tv Power Lunch CNBC December 3, 2013 1:00pm-2:01pm EST
averageses. the dow is trying to avoid its first three-day losing streak since september. not so successfuls thus far. the dow down 106 points. stocks have been up for eight straight weeks and trying to avoid a down one as well and apple, the move continues there, quick look, there it is up nearly 2%. "power lunch" starts now. "halftime" is over and the seconds half of your trading day begins now. >> scott summarized the state of the markets today. the dow in a downswing. we have not seen this kind -- these kinds of moves down on consecutive days in a long time. we're going to focus on catch-up stocks. if you think the market has more room to run where should you put your money with the dow industrials down two-thirds of a percent. cancer cooperation and big money. cell gene teaming up on a half a dozen medicines.
ankamed up 92% ons these deve p developme developments. u.s. education, failing grades for our schools. globally we are now on the lower end of the curve. below average in math and science. this is a competitive crisis for american business. why are we not succeeding here? what's being done to fix it? two leading people on the american education charge. first, though, to sue at the nyse. >> thank you very much. a rough day for the dow jones industrial average. we are off of our lows but still up 21% this year. right now the dow jones industrial average down 104 points. transports have been on a huge tear, down today, but up 35% year to date. the s&p also in the red today. it's up 25% this year. it's down just 7.3 points today. similar story at the nasdaq, up 27% year to date.
let's bring in bp and kenny polcari, director o'neill's security and cnbc market analyst. we've been talking about the pivot point in the market, the turn in the market when it would come. is this what we're seeing today? >> i think it feels like. the only thing you have to be careful of, not a the lo of volume. we've only done 300 million shares which tells you the big the boys are sitting out and waiting. does feel like it wants to, does want to turn. if it doesn't hold 1795 which had been resistance now support, below that at the moment, if it doesn't hold there it gives it a little momentum to the downside. >> how much is europe? >> europe lad a lousy close. look at the s&p, the market stabilized as soon as europe closed. there was selling pressure in europe. rolled over into here. and we've stabilized. let's take up kenny's point. lack of buying interest. number two, put the vix up. at the highest level since mid-october. been up three days in a row, there's what i'm talking about,
the highest since october. we see also generally markets near the top and i see poor breath here, three to two, two to one decline to advancing stock. all tells me given the markets we've got, looks like some people are trying to look in a little gains on the year. come up up 26%. >> up 26%. >> this is not crazy idea to do this. >> a smart thing to do. if you're a hedge fund guy and close your books before the end of the year and had a good year -- >> you might as well. i mean the chance you take in the next three weeks is the market going to go up 10% or could it, in fact, sell off a little bit, right. chances are it's going to -- you're going to make a bet bet it's going to sell off because of the move it's had. >> exactly. >> the problem with going into the jobs number on fry. we want a good jobs number and everybody does, interest rates go up and the stock market gets hurt. it's a lot of downside and not a lot of big upside. >> but it might be a seasonal number. >> be careful with that number. that's right. it's going to be a lot of seasonal jobs and the headline
number might be big and everyone will get excited but come january those jobs aren't going to be there. >> the markets have been falling, not been a great couple days if you're long in this market. still have faith, seema moody has advice and in seema we trust. >> for all those who feel like they have missed out on this tremendous rally on wall street we put together a list of companies that seem to be in catch-up mode. we screen for companies that have underperformed the s&p 500 this year, but are showing signs of life and are trading at an attractive valuation. first up, caterpillar. shares down about 6% year to date but this quarter, caterpillar is up 1.4%. the industrial player has been dealing with a slow growth environment but the company has been cutting costs and analysts say that could help future margin growth. next up, pea body energy down 30% year to date. but this quarter they're up 5.5%, coming off a strong beaten earnings thanks to lower
expenses. finally shares of apple up little over 5% year to date. one of the big tech laggards this year. rising anticipation that apple will lock in a deal with china mobile has helped shares gain about 17% over the past quarter. new products, specifically in the wearable space is seen as another potential catalyst. many ap lists are bullish on apple. ubs upgrading the stock to buy, writing that higher of burberry's angela hence may provide an inspiring face to the company. a major ruling has come out regarding detroit's future. a judge allowing the city's chapter 9 bankruptcy filing to proceed, despite big protests. senior correspondent scott cohen is live in detroit to sort it out for us. >> tyler, saying detroit's situation is unworkable and dangerous, judge roads approved the largest municipal bankruptcy in u.s. history. will allow detroit to get considerable relief from its
