coffee presses to infuse flavors into broths, that kind of thing. >> chiles, chiles, chiles, grilling, fermenting and candying is what i think you're saying. it's interesting how different parts of the world catch on at different rates to different cuisines. there's very few indian
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restaurants and conversely there's very little mexican food in europe. what you guys are doing, i guess, is kind of arbitraging and the world. >> we're finding a lot of those players are really, really similar. we're also celebrating our 125th anniversary this year, so we're kicking off a big celebration of that. we're looking forward and we're looking back. and what we're triering to do is capture 1.25 million flavor stories because flavor really brings people together. >> now it's sounding like an advert. i was going to ask how you stay relevant at 125 years old. explain the relationship with buzzfeed, which is emblematic we're trying to reach consumers wherever consumers are. and on jon's company buzzfeed, we ran campaign on grilling. >> this was all about new flavors and in each of the recipe we've shown which mccormick spices you can use to
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make a mango shrimp on the grill. we know our audience loves to cook because they're on a fixed budget in most cases opinion it's been highly successful. >> i have two questions. has seracha jumped the fence yet? >> no. >> and are these new spices more expensive? >> no. they don't necessarily have the scale and aren't as available. we're trying to make things that are a little more exotic more approachable to consumers in their homes. >> but things you can dependably source. >> and what is seracha? >> it's become very popular across the coast. we find the same thing with our thai products and it tends start
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on the west coast and come this way. >> lunch is too far away. >> when we come back, the street corner right across the river from new york city is not just a street corner. this view could be worth more than $22 million. we will explain that after the break. it's estimated that 30% of the traffic in a city
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is caused by people looking for parking. that's remarkable that so much energy is, is wasted. streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then there's a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. the collaboration with citi was important for providing us the necessary financing; allow this small start-up to go provide a service to municipalities. citi has been an incredible source of advice, how to engage with municipalities, how to structure deals,
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and as we think about internationally, citi is there every step of the way. so the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge.
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in today's " million dollar minute," a street corner not far from here has been turned into a masterpiece that's worth millions. our robert frank explains. [ engine revving ] >> reporter: right across the hudson river from new york city in new jersey is a street corner that looks like any other, although it has been immortalized in a famous painting worth millions. >> we are looking at an american masterwork by eric hopper. >> reporter: it's hitting the auction block for the very first time. >> even though it was painted 79 years ago, it still looks very much like the street does today. >> reporter: hopper was a realist who painted the scene in 1934 during the great depression. >> the reason why you see a for sale sign is why you see the
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ov overgrown lawns. today's viewer can have a connection with the painting. the for sale sign recalls the real estate bubble of a few years ago, and the contemporary feel to the picture. >> reporter: how much will this melancholy masterpiece set you back? >> estimated $22 million to $28 million, the highest price by a hopper at auction. >> and robert frank joins us from cnbc headquarters with more. not too bad, robert. >> reporter: what i love about the painting is there's so many economic lessons, the booms and bust in the real estate cycle, like we just had. but edward hopper has been a huge wealth creator. this painting, way back in the day, was sold for maybe a few thousand dollars. now selling for what could be the most expensive ever, over $28 million. and steve martin, the great comedian, sold a hopper for $26 million that he bought for $10 million back in 1999. so edward hopper painted a lot of economic desolation, but he's created huge wealth for those who've collected him early.
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>> robert, after the sotheby's and the christie's art auctions, are we saying it's topped? or does it escalate higher? >> there's lots of reasons to say it's a bubble and values have gotten ahead of themselves, but also no sign that it's slowing. i think this will set a new record. some of the more small sales, we saw one in china from sotheby's over the weekend, there is no sign that our prices are slowing down at all. >> all right. interesting. robert, thank you very much. >> okay, thank you, guys. let's get back to scott cohn for an update on the judge's reading in detroit on the bankruptcy there. scott? >> reporter: thanks, simon. judge steven rhodes is giving every indication that he'll allow this bankruptcy reorganization to go forward, but not necessarily entirely on the backs of retirees and pensioners. judge rhodes has already ruled that the state -- that the federal and the state laws that led to this bankruptcy filing are constitutional and that even though cuts in pension benefits
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are unconstitutional under michigan law, under the state constitution, federal bankruptcy law allows the change and the alteration of contracts and pensions are contracts. and so, that trumps it. but, he said, he's not necessarily willing to allow a plan that will allow for very deep pension cuts. and remember, the state emergency -- the state appointed emergency manager has proposed a plan that would deeply cut retiree pension benefits. the american federation of state/county municipal employees says a typical pension is $19,000 a year, not much, and under the proposed cuts it would go down to $9,000 a year. judge rhodes signaling he's not necessarily willing to allow cuts that deep. back to you. >> all right, scott, thank you so much for that. scott cohn in detroit. as we await the final ruling on the detroit bankruptcy, let's bring in justin over at fitch. jess lynn, thank you for being
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with us this morning. >> thank you for having me. >> why should pension debt be any different than any kinds of debt, sounds like is the question. your reaction? >> there are a lot of questions regarding the detroit bankruptcy, for sure. and one of the things we were surprised about at the initial -- at the initial filing was that the emergency manager included pensions, retiree health care, and g.o. bonds into one bucket, and that challenged the conventional wisdom of the market, in that g.o. bonds have been held superior to other obligations, so we want to watch this closely and see how it plays out. >> are you saying that pensions never really had a chance in contesting this? >> certainly not. i think what i'm saying is what's interesting about the way that the city filed is that they sort of lumped all of these obligations together into one bucket of unsecured obligation -- obligations, and they're actually asking people to basically take a hit across
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the board with all creditors taking an equal hit. >> right. as opposed to, of course, being senior, which is typical of g.o.s. and broadly speaking, this is probably not the first time we'll hear rising pension costs being of reality. here in new york, gone from $1.2 billion to $9 billion over the last 11 years. >> certainly pensions are getting a lot of attention. and while there are challenging situations, many local governments are doing just fine in figuring out the problem. one prime example of sort of the pensions -- the pension problem that's really affecting a credit rating is the city of chicago. we downgraded the city last month, and while the city has taken some pretty important steps in righting its fiscal ship, pensions remain a big concern, and we have a negative outlook on that rating. and if there is not pension reform, that rating is likely to go down again. >> what about the impact of whether they are considered along with everybody else equal to everyone else? is that going to have an impact on future municipal bankruptcies that we may see?
