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tv   Power Lunch  CNBC  May 7, 2012 1:00pm-2:00pm EDT

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final trade, dr. j.? scott thank you, this is "power lunch" and we begin with breaking news at this hour. just minutes ago, facebook ceo emerged and they are attending the road show and they tell investors why it's worth their money. >> well, tyler, we did see those executives arrive just about 15 minutes ago aspected and as we reported earlier today, mark zuckerberg, sheryl sandberg and the company's treasurer all
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arriving in the same vehicle, entering the road show presentation that's underway right now. starting off with lunch. and then introductions by each one of the executives. and now they are actually showing the roadshowed video. we're told in the small groups they are not but they have opted to show it again, which you can see at retail road show.com for yourself. evaluation and potential growth for the company is going to come up in the q and a session which is expected to last about an hour. we are watching investors coming out of the meeting to see what was said and how confident executives sounded. new york city being the first stop in what's expected to be an eight to nine-day road show but an exciting day for facebook and we'll have to see what investors say. >> we look forward to hearing
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more from you. we'll check back as things develop. now to the markets where we are almost green on the market, at lease on the dow. and that after election results came from from greece and france. we calmed down quickly. we may have answers as to why that happened. >> the idea threat to the euro, and today everybody is talking about him like this is slightly eccentric uncle and he's really no threat. we've had social lists before. i find it odd, i find greece wor worrysome. what happened, french bond yields down. >> it was a very tight race for a long time and some of the odds shifted the last couple of days through the socialists and perhaps some of this was factored in. >> i think it was and that's
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what the market is trying to say right now. greece was not. but the marketplace is going to be worried about that. here in the united states i was looking for signs that financials might be weak. didn't happen. in fact, the biggest mover today put up the xls today, that's the financial sector, the energy sector at lease is stable today, the oil prices down i think are the biggest thing we've seen in the last week and that's down on slower demand around the world. >> the dow is almost there, the nasdaq positive. left turn in france and greece spur optimism for u.s. investors. prices have doubled in the past few years, but small investors have dramatically stayed away. volume has dropped. so what has to happen to get investors back into the game? with us this week is jim urio
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and kate warren from st. louis, $600 billion in management. let's talk about where the investor has gone. why haven't individuals come back into the market? >> i think in many cases individuals never left the market they just stayed put and sort of have been frozen in place, not being sure what to do now. so i'm not sure they're so much out of the market but just not in the market. they've stayed invested they just haven't added more. >> volume is down. why is that? >> i think it's because there's so much incertainty and people don't feel comfortable making a decision in the face of a lot of uncertainty, be it europe, be it the economy, be it the elections, they're going to say i'm going to sit on the side lines, i don't think they're out of the market, they're just not rilg to make a solid decision going forward. >> do you agree with that? >> i think there's a ton of liquidity and a ton more money
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thrown at this problem over the last few years and that money isn't showing up in the stock market or the real estate market where the fed wants it to go. they lowered the interest rates, but people aren't going and that's because of -- >> what has to happen for them to come back? >> time and more time. remember after the depression, i don't think my father invested in a stock for 40 years. we went through a huge event and we're only a few years past it. i think it takes time. >> thanks. we'll be back to you shortly. we're going to pick stocks throughout the hours and get ideas on those and some other investments. sue? >> ty, oil has been hit hard all day. it broke below some key technical levels. sharon epperson is tracking the dives from the floor. >> we hit a low today overnight with the $95 handle and there's several factors where many traders say we could see more
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weakness in crude oil. and of course the macro economic picture is one they point to and elections in europe. but also the fact that we're looking at bearish fundamentals, and geopolitical tensions that have lessened. it's causing lower energy prices across the board in terms of pet yum complex, nat gas continues to pump higher. it has lacked consistency on the upside. >> thank you so much. talk with warren buffett three hours this morning right here on cnbc. mr. buffett had interesting things to say about the other big story in the news today, facebook and mark zuckerberg. >> he did, indeed, ty. in fact we got to talk to him about this. he has spoken with mark zuckerberg in the past.
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facebook is not a stock that warren buffett be attracted to. he said he's not going to be buying but he also said he wouldn't short the stock. >> i'm an agnostic on a company like facebook. any time you get a truly extraordinary business, and it's obviously an extraordinary business, they're the hardest ones to value because the question is whether five or ten years from now they will be as extraordinary as they are now or they may keep more and more wonderful things, it's harder to figure out than let's say coca-cola. >> warren buffett has spent time talking to ms., but bill gates has spent more time with him. gates is here this weekend and we got to talk to him about what he thinks about mark zuckerberg. listen. >> mark's done an amazing job and he and i have had a chance to talk, and it's very impressive. >> does he remind you of yourself? >> in some ways.