creditors including its unions which have a lot of unfunded pension obligations. the mayor who presides over detroit's bankruptcy filing is dave bing. if the waning days of his term he spoke this afternoon and tried to put the best face on things. >> i know there are a lot of people that are upset that are concerned about their futures, but we are now starting from square one. >> reporter: but under the situation now in detroit, the mayor has almost no power. it's all been delegated now to an emergency manager appointed by the state. his name is kevin orr, a bankruptcy lawyer by training. he, too, said today's ruling means detroit could get a fresh start. >> come with us, take this opportunity even in the process of litigation and appeals to try to get at the sorely needed reform that this city has got to
achieve so we can move forward into a new day. >> orr got some criticism from judge steven rods who said he did mislead the public about the pension situation and the unions are seizing on that within moments of rode's ruling detroit's largest union filed its notice of appeal. about the open thing they say could head that off is if the state and republican governor rick snyder offers some help to michigan's largest city. >> and if the governor is not going to examine to the table, other parties are not going to come to the table to keep some of their promises to these retirees, then we have to continue fighting until that -- unless and until that happens. >> and so the fight will continue, but now while it goes on, there will be the hard work of trying to reorganize the finances of this city which has some $18.5 billion in unfunded obligations under the ruling, all of that will take place in the bankruptcy court and the hope is that detroit could be
reorganized and may be out of bankruptcy next year. sue? >> scott cohn in detroit, thank you very much. time for the "power lunch" countdown. joining us phil lebeau and he is in chicago. start with the big news of the day. the auto sale were good friday, more like a great friday for some of the automakers out there. >> sue, we usually don't think about black friday being important for auto sale but it's clear when you look at all of the numbers it was a very strong black friday leading into a strong weekend and that brought a lot of traffic into the show rooms. look at the sales numbers for the leading automakers. as you look at these permgs keep in mind they are all coming in better than expected. chrysler is the one that stands out with sales increasing 16% compared with the estimate of an increase of 10%. bottom line, november coming in at a sales pace above $16 million. that's the expectation. >> the big red ribbons they put in the commercials on top of cars. makes you want to buy a car.
>> true. >> turn to union membership. it has been hurting recently. now a 25% increase in dues that will go into effect. that's going to be tough for a lot of those members to swallow. it's been a long time since we've seen an increase in dues. >> since 1967, sue. it's still a proposal at this point, but the proposal is a hefty increase of 25%. you might be sitting there saying to yourself, 25%. why do they need to do this. take a look at the drop in uaw membership just since 2005. now right now they're sitting with about 382,000 members. down a third since 2005. way back in '79, they had 1.5 million members. fewer members you have to do something to raise revenue and that is apparently by raising the dues. >> it will be it interesting to see how many people then decide to exit the union. thank you very much, phil. let's talk about the frequent flier suit going all the way to the supreme court. a lot of people who think that this is really going to change the industry and how your
frequent flyer miles can be allocated. >> really, what the argument here is with the supreme court has to do with the airline deregulation act and some of the legalities involving that. the bottom line is this, this suit goes back to 2009 involving a frequent flyer member with the previous, the old northwest airlines and he was kicked out of the program after several complaints. said he couldn't have his membership terminated. now northwest or the attorneys for what northwest and delta arguing in the supreme court about whether or not that can happen when you look at the airline deregulation act. by the way, the supreme court will be making a ruling on this some time next spring. >> stick with airlines having a bit of a pr problem at delta. did they really bump passengers for a basketball team? >> they did. it was delta. a flight out of gainesville. basically it comes down to this. two flights, supposed to leave at 3 and 3:25. the charter flight carrying the university of florida basketball
team heading up to connecticut was having mechanical problems with the plane, we'll put them on the other flight, fix the one plane. we don't think it will be long. they couldn't get the mechanics fixed. the plane with the basketball team goes up to connecticut, meanwhile, the other people are bumped. here's what delta had to say. delta connection partner expressjet which operated the charter and regularly scheduled flight made the operational decision to swap aircraft as the maintenance work was expected to be done quickly. guess what? as the statement continues, unfortunately it was not. the delta flight 5059 was canceled. delta made every effort to accommodate those customers. we apologize to the 50 customers who were inconvenienced. bottom line, those people stood there and they thought they were going to be flying somewhere and instead they saw a basketball team take off. >> yeah. not a good situation at all. it's going to take a while to repair that over at delta. thanks very much, phil. >> you bet. >> to seema moody for a market flash. hi. >> hi, sue. want to point your attention to