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>> well, depending on what happens in detroit, we're definitely going to have to consider those implications for certainly for michigan credits, and the ratings we have in michigan. and one point on bankruptcy, what we've been saying is we continue -- and we continue to say -- is that municipal bankruptcies are going to be isolated incidents. they're so few and far between, so the fact we've had a few over the last couple of years has been quite interesting, and each one is very unique and is going to give us more information, you know, as they continue to play out. >> finally, we keep hearing about pension reform as an overall notion in this country. your point is that that's great, but it's going to be years before that impacts municipalities' bottom lines? >> certainly our outlook on a sector for 2014 is negative, and one of the key things driving that is the fact that while pension reforms have taken pl e place, they really take quite a few years to effect change on the municipal budget. >> jessalyn, thank you so much, as we await final wording from judge rhodes in detroit.
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thank you very much for your time. >> thanks for having me. dow in tight range. cashin was saying earlier, buy the dippers were beginning to come in. some suggest that happens after europe closes, but a rough session there, too. >> nasdaq is positive. still positive overall. >> europe, though, not good. japan was okay. >> now, europe is very oftentimes, in my experience, a lot more pessimistic about what might happen in the united states so. they will be much more concerned about a december taper, it would appear, having had a strong run, and, therefore, the temptation to book profits than perhaps the u.s. is. >> if you're just joining us this morning, let's get to what you missed earlier on. >> announcer: welcome to "squawk on the street." here's what's happened so far -- >> what valuations are telling us is, you know, we're getting an alert here, for long-term investors, continued strength is probably an opportunity to start -- >> and people are holding out
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for the right deal, or they're only buying that special item that they really had their eye on. so they're not just spending crazy the way they were maybe pre- >> this is just a time when apple is reasserting itself, just when the analysts left it. the ubs upgrade is right. the stock is incredibly cheap. you're seeing the reversion away from expensive tech stocks into cheap stocks and apple is the leader. >> by putting the black weekend, as they put it, into review, brick and mortar retail sales up 1%, but retail shopper traffic down 4%. [ bell sounds ] there's your opening bell. >> for the month of november, sales increasing 7.2%. that is better than what the edmunds estimate was. >> new generation of shoppers is intensely focused on shopping between channels. so the store experience is still very important to them. but they start their journey online first. >> the bankruptcy judge
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overseeing the detroit bankruptcy case appears to be laying the groundwork now for approving this chapter 9 bankruptcy, the largest in u.s. history. >> announcer: the "squawk on the street" countdown to christmas is in full swing. ho ho ho! ♪ santa baby ♪ >> good tuesday morning, we're live here at post 9 of the new york stock exchange with a check on the markets. the dow's been struggling for most of the day, down 67, 68 points right now. the s&p is down about 3.3, and nasdaq flirting with positive territory a moment ago, but back in the red. tesla one of the big winners, up almost 12%. morgan stanley naming the electric carmaker its top pick in the auto sector. tesla saying a german probe of the recent model s fires in the u.s. found no manufacturer-related defects. and abercrombie up about 6%. shareholder engaged capital earning the teen apparel retailer to replace the ceo, mike jeffries, after his
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contract expires in february. first, we continue to follow a judge's decision on detroit's bankruptcy filing. senior cnbc correspondent scott cohn rejoins us outside the federal courthouse in the motor city with the very latest. hi, scott. >> hi, kelly. let's bring you up to date on where we are here. judge rhodes has been on the bench for about an hour reading a summary of his 140-page decision, and seems to be moving towards approving the sweeping bankruptcy reorganization for detroit, the largest municipal bankruptcy in history. he's already said chapter 9 of the bankruptcy code, the federal bankruptcy code, is constitutional, that the filing is constitutional, also under michigan law. even though there's a provision that limits the -- that bars the impairment of pension benefits. he says nonetheless, those are contracts and federal bankruptcy law allows the city to change its contracts. but, he said, he's not necessarily inclined to allow a reorganization that would call for very deep pension cuts.
