tv Street Signs CNBC July 31, 2009 2:00pm-3:00pm EDT
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the seinfeld gang is getting back together, finally a reunion of sorts will be on hbo next month on curb your enthusiasm. i'm anxious to see jason alexander and larry david on the same screen. they played the character based on the life of larry david who was the best friend of larry seinfeld. now he is the star and creator of curb your enthusiasm. the first time they are all back together and first hit show they had been on for a long time. >> that's right. they haven't done so well. >> a lot of them have not done so well. >> look forward to curb your enthusiasm on hbo. i think there were five episodes that they will be on. >> we are going into the afternoon session with an advance on the dow jones and oil popped up as well. we are above 68. that's interesting. >> a pretty good rally to finish strong. we are up 30 points at and change.. >> wish you were here to enjoy the cake.
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we will celebrate before you. >> happy birthday, milton and to the free markets. >> have a great weekend and see you on monday. >> street signs with erin burnett is coming up. >> cash for clunkers. a ponzi scheme or a panacea for the economy? a 300 unit apartment building in one of the foreclosures of the nation. it is empty except for one family.. we will meet them. our show begins now. >> the beginning is the check of the major market averages and look as if they are on track that finished higher. i know they were looking for a magic number.r. we will find out whether we will get there. let's bring in our traders.
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rick santelli back at the bond in chicago and mike huckman from the nasdaq. we will start with you. we needed a 56-point gain for the dow, the best since 1939. that was the statistic. it's just a statistic. >> we got a good shot. even just now where we are, this would be the best-month gain. it's looking very good for us here. the important thing is cyclical stocks are leaning forward. just before i go, there will be a little bit of fireworks and citigroup.p. we had the big preferred exchange for common shares. what's going to happen is they are rebounding to reflect the bigger weight and citigroup and the common shares that are now outstanding. we will have a little over 600 million shares and that sounds like a lot, believe it or not, folks and you get numbers here who are a billion shares a day.
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it's closer to 200 million. the s&p will have to trade next week. they will have to increase the waiting on wednesday. you get fireworks here towards the close. i will be covering that. rick, this is about a good day if you are a stock trader. the stocks are up and yields are down and dollars are weaker and stock traders are not so bad. >> i will tell you what. we will get to the most exciting at the end. how would you have played this with a big drop in the yields. a big drop in yields on the week. it has been a crazy time with supply and treasuries, but at the end of it all. look at the one-month chart of twos and 10s and a basis point or two unchanged. unbelievable. the road to get to unchanged is say wild one, but without a doubt music is the big chart and all about the dollar and specifically the pound is having a blowout day, but if you look
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at the dollar index, what you will find is you are hovering at the lowest levels when they are at the low price earlier this afternoon and going back to september. 10 months. even with a small bounce, it could have a new low close for the year and if you are a technician, end of the month friday, you want to watch the dollar.. you are going back to a close. >> i will ask mike about tech and more and more people are coming out and saying tech will still lead which will surprise some, but anything that sticks out? >> some people are saying tech will lead because of the rebound in the financials, but it doesn't look like we will crack that psychological barrier of 2000. we talked about what a strong month this has been for biopharma and biotech in particular along with the markets.
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today it is under pressure. i wanted to show you a couple of reasons why. look at what happened to the shares.. they fell off a cliff when the company put out a press release that the fda will reinspect the plant where it makes a lucrative drug for a rare disease and osi pharmaceuticals makes the lung cancer drug and shares under increasing pressure and investors are nervous about tightly anticipated data coming out of the conference this weekend about which patients live longer on this drug and how much longer they survive. back to you. >> thanks very much. all three of you have a wonderful weekend. cash for clunkers, tripling in size. at least according to the recent house vote. diana has been following a dramatic day of developments in washington. diana, this is one of the things people were not talking about and all of a sudden, boom. it exploded.