abercrombie & fitch, responding to activist shareholder engaged capital's call for the company to seek a successor to long-time ceo mike jefferys. his contract expires in february and the teen retailer statement says abercrombie's board and management team are committed to creating value and we welcome input from all shareholders including engaged capital. shares down about 25%. these shears ares on the day. >> it is early but this season the new york knicks, well, put it mildly, they stink. the rangers are mediocre at best. msg, madison square garden, about to try something else. maybe they should try the food additive. singe us a song, you're the piano man. plus, education in the usa. an f. we are behind the curve big time. in math and science. next up, two leaders in american education including former intel chief craig barrett give us their take on what needs to be
done now. and before the break, check out this. mount etna, that is sicily's volcano down there, it is a beautiful site, exploding. the fire and ash can be seen from miles away. local airport closed. no evacuations have been ordered yet. mount etna has been angry this year. registering 19 eruptions and an amazing site. more "power lunch" in two minutes.
take a look at tesla shares, rebounding up 13%, almost 13.5. the electric car maker said german regulators reviewed recent models as fires in the u.s. and decided no measures were necessary. separately morgan stanley named the stock a top pick saying the recent pullback is now a buying opportunity. ty? >> all right. you know, new york state of mind, billy joel moving into madison square garden alongside the knicks and rangers. msg striking a major deal with the singer whereby joel will host one concert at a month at msg as long as there's demands for tickets. msg calling him a new franchise. joel turns 65 next year and he is still in prime voice. check out msg shares this year, up 25%, though down about a quarter today. the knicks are 3-13, the rangers are 14-14. so joel is obviously their
number one star at msg. sue? >> ty, as you probably know u.s. high school students are lagging behind their counterparts as cro the world, especially in shanghai, singapore and hong kong. that's according to the result of a standardized test which measures performance in math, reading and science. it's called basically the international students assessment test. so why are u.s. tuneds underperforming chinese students and who are the top scorers? joining former intel chairman greg barrett, president and chairman of basis a charter school group and michael block, the founder and ceo of basis tucson and basis scotts dale and ranked in the top ten in "u.s. news & world report's" list of the best high schools. gentlemen, welcome, nice to have you here. >> thank you. >> craig, i'm going to start with you. we know basis has been doing extremely well and your students test better than students who go to both private and public high
schools here in the united states. why is it that u.s. students are lagging so far behind internationally? is it what we are teaching them or how we are teaching them or perhaps both? >> it's probably a combination of three things. the great education systems like shanghai or basis, have great teachers, high expectations, and a degree of accountability or tension in the system. you find that in all the high performing education systems around the world. you hardly find it at all in the united states. >> and michael, do you agree with that? and when you say that there's tension in the system, what do you mean by that? >> well, i do agree. i mean we spend our resources finding an supporting great teachers. we do make sure that the curriculum is rigorous and represents a curriculum used in the high performing countries of the world. it's benchmarked for those
standards. finally, i think our interpretation of craig's statement about tension is that everyone in the system is accountable. too often, in contemporary society, only the teachers and the administrators are accountable. we also hold the students accountab accountable. so that takes the form of having high stakes exams. students in our middle schools have to pass comprehensive exams before they move to the next grade. that focuses their mind and keeps them accountable and their teachers accountable. >> craig, what does u.s. education need to do fundamentally? accountability obviously is something we've already discussed. but 44 or 45 states have now adopted the core curriculum this year which changes the curriculum up, supposed to be more challenging. was that a good idea? is that going to make u.s. students more competitive or not? >> i think the so-called common core, the 45 states adopted, is a great start. what you have to do now is
implement that, train the teachers to be able to teach to that and then hold the school system accountable that the kids learn at that level. i would also throw something else in here. basis as you mentioned is a charter school. it's really a public alternative to the standard public mow know ply of k through 12. about 40 states in the u.s. have charter school laws. i think every state should have charter school laws and allow people to come in like basis, really start from scratch, copy the best techniques in the world, and then move forward. that that sort of competition will drive the public schools to improve their teaching. >> michael, craig, tyler mathisen at cnbc headquarters. you have used the word several times accountable. michael, you said holding students accountable if they don't measure up. craig, you talked about systemic accountability of teachers, administrators and so forth. what in real life, real world pract does that mean?
