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tv   Closing Bell  CNBC  January 17, 2014 3:00pm-5:01pm EST

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dogs. >> my dog speedy would own it. he's 13 but he would still own it. cooper lawrence a real pleasure. thanks for coming. everybody, thank you so much for watching "street signs." i hope you're weekend is filled with cragels and cronuts. have joo have >> have a happy and safe one. "the closing bell" is next. welcome to "the closing bell." we've made it to friday. i'm kelly evans here at the new york stock exchange. >> how many people realize that monday is a holiday? martin luther king monday. >> i realize. >> but late right? >> it's just a relief. >> you're doing such a good job, take monday off. the final hour of trading will determine whether we have a winning week or a losing week. the dow needs to hold onto an at least 20-point gain to be in the green for what has been a week of very big moves. big down daymond, two big up days tuesday and wednesday, a big down day yesterday, and through it all we've only been down 20 points for the week. but now we're up 40 points.
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>> a market in search of a narrative. that's kind of what it feels like down here. the dow may have been in full on rally mode today if not for general electric. it's the worst performing dow stock. it's down almost 3%, and that despite earnings that roughly met expectations. why the sell-off? >> art cashin just told me the market on close orders flat right now. the dow and the s&p continue to trade near all-time highs. the nasdaq is still a good distance away from his all-time high of a little over 5,000 set way back in march of 2000. 14 years ago. but you're wondering whether that could happen this year. could we hit 5,000 and if so find out which stocks could lead the way for nasdaq to retake that magic mill lenennial mark. >> it would have to be a 20% move after the year we just had. it would have to be the late
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'90s all over again basically. here is a look at what's happening in markets right now. we've mentioned what's going on with the major stock markets. the dow adding 60 points up a fourth of a percent. the nasdaq is slightly lower at this hour down 15. there's the chart. 4,200 is the level of the s&p. we should mention the ten-year keep a close eye on this one. a lot of people looking at what 2.83% means on this friday. >> we'll ask rick santelli. what do you think? >> sounds good. >> he's part of our "the closing bell" exchange today. so is rich peterson jim schlage, tom doyle. speaking of technology what's the best performing technology stock so far this year? >> in north america we know it's blackberry. >> blackberry. what a surprise. >> after today's performance. >> i'm sorry, i was leading the
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witness there. rich, what do you think of the earnings so far? they not exactly set the world on fire have they? >> well bill when we kicked off earnings season last week with alcoa, expectations were about 5.8%. now a week later we're at 5.3% for the fourth quarter according to the s&p estimates. what we're seeing it's a trend. energy and consumer discretionary are moving lower. financials and telecom are moving high perer. all in all, next week when they get a clear vision, we have a lot of big names, microsoft, ibm, netflix, proctor and gabl& gamble. >> john i'm curious if people are talking about this energy story and we're now hearing fed officials weighing in as well. lacquerk comments being made about natural gas. what is the best way for
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investors to play that because the energy space, of course generally is weak. do you play it in the u.s. dollar for example? do you buy the indexes broadly? >> i think you do. finally we're starting to get a little clearer indication from the fed about their policy moving forward. we're in the camp of thinking that $10 billion a month is what they're going to taper moving through the year which means easy money throughout 2014 and interest rate hike not until the end of 2015 perhaps. i think buying the u.s. dollar on that taper would be a good idea but also we're looking at all the indexes, all the u.s.-based indexes moving between 8% and 12% higher next year. >> jim i'm going to ensure that we get a 10% correction by making this statement. we will never have another correction in the stock market. why haven't we had one in so long? what happened? >> boy i mean the economy is doing pretty well and it continues to move forward at a much better clip than it did a
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couple years ago certainly. it's going to happen. we just don't know when it's going to happen and i think, you know, client portfolios need to be well-positioned to take advantage of both upside markets and downside markets. >> what if you had been sitting on the sidelines waiting for a pullback to get back into this market and it keeps going higher, do you still sit on your hands or what do you do? >> i'd say first thing i'm really sorry about that but i would continue if you're a long-term investor dollar cost average into this market and take advantage of the downturns in the market and assuming you're a long-term investor you should do pretty well. the economy is going to continue to move forward, and if you're sitting in cash inflation right now, even though it's a little under 2% is probably eroding your purchasing power. >> rick santelli, what does the ten-year say? >> i think it says we're down 20
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basis points on the year. most institutions whether you look at their portfolio adjustments, their duration settings, for the most part are short expecting rates to go higher. i think the thing to pay the most attention to is what's going on around the rest of the world. we know the term window dressing when we talk about stocks at the end of a major quarter or calendar event. what it means is what you're seeing from the window isn't necessarily representative of what's in the back of the store. and i think whether it's spanish rates, portuguese rates, italian rates, the state of the european economy in general just to pick a few, that all of those issues will affect the valuation of u.s. treasuries at a time when things are definitely getting better but as lumpy data shows us we can go from 270,000 to 74,000, there's going to be a lot of issue that is i think the error in judgment is that we will see logic win out in a highly indebted society.
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i think the u.s. will see lower rates for first half of the year. >> rich peterson i guess more important or more pertinent to our viewers is not so much how the earnings are coming in it's how the market is responding to those earnings. ge, for example, we'll talk about it later, they beat expectations but still the stock is trading lower. look at what happened to best by this week. they missed by a little bit. their guidance was not great and they got clobbered big time. is the market expectations way too high going into this quarter? >> well, you know, i think, bill, you have to look at it on a case-by-case situations. look at american express, they missed by a penny according to some estimates. the stock has been responsible for most of the gain today in the dow jones. i think all in all, we're looking for gains again in telecom, financials industrials. i think the recovery nascent as it is in europe will help large cap companies going forward, and i think looking at just a
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picture overall for the full year, we're seeing earnings per share of 119.6, looking at valuation of 15 times 4 on the s&p. it's not an excessive valuation. i think equities should be attractive to many. >> rich one more question here because i'm looking across these indexes which again you have the dow effectively a head fake for the investing public if they think we're rallying today because it's basically american express, visa. the s&p 500 is down and this dispersion between the dow and the s&p 500 has been a theme of this short year. what do you do? do you think that because the components have changed the dow is becoming less reflective of the broader trend? >> well again, in your opening remarks you're saying this is a market searching for a narrative and we're at the first chapter of a long story that's going to unfold throughout the year. that story is going to have a section about janet yellin. a market that's going to have a
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section about how tapering will or will not transpire. a lot of variables will come about. i think where investors should be poised to look at again, we're seeing a positive growth in earnings the economy is growing modestly, inflation has been checked. the issue is whether it's a revision come this month for december's jobs numbers. so all in all, i think the bias is positive for equities going forward. >> all of those questions, that's what keeps us employed. >> i just -- something has changed. >> absolutely. when the ball dropped on december 31st the sentiment definitely changed on wall street. you have to figure out what the new sentiment is. thank you, all. heading toward the close and the dow is not telling the whole story today. the s&p and nasdaq is trading lower but the industrial average is up 40 points. as long as we are up at least 20 points today, the dow can be positive for this crazy volatile week. >> and the dow and the s&p may so far be down for the year but 2014 has been pretty nice to the nasdaq. will this be the year that
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indeck finally retakes the 5,000 level? it was nearly 14 years ago when the nasdaq last traded there. and also, you know what happens in puerto rico may not stay in puerto rico. we're going to look at the damage a potential default by puerto rico could have on the nearly $4 trillion muni bond market. if you own a municipal bond or are in a muni bond fund you want to stay tuned for this segment coming up. and what did peyton manning mean when he was shouting omaha during the bronco's playoff win last weekend? >> omaha is a run play that -- but it could be a pass play or a play-action pass. >> can't give too much away. >> we want to know what you think he really meant. tweet us your thoughts and we'll hear from a top executive at omaha steaks coming up who is considering signing manning to an endorsement deal on the back of that. you're watching cnbc, first in business worldwide.
