tv Street Signs CNBC March 4, 2014 2:00pm-3:01pm EST
up better than 200 points on the dow jones industrial average right now. let's take a look at some winners on the day. delta airlines up 5%. trip advisor up 5 1/3%. e-trade up 5 1/4%. strong day. that does it for "power lunch." "street signs" begins now. see you tomorrow. i guess the saints aren't marching in. the s&p 500 is now higher for the year. hi, everybody. every tuesday is phat tuesday on "street signs." your other hot topics, we confirmed a deal facebook is trying to make to take to the skies. what radio shack might be able to learn from jc penney? and what american car buyers are doing that should make you a little nervous. happy mardi gras. >> happy mardi gras. i feel like i'm stepping back in time a little bit here. because the markets are doing a
rewind. we have wiped out yesterday's losses and then some. we are back to record highs for the s&p 500 here and if the dow and the nasdaq here are ringing up their very best day of 2014. that's just one day. let's put this in a longer range context, shall we? the market is now up about 7% since that low that we saw back on february 3rd. also, the mighty mighty small fries, the russell 2k, is also on track for the best day since january of last year, and the vix meantime, fear is falling back down to its recent trading range as well. lots of green behind me. over to you. >> you really are the queen of the krewe. thank you very much. that is a live shot of mardi gras as you might imagine. not many other opportunities to stand on a float dressed in a costume and throw stuff at people. it's also very cold down there as it is the rest of the country. still, phat tuesday perhaps does equal fat profits because if you are like i am, you hate tuesday.
it's the worst day of the week. it's far from the weekend -- don't give me that look. >> i thought monday was the worst day of the week. that's what you said yesterday. >> tomorrow, wednesday will be the worst day of the week. you get my point. there's nothing good about it. monday you're jazzed for the start of the week. but did you know tuesday is the best day for stocks? in fact, look at this chart from bespoke investment group. joining us now from bespoke investment group is paul hickey. also steve nicholas and david lutz. how did you pull this one out of your hat? >> you need to better that pun as well. >> yeah, come on. last week, we were looking, just like to look at the seasonal patterns, daily patterns in the market and just highlighted the point that monday's been a horrible day, which yesterday was pretty bad, and tuesdays
have been the best day. today has been pretty good. take it for what it's worth. but it is -- it has been a seasonally strong day of the week so far this year. >> it's not just tuesday. if you take a look at what's happening over the season of lent, you say for the past five years, the s&p has had a really, really good period. why? what is it about that season? >> well, it's interesting. this is a period of the spring, this two-month period we're in right now, the march-april is the strongest two-month period for the market going back historically. but it's interesting to see if you look at the s&p 500 during the season of lent, last five years, it's been up every year. going back to 1945, it's been up 70% of the time, an average gain of over 2%. so this springtime period is definitely a good time of the year for the market. we've heard of sell yom kippur.
maybe it's buy easter. >> how do we use these patterns to make money for ourselves? >> i tell you, it definitely feels like the wind is at the market's back right now. we are noticing a couple different things going on. first of all, we see a big short cover going on in the marketplace today. right now, at the beginning of the month, a lot of our competitors were saying they are short interest books was the biggest they had almost in their history. we had a very big short base coming in. we have got a lot of buy-backs going on. goldman sachs said february was one of their busiest, if not their busiest month for buy-backs on record. if you look in etf land, there is an etf out there called the pkw, the buy-back etf. that well outperformed the s&p in 2013. if the buy-back train continues, this will be the etf probably to be holding on to. >> i like all the stuff we do because we try to make this show fun but david, if my broker, if i had one, called me and said you got to buy it for mardi gras
trade, i would hang up and find a new broker. give me a fundamental reason to buy the equity market. i want solid returns with a relatively safe investment. what's out there for me? >> you look in the financials. the financials have been big lagers of late. they have been beaten up pretty good. we are starting to see life going on in the financials. that might be one area to be looking at, whether you're buying the xlf etf or buying the kbe which is a big cap bank etf. also, the thing to be cautious about is probably the treasury market. we have really noticed the treasuries specifically the ten-year have been trading in a two and a half to 3% range and right now, we just had a nice break back above the 200 day moving average for the ten-year. it feels like it's gravitating higher. why? because our economy seems to be getting better. caterpillar's ceo was out today saying you know what, this north america spring season feels like the strongest he's seen in the last four years. hopefully the wind is at our country's back as far as the economy's concerned. >> this is all well and good but
