tv Street Signs CNBC March 15, 2012 2:00pm-3:00pm EDT
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white house says they're not going to release from the spr. bottom line. >> there it is. that's it. all right. nice to have you here. >> thank you. it was a pleasure. >> that will do it for "power lunch." >> "street signs" begins right now. good afternoon everybody and welcome to "street signs." i'm mandy drury. another day, another milestone for your money. the s&p 500 crossing 1,400 for the first time since june 2008. apple of course crossing $600 for the first time ever this morning. how can you profit from these market moves? stick around to find out. and e bay making reports saying they'll give you a device to swipe your credit card on your mobile phone. ceo set to join us in a few minutes time. and couch potatoes, listen up. this one's for you. why that lazy boy you're watching "street signs" on could be as good for your bottom as it
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is fyour bottom line. the couch trade coming your way. in the meantime from buns to banks, the dow solidly in the green at this hour. biggest winner is bank of america. the stock now over $9 a share. and up over 60% this year. the s&p is also gaining grounds. shares of csx the biggest winner up more than 7% today alone. and the nasdaq also moving to the upside. it's up three straight days. and also six out of the last seven. that brings us to our stat of the day. apple, of course the fruit company hitting over $600 today. took only 22 trading days for apple to go from $500 to $600. i would imagine that is what your call parabolic. bob pisani, you have another amazing stat for us. >> everybody's calling asking for these amazing silly apple stats. let me show you how i look at the world. mandy, i look at the world in
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terms of sectors. what's moving, what's not. put this up. i talk about material stocks all the time, alcoa, freeport, apple dominates virtually everything. apple is about $540 billion stock. if you put all the 31 material stocks that are in the s&p 500 together, they're still below $400 billion. in other words, here's the point. take a look at that. apple's $541 billion. all 31 material stocks in the s&p 500 are only worth $440 billion. all the utility stocks, all the telecom stocks worth notably less than apple is worth right now. that's a remarkable stat. that's the way i look at the world. today those material stocks all on the upside. i'll give you an example. freeport is a huge company market cap of $36 billion. apple is $540 billion. 18% the size. and bhp one of the biggest material companies in the world, they're not in the s&p 500,
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maybe $120 billion. that's 20%, 25% of the size of apple. just giving you a sense of how big apple is compared to the companies that i talked about virtually every day, mandy. >> bob, i'm going to call it viewing the world through the apple colored glasses. thank you very much for that, bob pisani. no sector feels the pressure of high oil prices quite like the airline sector. and today was no exception. phil lebeau joins us live from chicago with a look at that sector in particular. what are you seeing, phil? >> mandy, in the middle of the day there was a flurry of activity especially as there were reports coming out about potentially the united states releasing the strategic petroleum reserve, as we all know that is not going to be happening. but look at the spike in the airline index when that report first came out, it was a huge shot up. and frankly it's been holding ever since even though the white house is coming out saying we are not releasing the strategic petroleum reserve. all the airlines see a bit of a spike about an hour and a half ago. they have come off that a bit. but they are still up. here's the reason why, mandy.