michael, does it mean if a kid doesn't succeed on a test, that you kick them out if he fails repeatedly? craig, does it mean that you have more firings of administrator and teachers if the system isn't stacking up right? >> michael, you first. >> well, we can't kick students out. it's a public charter school. as long as students want to stay, they can stay. but, we make sure that they know what the material -- they master the material before they move on. so yes, if a student fails a comprehensive examination, they get a chance to retake it once. if they fail, we offer the opportunity then to repeat the grade. during the year, the results are similar but not as -- not quite as stark. students fail an exam, do poorly -- >> required to hold kids back than say a traditional ordinary public school. craig, how about accountability across the teacher force, the administrator force, the
specialists? what does that mean? >> i think you need accountability at the highest level and that really means you look at the school, the administrators, teaching core. the school is failing you basically replace the management and those teachers that need replacing. we are getting to the point now where we start to grade schools a through f. when you have d and f schools they ought to be put on notice or the management of those schools should be changed to a new system. you need accountability at that top level and then push it down into the administrator level and teacher level below that. but until you start shutting down failing public schools you're going to get nowhere. >> it's a big task that we have ahead of us. thank you, gentlemen. nice to see you again, craig and michael. thanks for joining us. >> a big story in the world of cancer today. two major companies joining forces. the stock of one company involved is up 92%. today. and a big sales season for apple. the company has another reason to celebrate. we'll tell you why straight ahead. plus, say good-bye to waiters.
a national restaurant chain is planning something new. will their plan work? will you like it or not? we'll talk about it when we come back. what's in your ear? oooo! a quarter! check for more! well, i guess i can double check... my watch! [ male announcer ] it pays to double check, with state farm. my watch! [ bagpipes and drums playing over ]
and some of the best offers of the year [ ding! ] at the lexus december to remember sales event. this is the pursuit of perfection. if every u.s. home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes? 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. apple shares getting a pop on down day. upgrade to a buy from ubs and raising its price target to $650 on expectations institutional money will go back into apple
next year and may be more good news for apple investors. josh lipton is in san jose for that. >> remember in october tim cook said it was going to be an i pad christmas. looks like he could be right. analysts say apple had a great black friday weekend. i did just speak to scott kessler at s and p, he points out the ipad was a big seller at walmart and target. at best buy microsoft surface was a top performer. the tablet wars continue. still walmart says it sold 1.4 million tablets just on thanksgiving and it highlighted the i pad mini as a top seller. what drove demand? strong reviews for the new tablet and apple didn't discount products but did offer gift cards, $75 with the purchase of an ipad air, $50 gift card with an ipad mini and big retailers they took it one step further, best buy offered the ipad air
starting at $449, 50 bucks below retail. looking ahead, deutsch bank's chris witmore says strong ipad demand does suggest he says an ipad christmas and his december quarter estimate 24.5 million ipads could now be too low. tyler, back to you. >> josh lipton, thank you very much. another "power lunch" countdown. jon fortt here this time. stick with apple. iphone order screen popped up on a website registered to a china mobile subsidiary but china mobile denies that a deal is done. this would be a huge deal for them. >> it would. they keep on teasing us. december 18th a date out there in china media, trying to guess when they might actually start with the iphone. this report knocked down. that's the major catalyst. >> you don't want to be the guy that loses china for apple. google launching a cloud computing service, amazon is there, microsoft is there. google has already been there for consumers, but this changes
that it's going to be an enterprise cloud. >> nobody has better economies of scale than google. they could be a major player here. what i expect them to do is drive even further commoditization in cloud computing. the others are going to have to figure out how to do services on top to make it profitable. >> they'll make money charging companies for operating a cloud server for them, right? >> absolutely. they're going to drop the prices on that. >> we talked a little a minute ago about tablets. idc saying pc shipments will shrink more than expected in 2013. they were down 4% last year. this year they're saying 10%. it's not as though we don't look around this room, everybody's got a desk top. most people have a laptop. but what's selling now are tablets. >> people aren't buying a lot of new pcs. 10.1% the most it's ever been down, down to 2008 levels they're projecting. they're hopeful that the losses will stabilize once these two and one pcs come out. that's kind of wishful thinking.