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so that could be a little bit of a bone to throw to the unions and the retirees who are hanging on this ruling. he basically has upheld everything that's led up to this, including the state law that basically allowed the state to take over the city's finances and file this bankruptcy in the first place back in july. the one remaining issue that we've been talking about all morning is whether the city and the state negotiated in good faith with the creditors, with the unions. and this comes down to a meeting that they had on june 14th, about a month ahead of the bankruptcy filing, the union says that essentially it was a take-it-or-leave-it proposal by the emergency manager and not real negotiations. the city, the emergency manager, kevyn orr, said what he needed to do under the law. we're continuing to watch this and waiting for the final ruling. it certainly seems as though judge rhodes is going to allow the bankruptcy to go forward. back to you. >> a key line here, justin solomon, the producer on the
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ground there with you as well, quoting judge rhodes, who says nothing distinguishes pension debt from any other debt. and his ruling does come down, does it not, to the treatment of the pensions and how much they may be cut in order for detroit to shore up its finances? >> right. and that's going to be ultimately, if he lets this go forward, that's going to be a huge sticking point as they try to move toward a reorganization plan for the city that they want to file by march. the emergency manager, kevyn orr, who is a bankruptcy attorney, has said that he wants to basically give the unions a haircut, essentially, pay 16 cents on the dollar of the underfunding of the pensions, the $3.5 billion. the largest employee union, afscme, says that would mean an annual pension of $19,000 a year for a city retiree would be cut to about $9,000. the judge has signaled that he's not necessarily willing to allow cuts that deep. the question is, where does the other money come from? the unions are saying that the state should kick in some money,
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maybe there's going to be an argument that the feds should kick in some money. at this point, nobody is doing that. it's all about detroit trying to reorganize its finances, and michigan's governor, rick snyder, a republican, has said he wants to see how the bankruptcy process plays out before he decides whether the state will kick in any money to prop up its largest city. >> scott, thank you so much for all of your reporting this morning. that's scott cohn in detroit, joining us on the bankruptcy hearing. meantime, talk about apple of your eye. the tech giant certainly getting a lot of attention after its acquisition of social analytics firm topsy got the upgrade by ubs and now rumors that china mobile is taking preorders for the iphone 5c and 5s. let's bring in jon fortt to try to make sense of the stock, up almost 2%, something that's very interesting. >> and a lot of things to talk about. china mobile thing. china mobile has told cnn's beijing bureau that, in fact, there is no deal with apple yet.
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so we're still waiting on that. there are still rumblings that look like that could happen. the network is getting to the point where it's ready to accept an iphone. we know there's been talks, lots of interest, but nothing on that yet. the topsy thing is really interesting for a couple of reasons. back from 2012, fiscal 2012 for apple, they were on pace for around six or seven acquisitions for the year. this past fiscal year, it was 15. >> wow. >> and thus far, this fiscal year, which began just after september 30th, it looks like they may be speeding it up and spending more, so putting the cash to work perhaps in ways that may not be the ways carl icahn wants but ways that investors will be in. the key will be, can they keep topsy working, prove to the tech start-ups, that it is not a death sentence as some have felt it is. >> because of what, the curation problem? getting lost on itunes? what? >> that's part of it. the talk i've heard from
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entrepreneurs in silicon valley is that apple is not a data company at its core. they don't care about data as much as they care about design and products. they want the number to say what they want it to say in the end as opposed to going where the data leads. so all things being equal, some of these guys might end up going to a google or a facebook instead of to an apple. and there are real estate-style bidding wars that go on for these companies once they hear that one company's interested. they'll shop around to the other companies. apple's been losing out on some of those, because their reputation has been they won't necessarily let your product live, and they're not a data company at heart. >> huh. interesting. yeah, reputation speaks a lot, especially in these instances. jon, thank you very much. >> sure. >> meantime, after a hot start to the year, the housing market cooling off. half of the metro cities on zillow site showed depreciation from september to october. is that a trend likely to continue? joining us at post 9, speaking to us exclusively, spencer from
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zillow. good to have you back. >> thank you, carl. >> i remember, you used bubbilicious to describe san francisco and other markets. are you happy to see some of that come off? >> i am. we had come too far, too fast. we were seeing unsustainably high rates of appreciation, and that is moderating. we're still seeing it in some places. las vegas is still up 33% year over year, but nationwide, it is moderating. nationwide, we're expecting 3% of rate of appreciation, with i is a return to normal. this is a good thing. this is okay. and it's okay, because it means that the recovery is gaining a foundation instead of being kind of flash in the pan, too fast -- too quick too fast, and now starting to find its footing. >> going back to san francisco for one second, keeping with a lot of the discussion we've been having already today. there's a friend of mine who just moved out there and said, having lived in new york and kind of been through a couple of cycles here, that in san francisco, he feels like no one
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out there knows the word "cycle," that they feel as though this is just an interminable boom. >> that is something about the psyche of the bay area that john knows well around tech bubble, the excitement, the verve that is pretty unique to the bay area. and it translates not just to tech funding but to the real estate environment where sky's the limit there. >> what are you seeing in rents? i know you guys track that as well. how's the balance going between the real estate prices and the actual rents? >> speaking as somebody who has rented out west? >> yeah, yeah. >> rents are appreciating very quickly, especially in the inventory constrained parts of the country, like the bay area, where rents are up very rapidly, as well. so what is interesting, though, is the internet has changed shopping behavior. it used to be that consumers didn't dual track, look to buy or rent at the same time. now, we see a lot more people, because you can access rental listings online, and in mobile, we see people dual tracking. i'm not sure if i want to rent
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or buy, looking at both, as a viable alternative. and that's a bit of a new phenomenon. >> we had disappointments in pending homes. we had disappointments in existing homes. everybody blamed it on the spike in mortgage rates we saw a couple of months ago. 10-year at 2.7. are we still vulnerable to that, as vulnerable as we were earlier in the year? >> yes. in the sense that when the fed eventually tapers, mortgage rates will go up, and that makes housing relatively less affordable. but unfortunately, most american home buyers are still so uneducated about the importance of mortgages that they obsess about whether a home is going to be $300,000 or $310,000. but whether they're paying 4%, 4.2% is lost on them. >> really? >> it comes at the finish line almost. >> really? >> mortgage rates has an effect, but less than most people think. >> that sounds like a technology problem. could you kind of pull the covers off the real costs in the process. can you do that better? >> and we have at zillow.