what happens after the period of lent to the equity market? >> i think the seasonal factors as brian was saying, sometimes it's interesting conversation but you won't really make investment decisions on it. getting back to what dave was saying here, the spring season, as the weather warms up, if the economy starts showing better numbers, that is -- would be a positive fundamentally but what we want to watch here is we don't want things -- we want this sort of goldilocks environment. we don't want economic data to get too strong. when that happens, any sign that moves the timetable up for the fed to some day hike interest rates is going to be bad for the market. rising interest rates on the ten year, as long as they're below 3%, 3.5%, are not to be worried about. just the thought of rising short term rates is something we watch. >> you want the tuesday porridge just right. paul and david, thank you very much. >> thanks, guys. shares of radio shack are plunging today after the
retailer reported wider than expected loss for the fourth quarter. radio shack also announcing plans to close up to 1100 underperforming stores. know who's been in those shoes? jc penney. so what if anything can radio shack learn from jc penney? let's bring in cnbc contributor jan nippen and herb greenberg. i never thought we would be asking this question here on this show, what can radio shack learn from jc penney? >> the only thing i think they can actually learn from jc penney is they need to be an omni-channel online retailer if they're going to make it. i don't think there's a lot happening for radio shack. but the one growth part of the business that jc penney has is online. radio shack would have to be able to partner with somebody or figure out a way to be a serious player. >> we don't even really know what kind of destination it is. >> i think part of the problem is it's still stuck in 1990 so
it's very hard to determine what they could be able to sell that would be really relevant. but the things they have got there now, which are sort of reminds me of the old time store that has all the hardware you have ever wanted but it's all stored in the back room and they can bring it out when you go in to get it, they are kind of that person today. they could sell that online if they were with amazon or somebody. >> okay. let's go, herb, before we begin, i will defend radio shack based on those points jan just made. at least based on their commercial in the super bowl, they are self-aware. do you give them any points for at least admitting they know how the public and thus the customer perceives them? >> well, of course you give them credit for that. but it's one thing to have an ad in the super bowl and to say we understand how we're perceived, and it's another to get from here to there. i think we have seen this time and time again with radio shack. i was on our air many months ago, maybe a year ago, saying amazon, jan mentions amazon, maybe amazon ought to buy them
so it helps better local same day delivery. even that, and by the way, jan, you mentioned the 1990s. i say 1960s. it's like a 1960s strip mall. it just has that feel to it, even with the remodeling they've done. it's just sort of slapping lipstick on the same old ugly store. >> they've got 20 really nice stores. i think it's 20. i was in one of them. it is very modern and looks a lot better. the bad news is, that -- >> 20. wait, 20 really nice stores? >> he's making it up. >> they are closing over 1,000. they will be left with 4,000. >> my point exactly. >> please, sir. >> if you have 20 nice stores, you have 4300 bad stores, even if you close 1100 of them, you've got a long way to go before you would have enough good stores. i don't think there is any way the market, the investors would put up with the time it took to get there and we don't know once they did if it would work. so i do think they've got
enormous problems. i don't think they can really be solved but if they are going to solve them it's going to require a better-looking store, a more modern store with more modern offerings and a partnership online so they can sell online. >> why can't you guys talk about the finances? the credit facility in 2016, right, liquidity positions. those are the things i'm concerned about. >> if you go on the conference call, several times analysts talked about visibility going forward, especially for cash flow. the two times it was brought up in the call, management just sort of danced around it. they didn't really give an answer. i think that shows where they are. they don't have any visibility because they don't know and look, they are pulling out everything they can do. you have to give them credit for that. but i think they have something as they close stores, you know, then they will become less a convenience factor, more of a destination, but we don't need another destination for electronics because we already have best buy, and we don't know what's going to happen to best buy. >> talking with management, we have four ceos in three years. we have to leave it there.