better tablets come out they might continue to buy those. >> all about the mobility. sue? >> gentlemen, let's get the trading action here because it's a down day. we're down 197 points on the dow jones industrial average. initially it was a bad day in europe, a bad close in europe. >> remember, though, europe has been spectacular for months now. >> absolutely. >> nothing surprising. there's the dow. sue's right, we bottomed out around 1130, 1145 as europe closed but besides europe the breath has been terrible, two to one declining to advance in stocks. the vix, the volatility index, quietly moving up for the last he wi several days. i think we have a two or three month -- yeah. roughly that on the vix there. so that's moving up. what it looks like to me, sue, is that a lot of traders are locking in a little bit of gains for the year overall. look here. materials consumer discretionary and financials your cyclical sectors, the ones that are down. what's up, more defensive names. these are underperformed
throughout the year. a little bit of rotation but not dramatically so. one thing you see on a day like today high beta names move down more. if the dow is down 1% and have a beta of two, they're usually down 2%. that's what happens. the market is behaving in a predictable manner here. those high bidding names are down a little more. >> yesterday blaming it on interest rates. >> can't do that today. >> not today. you can't. we're going to get to that in a minute. gold market had a tough session yesterday. today things are considerably quieter as we go into the close. as a matter of fact, comex gold is only down 120 on the stragds six. a double d-double digit loss yesterday. the markets have steadied out partly because of the drop in the equities market. talk about interest rates, shall we, with the bond market report and rick santelli tracking the action at the cme. and all eyes were focused on europe this morning, now they're focused here on equities. how about the interest rate
scenario, about 2.7% last time i checked? >> yep. 2.77, so shy of that 2.80 mark. a couple dynamics as you look at the intraday chart of tens, yes, a big rally pushed rates down, started at 10:00 eastern but at 11:00 eastern it accelerated a bit. am i reaching? well, judge rhodes upholding the pensions based on the issues of the detroit bankruptcy, wouldn't be treated in a special fashion, really is good news for the rule of law and all debt holders and it isn't surprising to see that rally. to be fair, if you look at the mub, the muni etf, it's hard to pull out anything important out of that process. but the news of the day continues to be britain versus europe. look at the pound versus the dollar. the pound versus the euro, the pound versus the yen. this currency is on fire and accentuates your last comment that is europe probably will be a big story in 2014, just look at all the cred inlines being
closed by the italian finance system. this is something that's going to be important. back to you. >> all right. rick, thank you very much. we'll watch that. two cancer fighters joining forces. one of the stocks is up 92% today. that's next. plus, look at those shoppers. what's this year's holiday spending trends? revealing about the wealthy and everybody else. and no more looking for your waiter anymore, perhaps. find out what one national sit down restaurant is doing to automate your dining experience. that's all when we continue on "power lunch." [ male announcer ] once, there was a man 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 a...shell.
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welcome back to "power lunch." check out decker's outdoor continuing strong rupp for the year. raising its price target to -- by ten bucks a share to $91 with a buy rating citing accelerating sales. raised sales to 7%, stock up more than 100% for the year an one firm thinks it has room to grow. these are the guys behind ug boots. >> oh, yeah, know it well. thanks very much. big biotech news today. oncomed and celgene partnering to develop and commercialize up to six potential anti-cancer stem cell treatments.
shares of oncomed which went public in july and hasn't done much since is certainly making it move today, up 106% on oncomed at $28.96. under the terms of the deal oncomed will receive $177.25 million up front from celgene including a $22.25 million equity investment. shares of celgene have been trading on the downside in an otherwise down market but down about 1.3% at 160.26. barbara ryan, managing director with fti consulting joins us to talk about the deal. good to see you again. >> nice to see you, sue. thanks for having me. >> you know, celgene has been aggressive in pursuing different pipelines if you will. this seems to be another kind of innovative deal on their part? >> absolutely. i think there's two important things to note. you're right, this following deals with epigene and blue bird that celgene has done as well as agio, all companies that went
company for break through potentially early but break through therapies. the second point is we've had nearly 40 companies in the biotech space go public this year, raising about $4 billion. that has allowed these companies a long runway to develop their own pipelines. in order for the larger companies to participate and play, they've got to step up an we're seeing, obviously, the financial magnitude of potentially what celgene may pay for this collaboration. >> in other words, the financing window is open now, you know, and the cash is froe to flow allowing some of these deals to go through. >> years ago these companies would have needed to go to companies like celgene and the large pharmas to fund their portfolios. it's not just about they have the money to do that now, therefore they're really bargaining from position of great strength. >> all right. barbara, thank you very much. good to see you again. >> good to see you too. >> barbara ryan. ty some.