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when you look at jet fuel over the last six months as it continues to move higher, the bottom line is that the expectation among investors is that at some point there will be a break in oil prices. and jet fuel prices will come down. as we all know, mandy, jet fuel is the number one expense for the airlines. if they can get a break there after spending $50 billion on jet fuel last year, they'll take it this year. >> i bet they would. i'm sure they're wanting a break right now. i want to ask you in the meantime to what extent do high jet fuel prices driving the need for consolidation in the sector, phil? >> it's a huge driver because ultimately it's cutting into the bottom line. and that's going to force some of the limited players who are out there looking to merge to maybe perhaps make a move although a lot of people are saying it's premature to expect it to happen any time soon. >> okay, phil lebeau, thank you so much for that. in the meantime stocks are feeling the hopium today. is it time to go all-in in this market? let's bring in cio and chief investment strategist at full
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com securities. feels like there are only two stories out there, guys, at the moment. one is rising yields, treasuries, and number two, apple. i'm going to put you on the spot and quickly get your thoughts on that. rob, to what extent are clients asking you about apple? >> mandy, it's certainly our favorite technology name and certainly representative of what we like in a stock. we put it on our list when it was at 400. and even at this level it's still about 12 times earnings. >> still cheap at these levels. >> i would say so, absolutely. i know i'm the hundredth guest on this network this week but i would be wie buying the stock. >> stanley, do you want to be the 101st guest to say it's still cheap at these level sns. >> if you look at it from a fundamental perspective on the earnings multiple, yeah, sure. but we worry a little bit more about what it's like in its cycle. there's been no retail participation in this run up in
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the market in general and in apple in particular. i can't imagine people sitting at home creating online what are they going to do, buy three shares at $600? it's prohibitive. it's really dominated by the professional players and the institutional side if these prices and the institutional side was really underweighted in apple and that's one of the reasons it's had such a big run. >> stan, you know you're absolutely right. it's not just the lack of retail participation in apple, it's the lack of retail participation in the market in general. do you think they should split the shares and make it more accessible? >> that's a mixed thing over history. a lot of people have called for that. i would personally like to see them pay a dividend. i've been calling for that for a long time. i mean, cash starts to work against apple. the magnitude of the size of apple and then hoarding effectively that much cash with a 0% return on cash is really making it sort of hard to keep that growth rate. >> okay. let's go back to the market in
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general. rob, i want to talk to you just very quickly about this big spike that we've seen in yield. i mean, obviously the market is being propelled higher partly on the availability of cheap money. if we start to see a sustained rise in yield and that is taken away, is this going to hurt equities? >> well, mandy, i think what we're seeing here is that the bond -- people are fleeing treasuries because they know there's not going to be anymore qe. they know there won't be anymore bond purchase programs going on. they're realizing that really the only alternative here is stocks. so so many people said no more qe, that's going to hurt stocks, i think the movement is from treasuries to stocks right now. >> uh-huh. >> and i -- once again, you know, s&p 500 at about 14 times this year's earnings. we're not going to go straight up from here. my target for the year on s&p was 1,400. i've raised it to 1,500. but stocks in general from a fundamental standpoint are still cheap.
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>> which stocks are looking cheap for you, if it's coming out of treasuries and into stocks, which would it go into, rob? >> as i mentioned apple is our favorite technology name, but industrials are our favorite sector. and from a global infrastructure play, caterpillar would certainly be a favorite there from a machinery standpoint danaher. >> you're a little different here. you're actually more bearish and cautious on this market at these levels, aren't you, stanley? what are you seeing perhaps a lot of other people aren't right now? >> well, for one thing we look at things differently. we're very high in cash. we have a 50% cash allocation right now. the market's made a run. we look at sentiment shifts. we look at a lot of technical analysis. we look at long-term trends in wave cycles. we look at long-term multi-decade transaction even in what we think is still the beginnings of the deflation of the debt bubble which is being
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exacerbated by central bank policies even more than helping. so, you know, things start to work against themselves, there's a lot of macro issues still out there. >> does this mean you see just a pullback? or are you talking correction territory, stanley? >> well, i think we're actually going to see a little bit higher high here, but we could be getting very close. you know, relationships not just in amplitude but look we had a top in 2000, a top in '07. if you look at 144 months from the top in 2000, which is a fib natch chi number and 89 months to the '07 top, guess what this is in march? 55 months. so if we have a third top here and we turn down hard, i for one would not be at all surprised. >> rob, do you agree with anything stan has just pointed to in terms of any potential reasons why the market could correct? >> well, i certainly think -- back to your question to stanley
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about are we going to get a correction or maybe a sideways movement. stocks are overbought here. there's no doubt. they've moved too far too fast. i think though that once again fundamentally we've got support here. i would ask stanley the question that we talked about earlier with apple in the market in general just no retail participation. so i would argue that sentiment is still terrible not only for apple but the stock market in general. that could give us some fuel for this rally down the road after we get some type of period of consolidation. >> stanley, quick response. >> sure. there had been slight rises now and we're seeing a turn in people coming in more to the equity mutual funds, for instance. and the other thing, a lot of the sentiment indicators are pretty bullish. look, we've had a very long ratcheting up run. it's like watching a pot boil. everybody's been waiting and calling for the correction, and it hasn't come yet because everybody's waiting for the correction. so it's a self-fulfilling cycle.