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it's partly a technology problem. but mostly a human nature problem. that mortgages are complicated, relatively boring for most homeowners, most home buyers, and it requires a level of financial sophistication to understand the particulars. >> you'll still around, and come back later in the hour to talk about other elements. talk about mobile perhaps, spencer with zillow. we want to get back to scott cohn who has more coming out of detroit. scott? >> just when you thought it was all going one way, carl. this could be going a whole different way, because remember we've been talking all along about the issue of whether the city negotiated in good faith with the unions. that is a necessary element for the city to be eligible for bankruptcy. well, judge steven rhodes has said that the city did not negotiate in good faith, when you consider the june 14th proposal, a month before the bankruptcy filing, of june 14th, essentially take it or leave it offer to the unions and creditors. the judge says one month was not enough to constitute good faith
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negotiations. what exactly this will mean in his ultimate ruling we don't know yet, we're getting close to knowing, but what it could be is he's basically checked off all of the boxes leading up to eligibility. now he could say, go back to the bargains table and negotiate some more before i let this go forward. we don't know whether that's what he's going to rule, but it does appear that this is not as cut-and-dried as it might have seemed, as the hour now of decision-reading has gone on. so again, the judge has said that the city did not negotiate in good faith with its creditors, did not allow enough time. that could mean that detroit's bankruptcy, this historic bankruptcy is on hold, but ag n again, we're waiting to make sure exactly what that means. back to you. >> yeah, scott, you had warned that it could take some time to figure out how this plays out. in fact, it looks like it will. thank you very much for bringing us the latest there on detroit. apparently not negotiating in good faith. we'll continue to follow the story. coming up, the fallout over obama care. meet the ceo of health insurance marketplace positioning itself as an alternative to
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and also ahead, rick santelli over at the cme. what have you got for us, rick? >> we'll have a very interesting one today. think about interest on excess reserves. that is a hot topic today. a gentleman by the name of simon potter from the new york federal reserve making a statement that's been picked up that lowering or removing that interest rate could throw the money markets in a tizzy, the same money markets that have swelled because of fed programs! we're going to talk about this unintended consequence with chuck biederman. he doesn't know it yet either. we're going to put him in the hot seat. bottom of the hour. [ male announcer ] here's a question for you. if every u.s. home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes?
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1 million? 2 million? 3 million? the answer is... 3 million homes. by 2030, investments in energy efficiency could help americans save $300 billion each year. take the energy quiz. energy lives here.
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bestselling tempur-breeze beds. visit to learn more, and find a retailer near you. holiday season. you want to keep your eye on consumer discretionary today, one of the biggest losers. dominic chu has more on that. >> yes, carl, among the stocks pressuring this whole sector. you have yum brands and then disney. yum reporting flat november sales in china. remember, that's yum's biggest market. also, disappointing investors who were hoping to see growth in that area. disney also falling on a downgrade to neutral from buy at b. riley citing valuation concerns. among the biggest losers, it's across the board. whether it be kfc and pizza hut or out to mickey mouse and what's happening with donald duck, carl, that consumer discretionary sector is certainly leading the declines, at least on one side of the market today. >> not a bright spot today, dom. thank you so much. the headlines keep rolling
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out of detroit. let's get back to scott cohn. scott? >> reporter: yeah, and we're continuing to try to follow this and gauge which way it will go. we told you a moment ago that judge steven rhodes ruled that the city did not negotiate in good faith with the unions, which is an essential element they need to be eligible for bankruptcy protection. but he went on to say that it's impracticable, in his words, to negotiate with a stone wall. this is exactly what the city had argued, that the unions weren't willing to negotiate. so he said that the city filed its bankruptcy in good faith. again, it doesn't necessarily mean that he's allowing it to go forward. he could require more negotiations. but he sort of split the baby here and said that, the city did not negotiate in good faith, but it couldn't negotiate in good faith, so the bankruptcy itself is in good faith. we'll see what that means as he now nears the finish line in reading off this ruling. >> scott, this is fascinating. so for a lot of people who are just trying to catch up with the news flow, basically, today it was going to come down to which way the judge ruled with regard
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to whether detroit can really file for a chapter 9 bankruptcy, period. now, in the course of making that decision, he's come out with a number of rulings that hold huge significance and precedence for the way that other examples will be decided across the country when it comes to overburdened cities. in order, what he's saying now is that detroit didn't necessarily negotiate in good faith, but then, as you say, partly because they could not. and again, that almost seems to take us back to this question of just what that means with regard to the city's ability to file for chapter 9. >> reporter: right. and let's look at it from the broader sense of all of the other cities that are looking at this. he has, to this point, upheld the process where the state came in, said that the city was insolvent, basically took over the finances and authorized a bankruptcy filing. that, he says, was all above board, was all constitutional, both under state and federal law. so that's important, and it's something that's going to be hashed out in the appeals court, no doubt. but it's very important as all of the cities watch this.