it doesn't sound like you have a very good verdict for radio shack but obviously we hope they can turn themselves around. >> or, or there's another positive here. i know you love this country. >> i do love this country. >> i can't speak for you, i envision a future where there's no stores. it's all empty abandoned strip malls, tumble weeds, and we buy everything online. that's my version of utopia. there is also a sarcasm school. on deck, relative calm in ukraine but will it last? plus, something is happening in auto sales that never happened before. later, we will talk energy, pipelines and dc. in our exclusive interview with the ceo of trans-canada. in honor of fat tuesday, the world's most expensive pancake. the parade under way in a very rainy new orleans. laissez les bons temps rouler. [ bagpipes play ]
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both president obama and secretary of state john kerry speaking out on ukraine today, just as tensions seem to be easing a bit. the u.s. is now pledging $1 billion in aid. let's get straight to cnbc's steve sedgwick, who is live in kiev. give us more details on what you're hearing is the latest, steve. >> reporter: the key headline today, you guys have seen it with the risk on move on these markets, is the fact that russia has turned around today and said they have no intention of using military force in ukraine. of course, a little bit of relief in kiev, a lot of relief
on the markets as well. interestingly, though, putin did reserve the right to use force if indeed he felt that ethnic russians throughout the country were threatened. he side-stepped the thorny issue of the fact that there are 16,000 russian troops occupying the crimean peninsula. he said russian troops, no, no, no, they are pro-russian local defense forces. john kerry couldn't believe what he heard when he heard that. nbc's andrea mitchell said that to them and he was lost for words in the press conference he had today here in kiev. john kerry also disputing the russians' right to use military means, saying look, there's plenty of international agencies, the u.n., you can go through if you felt that ethnic russians were threatened as well. he also came back at those putin claims that there is an il legitimate government in kiev. he said the local government was voted in, of course it's the legitimate government. really interesting watching the sparring between putin and kerry and obama today. in other news, though, the
much-needed finances are beginning to trickle through. you mentioned that $1 billion in loan guarantees, that is much needed here as well. kerry also offering technical assistance and help towards international observers as we get towards that all-important may 25th election. yes, the tension is lessened a little bit but there is still that issue of all those troops in the crimea. back to you guys. >> steve sedgwick, thank you very much. let's now talk about how this may impact u.s. companies, stocks and your money. let's bring in chris kruger, washington analyst at guggenheim securities joining us on the cnbc news line. first off, do you believe the situation is at least semi-permanently now de fused? >> well, a bit, if you take into account that you have russian troops basically taking over the crimean peninsula. i think what you are going to see from d.c. is basically the reality that washington policy makers rarely let a crisis go to waste and to us, that sure sounds like a sanctions bill, an
aid bill to the ukraine and perhaps later this fall, an increase in u.s. defense spending using this as the rationale for it. >> so when you talk about a potential for increased defense spending, this would be potentially a sector investment-wise that would benefit from all this, if in fact we do descend into, i don't know, a cold war-esque competition between the west and russia? >> right. what you're seeing here basically is the administration putting out today their fy '15 budget looking to take basically military spending down to levels not seen since -- on an inflation basis since basically world war ii. a number of national security hawks in the congress on both sides clamoring for increased defense spending, pointing out that okay, maybe we don't have to defend western europe from the red army anymore, but maybe, you know, maybe we do. let's increase defense spending and use this as a justification, meaning water down sequester and
be a real positive for the aerospace and defense sector sometime in the fourth quarter. >> so you believe secretary of defense hagel may have to do a u-turn on his call for the smallest army since world war ii? >> well, it was always going to be a battle royale on capitol hill. pretty much every member of congress has a defense contractor with very high-paying jobs in their district. this was always going to be a real challenge for secretary hagel, much like it had been for secretary gates and secretary rumsfeld before him. so it was never -- the die was never cast and this is just one more excuse for policy makers to continue to water down the sequester to the benefit of those defense companies. >> just very quickly, the energy implications here, there are ongoing debates about the pros and cons of allowing lmg exports. if we make europe less reliant on oil coming out of russia or ukraine, this could potentially defuse the situation as well, no? >> sure. russia basically controls about