>> thank you very much. power run down time. jane wells and dominic chu, cnbc stands for chu, nothing but chu. applebee's placing tablets at every table in every one of its u.s. restaurants by the end of next year. they take the place of waiters to take your orders. we asked on yahoo! finance.com if this is a good idea. 32% say yes, it will make it more convenient, 52% say i don't want to use a dedevice at a restaurant and 16% i'm not sure. jane i think you have something to say. >> you know, we all use devices at restaurants already. how many people have their heads down. i love it. you can order food from your seat. it means you don't have to wait for the waiter to come around. they say they're ordering more food where they tested this and one less person i have to talk to during the day. >> oh, my goodness. >> it's a social thing, right? doesn't it make the eating out thing a little more kind of you're in a cubby hole versus talking to somebody at some point? >> well go out to dinner with it
a friend. do you really sit there and talk to the waitress, hey, how are you doing? >> if i don't want onions on my salad or want my martini made a special way. >> extra dirty i'm sure. >> people, get with the times. >> bob gengua, hope i pronounced it right, telling "squawk box" europe, the fed is increasing the gap between the rich and poor, consumer spending will show quantitative easing is causing an enormous skew in the distribution of wealth. in other words, i guess dominic, that asset prices are going up, but incomes surely aren't and that that's going to show up in the numbers. >> how many times on the moving target or any other segment we talk about about retirement saves do we talk about the idea that the fed and quantitative easing is having a negative impact on retiree, those saving, trying to invest in cds and saving accounts and giving the comparative advantage to younger
folks invested in the stock market. they've been doing great. relying on less risky investments to generate income that's where a huge disparaging gap comes from. one of the things that bob highlights yes between the rich and poor, but also just in general between the young and the old of our country. >> jane? >> wait. so the rich are getting richer? really? and the rest aren't. oh, knock me over with a feather. we want to blame this on the fed we can but seems there's a variety of reasons for it. mortgages will be more expensive -- >> i'm still stuck on jane not wanting to talk to anybody at a restaurant. >> i barely want to talk to you guys. >> you want to talk to me by text. the minnesota vikings breaking ground on new stadium today, a billion dollar project, supposedly going to be completed by 2016 in the nfl. the history of these stadium projects, jane, as you know, is very sort of questionable as to what they really bring and cost. >> yes. >> i am the expert on this because i live in a city that
doesn't have an nfl team. i remember watching the rams, lose to the vikings all the time. the problem, the state of minnesota wants to contribute its share through gambling proceeds but those gambling proceeds aren't coming in nearly as high as expected which is always the case. i tell you, if the vikings and minnesota want to get a return on that team, here's how you do it. win. >> quick thought, dom, and then one for gain. >> i'm looking at the stadium saying it looks so cool. maybe if you build it they will come. they have to win a few more games and adrian peterson has to break the rushing record but maybe they go and visit this state-of-the-art stadium. >> jane, question for you now, sar keysen, are you happy? >> i'm hopeful. to me, i feel as though it's a step back. he only has a 7-6 record. he's from the old regime. i was hoping for new blood and a completely new perspective. i loved him, but he lost to
notre dame and you can't do that. >> interesting. guys, thanks very much. sue, down to you. >> all right. thank you all. banker blues and lawyers lament, bonuses in the legal world not what maybe in the pro tegs are hoping this year. what's going on in the banking roo world? >> profits on wall street may be up but pay won't be. how banks are facing the bonus question after this break. ♪ i want to spread a little love this year ♪
[ male announcer ] this december, experience the gift of unsurpassed craftsmanship at the lexus december to remember sales event. some of the best offers of the year. this is the pursuit of perfection. wl back to "power lunch" disney is one of the worst performers, downgraded from a neutral to a buy. disney is up about 40% this year. far outpacing the dow. speaking of the dow a day when the dow is down 130 plus points. see right there, hovering just above session lows. so again, a very bad day. at least for the bulls. we seem to be doing a little bit of profit taking in this early