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now, again, in order for this the city to prevail on its desire to file for chapter 9, and to continue with this big reorganization, the judge has to find that the city bargained in good faith with all of its creditor, including the unions, and the unions said it didn't. the judge has said, no, the city didn't negotiate in good faith, but the union wasn't willing to negotiate. you can't negotiate with a stone wall. so the bankruptcy filing itself was in good faith. that seems to suggest, again, that he's going to allow this to go forward. the other thing that he signaled is that he is going to be watching this closely. he's not necessarily willing to rubber stamp the city's plan, which would include massive cuts in the pension obligations. and that, in fact, he might not allow reorganization plan that includes massive pension cuts. also worth noting, because a lot of people have been following this, the detroit institute of art, which has a huge and very valuable art collection, there's been talk about should that be sold, the judge said that
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essentially a one-time windfall doesn't cure the problem here. so he's cast a little bit of -- of concern on what some of the pensioners are saying, go ahead and sell the art if it protects my pension. the judge is saying, that doesn't necessarily do the trick, that we have to look at the pensions. >> yeah. just last week, scott, the creditors were agitating for detroit to sell the art collection, so perhaps trying to push back on that. again, it would only be part of -- it would hardly solve the whole problem they have, an $18 billion hole, i guess, they need to come -- they need to fill. >> reporter: right. right. i mean, look, it's huge. and the other thing that the unions are saying, why isn't the state kicking in some money? and will there be pressure for a federal bailout of detroit? >> yep. >> reporter: what the governor has said, we want to see how the bankruptcy plays out. so he's sort of going back to his negotiating stance here, seeing what they can get in bankruptcy before the state commits any money to prop up this city. >> scott, thank you for that. we'll be coming back to you in a
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few moments, i have a feeling. our scott cohn in detroit. a lot more on the ruling as it develops in just a moment.
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welcome back. in other news this morning, the obama administration pleased with the progress of the website, it says. but concern has been raised over the website's ability to hold up as those who haven't been able to enroll under obama care rush to do so now, before the looming deadline. a new health insurance marketplace, meanwhile, is allowing consumers to bypass gohealth is an online portal for finding health insurance coverage. clint jones is the ceo. and he joins us now. good morning. >> good morning. >> what can your website do? can it enroll people in plans? >> yes, we can. we've been live now just over a week, successfully helping consumers enroll in federal marketplace plans. >> okay. so there are others, healthsure,
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another private sector insurance group we had on, how long did it take you to get up and running? >> working on integration a little over a year, with cms and the federal government. so now we have the ability to tap into the federal data hub to help consumers get the subsidy information so we can apply that to their premium to see what out of pocket expenses they'll face. >> this was done working with the administration to some extent? >> that is true. we've again been negotiating for about a year now with them to figure out how we can best hook up the federal data hub. we have a contract with them. we've now been live for about a week, helping thousands of customers get through the process. and i'm hearing success stories every day. folks that were uninsurable, didn't have coverage in the past, or couldn't afford it, and now with our help, they have coverage that will be effective on january 1st. >> obviously, the white house is arguing that it's night and day, the performance of the website now as opposed to october. if their website gets to 100%
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efficiency, does that pose any existential threat to you, or can you both co-exist? >> we can both co-exist. we look at this as a partnership with the main goal of the administration and for us is to help the millions of consumers and uninsured get insurance coverage. you know, we're an alternate path to get coverage for consumers. and the more, you know, insurance we can provide to all of the uninsured, the better off we are. the same common goal that the administration has, as well. >> clint, here's what i don't understand, because this is fascinating. if the administration kind of knew that there were other websites like yours or certainly have seen more recently the way health sherpa has managed to get its portal up and running, why wouldn't they back away for and allow for the other methods of implementing obama care to be up and running and handling the traffic as you apparently can? >> i think they're just looking for multiple ways for consumers to access coverage. we're seeing that this is a very complicated process. it's not like buying, you know, an airline ticket or anything.
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most people are calling us. they're starting the process online. calling in to get the advice. i mean, you're dealing with tax penalties and different things now that did not occur in the past. so a lot of people are buying and getting coverage for the first time. or relied on their employers in the past to provide coverage. so this is a new purchase for them, and having the peace of mind of talking to a trusted advisor is pretty key, and that's where we believe in the high touch and helping consumers understand what they are buying to make sure they're buying the right product. >> clint, just briefly, finally, can you also tell whether you're getting healthy young people signing up? is that the main concern for the whole obama care initiative over the next year or two? >> sure. we're getting a good mix of people right now. yesterday was -- so last week we went live, obviously thanksgiving week. yesterday, we got, you know, inundated with phone calls and requests, and it looks like, you know, early indicates are a pretty good mix of young and older folks, looking for coverage. so i think time will tell as we get more data on how everything
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plays out. >> all right. gohealthinsurance is the website for those looking for more information. clint jones is the ceo joining us this morning. thank you so much, sir. >> thank you. let's get back to scott cohn who's been walking us through the detroit decision better than anybody could have expected. scott, what do you have? >> reporter: it now is official. detroit is the largest municipal bankruptcy filing in u.s. history. judge steven rhodes saying that the city is indeed eligible for federal bankruptcy protection, acknowledging that, yes, it was a foregone conclusion, but that doesn't necessarily mean it was in bad faith that the city had a plan and is continuing with this plan, and essentially has signaled with this -- about 90 minutes' ruling he's read from the bench that he's going to continue to control the reorganization process in his courtroom, in u.s. bankruptcy court, which is where he says it belongs. now, this is almost certain to be appealed. the unions are saying that this is an unconstitutional violation
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of their pension benefits, benefits that they worked for. and so, as we were told going into this, the city's largest union has said that all options remain on the table, and we expect that's going to continue to be the case. again, the judge signaled early on that he wasn't willing to allow a reorganization that would include massive pension cuts. so that may change the city emergency manager's plan for how it's going to restructure the finances. but judge steven rhodes, again, signaling that he wants to keep it in his court. he believes that the bankruptcy process is right for this, and that the city should be allowed to reorganize, but he is going to keep a heavy hand on it, so to speak. we will continue to follow this, and we expect to have reaction both from the union leaders, of course, and also from the emergency manager, kevyn orr, a bankruptcy attorney, appointed by michigan governor rick snyder to oversee this process, which now appears will go forward in u.s. bankruptcy court. >> and certainly the reaction
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from the union front happening as we speak behind you, scott. thanks to you, our scott cohn in detroit. dow's down almost triple digits now, down some 92 points. the bells are about to sound across europe. and it has been a rough day for stocks on the continent over there, as well, the european close after this break. tdd# 1-800-345-2550 searching for trade ideas that spark your curiosity tdd# 1-800-345-2550 can take you in many directions. tdd# 1-800-345-2550 you read this. watch that. tdd# 1-800-345-2550 you look for what's next. tdd# 1-800-345-2550 at schwab, we can help turn inspiration into action tdd# 1-800-345-2550 boost your trading iq with the help of tdd# 1-800-345-2550 our live online workshops tdd# 1-800-345-2550 like identifying market trends. tdd# 1-800-345-2550 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to to learn how. tdd# 1-800-345-2550 sharpen your instincts with market insight from schwab tdd# 1-800-345-2550 experts like liz ann sonders and randy frederick. tdd# 1-800-345-2550 get support and talk through your ideas with our tdd# 1-800-345-2550 trading specialists. tdd# 1-800-345-2550 all with no trade minimum. and only $8.95 a trade.