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>> suddenly they were. a ranking republican called it martial law tactics and the house passed it by lunchtime. the barely three-page bill takes renewable loan guarantees and shifts them to cash for clunkers. >> i'm pleased with the progress made in the house today on the cash for clunkers program. i am guardedly optimistic about the direction that our economy is going, but we have a lot more work to do. >> the program which officially kicked off monday spent $150 million and has 800 to $850 million in commitments penning. at $4500 per car, that's about a quarter million dollars clunked and the same amount told. they could add a half million. several dozen voted yea, some said the government should not play favorites with business. >> the taxpayers are hurting.
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$80 billion to chrysler and gm and the auto industry does not have a monopoly on hard times in this economy. >> of course the senate has to pass the bill while the house goes on recess. the senate should take it up next week. >> thank you very much, diana. you heard the headlines from diana and it appears they will triple in size to $3 billion total based on dealer comments. here to give us a story on what's happening at car dealerships, the director of legislative affairs for the national auto dealer's association with the general manager of williamson auto group and the vice president and sales manager of tarragon honda in queens. bailey, let me start with you. i know it is so hard to get actual numbers because so many things are in the pipeline and a lot of them have been taking preorders for a month at this
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point. if we are tripling in size, we are looking at 750,000 cars. are there that many clunkers? >> we believe that each dealers has about 14 cash for clunkers deals they have already done. we believe with the 14 deals, 16,000 dealers participating, we moved 225,000 vehicle in four short weeks. that's a resowning success for the program. obviously if we put more money to it, i have a feeling that there will be a strong interest in getting more of the gas guzzlers off the road and replacing them with fuel-efficient vehicles. >> do you know what the average mile per gallon of the new cars. people are turning in the clunkers. >> we don't have the numbers on the specifics of the cars that have been going out, but what i
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can say is almost from our survey, almost 2-1, people are trending towards the $4500 vouchers. people are going into the market place and getting rid of the clunker and buying a much more fuel-efficient vehicle. 2-1. >> you will mark up two totally different stories and you are way above average. >> we're told 60 cars under the program and a show room was packed when i left to come here to the studio. we have information on the gas mileage of the average clunker. the average clunker is getting 15 miles per gallon. in the hond on show room, it's 27. the customers are improving by 55%. >> that are is an incredible statistic. you have another that may interest people. 69% of the cars that people are turning in are american. obviously 100% of what you send
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out is a honda. >> hondas are made here. >> i'm not making a political statement, but putting out the facts. there is not a single honda that qualifies as a clunker. >> not one qualifies as a clunker. honda announced on the honda civic, you get a $135 replacement car. you will have your payment made for you by the gas savings you get. >> mark, i know you had a different experience maybe because of not doing preorders, but could you sell different cars? cars? you have done two deals. >> yes, we have. and the program obviously i think speaks for itself. it's a great program for the industry. industry. for us specifically at williamson cadillac hummer, we have one cadillac and one hummer that qualifies under a different criteria. >> hummer size fuel-efficient? williamson cadillac hummer, we
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>> yes, the hummer h 3 t qualifies because it's a long wheel base truck and many more trucks on the road that don't get gas mileage that comes close to the h 3. for us -- i'm sorry. >> it's two dealers. we have a bit of a delay. for each of the dealers for mark and brian, have you seen a direct increase in people who are coming in not with clunker, but because of all the publicity that people are buy something. >> business begets business. you bought a car and they think maybe it's time for us to get a car. we are getting an incremental sale for every clunker.r. one for one. one for one. a clunker and then a regular sale. >> it's actually better than that. the traffic since july 1st when the program was talked about for us is outstanding and many
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people with older cars that we wouldn't have seen are coming in, motivated to get rid of the older cars and see if they qualify. if they don't, a gentlemen traded in 1995 jeep for a hummer h 3 that didn't qualify, but he liked the numbers and made the deal and he was happy and quite frankly his new vehicle is getting better economy than the old jeep. >> the stories are consistent. i have been speaking to dealers across the country. the truth is the cash for clunkers program is moving metal off the lots. that's phenomenal. i had one dealer who complained to me the other day he was fearful he was going to run out of new vehicle inventory.y. i said that was a good problem to have. >> it sounds like and i know brian is one person, obviously a lot of the trade ins are american clunkers and foreign-owned fuel-efficient cars as opposed to general motors. >> the point of the program was