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you know, his company is doing a different thing, but he works long hours, he's a harvard dropout, he's very logical in his thinking. and he's willing to pursue his view of the world, even when it's not sort of faddishly popular, and he's got a vision of where he wants to go. >> now, when we were watching stocks this morning t tyler, the futures were under quite a bit of pressure, the dow was down about 90 points, things have turned around since then. when but the et said he wasn't bothered by the lower futures. he said it was good news for him because he planned on buying stocks today. he told us he bought 60 million in equitities on friday, he said the more stocks go down, the better he likes it because he gets more for his money. >> i've got to wonder whether bill gates has been to new
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jersey and tanning salons lately. what more do we know about where buffett is putting his money right now? a lot of ibm, obviously. >> we tried to pull that out of him. all he would tell us is these are two stocks he's been invested in for some time and he's buying more of both of them. hard to say exactly. >> we cover of course warren buffett 24/7, 365, buffett watch on cnbc.com. and breaking news now. indeed tyler, abbott labs, this is being build as the largest pharmaceutical settlement ever, it's about to be announced in a justice department news conference. we have the press release. $1.6 billion is the total
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settlement. that's billion with a bill, including civil criminal penalties and abbott labs pleeting guilty to criminal charges here. the stock has rebounded as this news comes out. it involves depakote which is approved for the troesmt of by polar disorders. it includes a five-year cooperate integrity agreement. abbott says this caps four-year investigation -- and we should point out depakote went off patent a couple of years ago. at its peek it was a big seller of course now off patent and there are generic equivalents. there has been an issue about off label marketing for these drugs, which they're effective
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but there's a medicare fraud issue, if you will, because these drugs are being billed to medicare and they're not approved for it. so that's where that issue comes in as well. so we're continue to follow this as the news conference comes on. $1.5 billion to be paid. we have two other major source pfizer helping to get closer to a drug designed to fight rheumatoid arthritis. they've been up better than 8%, 9% now for the year. >> sue, this could be a huge week for pfizer. ahead of wed's fda advisory panel, the agency posted key documents outlining their concern. these documents often provide investors with insight on what to expect for the meeting which is slated for wednesday. goldman sachs wrote there is no major derailers.
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the risks outlined bied fda were already known and they have not changed their models or expectations. with sales of lipitor rapidly declining, pfizer is counting on drugs in late-stage development to reviet lies growth. another major pharma story as well. vertex up 47.5%. >> it's because of better than expected result out of a still on gone phase-two study on adults with cystic fibrosis so far they have all seen improved lung function of the very good news. they're hoping sales will be very very strong in the coming years. back in november there were worries it was losing grournd as
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it tries to compete. as you can see here shares have almost doubled making up considerable ground since november. summer movie season under way. superheros leading the charge. lights, camera. >> after john carder bomb, disney needed a hit. marvel's "the avengers" had the biggest hit in the u.s. opening ever bringing in $207 million in the box office. the movie is on track to surpass $1 billion of the global box office justifying disney's $4 billion acquisition of marvel and it will help compensate for the write down they're taking on "john carter." we'll have a interview with bob
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iger. sue, over to you. >> we look forward to that very much. europe goes left. so what if this is the beginning of the end for greece and the euro zone and what if france says no more budget cuts in europe. we're answering those questions next. first, here is where warren buffett stands on the euro zone. >> you tell people to tighten their belts and you give them a chance to vote on it. it's, the real problem of dealing with 17 countries, because even if you manage to sell the people in one or two or three countries on the fact that it's an advise iblg course of action, you really need 17 going in the same general direction. and if you're going to have a common monetary unit, have you to have somewhat common fiscal policies. [ shapiro ] at legalzoom, you can take care of virtually
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the left is back in europe and there are a lot of questions now about what that exactly means for debt cutting and eventually the u.s. market. we're getting some hints on what one of the big winners in greece thinks through an interview michele scored in september. >> this is the main problem, who will pay the crisis, who will
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pay the banks. oh, come on. let me pay. why did you say that? you say that because he can understand the danger. the danger, it's very -- everything is back. >> michele joins us now, now that he's in place, does greece stick with the deal? >> that is the question. he has all the parties that did well in this election were ones that said they didn't like the deal and they were going to renegotiate with it. the things that come to power -- it hasn't been true. greece is different from the rest of europe in that they can no longer borrow money unless they go begging to people who are willing to give them
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charity. if they don't go along with the deal, they have to live on the tax revenues that they collect, which is not enough. so austerity is coming to greece, either from within or without. they can make the cuts themselves or it will be imposed upon them. >> so simon, michele says that austerity is coming to greece. >> i think there's two important things to say here. the first is the greek is fruk toured until they call a general election. the european markets have bounced back strongly today. most of our viewers wouldn't want to live under a socialist prime minister, but you may find that fran what swa hollande in aggregate pushes europe to a place where investors would rather have it. because they will take their foot off austerity to a sense, and if he has a fight with the german's over the role of the
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jurn central bank, so be it. for an american investors standpoint, that's great. it may be that the right of the socialist will do that for the american investor. >> i guess what i find frustrating about what you're saying, i don't disagree with it, but i feel like the starting point is strange and in the wrong place. they keep thinking this is a discussion about whether government should spend more or less in order to grow the economy. they need to be talking about liberalizing their economy. that's economist-spak like making it easier to hire and fire. >> i don't think that's how people see it. i think from their point of view they have brutal painful austerity. >> what have they had in france? they have to retire at 62
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instead of 60 now. where have the cuts in spending been? >> prime requirely in spain and greece where you have 50% unemployment where you have obviously fracturing. >> and the same labor problems. horrendous labor markets where you can't get anything done as a business person. >> that begs the question to both of you, does greece stay in the euro or given what we saw over the weekend, are we going to see a fracturing in the euro zone. >> the risks are higher, but this -- he wants to stay in the euro. he's going to have to realize if they're going to do that, they have to stick with some plans or he's not going to get more bailout money. >> i think she's probably right on that front. >> we'll leave it there. thank you both. at lease we got you to agree at the end. we told you "the avengers" really blew the doors off the box office. the power play on disney does it
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mean its a winner in your portfolio?