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welcome back. as markets here -- we see the
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dow down almost 100 points, keying off a pretty weak trading session across europe. >> yes, check out the figures on the screen. it is deep red in many of the countries. france, in particular, is down quite badly. there's individual corporate -- look at that, 2.5%. there are individual corporate situations, though. one of the disrupters in the telecom sector came with a $27-a-month 4g service, so the telecom stocks are lower. actually, some of the macro detail today is quite good. the construction spending in the u.k. is good. you've also seen a good bond swap for longer maturities in portugal. but that's not the big story. the big story is that europe is down. it's down heavily, and it's down broadly across. so you've got 90% of the those top 600 stocks that are in negative territory, as things stand at the moment. for the sake of completeness, the miners have probably led the charge into negative territory. obviously, there's a concern about where we're going with
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commodities. rio tinto has said that they're going to cut their investment -- the annual cap ex investment by $6 billion. as you look at the chart of where we've traded, i think this is really interesting, over the last month between the united states and europe, you will see that europe has had real difficulty gaining traction and is now in negative territory. europe, it seems, is much more focused on what the fed might do, and is very fearful the beige book and then the friday payrolls number could bring the tapering sooner. and that's quite logical if you think about it, because all of the central banks, they're monetary expansions flow into other countries, like the bank of japan comes here. the fed may be pulling back at exactly the wrong time when europe needs an expansion. don't forget, the ecb meeting is on thursday. >> oh, yes, the monthly meeting. think they'll make any major moves this time around? >> the feeling is not. they might slice a little bit of rates, certainly they'll talk to
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move the euro lower. >> as they have done so well. >> or attempt to. attempt to. >> yes. the dow is now officially down triple digits, first time since november 7th. let's get to bob pisani. >> reporter: yeah, 3-to-2, the breadth has been terrible the last several days. people think it's time for a pause. let's look at the sectors leading to the downside. and they're all the cyclical groups. so you see consumer discretionary, materials, financial stocks, you know, every time rates tend to move, financials tend to move with rates, rates move down a little bit, financials tend to move to the downside. but the full screen, basically a lot of people are saying, you know, we have moved up nicely. eight straight weeks in the s&p 500 and the dow industrials, but down three days in a row here. a lot of people, i mentioned yesterday, about the late-day fades we've been seeing in the last week, about what's going on. i got a lot of questions. i think it's the fact we've had a huge advance. we're up -- put up the s&p. we're up 9% since, i think, october 5th. it's right around there. there's the advance we've seen.
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that's not surprising that we're getting some late-day sell-offs that are going on, and i don't think anybody should be shocked about that. interest rates stable today. but emerging markets are again moving around. this has been the most volatile sector of the year. these groups were truly moved, 25% ranges in the last three, four months, and i've said many times you have to have a strong stomach to invest in the stocks. pick channels, buy low, sell high. but in this one, you have to pay attention, buying low and selling high. let's move on. crude at a one-month high, so seeing improvement in some of the exploration stocks. moving nicely to the upside. and when this happens, highs in oil, you get opposite effects in the airline stocks, all of the big airline names are to the downside, as you can see today. techs are also higher. there was strength in semiconductor stocks, strength in apple. milan veitch over at ubs had positive, raising the buy from a
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neutral, and i think it's time for a down week after eight-straight weeks of gains. back to you. >> bob, thank you very much, sir. let's shift over to rick santelli in chicago with a look at fund flows and what is happening in money markets at this point, as well. hey, rick. >> hi. and thank you. and i'd like to welcome our guest, chuck biederman from trim tabs, one of our favorites. thanks for taking the time this morning, sir. >> good to be with you. >> all right. as my flow guy, we have seen some market increases and very much a stubborn holding of investors in money markets, which basically pay bumpkis. why is that? >> it's money in the mattress. people are scared -- although we have been seeing huge inflows into u.s. equities the last two months, we're still seeing more money going into savings vehicles. >> all right. so if you had to summarize,
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being an expert in flows, we do see some huge inflows in equities, but not necessarily draining the swimming pool of money markets. is that correct? >> yes, sir. >> okay. >> that's accurate. >> let's go on a different tangent. you ever play that game, pick up sticks, chuck? >> sure. >> because i see a pick up sticks, unintended consequence, where you start lifting one stick, you'll get in trouble with others. so we have a gentleman from the new york fed named simon potter, who's on the wire saying any reduction in the interest rate on excess reserves could be a real negative scenario for money markets. >> absolutely. >> well, the problem is, that's been one of the potential uses, or potential areas to use when the eventual exit happens. so how do you reconcile this? on one hand, the fed has built these big-money market positions. on the other hand, exiting programs that they need to exit will cause turmoil. what are your thoughts, sir? >> well, i don't say how they
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exit smoothly from any of this. qe is the -- you know, as soon as they announce some sort of taper -- look, the market's only been going up because there's a lot of new money going into financial assets that the fed creates and they keep zero interest rate policy trying to get money into the economy. it's not happening. they're desperate. and desperate fed creates unintended consequence that could be disastrous for all of us. >> do you ever think that we would see a major pop in short rates even with a fed using the power of the microphone to say they're going to keep rates low forever? because that seems to be -- if you're looking for doom's day scenario, it would be a major inversion of the curve, not a steepening. thoughts? >> it's possible. given the unintended -- you don't know what will happen. how will this play out. no one knows. >> well, chuck, i know we don't know, but eventually we're going to find out. >> yes. >> thanks for taking the time today, and we'll have you back in a couple of weeks, buddy. >> you're welcome. just wanted to give myself a