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to sell cars and number two, simulate the economy and number three, help some of the struggling auto makers and all automakers because there so many american automakers as well as international who are connected to the market and the economy. while we don't have the exact numbers, this is going to help out struggling auto makers and more importantly, we are helping the environment. you have so many vehicles and sales and the tax that exists that are essentially paid to cities and counties and states while this is a phenomenal boom for them. as we said, the automobile dealer is one of the most powerful economic engines. >> brian wanted to get in here. >> the money has been put on the demand side instead of the supply side. they put $15 billion in and they didn't sell a car or save a job and they didn't save general
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motors. they put $1 billion on the demand side and the program exploded. they had to stop everything because there was so much business being generated. the comment made before, we contribute, we are the number one contributor of revenue for the sales tax. every time we sell a car, it goes directly in. >> they are giving this money back. >> how much of this is feel for example the future. to your point if someone sees the neighbor and they buy another one. you get a clunker and a real sale. some of those people may not have bought for a year or so, but they are taking sales notice that you might have had later. >> they were selling 16 to 17 million and on track for 10 million. this 7 million customers in pent up demand, even if we increase the sales by a half mill yore or a million, there is pent up demand and we can't wait. >> do you think that's true? there will be pent up demand there will be pent up demand even after the cash for clunkers? >> there truly is. our business will be up about 30 to 40% over may and june. that's a great increase. however this is new business. it's different business. incremental business.
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clunkers? however this is new business. it's on top of the normal business which the health is increasing and continue to increasing and continue to increase as time goes on. i think the program will bring a shot to our business, but it's not going to be a devastating blow that we can't recover as soon as the program ends. >> very quickly, is this going to save any dealers that would have gone out of business? >> absolutely. getting dealers to put new vehicles on the road and getting them to simply get people into dealerships again is a huge step in the right direction. >> thanks very much to all three of you. we appreciate it and we got a lost color we were hoping to get.t. is the cash for clunkers program
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a ja loppy or a boost? next on the show on this friday afternoon, the trade. people are buying more cars and there specific trades people may not have thought of. there it is. the real estate bust is making this man the loneliest man in ft. myers. we will let you meet him and explain why. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney.
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the s&p 500 is up in july so how do you play the midsummer rally. joining us with their idea with the president of conundrum research, good to have both of you with us. charles campbell, you are looking at a stock that has relatively underperform and you like it now? >> that's right. wal-mart and everyone knows about it. some people have shopped there and others refused. the s&p is up about 10%.%. up about 3% for the month and the s&p up over 7%. it was disappointing in the prior period and the first quarter was also revised down. with the consumer representing
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the biggest part, 60%, huh 6.5 mi million people unemployed. that number is continuing to be a job loss and probably the end of the year. consumers will feel a pinch. you feel it in the environment where tax hikes for at the individual level appear increasingly probable. >> wal-mart would be your trade and now they will go into the new car. more clunkers in the parking lot. that is your trade. you are saying forget what you think about cash for clunkers. there will be more cars in the trade. >> the summer rally trade is north american. about a month ago, i was here and talked about buying the auto dealers ahead of the cash for clunkers program. they were trading around $16.50 a share. we need to look at the
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manufacturing side of it. you look at the gdp and first quarter 2009. auto manufacturing reduced by 1.69%. the second quarter came out and added to gdp by 2/10 of 1%. you are looking at a structural change and auto manufacturing ramped up the construction. you can use platinum or palladi palladi palladium. platinum is preferred because of the melting temperature.e. there is an incentive to buy the company's products. the structural change and economic incentives and trading about $2.50 a share right now. the reason it couldn't go to $4 or $5. i take that every day and twice on sunday. >> do you have an idea if i should check or care if my catalytic converter is made out of palladium or platinum?? the melting points, it depens
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what sort of driving you have. >> maybe if you are a chemist. i get from point a to point b. >> thanks to both of you. just ahead on the show, finally a stimulus plan that does appear to be working. what is next. we need to keep pumping cash to keep it going or will the engine start on its own. investors have fallen in love. we will tell you why. we will be back. to the now netw. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.