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and the other thing is in an election year everybody thinks, oh, it's an election year sorks in some magical mystical way the market will be propped up. this might be a different experience this year. >> we'll be watching. stanley and rob, thank you very much for your thoughts today. >> thanks, mandy. >> you're welcome. thank you. >> you guys all heard herb talk about it here yesterday, the s.e.c. filing charges against felix investments and two other firms for the way they trade shares of private companies like facebook and twitter. herb, i know you're following this story today as well. what's the latest on that? >> it's interesting. it was just about an hour after i said something was imminent with the s.e.c.'s announcement came and felix did not settle. now, the s.e.c. went after felix and its partner with a number of allegations, but important to remember one of the things i had pointed out was the way felix had ambitiously been promoting its investments through mass e-mails. almost like it was operating a penny stock boiler room.
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as it turns out, later in the day after i went home, said it had actually censured felix and reached a consent to pay a fine of $250,000. this is what's really interesting. among the things said that felix pitched unregistered offerings to over 1,000 people through mass mailings of boiler-plate e-mails without first establishing a substantive relationship with each person. also said that frank pitched the offerings through cold-calls. this by the way was just a few months through 2009, 2010, people i know who know him say he's one of the best at cold-calling. i also want to point one other thing out as it relates not to this story but another story developing. a company in chicago, advanced equities, number of stories in recent days its principles have received -- two of its principles received notices
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suggesting the s.e.c.'s into something. this is an interesting company. much bigger deals with private companies and public companies tied to silicon valley. an interesting one to watch. >> keep an eye on that for us, herb. coming up next, a cnbc exclusive with the man at the helm of e-bay. will paypal pay off for investors? and you don't have to leave your living room to make money what we are calling the couch potato trade. we hope you'll stay planted in your lazy boy to find out why it may be a great place to stash your cash. we'll be right back. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ why? i thought jill was your soul mate.
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we had to check out shares of broadcom. shares up nearly 2% today. the reason, the new ipad has a broadcom chip in it. e-bay making a big move to make paypal the way to pay when you're on the go. jon fortt is in san francisco and he has an exclusive with the ceo. jon. >> yeah. first start with john donahoe. it's a system beyond that for engaging merchants and getting them to serve customers and small businesses specifically better. you swipe a card 2.7% transaction fee, 1% cash back if they use their debit card. why does this position you better than competitors like square, intuit. you're not the first mover in this. >> first of all, the product we're releasing is better.
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it accepts every payment type, it allows merchants to get their money out immediately and it's safer. it's fully encrypted like paypal. secondly, it's one part of the full capabilities. we're allowing a small merchant to sell online, sell on the mobile device and on their offline store. increasingly that's how consumers are buying. so we're the only company that has all three of those solutions. we're the leader online. we're the leader in mobile and now we're coming offline. >> i definitely see some advantages. one point that wasn't clear to me from the presentation is your marketing and distribution plan. how do you plan to let small businesses know what all the capabilities of this are when they may or may not have iphones or android phones already. i know you're launching on iphone and ios, how are you going to make sure they get nit their hands and understand it? >> good starting point. there are 25 million active sellers on e-bay. most are small businesses. many of whom have offline. paypal supports millions of
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small businesses online, many of whom have offline channels. we'll start with our existing customers. and as word gets out and people see the features of this product as well as the pricing, i think we'll have good merchant ada adaptati adaptation. >> how should merchants value the success and how should they see mobile transaction volume? is it some other metrics we should be watching on this? >> as you know, we've said to investors paypal will double business over the next three years based just on sales on the web and on mobile. our move into offline, which is an enormous market both with large merchants with home depot solution which will go to other retailers and small business, we're not even putting in our numbers. >> this is in addition to that. >> this is in addition to that. we're going to where the market is and providing the most comprehensive solution so consumers can get what they want when they want it, how they want it. and we're helping retailers compete in this rapidly changing