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welcome back. well, it's massive. the $4 trillion u.s. muni
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market. probably many of you watching right now, that market is facing some major headwinds. one in particular the threat from a small island of puerto rico with $70 billion in public sector debt and concerns are growing the country won't be able -- not country, the territory? >> territory, yeah. >> won't be able to repay it. >> so how worried should investors here in the u.s. be worried about a possible puerto rican debt default? joining us is larry mcdonaldcdonald, doug lockridge and also with us is our own michelle caruso-cabrera. michelle, put it in perspective. what's the possible threat of default? how real is it? >> the possible threat of default, it really depends on issuance to issuance. puerto rico has so many different flavors of bonds and you really don't know if there's a restructuring how it's going to play out. i would say though if you hold a u.s. muni bond fund here in the united states, you probably have
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exposure to debt from puerto rico and here is why. here are the numbers from morningstar. of all the municipal bond funds in the u.s. 69% hold at least some exposure to puerto rico. that number is down from several months ago. used to be 75%. why is that? because there's a triple exemption from puerto rico. you don't pay federal, you don't pay local, you don't pay state tax on revenue you get from a puerto rico bond no matter where you live in the united states. so if it's yielding 8% wow, you'd have to get 12% in something that's taxed to get the same kind of return. so a lot of funds have bought puerto rico over the last several years. >> yeah and i'm curious, a lot of people were looking to puerto rico to juice returns in muni bond portfolios. >> the bonds themselves have very strong legal protections. when you're talking about the general obligation bonds, and
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michelle is right, there are many different types of issues on the island general obligation bondholders have a constitutional protection. the constitution of the commonwealth places debt service on those bonds first ahead of any other expenditures ahead of any other pension payments for instance, or any vendor payments. it's a strong legal position to be in. furthermore, the territory is not eligible to file chapter 9 bankruptcy. nor can any of the agencies on the island -- >> we're up against the limits of feasibility here. i understand why they prioritize investors, but at some point they simply won't be able to service the debt. >> well let's talk about that. because of that constitutional hierarchy, gl bondholders have nine times debt service coverage ratio. their general fund budget will be $9.7 billion and debt service coverage requirements is about $1 billion. furthermore, their plan to
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ultimately balance their budget is right on track. halfway through the fiscal year they're right spot on where they want to be. they're anticipating their total revenues to be $1 billion higher than last year. so there is concern about their ability to pay.pay. i believe it's there and they've always showed a strong willingness to pay. we heard again this week how the government said we're going to do what it takes to honor all our debts in the monday market. >> larry, are you concerned? should muni bondholders in puerto rico be concerned? >> keep in mind the bonds are down 30 points on the year. >> i'm talking to larry now, dan. hang on. >> they factored in a good part of a mini default. the senate president of puerto rico reached out to me last week and he mentioned that constitutional protection and i did some research and it's true some of the bonds -- they have $70 billion of debt. five times detroit. but out of that $70 billion,
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only 64% are constitutionally protected. so not all the bonds are constitutionally protected and that's one of the things investors have to know. >> meaning? >> meaning that out of the $70 billion that some of the bonds don't have that -- >> could, in fact default. >> don't have that protection. one of the black swans nobody is talking about is what's called gatsby 68 and 67. it forces pensions in states like illinois, puerto rico territory, to take a risk adjusted rate of turn. a lot of these pensions are assuming 7% 8% assumed return but that's not a risk adjusted return. the new regulations are going to put that down to about 4% which means that puerto rico's obligation on their pension goes from $32 billion up to $38 billion. it spikes. >> do we know who owns this debt? has there been a rotation from the retail community -- >> dan owns ton of it kelly. he's the guy with the most of it. when you look at all the funds
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that morningstar has out there, dan has got the biggest exposure. are you worried? everybody else is on the other side of this trade compared to you, dan. >> keep in mind that between $25 billion and $30 billion in bonds are owned by retail individual investors in the bonds directly themselves so they're widely held not only among the funds but individual investors and the hedge funds now. the smart money have been buying. that's actually helped dry up prices so far in this year-to-date. long g.o. bonds are up 7%. >> what about the 36% of the puerto rican bonds larry was just talking about that don't enjoy that constitutional protection you were just alluding to? >> yes, thank you. >> do you know if you own any of those bonds? >> yes, yes, thank you. some of those are revenue bonds that have strong protections ring fenced by themselves. look at the bonds that are known as cofina, they are backed by sales taxes. they don't have the
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constitutional protection but right now they have close to two times debt service coverage on all bonds including senior and subordinate. so that means sales taxes have to fall by half before there's not enough money to pay them. >> i also wanted to ask you about this look we all know the status quo for the way this is supposed to be handled, but we've also witnessed the example of europe in which, you know, it seemed as though they're often deciding -- >> i don't mean to contradict you but this was the point itches going to bring up. we don't know the status quo. >> that doesn't help. >> it's neither fish nor fowl. it is not greece it is not detroit. we don't know what a bankruptcy looks like. that's the issue. so a lot of attorneys that work in distress are trying to figure out what on earth would happen. it's not really clear. people wonder could they change the constitution the way greece went and changed its laws retroactively to screw
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bondholders. could they do the same thing in puerto rico? >> good point, and right now it is not a latin american sovereign. it's a territory of the united states of america. so it's a good position to be in now. >> okay. larry, what about what dan was saying about those bonds that are not covered or -- >> i have been in the distressed business many years, special shout out to acg analytics. we've been advertising hedge funds. the interest we've seen the last 10 15 days from puerto rico from institutional accounts is spectacular. there's a lot of people looking at puerto rico credit. but from a long-term perspective, remember one thing, every day 92 people leave puerto rico. every single day. their population has gone from say 3.9 million people down to 3.6 million the last ten years. it's completely not sustainable. their tax laws. their tax laws are not effective
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for keeping a population. >> for those people who own oppenheimer funds or themselves own general obligation bonds out of puerto rico should they be concerned about the possibility of default? >> short term i think they get the deal done. it's a third lien bond. they're doing a third lien bill on the cofina revenues. that deal probably gets done so the bonds will get a rise but i think late in the year there's a black swan with like i said this gatsby 68. it really makes it difficult for puerto rico. i think people should be concerned about a default late in the year. >> we'll revisit this i'm sure at some point. thank you all for your thoughts on this. >> thank you. >> thank you, guys. >> thanks michelle. >> we have 40 minutes into the close. as mentioned, the dow is supported by the likes of am ex and visa. it's up 20 points which would put it in the black for the week but the other indexes are lagging. we'll keep a close eye on that. after a rocking 2013 general electric shares one of the worst dow performers so far
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in 2014, has gotten hammered today on earnings that frankly look kind of okay. so what's going on with ge stock? we'll get some answers in a good old stock brawl. and that will be an undercard to today's main event. see ma seema mody and dominic chu are duking it out over bed, bath & beyond and best buy. see who will be left standing. 1971. afghanistan, in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve. [ male announcer ] start the engine...