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you are looking at nancy pelosi and the house speaker is giving an end of term commentary. she spoke about health care reform and should the house speaker say anything you need to know about, we will give you an update on that. the gdp number she referred to and the president referred to was good news for the administration. >> the gdp also revealed in the last few months, the economy has done measurably better than we had thought. better than expected. as many economists will tell
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you, that part of the progress is directly attributable to the recovery act. >> the same administration is here to weigh in. good to have you with us, sir. he is right about something. love or don't love this stimulus plan, government spending was the only thing going up in the gdp report. >> we will never know what would have happened without the stimulus bill. 1,000 administrations are about to be written on this, but this was not good news. if you look at last year's bush administration effort, you can see the failure on that one. the places the stimulus bill put the most effort in the state and local governments and the households were not real strengths. the big thing that happened is business stopped the free fall in the capital expenditures and
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that is not something you can pin on stimulus. >> is it possible that cash for clunkers could save us? the dealers are highlighting how sales tax on autos is the single biggest contributions that states can cover. you can see this thing at least for a brief period and that's a separate issue. really doing something. >> let's put this in perspective and it's not an aggressive policy. we ought to acknowledge we can do better than that. from the perspective of the auto industry, this is largely a timing shift. this is $250,000 cars that would have been told anyway and moving forward in time. the dealers were happy to see that. when really matters to the economy is overall production and this probably won't move
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that very much. >> what happens?s? i can see how this quarter will grow and we will have auto as a big part of that. fourth quarter will grow compared to last year. next year we will have this spending. love it or not. you can see four quarters of actual positive gdp. >> what we will see is the second half that shows modest growth. if we see a big number anywhere, it will be the cause of an inventory bill that is hard to predict. we will get a quarter of the bill up. i don't think you should expect big changes because of stimulus. that is a two-year operation, about 12% goes out in every quarter. we are about on track for that. whatever we got this quarter is what we will get. i expect as a result the real force of recovery to come from the business sector and from the export sector and not from households and not from the state and local government. >> i know it's hard to look out that far, but any year when most of the stimulus is exhausted by
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september of 2010, there will be some left. >> absolutely. i believe what we will see is a sluggish 2009 and 2010 will be the year the economy gets back on their feet and consumers will have adjusted to the fact that they lost this wealth. it will go up a little bit more. businesses will have really come to need to replace the equipment. we will see the rest of the globe catch up with you. that will help our exports. this year is sluggish. >> next year is more robust with the new normal. we are not as wealthy and that is depressing and there is something that is different. we have a few trillion in debt paying off. >> we entered this recession in an unprecedented state of debt, both households and the private
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sector and the government and our top objective going forward is to rebuild assets of the nation. well said. it looks like a lot of the new ca cars. >> next on the show, the summer rally was everywhere. looking for the best places for your money. then, t gi f. that means it's time for funny business. take a look at this picture. we will let you wonder what the story s.
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exchange where we completed a volatile day for the kmod is trade, but swinging more than $3 on the barrel and finishing out the month of july and basically where we started the month of july. what drove things today? as soon as the dollar started to break down and we saw oil prices off of the races and that has been a key driver today. traders will watch that as well as the fun flows into commodities in the beginning of august. back over to you. >> thanks to you, rebecca. we like to follow the money to see where the opportunities are around the world. right now the money isfullying into the largest eastern economy. poland. crashing. what is going on?n? let's get the answer from warsaw. he joins us to give us the details. what is happening?