part of december, at least on the dow and s&p. now off to brian sullivan for what's next on "street signs." >> yeah. more on the market sell-off. thank you very much. plus with two sort of bizarre deals in two weeks, what exactly is apple up to? former ceo john sculley with us. also the detroit bankruptcy ruling, may not care about the municipal bond market but what will this ruling mean for your city and state? we'll talk about that. you guys hit it, ipads or tablets on restaurants, self-check-in hotel and flights and drones, are we head toward a humanless economy. it's a serious story in the job market. we'll hit that as well. back to sue and tyler on "power lunch." >> thank you very much. stocks at record highs, more ipos coming on to the market but investment banks are bracing for yet another year of pay cuts. kayla tausche here with more. >> it's not only profits but it's also the stock prices that have been jumping this year for the banks. if you take look at this chart. the problem is the bottom line is going up by cutting expenses
and these banks releasing money that had been put aside for bad loans. the revenues lacks luster led investment banks to pay their ranks less and less. goldman sachs paid 5% less in the first three quarters of 2013. jpmorgan 4% less. morgan stanley 3% less. citi paid its people 2% less, across the entire company. what we're focused on here is the investment bank. bonuses aren't decided until the fourth quarter with many scheduled to meet this week and next to figure out who gets what piece of the pie. most executives say it's going to be flat to down and that echos the estimates of compensation consultants, johnson and company with the report out last month. the key number that analysts watch is compensation as a percentage of revenue. banks main assets are people, so it's normal for the largest portion of their expenses to be salaries and bonuses. even that's been slipping too. down at most major investment banks and last quarter, jpmorgan's legal costs outstripped compensation for the first time for any of these
banks. there's one corner of these companies where pay is almost sure to rise if a big way and that's asset management. >> asset management. high net worth clients pouring their money into the market with a stock market on a tear. if you're elsewhere in a bank tbd. >> it's reliable business that comes off a percentage of the money under management basically. it's a beautiful revenue stream. >> it is. thank you very much. >> sue, down to you. >> ty, the prestigious and profitable law firm announcing its 2013 bonus scale. it's the same as last year. the firm is the traditional market leader on bonuses. david joins us, founder and managing editor of above the law.com and ellie is editor with above the law. welcome, gentlemen. nice to have you here. ellie, start with you, this does not seem to bode well for those who were looking for a better year this year. >> yeah. i know. i think these bonuses are very underwomening and disappointing and that's a little weird to say when talking about bonuses that range up to $60,000 for the
senior people. right now these bonuses the way i like to put it, makes those associates working at these top law firms feel like they're playing for the mets instead of the yankees. >> i disagree. i think these bonuses are solid, maybe verging on generous. as we were hearing bonus is on wall street are going to be down so why should the lawyers who service these wall street banks be doing better than the bankers who are really their clients? >> take that, ellie. >> the firms have rooebounded t partners people making these decisions rebounded to post-recession levels but the associates who are, you know, putting into the pie have not rebounded. >> that goes to the fact does it not, david, that the structure of law firms is changing fundamentally? >> yes. >> the big firms are not what they used to be. >> yes. >> they're changing, getting more boutique firms, smaller firms and the like. >> that risk to the sort of so-called big law model, the challenges that are being faced by the large law firms are what
firms are taking into account when conservative and compensating their associates. you don't want to have a situation where they pay very large bonuses an then they have to lay people off. >> conservative, they are laying people off. they've recouped some of their profits laying off a lot of staff. we had a study, we haven't updated it this year, that showed that 1.2% of total -- of bonus compensation was 1.2% of total partner compensation in post-recession 2007. last year, and again bonuses this year are the same as last year, that figure was only about.3%p. right. point 3 of a percentage point. they're physically spending less money on their associates now than before the recession. that's not just -- i don't know that -- >> why would you want to be a lawyer in this day and age. you have to come back when you update the survey. >> absolutely. >> thank you very much. appreciate it. the market right now is down about 133 points. let's go to bp.