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shoutout, trim tabs float, shrink etf, the best performing managed year to date, 38%, supply and demand works. >> my hat's off to you. carl, it's all yours. >> all right. thank you so much, rick santelli. we've all done it, logged onto some of us have done it, to check out real estate prices, maybe for a zestimate for our home. up next, we're taking that technology to address the ipos. we'll be right back. [ bagpipes and drums playing over ] [ music transitions to rock ]
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it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank. a better way to save. ally bank. your money needs an ally. coming up at the top of the hour, mohamed al ariane is here to give us a look in his playbook and why you should sell stocks now. and morgan stanley revealing the number one pick in the auto sector and the analyst is here to tell you why he's selected such a controversial stock. and the online shopping numbers are in. we have a retail fund manager here to help you find the best deals in that space. we'll see you in about 15, carl. >> sounds good, scott. thanks a lot.
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let's get to another scott, scott cohn in detroit, following the detroit ruling. scott, let the appeal filings begin, right? >> reporter: absolutely. within minutes of the ruling, the detroit is eligible for chapter 9 bankruptcy, its largest union, they filed the notice of appeal. we knew going in, whatever was going to be ruled, was going to be appealed. the union has said this was an unconstitutional attack on the retirees' pension benefits, so they are going to the u.s. district court, and possibly further, to try to head this off. again, just to recap what the ruling was, judge steven rhodes ultimately deciding that the city did act in good faith in filing its bankruptcy case. and said that without the protection of chapter 9, of the bankruptcy code, the city will continue on its path that it is currently on. we'll continue to need to borrow money and shrink its workforce. the solution, he says, has
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proven unworkable and dangerous. and throughout about the 90 minutes of reading the summary of his opinion, signaling that he plans to take over this reorganization, watch it very closely and he said guard against deep cuts in the employs' pensions but the unions are not going on faith on that. they're going straight to the appeals court. we've got, actually, sharon levine, the attorney for the american federation of state, county, municipal employees, and me is here with us. this was not the ruling that you had hoped for. >> no, very disappointed. it's a sad day for the people of detroit. and we've already filed our notice of appeal. we're going to keep fighting for the pensions. we're going to keep fighting for our members. we think that the judge is legitimately concerned about these folks, but he did what he felt he had to do, and we respect that. but we're going to keep fighting it. >> reporter: on what grounds can you appeal this? he seemed to be very careful to go through every possible scenario here and every possible ground for appeal, perhaps anticipating that this was what you're going to do. where do you see the strongest case for an appeal right now?
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>> we're appealing all of the legal issues. we do believe that the chapter 9 is unconstitutional. we believe the pensions are constitutionally protected. we believe the facts are not clearly -- the judge didn't -- the judge render add good decision, as you pointed out, but even he expressed concerns about the facts and we'll argue those on appeal, as well. we don't believe the city negotiated in good faith, and we don't believe you can find impracticality by coming in on 30 days and then running into bankruptcy. >> the judge echoed the city's argument that you can't negotiate with a stone wall. that the unions weren't willing to negotiate. what's your response to that? >> i think that's an unfair characterization. we have previously negotiated concessionary agreements, and they've been binding and they have affected retiree benefits as well as active benefits, and we came up with at least three mechanisms you can use to bind retirees even if you can't get every single person in detroit to agree. so we think that's an
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overstatement, and we if i if there had been time and actual good-faith negotiations there could have been potentially a solution that might have avoided this bankruptcy case and been less scary and less devastating for the citizens of detroit. >> reporter: he also signaled that he's not willing to just rubber stamp deep cuts in the pensions. why not let that play out? let him -- take him on his word on that and let the reorganization go forward and let detroit move forward? >> well, i think what he also signaled is that there are parties out there that need to come to the table, including at least -- including the state, including governor snyder. and we haven't seen any indication that that's going to happen. so while we understand what the judge would like to see happen, we haven't seen any evidence that it's going to happen. if the governor's not going to come to the table, if other parties are not going to come to the table, to keep some of their promises to the retirees, then we have to continue fighting until that -- unless and until that happens. >> reporter: parallel to all of this has been mediation between all of the creditors and the city. does this weaken your
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negotiating position in that mediation? is there any hope that might be a way to come to common ground here? >> we've been working hard in the mediation process, which is confidential, so i can't comment on what exactly has been happening there. hopefully, the city will take to heart some of the comments that the judge made today, and hopefully, the state, and particularly the governor, will encourage better and more useful use of the mediation process. >> the city wants to get out of this, have a reorganization plan by march. is that practical, especially with all of the appeals going on? and what ps -- what happens to detroit as this plays out? as the judge said, it's a dangerous situation, the situation is deteriorating. what happens as this plays out? >> detroit has financial issues obviously we'd like to see addressed and the citizens would like to see addressed. but the difference in time between a month and two months and the loss of a pension for the whole rest of your life, we need to keep fighting.