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we have some divergence across the indexes again today with the dow up 25 while the s&p 500 and the nasdaq are lagging. dominic chu, what is driving the market action? >> let's start with american express which hit an all time high. then there's morgan stanley rising to the highest level since 2009. now, on the flip side, there's intel falling after the chipmaker posted weaker than expected fourth quarter earnings. they gave a tepid forecast for first quarter in terms of sales and reuters is reporting it will reduce the workforce by 5% in 2014 through layoffs, attrition, and other methods. u.p.s. down as well after they said it expected its fourth quarter and full year profits to be below previous expectations. this as it struggled with the
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surge of last-minute online orders and a shortened holiday shopping season. fed ex is falling in sympathy with u.p.s. apple is falling lower. we're going to end here on general electric. ge, which is losing ground after its profit margin missed goals set by the ceo jeff immelt. the company reporting fourth quarter earnings that matched wall street estimates. back over to you guys. yoop >> there it is down 3%. so why is general electric getting smacked today? the earnings seemed pretty innocuous. the profit margins not withstanding. one of our next guests says this time the street is getting it wrong. could this dip be a buying opportunity for ge? with us now, typically we have a bull and bear in our stock brawl. i'm telling you, our whole staff scoured wall street and couldn't find a bear. why doesn't this stock move
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higher in an appreciable way if there are no bears out there? >> i think it will. i mean look it's all about their industrial operating margin. that's what set it off here a little bit. but this company is restructuring. things are changing there. they're getting out of the financial business. they're becoming much more of an industrial. if you look at the industrials and the way they're set up ge is trading at 15 times. most of the industrials, you look at honeywell, they're trading al 18t 18 19 times. the stock has a lot more margin expansion and the stock will go higher. we saw this thing sell off over the last couple weeks. it's off roughly 3.5% before the print. so i think a lot of selling got out of the way ahead of time. i think you're seeing a little pressure on it right here but i think it's important to look at this as an opportunity to get in. >> i'm no chartist but it doesn't look like the stock performed that well lately
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either in response to the earnings report or going into it. what's going on here? >> well i think obviously there are some bears out there otherwise the stock wouldn't be down so much today. but really the company has been going through this transition here. we've added it to our mutual funds over the last six months. we now own it in three of the seven mutual funds we manage. we really like the fact that they've restructured the business. when you look at it i think you have to look through all this noise because there's a lot of restructuring still going on right now and a lot of moving parts, but if you look at it over the next two to three years, ge has really positioned themselves as the leading global industrial company. they have exposure now to just about every facet of the energy and power market as well as water infrastructure transportation, and a lot of these industries have really gone through periods of consolidation. in some cases a decade's worth of consolidation.
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capacity has become more rationalize rationalized. you will see margins expand we think over the next two to three years, and they just haven't gotten full credit for it yet. >> it's not our parent anymore, but is it incumbent for full dough disclosure, a lot of us have shares of ge. we have been watching this stock. i have been hearing about this restructuring since jeff immelt took over in 2001. yes, he faced 9/11. yes, he's faced some wars. yes, he had the financial crisis but the stock peaked in late 2000 at $60 and has never looked back. he's been restructuring the whole time. i mean when is this stock going to gain some traction in a meaningful way? >> look, i can tell you that, you know, the flows i'm seeing on the desk the important thing to look back on is the money flow and who is buying this name. we're seeing a lot of hedge funds on this weakness buying the weakness. they obviously have done their research. i can tell you when i look at
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this name and i look at them restructuring and getting back in line with what the other industrials are trading at this stock could easily go right back up towards its highs. i think we're at a crucial level here. technically we broke through the 50-day. we get down toward the 100-day and i think you will see a tremendous amount of demand come on for this name. >> even the company's management country indicate it's going to be growing earnings by leaps and bounds. you put money into this stock how are you confident that the earnings power of this company is going to reward you? >> well that's very important. if you look at what the orders that came in this last quarter, if you look at the orders on the industrial side of the business they were up almost 10%. so as you do get a recovery in the global economy, which is lagging the u.s. you're going to get a lot of leverage to capacity as well as the fact that they've taken so much costs
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out of these businesses as demand does recover in the global economy. you're going to see that the profit margins expand and they'll get back to that historical earnings power. they've also shown a real commitment to increased shareholder value through all this restructuring but also return capital to shareholders. right now you're getting a little over 3% dividend yield on a stock that trades about 15 times earnings. we think it's a very good risk/reward for somebody looking out over two or three years. >> i'll be the bear. i have heard this all before many times. we'll see. it's a show-me time right now for a lot of shareholders. >> thanks, guys. have a great long weekend. >> 30 minutes to go here. hanging on but not by a lot. the dow up 12 points. we need to be up 20 today for the dow to finish positive for the week so that's not the case right now. we're starting to lose altitude as we head to the close. >> we started the hour up about 60 on that index as the others
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boded poorly. did walmart fire the relatively few employees that participated in strikes against the retail giant? we'll speak to one of the former employees and get reaction from the company. and divorce filings among the rich are booming. so why are so many couples say good-bye these days? here is a hint. it has something to do with the stock market. we have more on that answer later on "the closing bell."
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welcome back. there have been many protests at walmart stores lately. the main issue has been better pay and benefits. most of the folks involved in these protests like the one you're looking at now were not necessarily walmart workers but rather people brought in by unions who want to unionize. there are some actual walmart workers who participated and a few who are saying they were fired in retaliation. >> now the government is getting involved in this story. the national labor relations board say those firings of those walmart workers was illegal and it is suing walmart. it filed suit this week to get those workers reinstated and we are joined right now by one of those workers, colby harris was fired in september from his job
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at walmart in texas. thanks for joining us today. >> thanks for having me. >> the complaint is 33 pages long filed against walmart. you're on page 11 and it itemizes various protests you participated in, and you took time off from work to participate in those protests. that is why you were fired, because you missed work is that correct? >> that is actually not correct. i was actually fired because i was on those days that they accuse me of being absent from work i was actually on protected strikes against the company and that's the reason why they fired me. the reason why they claim they fired me was because of absenteeism, aka, not showing up to work but in reality i was fired for all the days i was on ulp strikes. >> that's their reasoning, because you missed work you were let go. >> yeah. they're saying i simply didn't
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show up to work when scheduled. >> we know workers are allowed, of course, to organize to form unions. that's what the nlrb is upset about, that walmart had threatened perhaps by indicating the workers would be punished if they participated in these protests. the complaint does indicate that for 11 days from may through june of this year you were away from work and as you mentioned, you have traveled to various cities to participate in some of these protests. how many days off does -- do walmart workers get each year? >> it depends on how long you have been there. most workers are part-time, so they don't get any full-time benefits or they don't get any vacation time. so when we take time off, really it's not taking time off. we're on ulp strikes. a lot of workers do not get the benefits. >> so let me put it this way. are you a part-time worker or full-time worker at walmart? >> i was one of the more fortunate ones before i got fired who was full-time, but i
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still was not able to make it. i was making roughly less than $15,000 a year and not able to afford to live on my own. even being one of the more fortunate ones i still was not well off or doing good enough to be able to sustain myself. >> okay. let me read -- we contacted walmart, wanted their side of the story. this was the statement they sent to us. we believe we acted respectfully and most important lawfully. walmart has a strict no retaliation policy and the associates who are included in the complaint were not terminated for participating or membership in an outside group but rather for violations of other policies including attendance. we have their side of the story. what is your greatest beef with walmart? >> my greatest beef is the rhetoric. the fact that the statement that you just said is completely erroneous and bogus. >> but is that why you protested? tell us why you would take the time to go out and protest against your employer like that.