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>> in june the main index gained 15.9% and the polish currency followed. it was over 9% and gained to over 33% against the u.s. dollar since february lows. a very different economy for the region and a different picture from the winter of this year when they went as far as to describe the region as a prime of europe and forecasting a surge in corporate default because of the large exposure for loans and foreign currency. right now the main country in the region has very much avoided the financial melt down with the help of the ims and european union. poland has been sending out reporting of a positive gdp growth in the first quarter. said to report a positive growth
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in the second quarter and they now say they set to avoid the negative gdp. this pretty much sets it in front of such economies. they are all going to contract between 4% and 8%. they are one of the few or the only country to record positive growth and getting out so easy of the slow down that we saw in the emerging economies and central and eastern europe. so far, however, the equities underperformed and the week is up by over 29% so far this year. the hungarian is up by over 30% and the turkish and russian markets are up around 60. a very different picture and of course the risks maybe have diminished and still remain.. there is this huge budget
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deficit and fiscal risk in poland. they are struggling with fiscal revenues on taxes because of the slow downs and some analysts say after the recent rally the earnings are yet to catch up. what's going on on the equities markets. for cnbc here in warsaw. >> thank you very much. we appreciate it. a lot of people are focused on what's going on, but maybe you are not interested in that part of the world in terms of your money. we have two money managers talking about how to trade the rally which is so global. our market has lagged a lot of other places. the lead portfolio manager. good to have both of you with us. we appreciate it and overall, what is your view of the sustainability of the rally? scientist these markets when you look overseas, it has been stupendous and they have doubled so far this year. would you stay in markets like
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that? >> we are fairly optimistic. the markets and a lot of the markets were beatsen down terribly. to come down 30 or 40% is a small ways back. there has been an enormous amount of monetary stimulus released around the world. this is one of the places where it crashed the most. you are right. the united states has lagged. i think this is a time where we are going to see a fairly broad trading range. we certainly have favorite stocks we like, but you will have to be active and trade them aggressively, move for example defensive to aggressive when we
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have aggressively positioned the stocks that rebound strongly. shift back over to defensive. i think we will have slowing economies most places around the world with the exception of china. >> let's goat a trade for each of you globally and start with you. i believe is it your trade in hong kong some. >> 6% of the properties are in hong kong and the other 40% are in chaina. if huh to pick a market where the consumer is doing well, you have to focus on china. they have seven new projects that are retail-oriented. they first got to china in the mid 90s. his return on cost in china and shanghai have been in excess of 24%. that's a cash yield. he has done a good job and we see continued strength here. >> what about you?
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>> i like it. it's the largest bank in chile. one of the key things is the chilean economy is robust and one of the freest economies in the world. they dominate the banking sector there. they turned in numerous years of strong roe and cost containment. the key thing i like about it is they didn't get involved with the alphabet that brought down the u.s. and european banks. they stuck to their knitting and they are sound in banking which i think is a sound economy. particularly they tend to make thing that is the chinese want. the key is copper. chile is the largest copper-produce being country in the world. >> thanks to both of you.
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cull min 8ed with the collapse of lehman almost a year ago. then early 09. take a look. when we look at credit, i'm talking to things like leveraged loans and places where nobody was willing to lend for sometime. things are loosening up, no doubt about it and we have seen the tidal wave of credit issuance taking place in the past. over the last quarter, certainly through the spring, that was both the investment grade and to a certain extent in high yield. we had a lot of nice charts to show you. i am told they are not coming up. >> can i ask you one question. i have seen them and they show things have improved. >> spreads are back to know 1,000 over. back to levels that have set
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roars in 1990 and 2002 and down to 18 percent above what we saw a year ago. >> what are about the emerging markets. a record of issuance. does that make you feel good that there was a market for debt or make you feel worried. there was this assumption of nobody failing and questionable. >> i think it's both. it's seen as a positive and the issuance of credit and a high yield investment grade and secondary offering with ipos that we see more of. it raises the question and we got the chart. can we show them quickly? >> yes and then we have -- >> there is what i was talking about.
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that's high yield and shows you how it came down. we are well above the 600 over average of the last 20 years. yields on loans as well, same kind of a story. we are back to about 8%. here's something for people to think about.. that's maturities of high yield bones and leverage loans. there is a lot of money needed to be paid back by corporations as we head into the maturities at 11, 12, 13. that becomes an issue when you think about issuing debt and even when you think about your capital structure and your ability to access. >> speaking of debt problems, real estate is where they are still focused for a lot of individuals for foreclosures. i don't know if you have seen us talking about this piece, but what would you think about a luxury complex in florida all to yourself. about 300 apartments. just you. all for you.