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world. >> jon, i want to jump in here because i know that you also recently launched another app on the ipad and various other devices. you can basically watch tv and also shop at the same time. two of my favorite things. called watch with e-bay. are there any other ways that you see right now to be able to hitch a ride on the apple wagon considering its blazing success? is there anything you can do more with that company? >> well, i think what we're doing today, which is building some of the most compelling applications available in the apple store. so e-bay's -- the e-bay applications have been downloaded 70 million times by consumers all over the world. paypal application's been downloaded 17 million times. check out the stub hub application which allows you to take your itunes library, automatically integrate it and bring up concerts and shows for your favorite artists. so our real focus is building compelling consumer applications that work seamlessly on both
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apple smartphones and the ipad, but as well on every major smartphone platform. >> i wanted to follow-up quickly. i'm wondering whether you ceos sit around with each other having a beer and say, man, look at apple. look at it go. is there anything you feel as a ceo there's anything you can learn from that company in terms of its success? >> well, i think apple is a very consumer-driven company. and so i think the products that we're showing here are very consumer-driven. i don't sit around saying, wow, look at apple go. i sit around saying, wow, look at e-bay go, paypal go, i'm happy with how we're going at the moment. >> wondering about small business, how big a proportion of paypal's potential is that? do you look at it in terms of small business as a total
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percentage of the economy? do you expect that to track with paypal's growth? >> remember small business has been the sweet spot for e-bay and paypal from the beginning. >> right. now you're working with home depot -- >> yeah. a large portion of our existing is small business online and now we'll serve them through mobile and offline. the new areas for us is the large merchants. so that goes on top of this. >> john, thanks for talking to us first on cnbc. interesting product. can't wait to use it. >> thanks very much, jon. >> it is a great product. thank you very much, jon fortt. just ahead on "street signs," don't move a muscle off that couch. your lazy bottom could be good for your portfolio's bottom line. and we have a five-star stock picking stud who's got a play to turn trash into cold hard cash. the name and analysis when "street signs" returns. if you are one of the millions of men
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must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world. taking the markets for you. advances are outpacing decliners at this stage on the nyse. unchanged 94. as for the nasdaq, again, same sort of thing. advances are 1515, decliners 879. being a couch potato and laying around in bed all day may not be good for you bottom, but it could be good for your bottom line.
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furniture makers like lazy boy and ethan allen trading around 52-week highs. let's find out why. director of furnishings researcher at raymond james. good to have you with us today. >> thank you. >> how much of this i'm looking at stats for overall furniture sales in the month of february grew 8.3% from the year earlier. how much is pent up demand and how much longer do you feel these better times are going to stay? >> well, a lot is pent up demand. as the consumer feels better about himself or herself, they will go back and make deferred purchases that have been deferred. there's a lot of pent-up demand. we're seeing a lot of movement in the mattress companies towards alternative sleep, towards premium bedding. and in the furniture arena we've seen the improvement as the consumer's been willing to go back and spend money on their home. >> do you think this improvement will continue to improve considering obviously in bad economic times furnishings are essentially one of the first things to go because they're
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highly defer bl. they're not necessarily essential. >> as long as the consumer's feeling good about themselves, i think we'll continue. i do think there may be some challenges seasonally as we come through now what is really a lax promotional period until we get to memorial day. and i think that perhaps we have some issues as we get to the second half of the year as it will be difficult for retailers to break through the advertising clutter of the political campaign. >> absolutely. let's talk about some names. you've got a strong buy on lazy boy. market perform on ethan allen. what are you seeing that's a strong buy? >> it's more of a stock call than company call. both companies are very good companies. both really vie for what we would call best of breed status. right now both companies have strong balance sheets. la-z boy outperformed over the last 12 months.