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>> because my livelihood and other people's livelihoods that work for this company are important, and the fact that walmart could care less about us and the fact we've come to them way before the cameras came and all this bad press came to walmart, wee came to came to them and said this is what the workers need, we're not able to make it. most make less than $25,000 a year which is not close enough to be able to make it. that's what our biggest beef is and the fact like they did nothing wrong in this situation when the labor board clearly stated they were wrong and they're prosecuting them for it. if they don't reinstate us by the 28th of this month, this will go to trial. >> colby, we certainly understand where you're coming from. the issue though of this particular suit is going to come down to whether walmart terminated you for participating in these kinds of events or terminated you for violating their attendance policy. that's why i was wondering if you miss 11 days of work in a four to six-week time span does
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that violate the attendance policies? >> not at all when i'm being retaliated against for speaking out for better and the fact is i did not violate their attendance policy. i informed them and all the associates who participated in these ulp strikes, informed them that's what we were doing, and by that we were protected. so for them to fire me specifically for all those days that i missed being on those ulp strikes, they're in direct violation of my federal rights and all the associates who were fired from the strikes that we've taken over the past year. >> colby, i'm running out of time but i have to ask you, my friend, with all due respect to you and other workers who are in this protest, do you sometimes feel like a puppet of the big unions that are just trying to gain a foothold in the largest retailer in this country and if you were so unhappy with your job, why not just go find another job somewhere? >> that's a great question and the fact of the matter is that i'm an associate, and we created our walmart, and we coordinate everything we want to do and no
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union has coordinated anything we do. the reason why i don't get another job is because walmart should provide better jobs in our communities and i slunthouldn't have to work two and three jobs to make it. they need to respect their associates and pay us a liveable wage. >> it's going to be such an important case. colby, thank you very much for joining us. >> good luck. >> thank you so much for having me. >> appreciate it. >> thank you. >> that's colby harris. we've got about 20 minutes left to go into the close now, bill. >> losing altitude. the dow up only 6 points. we were up 60 when we came on the air here with "the closing bell" and we need to be up 20 to be positive for the week. doesn't look like that's going to happen right now. coming up we'll hear from somebody who say the long-term unemployed aren't leaving the workforce because they can't find jobs. it's because their 401ks are up
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so much. seema mody hot for bed, bath & beyond. dominic chu says best buy may be your best bet for a come back. they'll go head to head when we come back. powerful screening tools and guaranteed one-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today. [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something
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welcome back. it's the battle of the bbys. best buy and bed, bath and beyond were red hot in 2013 but they turned ice cold in year. >> we have seema mody. she says savvy shoppers should check out bed, bath & beyond. but dominick chu says best buy can still be a best buy for your portfolio. it's all yours, guys. >> i don't have the time to go to bed bath & beyond. i'm going to let seema go first. >> citi maintained its buy rating highlighting its diversified product mix from blenders to plates to lamp shades. off variety of products available at bed, bath & beyond which gives the retailer the opportunity to appeal to a broader audience. when it comes to online morningstar says enhancements made to the mobile and online site could help the retailer capture more sales online in the coming years. analysts point out the company still has $1.7 billion left in its share repurchase purchase
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program. buybacks could fuel earnings in the coming quarters. >> if you take a look at best buy versus bed, bath & beyond it's a pretty decent size gap in terms of divergence. they have a $39 price target. they're not the only retailer disappointment. all these retailers are getting clocked because they'd weaker an anticipated holiday sales. less promotional activity going forward. best buy got hit because it matched a lot of prices. margins got hit but those holiday promotions start to tail away. then there's solid senior management. they are in the midst of a turn around. this particular holiday season may have been a bad one. however, they have faith in that senior management team and that's the reason why execution is important, having the right people is an important part of that picture for them. >> sure of course. so far this year let's take a look at those charts because bed, bath & beyond down 18%,
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whereas best buy down 40%. you can see how the street is vaulgs valuing these companies. here is what analysts say could help bed, bath & beyond. the ongoing recovery in the housing market. experts say the strengthening housing market coupled with a recent pickup in consumer spending should translate into consumers spending more on home related goods. you think of bed, bath & beyond not best buy. >> when you think consumer electronics, best buy is still the brick and mortar store out there everybody talks about. when you talk about valuation, i will take that 38% drop i will say that a compelling reason to own it. it has more upside to go. that's why citi's take is also a buy. they have a $31 price target. the cost savings are likely to be announced later this year. this will be a big part of the story. you talk about share buybacks. there's a possible buyback for
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best buy coming as well. that's what citi thinks. that compelling valuation is another reason why. with best buy, it fell a lot, but that may be one reason why it has a lot more to go up. >> only if it has the fundamentals. that's what we'll see. >> there you go guys. bby and bbby -- just one "b" separate it'ss those stories. >> thanks guys. ten minutes to go before the closing bell. we'll see if the dow can hold these levels. it's up 23 which would make it positive. not the case for the s&p and nasdaq in terms of today's session. they are lower. up next david lays out the three things investors need to watch in order to know which direction this market will head next. and president obama's big speech on the nsa controversial phone surveillance program and the changes he will be making. david gregory joins us later on
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so you can. heading toward the close. this is expiration day, by the way. we're going to get some volatility, but you will mainly get a lot of volume on the close
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today, and the question is which way do we go up or down? we're up 25 points right now. any 20-plus point game for the dow means we will be positive for the first time on a weekly basis in 2014. why has it been so tough to get this market going this year so far? let's talk about it with greg from high tower and our friend david darst. why the stutter step? something obviously changed from 2013 to 2014, greg. what was that? >> 2013 was a straight move up for the markets with a couple hiccups in june the market moved straight up throughout the year. i think in 2014 we have some more limited space. some more hurdles. >> what are they? >> we have tapering occurring. what is going to happen with the debt ceiling? you have the midterm elections. i think the fed is at our back fundamentally. it will be a good year for the market but it will be more choppy this year. >> d.d. i hear you have three things that investors need to
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know to tell the direction of this market. >> well you want to watch the earnings, bill. you know so far about 50 of the 500 s&p companies have reported. 62% have beaten expectations. the long-term average is 69% to beat expectations. i think that's one thing. the market is taking a wait and see attitude on that. >> so far. >> wait and see attitude on the fed. you have the three vs holding the market back. valuations are a bit to the stretched side. not egregiously so, but a bit to the stretched side. volatility has been very low. that's a complacency. finally is the vacillation, okay? you have had mixed -- those jobs numbers last month. people want to see -- >> there's no consistency. >> but the last six times it's been below 100,000, five of the six times as you recall it's been revised upward well above 100,000. so people are hoping for that.
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>> you have to put money to work. where do you put it to work in the meantime? >> bill we think small caps represents still a very good opportunity. >> even though the russell was setting all kinds of highs last year? >> but look at the m&a activity that moved it. you saw record activity in mergers and acquisitions. companies are sitting on lots of cash right now not earning money. we think they will continue to put that money to work by firing small growth companies. this is also very seasonally strong time of year for small caps with december through march showing us the january effect. we think small caps will have a good year. >> you like the bigger guys like an intel. did you like what you heard? >> well you know, it was mixed. we would go with apple right now. we think that stock can have a $650 number on it. cheap valuation. that buyback under way, and you have that new china contract. you have got those three things behind you for apple. >> all right. got to go, guys. thank you for joining us. we'll head to the close. come back with a countdown.
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the dow, this could be the third consecutive down week to begin the year if we don't go much higher from here. we'll look at that and after the bell when you think of omaha, what comes to mind? warren buffett maybe? how about a song from the counting crows? how about steaks? well, football fans cannot stop thinking about denver quarterback peyton manning when they heard the name of the nebraska city, he mentioned it 40 times last weekend and it may get him a sponsorship from omaha steaks. that story is coming up. you're watching cnbc first in business worldwide. ♪ ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. lease this 2014 cadillac srx for around $319 a month with premium care maintenance included.
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a minute left. this is the dow this year. i mean there's no real trend to this market. slightly to the downside. we've had two consecutive down weeks. we could have a third one unless the dow finishes up more than 20 points, ben willis. why the lack of direction and the s&p up one week down the next week up one week down the next. >> if someone has an answer call in and let me know. really what we faced for the last three weeks is a market of stocks where individual stocks may be the shining light whether it's schlumberger et cetera but there's been no able to discern which way the market is going. >> what's it going to take? earnings aren't doing it? fed tapering isn't doing it? . >> money coming out of the sidelines.
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right now it's a stock by stock day and it looks like that will continue into next week. >> thanks ben. see you later. well we are finishing higher. it looks like we'll have our first up week for the dow in 2014 but not bimuch.y much. stay tuned for the second hour of "the closing bell" with kelly evans. >> thank you bill. welcome to "the closing bell." i'm kelly evans. here is how we're finishing. a mixed day on wall street. looking at the dow in particular trying to hang on there and finish positive. it looks like that will be the case. we're up 33 points at the close. we needed 20 to be in the black for the week. interesting though that's not carrying over to the s&p and not to the nasdaq down 7 and 21 points respectively. let's get straight to it with the panel. our very own robert frank. howard dean.