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and if there's a little bit of delay that results in a better result for detroit and for its retirees, that's our goal. >> reporter: are the retirees willing to take any cuts to the pensions? >> i can't discuss those -- we're exploring all of our options. we're participating in the mediation, but right now there doesn't seem anything viable. remember, when you're in a municipal bankruptcy, unlike a corporate or private, there is no safety net for these retirees. so if you take somebody like our members who are getting $19,000 a year on average, and you cut it to 9 or 8, or whatever you're going to cut it to, that's it. they worry about their houses, their food, their medicine. in the private sector, the federal government, through the pension benefit guaranty corp. guarantees pensions up to $57,000 a year, because they view that as an appropriate number for protection. in the private sector, you're getting paid. in the public sector, here, a municipal retiree, some of whom have given up social security, it's a desperate situation.
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>> sharon levine is the lead attorney for afscme, the city's largest union, reacting first on cnbc to the ruling by the judge saying detroit is eligible for bankruptcy protection. we expect to hear shortly from the emergency manager, kevyn orr, who will now try to implement his plan, but the appeals go on and we'll continue to follow the breaking story. back to you. >> great stuff, scott. anybody who hoped this would get less complicated severely disappointed. when we come back, a lot more with zillow ceo spencer rascoff. up 300% since its ipo. we'll find out where he sees opportunities with other companies looking to price. back in a minute. [ female announcer ] thanks for financing my first car. thanks for giving me your smile. thanks for inspiring me.
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busy day for auto sales. ford's numbers out earlier. and phil lebeau has more on that. phil? >> carl, i want to bring in eric merkel, the lead analyst for ford, and he joins us from our affiliate in detroit. eric, when you look at the sales in november, how much were they improved by what happened on black friday and the holiday weekend? >> there's no question we saw a strong improvement, black friday, the holiday thanksgiving weekend, but keep in mind that is generally the case. the month of november tends to be very strong at the tail end because of the holiday weekend. >> and yet you've got the rest of this year where a number of automakers are saying we're over 16 million for sales pace this month, likely for december, as well. do you think we finally have crossed the threshold for good? >> well, certainly we're taki
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taking -- for good, i never want to say for good. but certainly, what we saw in november was an excellent month. we estimate that mid-16 million vehicles our total vehicles. and we think that we're going to have it shaping up to be a very good december for us, as well. >> and quickly, cars are still the hot seller right now, am i correct? >> cars are very hot, but, also, if you take a look at this time of the year, full-sized pickup trucks are also very hot, as we get into november. and particularly as we get into december, for tax reasons, businesses start to look to make those capital equipment purchases, and those include things like full-sized pickups and "f" series. >> eric merkel, lead sales analyst from ford, joining us from detroit, when we're waiting for other automakers, including the big luxury names. we'll see what they had to say about black friday sales. back to you. >> oh, yeah, definitely it looks like, phil, seeing a bounce from that friday. thank you so much. phil lebeau for us. coming up, zillow's ceo
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the decision out of detroit is now official, and the reactions have begun. that's the mayor of detroit, dave bing, and we've had reaction already from the union side, an afscme attorney telling scott cohn that it is a sad day for detroit, and that they will appeal this decision. in the meantime, we try to make sense of what judge rhodes wrote. we want to bring ceo of zillow, steve rascoff. what advice does he have for other companies recently going public and the ones that aspire to? this is the million-dollar question, i guess. >> you know, the biggest thing companies need to keep in mind firstly is an ipo is a means to an end. it's not an end in and of itself. it's a step along the way. a financing event, just like a private venture capital round. at zillow, we make sure employees don't focus on the stock price. it's not that important in the near term.
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what matters is building the company for the long term. >> did you give them options? >> all employees have stock options in the company, absolutely. so creating an incentive for them to care about the long-term value of the company is very important. we try very hard to make sure that employees don't focus on the near term stock price, because we want to build a company for the long term. >> so the theme that you think will work in 2014? >> so some key tech themes. one is companies that are trying to turn this little thing into the remote control for your life, okay? that could be grubhub, redefining the way that you b k book -- that you get restaurants delivered, or uber, which helps you summon cars with a couple clicks, or shake, which helps you create complicated legal documents through your smartphone. second key theme, has a lot of heat in west coast tech, is information marketplaces in opaque industries. so these are companies like glassdoor, which help you see what it's like to work at the inside of a company. or the one that you j uft had, gohealth, companies trying to provide information transparency in health care. so very, very big theme.
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taking the opaque industry and providing transparency. the third is quantified self. that's this guy, the fitbid, and jawbone, and nike fuel band, data to analyze yourself and your wellness. >> if only jawbone told me to take more steps than i actually do. >> i have a treadmill desk, so you can walk while you're on air, and your pedometer will love you. >> spencer, thank you for coming in. let's get to headquarters and scott wapner and "halftime." >> thank you so much. here's what we're following today. overdrive. morgan stanley tops tesla as the top pick. the analyst who made that call joins us live. dot-commerce. the cyber shopping numbers are in, they are big. which stocks are the best deals to bag right now? but we do begin with stocks, hoping for nine-straight weeks of gain but facing a familiar faux, rising interest rates. look at the 10-year, as the yield's moved back toward 2.8% yesterday.


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