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>> you've got an all-time high level currently for tempur-pedic. you've recently downgraded. is this purely on valuation level? >> it is indeed. valuation drove the downgrade. we are a little concerned about a couple things we mentioned in our note. there's a new product called simplicity that we worry that expectation on the street may have gotten a little too high for that. and recently we've seen increases in phone costs that are starting to make their way into the industry both in the bedding side and also effect the upholstery makers as well. >> it's interesting you mentioned phone costs. there are a lot of things like paint costs and wood costs and all kinds of commodity costs that are going to go into furniture making. so what extent is this pressuring their margins across the board? and are there any in particular feeling the pinch? >> not yet. it's to be determined. those costs are starting to be discussed. but in the case of tempur-pedic, chemical costs are about 35% of their costs to goods sold and
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that has a great deal of interest for phone costs. they have in fact raised prices. and on the 3rd of april we'll see a price increase go into effect for tempur-pedic we think will be probably around 2% overall price increase. but still it may prevent margin gains that maybe the street is expecting. that's really the point we've been making about the tempur-pedic call is that there are some gains expected that may not in fact be as easy to achieve. >> understood. you've also got a strong buy on select comfort. and you recently downgraded mattress firm. thank you so much for joining us today on the couch trade. up next on "street signs," if you think china's economy is in overdrive, wait until you see the headline we found along china's highway. >> how much is the bill? >> we have one available and it's $4,200 for the night. >> we'll take it. >> this isn't the real cesar's palace, is it? >> what do you mean? >> did cesar live here?
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it is 90 minutes left in the trading day. it's time for street talk. basketball's march madness is underway. and the markets right now are also showing a little bit of madness of their own. the s&p is hitting 1,400 today. the first time since the summer of '08. the dow and the nasdaq also sitting high. netflix is one of the biggest winners in trade today. also the official start of spring is just around the corner. in fact, it's next week. even though it feels like winter never even began here on the eastern coast because of course the weather's been absolutely beautiful, noaa releasing its forecast for the season. good news here they're predicting less flooding and higher temperatures. so will it be a spring stream for businesses? let's bring in evan. great to have you with us today. what are we expecting in terms of the impact on business as a result of the very fine weather we've had in the northeast and also what we're expecting to
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come? >> great to see you, mandy. yeah, march madness indeed. we're seeing scores of record temperatures in the upper midwest and northeast. all of that screams favorable business for people that sell anything in the home sector space, for mass merchants, people are out and about. they're out doing some spring purchasing earlier than they typically do. certainly earlier than last year. that's a boom for those businesses. >> do you feel that maybe people are pulling forward their sales and their purchases because there are some predictions out there of a very active severe weather system coming towards us over summer? >> possibly a little bit, but overall we saw a warm start to the spring last year in the south. and that certainly continued with strong selling right through the entire spring selling season. any time the weather is favorable for business, as long as they have the inventories as we help our clients make sure they position inventory in the right place at the right time, it will sustain itself over the spring season. >> one thing we have been hearing, evan, is that because
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it's been a mild winter, people haven't spent as much on heating oil. think maybe they have more discretionary to spend except for the fact we've been faced with rising gas prices. have they offset each other? >> a little bit. but overall i think the fact that we've had a 20% to 25% drop overall in terms of how much people have spent in terms of heating their home ths winter, i think that's helped consumers significantly and the rise in gas prices has had an impact. overall in what we've seen in terms of spending is double digit gains in a lot of spring categories relative to the same period last year and that's great news for businesses and overall for consumers who have more money to spend. >> and just bringing up a chart there with regards to the jump in foot traffic, people get out there and make some purchases, go into restaurants, go into retailers without even planning it just because the weather's good, right? >> that's exactly right. and what you see in those instances is you see where last year they may have made one trip to stores, now they're making two, three or four. an extra trip to the restaurant