30% of europe's natural gas supply which is one of their biggest sticks in this crisis. so the thinking sort of in washington is starting to be clearly a potential positive sentiment for energy exports, really highlighting the national security value of either exporting lng or perhaps liberalizing crude policy. i think clearly that's a longer term issue but clearly has a lot of people talking about utilizing america's huge energy exports, perhaps as a carrot and a stick in this crisis. >> chris kruger, thank you very much for joining us. apologies to our viewers for that little dark time, little technical hitch there on "street signs." those things happen. >> i blame ukraine. how is russian media playing up today's developments? our russian speaking producer -- see, i got your disease. there you go. monitoring the russian media. she joins us from the newsroom. save us. >> you should know my last name
now. it's okay. >> all the vodka you fed me on the last trip. >> the bathhouse really got to you. that's okay. i forgive you. the tone and rhetoric, still pretty harsh on last night's broadcast. the anchor said the west is quote, unquote, still supporting the neonazis. those sentiments really echoed in vladimir putin's press conference from earlier today. here's what i found interesting about that. when he was talking about it, he said listen, i get their demands, they are sick of going from one swindler to the next as their leader. of course, that was pretty funny to everyone else who was watching because of the protesters throwing out viktor yanukovych who they considered a swindler and ally of putin's. here's what he said about the americans. i'm quoting this. he said these people in america, they are sitting there in their laboratory and doing experiments like on rats. of course, rats referring to the protesters in ukraine. tonight's broadcasts are also going to be very interesting because i bet they will focus on secretary kerry's remarks from earlier today. i will keep an eye on that for
you as well. >> all right. by the way, i'm blair thom-seen. >> what am i? >> we'll do that next. we are talking pipeline politics with the ceo of trans-canada. he will join us exclusively when "street signs" returns. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
the markets out here are having the best day of 2014 so far. let's take a look at the dow. we have five dow stocks that are either a multi-year or record highs. the list is such as home depot, united health care, dupont, disney and pfizer. it's a very good day here. a classic relief rally. >> lot of green on the screen. why listen to a guy who knows something about green. that is warren buffett. listen to what he said on cnbc yesterday. >> i don't believe in the keystone pipeline because of the jobs you make building it. you can build anything and create jobs. but i believe -- i just believe it's a useful pipeline. >> that was warren yesterday telling becky quick that he is in favor of the keystone pipeline. right now in houston, texas,
keystone exports, russia nat gas, ukraine, all huge topics at the ihs energy conference. if it's a big energy conference, sharon epperson must be there. she is joined by the ceo of trans-canada. >> that's right, brian. i am here with wes girling and all the topics you mention are key themes here. of course, russia and ukraine are at the top of every conversation and to start by talking to you about that, has that increased perhaps any of the indication that you may be getting from washington that we are going to see approval of the keystone pipeline any soon sner sooner? >> we haven't heard anything directly from washington on that issue. the fundamental basis for building the pipeline was first and foremost, to provide secure supply from reliable neighbor and displace foreign barrels coming from places like venezuela. the bonus on top of that was you would get jobs and economic development at the same time.
the most fundamental thing that the pipeline is built for was to provide energy security for the united states. >> it's always been a strategic importance where we are in terms of the time line for the approval of this. you say perhaps 60 days? >> we are into what's called the natural interest determination phase, a 90-day process, and through that 90 days, they are supposed to consult with all of the agencies of the government to come to a conclusion and we are 30 days in, so that kind of leaves about 60 days left in this process. >> of course, with the state department having its hands full and of course, the secretary of state in ukraine right now, focusing on this issue is going to be on the front burner. could that perhaps delay approval of keystone even further, although the indication of why it's needed, as you mentioned, this is a perfect example. >> i would hope not, that the folks at the department of state that are responsible for this review are continuing on. my understanding is most of that interagency consultation has occurred with respect to epa questions, department of interior questions.