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>> just me? is it like hell or heaven? >> i think it would be scary. nice. >> from the nbc affiliate in ft. myers will be back with this report. >> victor's only neighbor is silence. >> it's like a scary movie. >> the newspaper in the luxury condo's lobby is months old. the security cameras sit unmanned. the state-of-the-art gym untouched. >> we are the lone people in the building. >> the oasis condo is the only one out of about 300 in the tower that is occupied. >> i put all my money into this knowledge. >> now they fear they are stuck here without the amenities they were promised. the family said there is no more regular garbage service or building security. it got to the point where the
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developer shutout the electricity on every floor in the tower. >> you see one solitary light on in a 32-story skyscraper. >> their attorney said the situation created safety concerns for the family, especially after a recent break in.. maintenance has been an issue. >> we have fire alarm problems and electrical hazards by the pool and health department issues. >> why not move them to the other tower with 15% occupancy. the developers told us they did that for other when is they realized how many buyers were backing out. the problem for them is they have a mortgage for this tower and the lender won't budge. >> they said if i transfer i abandon my unit. i'm stuck in the middle. >> here wants to buy back his unit so he can move into the other tower or move on. the company said they can't do that because of construction loans it owes on the property.
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no one, including victor seems to have an answer. >> everything we have we invested in this. >> in ft. myers, nbc 2. >> the whole family is on cnbc reports. it's frightening. >> it goes to the point of the inventory. one of the worst markets in the country and overbuilt clearly.y. >> the second highest foreclosure rate. >> how long will it take. you saw the june numbers and a lot of that. >> what are we going to do? this is a great example and empty condos around the country and new housing, we have all seen the stories. do we end up at a point where we raise this stuff. day people will move in? >> you get there. we are getting there. there is a market at some point at which these things will sell. maybe not there.
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maybe it's pure overcapacity and nobody is speculating. in many markets, you are talking about hit bottom. and we are, as we saw from the case shiller numbers earlier this week, starting to at least see what some would say are signs -- i'm not so quick to say, signs of a bottom.. >> that one was amazing because everyone's trumpeting that it was an improvement from april. versus a year ago you're still dropping at 17% versus 18% in the month before. what improvement -- >> and the declines are stunning, especially when you consider it wasn't that long ago that nobody expected housing could ever, ever go down. >> all right. well, david faber, thank you. >> thank you. >> a new use for tidy whities. and it is a business story. it is a business story that only jane wells could find and tell appropriately. and that's next. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips
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>> erin, at funny business blog we like to highlight people who have successfully created markets where no need exists, like handerpants. >> handerpants? handerpants! handerpants! >> this is chester mcguinness for handerpants, the underpants for your hands! >> all right. handerpants began selling a week ago for 12 bucks a pair by seattle retailer r.c. mcfee which tells me they sold hundreds already on the basis of internet word of mouth and this video. who might need handerpants? well, who doesn't? >> architects, stonemasons, the elderly. gastroenterologists. night bloggers. and talk about sexy, you'll have to hold the ladies back after they get a glimpse of these tidy whities. >> he actually came up with the name handerpants first and then they created the product at
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handerpants.com. the firm hope, to top last year's best zeller, squirrel underpants. they sold thousands of those. they were even used by one npr station as a pledge drive prize. but nothing may ever match the company's best product ever. ♪ it's the yodeling pickle. look, they've made enough money on these gag gifts to employ 40 people, and that's no joke.. as for handerpants director of marketing david wal gives me a cheeky outlook. "this is the first expansion of underwear from one body part to another." adding that handerpants is the enhave i of the undergarment industry. for one thing, they didn't have to pay underwear import duties. score one for free trade. when i asked wahl if any of their overseas manufacturers has ever balked at the designs they give them, he said, no. >> the problem is if you borrow someone else's handerpants. >> oh, gross. but you have a guy in china
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who's managing the selling floor and you have to turn around and say look what the crazy americans gave us. >> that's exactly what they say. then they say give me the money and run. thank you, jane. >> yeah, yeah, yeah. >> we just found something pretty shock on the cars.gov website about dealers. our investigation. we're going to tell you what it is after the break.
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