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or the quick service starbucks, dunkin do nuts, et cetera, more foot traffic is better news for businesses this spring. >> thank you very much, evan. auto sales in overdrive in the emerging markets. china and india on track to take the top two spots in asia within four years. let's bring in our own phil lebeau once again. phil. >> mandy, you used to live in asia, you understand how explosive growth has been in china. it doesn't appear to be slowing down any time soon. a new report from ihs automotive forecasts that sales in china will hit 30 million annually by 2020. 30 million. i'm not sure what that video's showing there but we should be showing china auto sales. 30 million is the forecast from ihs automotive. this comes at a time when china auto sales grew just 5% last year. it brings up the question, should we expect these forecasts to hold up? well, gm and vw certainly are. they are ramping up production. in fact, vw has three plants
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coming online. when you look at the emerging markets, we're seeing explosive growth that kicked off in 2005. back then 20% of all the autos sold in the world were from what were deemed emerging markets. by 2010 more than half of all autos sold came from emerging markets. and india's the other story when you look at asia and auto sales going on over there. it is projected to pass japan by 2015 and it will become the second largest auto market in asia by 2015. so, mandy, the expectation is when you look at certain automakers, tata motors, look at the growth they have seen over the last three months. up 74%. 74%. now, a lot of people are saying, well, listen, that's one isolated period when you look at tata, but the fact of the matter is this explosive growth we've seen over there, it's expected to continue to the states. >> and you thought it couldn't get more crowded here come the
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next wave of cars. >> the inner cities of china. coastlines are filling and now it's inner cities. >> thank you very much, phil. so is asia the next huge market for auto part suppliers? let's ask jeremy. to what extent, jeremy, are they targeting asia or other emerging markets like south america, brazil, et cetera as well? >> i think it's a good question. when you think about the auto industry globally about the only question mark right now is europe. a bit going in reverse. even the united states sales are climbing pretty nicely. from a parts perspective, that's generally pretty good news. but you have to temper that a little bit because it's still a very competitive industry. there's a lot of pricing pressure and margin pressure. and the emerging markets these vehicles that are doing pretty well tend to be on the low end of the pricing scale. so definitely opportunity, but also some risk as well. >> when you talk about risk, are there any auto part suppliers at particular risk here perhaps can't stay in the game considering it is so competitive? >> well, i think what we've seen
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over the last few years is a trend with the major car companies to want to reduce the number of auto suppliers that they work with. certainly what's called the tier one or major part suppliers. they do this really for quality reasons but also just i think from the ability to try to manage costs. so the key thing from a parts supplying perspective is to make sure you get into that status. make sure you're considering a key suppliers to one of the major car companies. >> absolutely. want to be a favored auto parts supplier. >> no doubt. >> i was wondering, you mentioned the fact that we're seeing rising sales of autos here in the united states. are the auto part suppliers able to keep up? is there any risk of a supply shortage out there? >> that's a really key question. we saw the impact of what part supply shortages can do last year with the quake and tsunami. but this year it could be widespread because the first three months of the year we're looking at march sales now being in the 14 million range on an annualized basis. this is way above what people were expecting. that's going to put a huge strain on the supply chain.
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we could see later on this year that sales are restrained by the lack of parts. >> something to keep an eye on. we certainly learned a lesson from japan. thank you very much for that, jeremy. >> sure. >> up next, a sunshine stock that may provide another dose of hopium for the jobs market. here's a hint, get your dry erase marker out to write it down. plus, march madness is taking hold in miami. but this frenzy has nothing to do with college hoops and everything to do with housing. yes, a happy story about housing in south florida. all the details on that when "street signs" returns.