we have responded in great detail. that great detail was outlined in the department of state's final environmental impact statement. i would hope that all the bulk of the work and the questions have been asked, and they are going through the process of just finalizing so i wouldn't think that these issues, international issues, would upset the timeline. >> we have already seen the opening of part of the keystone pipeline, that southern leg of the pipeline. tell us where that stands right now and what you have seen in terms of the progress there. >> that leg that you are referring to is what we call phase three from cushing, oklahoma to the gulf coast. the pipeline is built right from canada through the united states, we can deliver to the midwest and to the gulf coast. in this last week, we actually delivered our first batch of oil right from alberta right through to texas. a very important part of getting this project done. what's left in fact is only about 800 miles of pipeline through montana, south dakota
and nebraska. once that's complete, then you have the full four phases up and running. >> that's when we get to the $830,000 some -- >> the first two phases have delivered about 560 million barrels of oil since 2010 to the u.s. what will happen with keystone xl, it will add an extra component to pick up barrels from canada and deliver them to cushing, oklahoma. subsequently they can be delivered in gulf coast to go to refineries in the gulf coast. >> the ultimate question consumers want to know when this is said and done, what will that mean for the price of crude oil? >> this is the benefit of this pipe is internationally, we had constraints in the system. we weren't able to get the barrels from the interior of the country, essentially to those refiners on the gulf coast so gulf coast refiners were having to pay brent prices for their
crude and once we get the pipeline built, and we saw this with the gulf coast project, wti prices went up so producers got a higher price, refiners were paying less for their oil which should translate into lower gasoline price at the end of the day. >> that's at the end of the day what the consumer wants to hear. thank you very much for being here from transcanada. more to come. back to you guys. >> sharon, thank you very much. up next, why in the world would facebook want to buy a drone maker? plus a car bubble might be brewing. we'll tell you why. stocks you need to watch. "street signs" is coming your way on a big rally day on wall street. the system works. way
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the biggest gain is disney. disney is trading at all time high levels. when you say all time high, that goes all the way back to at least the history we can cover and that is to 1956. >> wow. they made the deal with dish, where they are not going to be able to skip over abc's commercials on the -- >> let's do street talk time. first of all, we have a herb stock, intuitive surgical which has been cut to hold. >> stock's down 1.5% to 447.26. cantor is cutting it to hold. they do keep their price target at 450 a share, saying listen, stock's up 18% year to date and they prefer to move to the sideline. basically we had our run, it's over in cantor's view. >> we also have web m.d. >> web m.d. okay, that's up 1.7% to 44.06. this also cut to a hold from a buy. this one by david lutz's firm. they cite things like deferred
revenue trends. >> we also have family dollar. that's stock number three. getting some positive comments. >> from credit suisse here. this is what's interesting. the stock's not moving a lot. here's what you want to pay attention to. credit suisse says support for a takeout of family dollar, a buyout, is growing. they think earning potential provides support for a positive deal, maybe by dollar general or other strategic buyer. their price target is $75 so $10 even of upside. >> little bit of a change. >> i was really torn whether or not to put this call on today. tell you why. first oaff, it's a small compan. the ceo quits. roth capital comes out, they love it. they reiterate their buy. they have a $27 target on this stock. what's the price? >> $5.82. >> what's their price target? $27. that's 350% gain. they think the company's well positioned to attract top-notch
talent. in other words, a better new ceo. >> you think that will make the difference to that degree? >> it's a biotech so it could be a bet on a drug. you know what happens. we saw it with intermune. i want to caution viewers, listen, it's a big call, it's out there so i put it in but that's an extreme price target. >> we have also got bank of ireland. why are we mentioning this? it's absolutely tanking and has to do with wilbur ross. t-billionaire, right, selling part of his stake in bank of ireland according to reports. maybe because he made money. stock's up 160% over the last 12 months. some people obviously are leaving with him. >> that's what we call the luck of the irish. all right. ge's ceo betting big on his company. according to an s.e.c. filing, jeff immelt spent his whole 2013 bonus, about $2.6 million, buying ge stock. that brings his total stock purchases for the year to
145,000 shares, more than any other ceo of an s&p 500 company. so if our former boss is buying shares of ge, should you? let's talk numbers. on the charts, rich ross. on the fundamentals, steve cortez. rich, first to you. i actually never worked for jeff because comcast came in, so i'll just go to the charts. rich, is it looking like jeff, who is a smart guy, is making a good call on ge stock? >> well, i tell you, i put my cash bonus into j. crew and snow removal but i actually did buy a little ge in the 401(k) and if you pull up the chart, i will tell you exactly why and exactly why i would buy more right here. the first thing that you see when you look at the chart is that well-defined trend line, a stock that's been hugging the 200 day moving average now for over a year. early this year, we get a 13% pullback which breaks sharply below the 200 day but that breakdown proves false. as history has shown us, false breakdowns beneath the 200 day