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bob pisani also joining us for more on the markets, and mr. pisani, i want to kick it off with you. i suggested this is a market in search of the narrative. what's the narrative? >> the narrative is we are in a little bit of trouble in terms of the guidance. i'm a little worried, we have 10% of the s&p 500 reporting, 50% of the companies are making their numbers. the other 50% are not making the numbers. that's a very very low number so far. i think that's an issue. so far the guidance for the first quarter is not particularly good. to get the market going forward, we've got to get a little more positive commentary. if this is it what we're going to see, these kinds of numbers, market is going to have a tough time advancing. >> mr. newmark, i want to know what you think. >> i kind of agree with mr. pisani. with mediocre earnings the market is not going to go higher. i think it's going to go down. whether or not it's the big
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correction -- >> what? >> i actually think the markets will go down -- >> wait a minute we've been talking for years about this market and you have been -- >> i have been super, super bullish, but you know what? the s&p closed the year close to 1850. it was up big last year. why should it go up higher if earnings aren't that good? >> a very sound point. robert frank, what do you think? >> look, i think last year was all about the fed, it was all about financial engineering and stock buybacks. what is going to reanimate this market? it's going to be earnings the macro story, something out of washington like a grand bargain, or a great rotation where the retail investor finally comes back. none of those things are happening. what we can really see clearly now is that it's certainly not going to be earnings which is what people were hoping at least in january was going to help power this market. you guys feel confident saying that even at this early juncture? >> i feel pretty confident. largely because i think -- >> you always feel pretty confident. >> you cannot look at twitter stock and say, oh everything is great in the u.s. economy, great with u.s. companies.
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>> right. >> you can't do that. and basically the fact that you, kelly evans, are desperately searching for a narrative, that's the tell. >> there's no top line growth. we need revenue growth and that's not happening. still, five years, six years, seven years into theit, it's still cost cutting. >> where are we in this cycle? i think a lot of people are thinking to themselves it's been four or five years since the market bottomed since the recovery began. it took people a while to begin that was even the case but that we could still, in fact be in early to mid stages. in other words we have plenty of room still to go so why shouldn't that ultimately support the market? >> i think at the end of the day you're talking about searching for a narrative, i think it's searching for each individual stock's narrative. i think we're looking at a stock picker's market. we can talk about earnings and 50% not beating estimates so far in this season but we've also
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seen some very positive numbers. we've seen -- and we've seen some companies have that surprised and missed like cs x and slm in the last couple days. at the end of the year it comes down to each specific company right now. the frothiness we saw with the index overall i think that's -- >> we also have this relentlessly positive story that everyone seems to be talking about with the u.s. energy production boom and certainly that again has got to feed into a story with what sort of a stronger dollar narrower trade balance over time, better balance of payments? >> you'll see all of that but i just heard -- he didn't say the market is going to go down for the year but for the next couple months. here is a little quirky indicator i like. there is a ton of money, venture capital money, for the first time in a long time going into the biotech industry. biotech industry is one of the few industries left where america has an enormous edge
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over everyone else in the world. really smart people with lots of money have decided now is the time to invest in what is a pretty risky industry. those people must know something. >> that's interesting, but what if people are piling into biotech because they're in search of a growth story or an intercept that's going to -- >> not venture capital. that would be true if the stocks were going up and maybe they will and maybe they won't. these are the people who are putting not hundreds of millions, but even billions of dollars in. these are long-term investments they're deciding to make and -- >> bob pisani, what do you think? first of all, biotech is going up because the jpmorgan conference there was lots of news coming out of there and if you look at the biotech group, they popped right on jpmorgan. the pharmaceutical group popped also. this tends to be very predictable. we're getting great stuff. you want to know what's going to move the market. there are two things that will advance the market. number one more positive commentary about europe. remember, all these multinational corporations have been very very cautious on europe. we're waiting for them to say
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something. ge i would say modestly positive on europe. schlumberger was modestly positive. i would like to see more commentary. number two the biggest thing, you really want to advance the market, job market goes on the front page and everybody says the job market is improving and the country starts talking about it. that's when people will start re-engaging with the stock market in a way they have not, we all know this for the last five years. that's another big thing. >> i think the story is going to be the economy and, kelly, i know you want to argue, i think this is the fifth year you have been telling me that it's going to surprise to the upside on the economy on gdp -- >> no -- >> our famous argument was -- >> i'm not talking about that today. i refuse to talk about that today. but in general the economy will grow but it's still going to be lackluster performance. i think if you get 3% gdp -- >> i thought i was the debbie downer and you were mr. positive on america. have we switched roles?
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>> i said the world isn't falling apart like you insisted it was every 15 minutes. >> morgan what do you think? >> i want to go back to europe. i was covering u.p.s. and the fact they issued -- lowered guyance for their earnings later this month and one of the things that came up when i spoke to analysts about that was even though the numbers are looking good for the fourth quarter, they're expecting, analysts as well as the company, they are expecting a stronger growth story there. one of the things they are looking at is europe. it's an interesting thing to keep in mind. >> let's get -- if you don't mind let's bring "fast money" steve grasso into this conversation just off the floor. it seems like we had a real pickup in volume late in the session and the dow did manage to finish up 41 points now that things have shaken out. what was driving that? >> you had option expiration. it was largely to do with options and guys making sure they were covered on the equities side of business. but, you know, i don't really see a huge sell pressure on the
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market even on days where we get catalysts to the downside. i don't see people selling this market just yet. >> for all the worry, we're 0.6% below the historic high on december 31 -- >> i will say, mr. dean brought up a good point that we have an edge on biotechs. what about an edge on energy? what about this keystone pipeline? canada is losing their patience with us, and i do believe that mr. dean is for the keystone pipeline but i could be wrong. >> do you want to comment? >> i don't want to comment particularly but -- >> are you more simple thet toikympathetic to the keystone pipeline that you might have been in the past? >> i think it's the wrong target. if you want to deal with greenhouse gases, i don't think that's the biggest target in town. >> how do you do it? >> you deal with renewable energy. let me just say one thing about energy. i'd be interested in steve's comment on this.
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one of the big items in front besides the keystone pipeline, one of the big items in front of the administration and the congress is what to do about exports of liquefied natural gas and petroleum. that's going to make a big difference in price and a big difference in what happens to the economy. >> steve, it's new jersey interestingly enough which is one of the states coming out of this saying wait a minute our refineries do really well. we want to be careful here. >> it's a groat pointeat point because if we lift that ban on crude exports the luxury refiners have had, that collapses. their margins collapse. you will see thee m esmmp companies do well. >> i want to ask you about this divergence with the dow up 41 points but the nasdaq and s&p finishing lower. are we making too much of the divergence of the indexes and dare i ask whether the dow is less relevant to the broader market trend? >> usually they're in lock step but the truth is i'd rather go with a bigger broader index and
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professional traders watch the s&p 500 and watch the russell versus the dow. so a lot of times i don't even know where the dow is. i focus on the s&p. >> all right. >> kelly, for steve and for bob pisani, the issue about why the market hasn't gone down it's because of alternative investments. it's not because people really want to be in equities. they simply go look you know what? what am i going to do? i can put my money and get no yield. >> it's the search for the reveal. >> fully invested bears. >> people are forced into it to migrate into stocks and the truth of the matter a lot of the retail investor that was burned during flash crash and their confidence has been so shot they're actually not all back in yet because they watch their 401(k)s get cut in half and they have been sensitive to get back in. >> you put a 4% yield on that ten-year kelly, i can assure you the stock market would go down. >> you look at the wealthy and affluent, there's just so much money in the world for --
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they're putting money into cars in art, into every kind of collectible in the world. so assets of all kinds are way up. we tend to look at stocks in an isolated bubble -- >> we moved 100 basis points. >> there's so much cash at the top. >> i think the higher rates are ultimately procyclical. we have to go. we will try to keep the discussion going in the next block. thank you, steve. be sure to stick around and catch steve on "fast money" at 5:00 p.m. bob, pisani, appreciate it. the nasdaq is still well below its all-time high. 5,048 set in the year 2000. we want to know if it could recapture that mark and if so could it happen this year? it would be a move of nearly 20% but we'll ask our next guests. st also, are fewer unemployed baby boomers not looking for jobs because they have enough stashed away to retire early? usual watching cnbc, first in business worldwide.