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today before falling back into the red in the last hour. should you buy this stock ahead of tomorrow's new ipad release? we'll look at both sides of that issue. plus, e-bay's been on a roll. the stock up more than 20% just this year. is it time to take some profits right now? a stock brawl on e-bay coming up. and we'll check in with the ceo of four square to find out when the popular social media company plans to go public, if at all. michelle caruso-cabrera will be joining me here at the new york stock exchain. we look forward to seeing you at the top of the hour. >> we will indeed. thank you, bill. the children's book publisher soaring today after a narrower than expected quarterly loss. also raising outlook for the year. the surge driven by megasales of "the hunger games" trilogy. the book is coming to life on the big screen just next week. in fact, more than 23 million copies have been sold. well, the hopium heating up in miami. miami's condo market took a brutal hit in the housing
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downturn, but things are turning up again. but this time around, size matters. diana olick is in miami with a special report. what have you found, diana? >> well, mandy, it is size and it is cash. that's what's fueling this brand new miami-south florida condo boom. foreign investors are coming in looking to park their sizable wallets, many of them venezuelaen into u.s. real estate for number of reasons, political, economic and even criminal. >> you're also seeing mexican buyers increasingly coming here as the drug wars being fought in mexico. you have mexidical examinexican buying out of fear. also columbians buying out of prosperi prosperity. and europeans are somewhere in the middle as the greek default issue plays out. >> now, the bulk of the 25 new condo towers going up this year in south florida are high-end boutique, call it. with only the ritziest
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amenities. one will offer an elevator that takes you and your car in your car right up to your unit. also the tower going up in hollywood, florida, will have direct yacht access. that's because the buyers of these units are all wealthy, all cash. that's what makes developers here less nervous about what happened the last time around. >> the kind of buyers we get, they don't need financing. they're all cash buyers. we sell these apartments for over a million dollars. and goes up to $4 million. it's a way of life. it's a lifestyle that they have. so they're not reliant upon a bank to give them money. >> now, here in downtown miami you're seeing all these towers that were already built plus new ones going up. the investors are seeing a very robust rental market. they're renting to people who lost their homes to foreclosure or who can't get mortgages to buy single family homes. the question of course is when the single family housing market
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starts to ease up and the credit market starts to ease up and those renters go back to being buyers, what happens to all these condo units and all their investors? got to say stay tuned on that one. >> yeah. stay tuned on that one and buyer be ware. i have another question for you. how many of those condos are leftover? what percentage would you say the condos behind you are still empty? >> well, actually believe it or not over 4,000 unsold condo units leftover from the condo crash. and now they're putting up over 5,500 new ones just this year. >> crazy. >> how does that math even work? they say there is demand. they believe there is demand from these foreign buyers. >> foreign buyers like i hear a lot of brazilians are coming in. >> absolutely. >> thank you very much, diana olick. miami looks lovely. today's disaster du jour is in the bag. what's happening here, herb? >> well, mandy, back on january 10th i did a herb alert pointing
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out issues including inventory problems they had. the company out with earnings yesterday. it was the outlook that disappointed. the company's spring collection was below expectations as the company said and rising receivables. the inventory came in line, but if you talk to some of the bears, they'll tell you they think this is sort of temporary. and this is certainly one to watch. seems like a lot of internal conflicts going on. not with the individuals just with the mechanics of the business. the company went public in 2010 and trying to feel its way through the market. we'll see how this one evolves. >> i also want to get your thoughts on this particular sunshine stock that we have here today, herb. it's probably near and dear to your heart. acco brands a company provide folks with office products and supplies. i know this is an area you look at very closely. this is everything from stapl s staplers, binders, bulletin boards, whatever, you name it, stock up 34% this year. nearly 50% in the last year. could it yet be another sign of hiring? you know, you got new workers,
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they need new supplies. >> i don't know acco. i bet you anything cramer's worked on it. they make the nuts and bolts of the business, basically. pencils and pens. >> i wonder if it's a good indicator of hiring? >> it could be. >> we'll ask jim about it another time. >> i'm sure you will. >> i'm surprised he's not flying in here on the set. anyway, next, from trash to treasure a five-star fund manager tells us how to find money in the garbage. plus, you've got to know when to fold em. is it time to cash in your chips at cesar's and head to other casino stocks? ♪ i'm making my money do more. i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money. and seven-dollar trades are just the start.