have corresponded with fast moves in the opposite direction. now, if you zoom out real quick and look longer term, this is where the story gets rather compelling here. you see that well-defined multi-year trend channel and the pull-back to the 50 week moving average. once again we held and tested it on six separate occasions over the last three years. we are building a nice little base here. the stock should launch higher and retest the high end of that range and push out to a fresh marginal new high. you want to be a buyer. >> what about the fundamentals side, steve? do they see a launch higher as rich just put it? >> mandy, i do not agree. rich, i think you need to be careful here. ge says it brings good things to life but it hasn't brought good things to portfolios. right now, today, the s&p 500 is at all time highs so it is more than made up for all the losses since the '08 crisis. ge has only made up about half of its losses from the '07-'08 high. it's been an incredible laggard behind the market. the reason is simple.
the conglomerate model does not work. there is a lack of focus in ge, in a company that tries to make everything from washing machines to warheads and for that reason, it has been and will continue to be a market laggard. >> all right. listen, only thing i'll say is that immelt's changed it to more of an oil and energy company. they don't even make light bulbs anymore. last light bulb company in america was where, winchester, virginia. your co-host is from where? >> winchester, virginia. >> be sure to check out the online version of talking numbers. go to the internet, check it out. please do. let's take a look at it says ad lib wall in the teleprompter. i assume they mean the stock wall. >> the big wall. there you go. the green wall. >> as we noted top of the show, the s&p 500 up 1.34%. as you noted, that brings it into positive territory for the year. the best performing stocks on the s&p today perhaps tell a story about the consumer. why do i say that? because the single best
performing stock the last time i checked, about three minutes ago at the old desk there, was delta airlines. you also had chipotle and trip advisor. people are looking at trips, they are getting on airplanes, going out. we will talk about car loans coming up. the consumer has been spending despite all the concerns about the weather. delta airlines continues to power higher. the consumer names, even the retailers, despite all the concerns, have been the best performing sector of the stock market this year. >> incredible. >> all thanks to you, i assume. i have seen those shoes. >> never underestimate the power of the american consumer. that's my bottom line today. >> which is a good segue to the story coming up after the break about why the american consumer may be spending a little too much on cars. what do you think? let us know. >> rein in that power a little. also, we have yacht cars. whoever thought we would talk about yacht cars. but yes, cars turning into yachts. first, what is coming up next on "closing bell"?
bet you can't top yacht cars. >> of course we can. we have the final, most important hour of the trading day coming up. we will track these markets making a huge rebound after yesterday's sell-off. one prominent analyst says the damage has been done. >> we will also pose the question to former u.s. ambassador to russia, who only left his post a few weeks ago. as you are alluding to, auto loans are up big. how many, how much, how long. we will take a look at what is fueling this automotive loan boom. and we will unveil a new feature, off the wall street. today we talk robots, not drones or vacuum cleaners but the kind you used to dream about as a kid. a new segment, more robots, coming up top of the hour. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads...
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for access to one of the top wealth management firms in the country. ♪ for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. all right. we've got some developing news to report. this is the kind of story you don't go on the air with unless you've got it properly confirmed and vetted, even though it's been on the internet for awhile. we have confirmed that russia has test launched an intercontinental ballistic missile. let's go to nbc news pentagon
correspondent jim miklaszewski. >> i have to admit, when the news first flashed across the reuters wires that the russians had launched a ballistic missile, everybody suspected it was a test. nevertheless, it sent all the reporters scrambling here in the building and in very short order, we got confirmation from defense and u.s. military officials that yes indeed, the russians had launched a ballistic missile in a test launch from a launch site near the caspian sea. the dummy warhead hit its target in kazakhstan according to the russians and all was well. according to u.s. military officials, this was a pre-planned, pre-scheduled launch for some time. and in compliance with the s.t.a.r.t. treaty and all maritime international laws, the russians had made all the proper notifications well before the launch occurred. according to u.s. military officials, it's not unusual to test icbms.