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[ male announcer ] this is the story of the little room over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment ♪ it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪ ♪ ♪
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25% of the s&p 500 tech stocks report earnings next week. we'll have full coverage on companies like ebay microsoft,
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ibm. the nasdaq's high was 5,048 on march 10th. we're 20% away from that level. could earnings help propel the nasdaq closer to capturing that mark? >> good afternoon. >> hey, kelly. >> nick first to you. is it telling that we're even asking the question. it would have seemed unimaginable after the lows of the dotcom collapse. >> it's amazing we're getting back there. it's taken a while to get back to this level. 20% return from here would be a fantastic year. it would take the fed tapering and interest rates not spiking for it to get to that point and really what would take to get to that level of 5,000 this year would be ceo confidence getting restored where ceo's start spending money and hiring and then this economy could be off to the races. don't know that that's likely but that's what it would take. >> just the earnings piece of it, because we just had sort of a long debate about this on the
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panel. if it really does come down to earnings, what do we have to see in terms of earnings growth for these company to achieve anything like a 5,000 level on the nasdaq? >> one thing about the technology companies, their expectations are higher than the overall market. that's one good thing. what we're seeing that we like about technology out of the ten sectors in the economy, we recommend overweighting technology because they're earnings expectation trends. the rate of change to their earnings estimate have been positive. and stock prices usually follow that positive delta. >> i feel like using the word tech is too broad. we have to make explain what we're talking about. old tech new tech, social media. what are we really talking about and do you think it's achievable? >> it's certainly achievable. i have little doubt in the next few years you'll probably get there. i agree that i think it's a stretch to get there this year. probably need not only earnings growth but multiple expansion to do it but i think you ask an
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important question. generally we like the technology sector. the valuations are very reasonable compared to its history. it's the second most profitable sector after consumer staples, but there are significant differences and one distinction i'd make are companies geared to capital spending to enterprise spending, which we think is going to accelerate this year versus companies more tied to the consumer which are more cautious. >> it seems like there's this massive, you know, activity happening in the enterprise space. it was interesting to see blackberry spiking with citron pointing out it's a software company not a hand set one anymore. if people want to play that theme, that's the best way to play it? >> it is some of as we all them the old technology companies. they are companies whether they're in the hardware or software geared to the enterprise space that are really -- their business model is tied to whether or not companies and i agree with the previous comment, have enough confidence to dip into that
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large cash pile which is about $2 trillion for u.s. companies and start to spend. i think one of the catalysts might be particularly in tech there's a lot of obsolescence. there's been a being time since we've had a big capital spending cycle. we're overdo. >> given the nsa and what the white house is trying to do to tweak it how does that play into this theme? is it a net positive net negative for the tech industry or is it an investable thesis? >> well with regards to the nsa and anything for certain software companies, it would be a benefit for sure if they can build technology and software that would benefit from anything that would be government related in that regard. anything that increases profits for any company is what we'd like and anything that would increase their business would be good for the stock price. >> right. guys, thank you. nick and russ thinking about the nasdaq recapturing that 5,000 level. maybe it will happen. twitter last year facebook the year before. which companies are expected to go public in a big way in 2014.
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julia boorstin joins us with the big money bets. julia? >> well, kelly, the final venture capital numbers are out for 2013 and the biggest funding rounds are a good sign of where investors expect the biggest paydays which could mean the biggest ipos. according to a new money tree pricewaterhousecoopers report. raising more cash was pinterest bringing in $200 million last february and another $225 million in october. this money is expected to help pinterest start making money this year. so which other startups should investors watch? rounding out the biggest funding rounds, car service uber raising nearly $260 million. big data cruncher palantir technologies with $374 million in financing and genband which drew over $340 million in investment last year. total venture capital
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investments grew 7% in 2013 to nearly $30 billion with internet companies drawing $7.1 billion in investment. that's the highest level of internet investments since 2001. the surge in investment is thanks to the success of recent ipos like twitter's and an active acquisition market of companies like ways. with investors trying to get in before valuations explode, early stage investments throughgrew 17% last year. not on that list were two cloud companies that are expected to ipo this year box and dropbox. they have both raised hundreds of millions of dollars over the pastself years. kelly, back over to you. >> and julia, given the numbers as these banks report earnings the investment banks, how well the equity business has done i have to imagine they're spending a lot of time out your way. >> absolutely absolutely. i think this is a trend that's only going to continue as long as the returns continue. >> right. drooling over that's targets. julia, thanks very much. have a great weekend. our julia boorstin.
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so a close call here for the major indexes. there's dominic chu. is it a winning week or not? >> let's talk about this because if you look at the overall picture, kelly, we're going to begin with how the s&p 500 really was, and it was down for maybe we'll call it 0.2 of a percent for the week and for the year it's down a half a percent. so we're still treading water trying to figure out some kind of direction in a holding pattern. as for the dow it eked out a small gain for the week. for the year now it's down less than we'll call it 1%. and the nasdaq also managing a slight gain for the week despite today's mishmash session here. for the year it's up about half a percent. so as you can see, there's not much overall movement for the three major indices so far this year, but again it just reiterates this idea traders are trying to find what direction they want to go in after that banner year last year. so, again, this week just another continuation of those fairly even markets we'll call them. >> thank you, dom. there's been plenty of talk
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about how the unemployment rate is down for the wrong reasons, namely that people have stopped looking for work. maybe it's not all as bad as it seems. my next guest suggests some older workers may not ever re-enter the workforce because their 401(k)s have come back with a roar. joining me is the chief managing director at deutsche bank. forson torson, great to see you. is it really the case that 401(k) balances have improved enough for enough workers that that's the reason why the unemployment rate is falling? >> as you know that's a huge debate about why has the labor force participation rate fallen and the unemployment rate fallen. the wisdom from the fed and the work we have done is about half of the decline is for demographic reasons and the other half is for cyclical reasons. while there's not only structural versus cyclical because now the stock market is coming back is indeed interfering with this because higher wealth does also raise
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the propensity to retire if you will, if the wealth level goes up people also have a high likelihood of retiring. >> i want to bring in the panel on this with some thoughts. the average balance you're talking about here is $168,000 which doesn't seem like enough to retire on. >> that's correct. certainly it is true that these levels can seem a bill low but the median income for households in the u.s. is $50,000 so it's three times the annual salary of workers. there are other savings vehicles than 401(k). if you look at the floor funds then you have the average household has net worth of about $700,000 $700,000, so this whole idea is just to say the wealth has increased in the last few years and this is a really important driver that has an influence on the labor force participation rate. >> robert frank, what do you make of it? >> let's say the average balance here is $160,000 np.
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let's call it 3% or 4%. that's a tiny income a few thousand dollars a year for someone to live on certainly less than 10000 as year$10,000 a year. i don't get how the math can enable someone to live on that amount of money. >> we're only looking at 401(k)s. if you add everything up, this category of people in the 50s and 60s, assets are not only 401(k)s. it's much broader vehicle of assets. you have other things. you have also house something 50% of assets -- >> what's the total. if you add up everything, what do you think the role total is -- >> you can't live on a house. >> we know from the federal reserve if you add total net worth for the household sector and divide it by the number of house holds which is roughly 116 million, the average net worth is -- people in the 50s and 60s this is the average. they probably have higher levels if you include everything. >> torsten, all the data i have
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seen suggests the labor participation rate has actually gone up over the last couple years and in fact my anecdotal data, which is my mother my mother and my father they're both in their 70s. my mother worked up until a year ago -- >> that's because they have to pay your bills. so anecdotally and datawise, it seems a lot of older people are working a lot longer now. >> david, i'm glad to hear your mom and dad are still paying taxes and supporting the economy. there are underlying trends going on and that's you have seen an increase in the workforce participation group for this group in the last several decades but we have seen a flattening out. because of the level of wealth being so high going forward, the whole argument here is when will we see inflation and if the labor force participation rate continues to be trending down because of the wealth level being high then going forward maybe there is not this enormous amount of slack in the labor market. >> are you ever retiring?