bob pisani. a lot of people thought we would see a better performance in the market when europe was out of the way. we're off our lows, down 124, but not improving the way a lot of people thought it would. >> no. do remember, europe's had a great run so once again, looks like people lighting up a little bit after a nice move on the upside. we've been down three days in a row for the dow. put up the dow in the last three days, that hasn't happened in a long time. we're down only 1% from the historic highs. no tumultuous decline going on, three days in a row. also unusual is the vix. we are popping up to about a 1.5 month high. the vix would get really significant in my mind around 20 but since we've been so low for so long what's going on here, is people are buying a lit bit more protection and lighting up a little bit after 26% gain in the s&p 500 this year. sue, back to you. >> actually, ty will take us out. >> folks, thank you. this is one big donation and one serious holiday gift. who better to explain it than
our robert. >> 'tis the season of giving. seattle man who clipped coupons took the bus and left $180 million to charity and while we're talking mega gifts the fastest, most expensive ferrari ever built. that's coming up after the break. tdd#: 1-888-648-6021 there are trading opportunities tdd#: 1-888-648-6021 just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has
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robert frank with three interesting stories. unlikely philanthropist in seattle. >> today is giving tuesday. this guy jack, nobody knew he was rich. he took the bus, wore grubby clothes, you know, basically lived in a small house, humble life. he left $187 million to charity and -- >> who got the cash? >> the seattle children's research institute. he ask it mostly through investing. been investing since the 1950s. shows if you stayed in the market for that long you did well. >> and save a little every time. >> let's talk more about giving tuesday. this is a day that has gone social? >> yes. it's called the unself-y. we know what the self-fy. today is the day of the unsel e unselfie. take a picture where you've written your favorite cause or what you're going to give to, take a selfie and put it up.
this has exploded on the internet. heidi klum, katie couric, a nice way to offset. all we talk about are retail sales. nice to talk about giving. >> what a great idea. >> move to something that is totally unrelated and not charitable at all a new ferrari, the most expensive ever? >> it's giving of a sort. if you want to give to yourself. the most expensive, powerful ferrari built. la ferrari. $1.4 million. the ceo of north american ferrari was on this morning saying that if you bought the last super car they made, which was the enzo, in 2002, for $650,000, you would have more than doubled your money. he's saying this car is an investment. this could actually appreciate -- and a hybrid. >> and a hybrid. 40% more fuel efficient. this is sold out. they've sold all 499 models they're going to make. >> thank you very much. to phil lebeau for quick breaking news.
>> tyler, the research firm auto data haskell clatsed the november sales number and the sales pace last month came in at 16.4 million vehicles. that was much higher than most on wall street were expecting and to put that in perspective, tyler and sue, that is the highest monthly auto sales rate since february of 2007. 16.4 million. back to you. >> phil lebeau, thank you very much. three of the biggest winners in today's down day, we'll tell you about them next. [ nick ] congratulations on your new chevy. with 10 standard airbags and an epa-estimated 38 mpg highway, you guys are gonna love your new chevy cruze. thanks again for the great deal, nick. [ chuckles ] happy holidays. [ coins jingle ] [ male announcer ] chevy's giving more. this holiday season, chevy's giving more. get this 2014 chevy cruze lt for around $159 a month.
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welcome back to "power lunch." one stock is doing well and that was really one priced to move. this is zen core. the biotech priced at $5.50 a share after twice having its price reduced but the amount of shares offered was increased by 2 million to 12.7 million shares. you can see there up 25%. back over to you. >> can't say that much about the dow jones industrial average, certainly. take a look at where the markets are right now. the dow jones industrial average off triple digitses down 128, off the low, the s&p down 10 on the trading session and the nasdaq down 18. in terms of the ten-year yield we are seeing a rally in terms of the price so the yield is going down which is 2.77%. we were up above 2.80%
yesterday. three winners abercrombie fitch, activist investor pushing. abbey vi and ownok. >> that will it for "power lunch." "street signs" begins right now. ♪ got to get up ♪ listen to me >> stomp going on in stocks. we're going to get to that in a second. what is apple up to? now buying a data analysis company? apple's former ceo thinks he knows what they're doing and he is here. hello, welcome to "street signs." melissa riding shotgun all week. welcome back. stocks are down more on that in a second, but your other top stories at this hour, how the detroit bankruptcy ruling may impact your city and state. tough day, perhaps some very good news for detroit and the