the united states does it from vandenberg air force base in california on an average of about twice a year. >> jim miklaszewski, a big story at the pentagon. i'm sure we will hear more about it tonight. thank you very much. okay. switching gears. are new car costs officially out of control? consider this. we as a nation are borrowing at a record high to buy new cars and a record percentage of auto loans are at least six years long, some longer. are we buying too much car and taking too long to pay it off? phil lebeau joining us now. maybe i'm just cheap, phil, but you and i were going back and forth. i love chevys, used to have an impala, an acura rlx for 60? where's the tipping point? >> we're not there yet according to the people who are not only in the industry but who track the industry. specifically, the loans that go into this industry. let's look at the latest data. this data has been tracked since
back in 2006. the average auto loan is now at an all time high, $27,430. that is the average in the fourth quarter of last year, an increase of about $739 compared to the year before. where we are really seeing the growth is in six and seven year loans. look at what's changed compared to 2007. this is the percentage of all auto loans in the fourth quarter of each year. it was just 7.39% back in 2009. look where it was at the end of last year. one out of every five auto loans was for either six or seven years long. the average monthly payment is really what people are driving for. they want to keep it under $500. it was $471 at the end of last year, up slightly compared to 2012. the auto interest rates still holding at around 4.3%. when you look at the auto makers, i get this question from people all the time, are the auto makers worried about a bubble when it comes to people buying new cars. we're not seeing that in terms of either delinquency rates or repossessions.
so i know a lot of people look at this and say this is nuts, people taking out a $30,000 auto loan or $40,000 auto loan. the repo rate still remains extremely lower, lower than back in 2008 and 2009. >> i'm glad you raised that issue. there are a lot of people who are making parallels here with what happened with the housing bubble. it's kind of scary when there are people who are pouring this amount of money into their cars, but unlike a house, it's not an investment. you buy your car, you drive it off the lot, and it immediately depreciates. >> absolutely. that's long been known. everybody knows that as far as investing goes, automobiles are the worst unless you talk about the collectible market. robert frank talks about that all the time. otherwise, yeah, you are going to immediate depreciation. the issue that people need to keep in mind is when you look at new vehicle costs, you talked about the rlx earlier, brian. when you look on these web sites and see that a car is maybe $10,000, $15,000 more than the msrp, keep in mind, the dealers
buy these vehicles from the auto makers, add in a lot of content because as americans, we like to buy what's in stock on the lot. if you know that it's in stock fully loaded, generally speaking, you are going to pay that price. are you not going to pay the msrp. >> that's a good point. nobody knows the business like you do. just a little something to be nervous about. phil, thank you. all right. up next, facebook's sky-high status update. while the social network's latest move could be a game changer. it's a yacht, it's a car. it's actually both? the new must-have for the stupidly rich. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪
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earlier today cnbc confirmed a story first seen on tech crunch. facebook in talks to buy drone maker titan aerospace for $60 million. $60 million to facebook seems like chump change, but it's an interesting deal because it's so very different from anything else they've done. let's bring in business insider chief correspondent nick karlsson as well as our own jon fortt. nick, first to you, what do you make of this deal?
>> i think this is about facebook making a small bet on a long-term growth plan which is to really be interwoven into developing countries across the world. >> it sounds to philanthropic. we're going to bring connectivity to millions of people, but they are going to make a buck out of this, too. >> they are. i don't think the developing market is what this is about. zuckerberg was just out appealing to international carriers. the drones are interesting. you can certainly do communications with them by mounting repeaters on these things, but it's not going to be carrier grade. it's not going to be scalable. i wonder if it's a security play from facebook. they have facilities all over the world that they need to keep an eye on. they have teams going out into emerging markets trying to figure out how to deliver internet access. it seems more a technology that's targeted for internal teams or small-scale projects than a big, big roll out. >> what do you think about that, nick?