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>> i hope not. but i have a major problem with this whole thesis. the first part of the problem is if there's an average wealth of $700,000, i can guarantee you almost all of it is in the top 80%. and that's not going to have a major effect on the unemployment numbers. for most people's experience if you lost your job when you were 55 or older in the last recession, you had a terrible time getting it back and when you did get it back you were working for two-thirds or half as much. so i really don't buy this thesis. i do not buy that wealth going from 77 to 168 and whatever -- >> have you looked at the actual numbers of people instead of just the -- >> or maybe more the median than the average because the average takes in that top has done very well. >> the median is lower but the key issue is the fed worries that the labor force participation rate in the last few years has dropped three percentage points. that corresponds to 4.5 million people. the number of people in the labor force in their 50s and 60s is 33 million people. we have a huge amount of people who have seen their wealth go up
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and the fed is complain being 4.5 million who have left the labor force. you can't quantify exactly how many we're talking about in terms of how many of these would have a propensity, but the bottom line is it's not rocket science to conclude if wealth goes up there must be a good deal of people on the margin who says i don't want to come back to the labor market. >> what does this suggest about what i see as the bigger issue, which is the huge transfer of wealth going on in the united states from the younger people to the older people? i mean this is a case where if the older people are getting wealthier, it's really the rich getting richer and the poor being the younger generation. >> i think there's a point to that, too, because you're also talking about the sandwich generation right? the generation supporting their elderly parents and the generation supporting their under employed children in college. >> that's all correct. i would split that into the cyclical problem. and then there's a structural problem that we have a whole
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generation here that hasn't quite been lost completely but definitely has been suffering much more than the older generation. those are two separate discussions. one is a structural discussion but there's a cyclical issue for the federal reserve namely when will inflation appear. >> you can almost see it as a double whammy. fascinating piece. thank you so much for joining us to discuss it. really appreciate it. >> my pleasure. president obama revealing changes in the government's data surveillance program including restrictions on eavesdropping on foreign leaders. notably germany's angela merkel when it was revealed last year her phone was targeted. eamon javers has all the details from washington next. and what about the tech companies cause in the crosshairs like google and facebook? we have reaction and we'll talk to "meet the press" moderator david gregory right after this. ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪
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welcome back. president obama today announcing some changes to the government's controversial surveillance policies while offering a pretty robust defense for the programs. eamon javers joins us now with more on what the president has said and will do. eamon? >> hi, kelly. the news here today was that the president said that the nsa will no longer look into its database
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of so-called metadata of telephone call information without court authorization. that's something they had been able to do before. also, the president saying that he doesn't think ultimately it's the government that should handle this data at all but the big question here is who will handle it if not the government? so for now that data will remain with the government. nonetheless, as you say, the president really defending here theoverall overall intelligence capabilities by u.s. intelligence agencies. take a listen. >> we cannot prevent terrorist attacks or cyber threats without some capability to penetrate digital communications whether it's to unravel a terrorist plot to intercept mall wareware that targets the stock exchange to make sure air-traffic control systems are not compromised, or to ensure that hackers do not empty your bank accounts. >> we got reaction from two different technology companies.
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interestingly, yahoo! and google issuing the same exact statement word for word saying the commitments outlined by president obama represent positive progress on key issues including transparency from the government in what companies will be allowed to disclose extending privacy protections to non-u.s. citizens. the tech companies clearly very much on the same page in terms of their reaction but still unknown is what's going to happen to that metadata. who is going to handle that. that's become very much a political hot potato in washington. >> eamon javers this afternoon with more from the white house. thank you. and joining us now for more on the nsa controversy is david gregory, moderator of nbc's "meet the press." david, it's great to have you here. >> thanks. >> this announcement from the president universally met in silicon valley with a reaction of this doesn't go far enough. so what does the white house do now? >> you know, a lot of this is going to be up to congress. that's what's interesting. the president has outlined certain reforms he'd like to see, some of which he can do
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administratively but congress has got to take a look at this. they have to reauthorize a lot of these programs come next march or they're going to have to take this on. the question is whether reformers are really going to be emboldened by this. i think what's significant about today, what you cannot overlook is if for all the criticism the president is sticking by these programs, there is still going to be the bulk collection of metadata, the programs go forward. he says they're vital to protecting the company. a lot of changes may be significant but they're still on the margins of existing programs. >> and, david, if you look at the reaction overseas and europe, there was a lot of skrep at this simple as well and that's where a lot of heavy criticism, for example in jarment germany, came from the first place not just surveillance that was going on but also the extent to which u.s. companies selling hardware and cloud services, expanding into that's important areas have a massive pr problem
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that this white house today doesn't really seem to have solved. >> well, i agree with that. but i also think the president is right when he says america's judged differently and is judged at a different standard and there's a lot of good reasons for that but a lot of this -- a lot of the spying goes on not only among heads of state for political reasons but also among businesses as you well know. i think that that's going to go on. and i also think there's questions about whether the line is. i think for basicallyp pr reasons, the president had to say we're not going to spy on heads of state we work closely with. well, why not? and then where do you draw the line? what about an opposition leader? what about somebody who is farther down the chain who could, you know, rise to power at some point? again, there's a reason why they do this kind of surveillance in the first place, and it's about business and it's about protecting the country and it's about just understanding -- >> it is national security at the end of the day sure. >> not always national security
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but it has something -- mostly national security, but it still has to do with competition. >> it was interesting as well when edward snowden first had these documents and they came to light, there were some strange bed fellows in terms of the reaction in washington where you had people to some extent on the far right and far left on the same page than the parties lining up against each other. you know you guys on sunday i imagine will be talking about this. and how now have those lines changed and if congress needs to move forward on this who should we be watching for action? >> well you're going to want to watch dianene feinstein, mike rogers, they will be on the program, they will be leading whatever changes take place. sensenbrenner and widen in the senate that would like to have a more transparent debate. i think what's important is this is a truly important and tough debate about who we are, about our privacy, and about how we protect the country and what it means to have privacy, and that
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is a debate that i think we ought to be having as a country and i don't know that we would have had it at this level had we not seen these leaks that the president was critical of but now congress has the ability in a more transparent way to have a real debate about this and see if they want to change it. >> you have to wonder again if privacy norms will start shifting back after having moved already so far since this country was founded. david, thank you so much. again, you can be sure to catch much more of david. "meet the press" is on sunday. check your local listings for show times. what's trending right now? the top of our website, "the hot list" is coming up next and divorce lawyers for the rich are seeing more inquiries for hungry wives looking for handsome payoffs and handsome new husbands. the stock market has a lot to do with what's going on. we'll he beexplain next.
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because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve. welcome back. looking at the hot list this friday afternoon. >> how are you doing? >> great. what's happening on the website? >> you would think we would have started to lose our traffic with the long holiday weekend, but you can see that there's actually still quite a few people on the website. our number one story right now is the state that's in the worst fiscal condition. can you guess what it is? >> illinois. if i had to venture a guess. >> you would think or maybe michigan you might guess, but, in fact, i'm sitting in it.