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let's look at some of these names. wynn up by 2%, and mgm resorts up by nearly 4% today. good performances there. shares of caesar's, down about 3% today. so do you ante up the stock or leave the table? i want to first of all start with the news today about caesar's planning to offer up to $500 million in stock. as we can see, the shares down significantly as well. what are your thoughts on this,
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chad? >> yeah, the potential for apollo and tpg, the two major investors to sell their shares down the road creates an overhang in the stock. it's a number of reasons we're negative on the stock right now. >> what are some of the other reasons? which by the way, guys, it's up 40% since its ipo. which is an incredible run. >> they've had an incredible run. we think the stock's overvalued, number one. the stock is trading down about 11 times ebda. that's in line with mgm, but mgm has a lot greater growth prospects due to asia. mgm is more exposed to las vegas. the second major factor is, caesar's is really a domestic casino company. 95% of revenue cash derived from the sufficient, we view the u.s. market as mature, cyclical and saturated, like 900 locations with casino gambling right now.
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those are the two big concerns. and then the other big concern is just the mountain of debt for caesar's. almost $20 billion in debt. they're barely covering their interest payments. so if we get into a tough economy, this would be definitely a candidate for chapter 11. you know, they might be able to squeak through. they've extended some ma turts, and done a good job on that. >> that's a serious argument to say if we go into another recession here in the u.s., it risks chapter 11. that's pretty serious. >> it is serious. this is a stock that could go to zero. i think for a long-term investor, they need to consider that, if the economy turns bad or get any type of economic shock, this is a company that could not make it through the next three to four years. >> is it too late for them to diversify their revenue sources and get into the asian market?
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>> we think they're shut out of bok macow and sing a bore. we don't see that changing in the next five to six years. singapore is a du op pli. it's not open to another operator for six years. so for caesar's, they made a huge strategic blunder. steve wynn offered gary ludman, the ceo, to sub license it. ludman turned it down. he really has no shot of getting back in. they compounded their problems by spending $6 million -- >> chad, i've got to jump in. we've got another guest waiting in the wings. thank you very much for joining us. >> sure. >> from casinos, to trash a fund manager likes a couple of dirty stocks. and one that can maybe help you clean up. brian is portfolio manager. good to have you, brian. let's start straight away with republic services. this is in the waste business.
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this is a pretty stable business, right? >> it is. and that's one of the things that we really like about the company. it's a stable industry. it has predictable cash flows. they've got good earnings visibility, because they're basically set up in multi-year contracts. we love the predictable revenue streams. you throw in a 2.9% yield, and it looks like a great business. >> in general, for our viewers' sakes, you like large cap companies, you like them if they pay a dividend as well. you've got pg&e on the list. what should we be looking for a bigger dividend from them, though? >> it really depends. the revenues were up in all six of their business lines, but they've been hampered a bit by the commodity pricing. if commodities can come down a little bit, you could look for margin expansion, or if the u.s. dollar weakens, then exports go up. that will give them some room to increase their yield. they're at 3.1%. they've been extremely shareholder friendly.
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we would anticipate that that could easily go higher. >> third on your list is chevron. is this a good one for the long term? >> absolutely. we love chevron. pe of 8.4%. earns $13 a share roughly. again, about a 2.9% yield. basically what you're getting is a ten-year call option on it. you know, equivalent yields for the u.s. government. they're basically -- you know, if you believe in ten years that we do that chevron's going to be higher, they're giving you a great return and hopefully capital appreciation as well. >> and plenty of room to raise their dividends going forward as well. brian, thank you very much for joining us. next, germany's housing bombshell. stay with us.0-345- 2550 ttd#: 1-800-345-2550 let's talk about how some companies like to get between ttd#: 1-800-345-2550 you and your money. ttd#: 1-800-345-2550 at charles schwab, we believe your money should be available ttd#: 1-800-345-2550 to you whenever and wherever you want. ttd#: 1-800-345-2550 which is why we rebate every atm fee worldwide.
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germany has a unique plan to boost the housing market. the hottest properties, warbunkers, stepping up a campaign to sell world war ii bunkers that could be converted into homes or condos, raging from $100 though $500,000. a quick look at the markets. railroads are doing incredibly well today. transports in general are really outperforming the market today. bank of america is another one on our screen. also doing very well today. above $9. remember, it wasn't that long ago it was below $5. it's up 63% year-to-date. it also passed the
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