>> i think that's probably true. i think there's another aspect which is right now you see google and larry page making lots of moon shot bets. they have driverless cars. even google has these balloons they're floating over africa to try to get wi-fi. and a lot of it is about inspiring the troops with vision, and that's a lot about the recruiting battle out in silicon valley. i think facebook needs to show they have this long-term exciting vision, that these engineers should stay here and work for us and do that. >> this would be the source i talked to on the story that helped us said this was their salvo against google and just technology, they're all atmosats. a combination drone/satellite. they can stay up for years because solar power or whatever. this is going to be the new wave. google may have balloons. facebook has to have something up there and they obviously feel this is the best way to do it, but is the strategy in your mind right? >> well, i think if you look at
china, what happened to china and these messaging apps, it's an internet apart from a lot of american companies. what happens is things like w waybo develop and economies are built on this. they want things build around them instead of internet companies from those countries. they want to be on the ground floor so 20 years from now everyone over there is really a facebook user. >> and we're going to be watching as to what facebook does next. nicholas and jon, ought graealw to have you. up next, yacht cars, and the world's most expensive pancake to boot. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ]
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♪ every day, all day, cheesesteak, cheesesteak! ♪ ♪ every night, all night cheesesteak, cheesesteak! ♪ ♪ 9 a.m. cheesesteak! ♪ 2 p.m. cheesesteak! ♪ 4 a.m. cheesesteak! ♪ any time (ruh!) >>geico. fifteen minutes could save you fifteen percent or more on car insurance. a lot of breaking news already this hour. we apparently have more with phil lebeau. >> brian, this is from mary barr outlining how the company handled the most recent recall of 1.3 million vehicles. we're talking about the ignition key that might become switched off so the air bags do not activate. in the memo she says when this recall, this issue was brought to my team a few weeks ago, we acted without hesitation to go well beyond the decision of the technical experts. then goes on to list the number of steps general motors have taken, including launching an internal review to, quote, give us an unvarnished report on what
happened. mary barra goes on to say they are continuing to investigate this and you can anticipate additional developments. this is a memo to gm employees. brian, back to you. >> we can see the stock is up 2% as we speak. thank you very much for the breaking news, phil lebeau. when you're rich, you own a hot car. when you're super rich, you own a yacht, but when you're super duper duper rich, you own a yacht car. robert frank, please explain. >> you buy a really rich super car and you want a yacht to match it. so check these pictures out. these are people who are basically building boats to match the super car. the first one comes, this guy pa bought -- this is a mercedes concept car. then cigarette boat bought this concept mercedes cigarette boat. we will skip to the lamborghini boat. $1.3 million for the boat. this boat has 1700 horse power. it can go 190 miles an hour, and
the interior is modeled exactly on the event. just when you think the rich haven't come up with crazy enough ways to spend that you are money, they come up with this. >> how fast does it go? >> 190 -- you're not even on the water -- 190 miles an hour. almost as fast as the real car. >> it's like the start of "miami vice." >> before we go you tweeted this out earlier. in honor of world pancake day, we give you the world's most expensive pancake. it's selling for 800 pounds, about $1,300. it's filled with scottish lobster, beluga caviar and truffle and comes with a dom perignon hollandaise sauce. and manchester, england, of all places. i would have thought dubai. >> here is my concern. look at this, in honor of world pancake day, here is my problem, world maple syrup day is december 17th.
these days need to merge, okay? they need to merge and they need to merge now. >> these are looking pretty good. they don't have any shirp but i don't think a pancake should have caviar and champagne on it. a good pancake is sweet. i'm sorry, it's not savory, it's sweet. >> thanks for watching "street signs," everybody. cheers. "the closing bell" is next. what is day. stocks are trying here for their best day of the trading year. welcome to "the closing bell." i'm kelly evans at the new york stock exchange. >> welcome back. >> great to be here. >> a classic turnaround tuesday. yesterday the market punishing vladimir putin. today some say he blinked, because of that stocks are off to the races and then some. the dow up near the highs of the day. we were up 240 points at the peak. now a gain of 231 points and the s&p is back in record territory ri