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it's new jersey. >> ah. >> new jersey ranks as the worst fiscal condition according to the latest study. >> a challenge for governor clitionty. christi. >> like he needed another one this week. you can see all the states that are doing the best and the worst. tonight on the kudlow report larry used to sit on that board. they're going to be talking about that a lot tonight so you don't want to miss it. now, next up a story that's really interesting i think, china's millionaires. we've been talking about that a lot. they're starting to flee the country. a third of them have already left and two-thirds of them say they have already left or they're about to leave. now, you probably can guess why, pollution or they want better education, but an interesting thing about that now is that they actually are thinking that because the government china's cracking down on corruption they want to make sure their money is safe. those are bigger numbers. i don't know what you think but
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i think that's much bigger than i would have thought. and robert frank -- i was going to say, i hear it's just a real interesting column by our robert frank. it's a great point. sorry, carry on. >> you should totally check that out. next we move on to real estate. another hot button issue for all of us actually. what we found out is housing starts actually shot up, right? that's usually a gauge. home builders are confident so they're building more. interestingly enough vacancies are also up. so it's not actually necessarily a good sign for the economy and diana olick has a great video. she was on tv earlier, you want to check that out, talking about how maybe it's time for us to stop building. maybe we need to take a breather in this recovery. >> thanks so much and have a good weekend. >> you, too. coming up shall honey, honey, we're rich, i want a divorce. and we want to know what you think the denver bronco's peyton manning means when he
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continually shouted omaha at last week's big game. twet tweet us and we'll put your reaction on air.
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welcome back. our robert frank, of course covers the wealth and he's bringing us an amazing story.
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a rising stock market means high priced divorces are also on the rise. he's invited along jeff fisher one of the top divorce attorneys for the rich and famous who is based in florida. robert, welcome. first of all, how much of an increase in activity are we talking about? >> since the third quarter -- >> i'm sorry, go ahead. >> since the third quarter of last year there's been a notable increase in the consults that we've seen and the other practitioners here in florida. >> jeff, you mentioned to me you're always busy but give us a sense of, you know is the volume twice what it was three or four years ago? how many calls are you getting versus previous to this run up? >> if you're comparing to 2009 i would say the volume is double, but, again, our volume is low. so if we used to see ten people now we're seeing 20 and that translates into maybe eight or ten cases. >> and you do the really big divorces, so that's actually a lot of money.
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let me ask you, let's say we're talking about stocks here being the key factor. let's say you're the wife of a ceo or a big executive at say google and you're getting a divorce. how do you value that stock in a that stock in a divorce? do you value it at the current price or does the wife or husband have to end up selling that stock to pay off the divorce? >> as for the valuation issue, the simple part is when it's a vested publicly traded stock. you value it either on the date of filing or at a date closer to the date of trial if it's a lengthy period in between. the problem is the unvested stock and options because you don't know whether it's going to vest and you don't know the value on the date of vesting. so it becomes much more complicated when we're dealing with unvested securities. >> i had an issue with robert's insinuation here that it's always a woman who is going to -- >> i said woman or man.
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>> divorcing the man here. i think we live in a -- >> woman or man, spouse. >> that's exactly correct. there is parody between women and men. men want to exit marriages sometimes, too. a rising stock market helps make that easier. >> just like -- it's just like the m & a business. it's like a reverse. >> how is it the same? >> ceos when stock prices are rising people feel confident. >> it's a spinoff. >> in the end, divorce -- >> they feel confident about divorcing someone. >> we're talking about stocks. i'm curious -- i know you're in florida right now. how much does housing play a part in increased divorce rate? >> everything plays a part. stock, real estate wine cars jewelry. when people have more wealth they feel more comfortable dividing the wealth. we're talking about taking a
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marital state and dividing it in half. and also the days of big alimony awards are passing and so now you have to take a chunk of change whether it is $10 million or $50 million and invest it and live off it. as the value of the assets rise the ability to divide it in half and invest it and live off it increases and so people that want an exit do it now. >> it's fascinating. >> i have a question. >> we'll ask you offline, jeff. thank you for joining us. appreciate it. >> you're welcome. thanks very much. have a great weekend. >> what is the question? this is going to kill me. >> when you get to a certain echelon of wealth i would imagine with all of your money managers and wealth managers that you're talking about prenups as well. i would think you have a prenup in place and that would essentially negate how much -- do you know what i'm saying? >> murdoch had two prenups and a
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postnup. they had a lot of issues to selt. >> now we know. he may play denver but his heart is in omaha. tweet us what he ment when he shouted omaha more than 40 time last weekend. we'll check in with omaha steaks which may try to capitalize on manning's fetish. 2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.
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welcome back. this is what many remembers about the game last weekend between the broncos and chargers. >> omaha! omaha! omaha! >> yes, peyton manning shouted omaha about 40 times during that game. and now omaha steaks is thinking about signing manning up for an endorse. deal. joining me now with more on this is todd simon, senior v.p. of marketing and sales at omaha stakes. welcome. does peyton know you're interested? >> he doesn't know we're interested. but there's been a ton of media speculation. in fact, i was asked the question and i gave a speculative answer and we spiralled into this. any big brand would love to have the star power of mr. manning behind them. >> i imagine it doesn't come cheap. you guys are getting a lot of free buzz out of this. you are thinking about doing something more formal? >> you know that really remains
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to be seen. i'll give you my peyton manning answer. if the wind is blowing in the right direction, we may do something. it could go on the other side. >> todd you don't have a lot of time though. you have to make this decision quick, don't you? >> we certainly do. right now it's been really great to you know represent omaha and the name omaha is synonymous with omaha steaks. that's an honor. we're hopeful that people will think about omahasteaks.com when they plan their game day celebrations. >> you are one of the companies that says they're going to put $500 into his charity fund every time he says omaha this weekend? >> that's right. in fact it's grown to seven companies. to now every time he says omaha during the game there will be a donation to the payback foundation of $700 and the payback foundation benefits at risk youth. >> what happens if he changes tactics? now that everyone is on to this omaha thing? >> well i think that will be a
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really great story in and of itself. everybody will have a great time tweeting about what happened to omaha. so i think either way it turns out to be a good thing for omaha, omaha steaks and for the rest of the companies. >> i'm going to tell you that the nfl will not be happy with either our guest or with peyton manning on this whole thing. >> why? >> because can you imagine, you know instead of doing omaha steaks, he's going to be shouting -- i think he is a spokesman for popapa john. papa john. and i'm, of course rooting for the patriots. you know i'm a big patriots fan. can you imagine tom brady doing for ugg shoes. ugg. >> i have full confidence no quarterback would compromise the integrity of the game. todd, do you think it would ever happen? >> you know there's certainly a chance. we have -- we've done some big product integrations. we work with celebrity
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apprentice a few years ago. we've done some of these things like it. i don't know how the deals work. we just hope that if we could put something together it would be great for both of us. >> we have to let you go on that note. >> it ain't going to happen. >> we asked and you tweeted. here are the standout thoughts. to peyton ment the broncos are going to beat the patriots when he was saying it. manning yells omaha to channel his inner warren buffett and hope prudent moves will pay off in the long run. i think peyton is remembering mr. buffet and hoping to be long term successful like him in the playoffs. maybe warren will have a response. >> i want to hear evan do that ugg thing again. can do you that one more time? >> i'm not doing it. >> come on. >> unless i'm paid by uggs. i'm not going to do it. i'm going to put my foot down. good luck to new england this weekend. >> all right. >> that's going oun to my son. >> thank you so much for being here. a lot of fun on this friday. "fast money" is coming up.
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melissa lee, what's on the table? >> i don't know if you noticed, bioteches, new highs almost every single day when you take a look at the ticker. city stop analyst is going to join us. the last time he was on his pick gained 8% the next trading session. you'll want to listen to what he has to say. >> a long weekend to think about it too. >> "fast money" starts right now live from the nasdaq market site in times square. i'm melissa lee. warnings warns everywhere. u.p.s., royal dutch, nintendo issuing warnings. deutsche bank is considering issuing a fourth quarter profit warning as well. does this bode poorly for earnings season in the market? josh brown, what do you think? >> you know wall street is all about expectations. and so we have a really interesting situation here. 94 companies in the s s&p 500
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