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in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this. gym yuroi is with us. of the stories we've talked about so far in power lunch, what are some that have caught your eye and how do you play them? >> the biggest one is obviously the story in europe and i think
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the one is the market disconnect. there's a tremendous amount of trading across the world short of euro and the rest of the market thinks that's, the behavior of the euro means that everything is okay. i don't think that means that everything is okay, and i still want to be short the euro over the long term and i hate to disagree with warren buffett and bill gates, but i still like gold. if the euro is running into a dramatic event, we're on the press miss -- >> so short the euro and long gold. that would be your trade right now? >> yes. fxe in the euro and gld in gold. >> and speaking of the metals, we are going to have the metals closed in just a moment. the countdown is on and we will be back with that in two minutes. [ female announcer ] it's time for the annual shareholders meeting.
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when we took over berkshire, it was selling at $15 a share and gold was $20 an ounce. gold is now 16 hundred and berkshire is 120,000. if you buy an ounce of gold today and you hold it 100 years, you can go to it every day and you could fondle it and 100 years from now you'll have one ounce of gold that won't have done anything for you in between. >> well, that was warren buffett on cnbc earlier today in a three-ur squark squawk box special. equities for farm land will outperform gold. gold prices are closing right now, at the lowest levels since the start of the year.
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sharon epperson, if you put $100,000 in gold, if your timing is right it can do something for your portfolio. >> reporter: of course. they don't believe all these comments, every one listens to what mr. buffett has to say. but it is something of corresponds that is one opinion and shared by many that are not that bullish on gold. but the fact remains when you look at what we've seen in terms of the run-up over time, it's been a stellar showing for gold. that said in today's session, we'll look at one of the narrowest trading sessions, we're only at the $12 range or so and gold prices have been fairly resistant, even with the concerns in europe, gold was down fractionally. so really, traders say we're still in this trading range, looking very carefully at that
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1625 level on the down side, we're in the middle of the range, toward the low end but still able to hold here above that range. also adding to the net loan bogss and some other -- silver is a different story. that below 30, we could see it $25 an ounce, that's something to look at from more of a bearish perspective. all right. the trading action here, the s&p has turned positive, the nasdaq is positive and the dow is pairing its losses. you're focusing on airlines, oil hit the 95 that's got to help the airlines. >> not only do you have lower jet fuel prices in the last week and a half, but they're raising their prices. i'm trying to go to rome. $1600 to go to rome.
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and that's the cheapest one. so sue is right, the prices are sticking, and fuel costs are coming down so that's a big help to them. i keep wondering when these exploration production stocks are going to start bouncing. really anadarko has been down, but these stocks today are stable. anadarko has got to be down 24, 25% in the last two months is this still the chesapeake hang over? >> partly. but partly what's going on with oil and global demand. i keep waiting this week we've got to see somebody put on notes. just let me note the financials, everybody was expecting things are going to be tough because of what happened in france and greece, financials not only in europe, but financials are leading the market as well. let's head to the nasdaq and
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koirt any reagan. >> we've been on both sides of the front line, cognizant technologies that has been red all day licensing, almost 17%, they did say that its profits up 17% but it's the lower guide sending the shares lower. the ceo was on cnbc earlier today said some of their clients are in a wait and see mode when it comes tody kregsry p spending. take a look at shares of groupon going the opposite direction. after the ceo put in his letter to shareholders noting that the bumpyness is due to rapid growth. shares are up to 10.42 and the company ipoed at 20. let's look now at how the bond market is trading as we bring you the daily bond report.
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you can see the moves in yield are ever so slight but they are all just a little higher. the three-month, the five-year, the ten-year and the 30-year. the two-year is dead flat in the water. the look at the two -- with the 30-year bond at just a little above 3%. and that's your bond report. the world of politics and economics of course forever tied together but today is especially important in that regard. three question now for greg yips, economic editor at the economist. welcome, good to have you back with us. sarkozy is out, hollande is in, what does this mean for austerity in europe and then eventually for the u.s. economy? >> well, everybody knows that the ultimate solution to the european crisis don't revolve around a single country. it has to do with the european
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central bank pursuing an easier monetary process, and some forth of debt neutralization. where germany shares responsible for the country debt. the catch is that neither germany or the bank are inclined to give it and they're especially not inclined to give in unless they see a lot of austerity. so in some sense, the french results take us further away to the solution rather than closer. here's the catch, though. hollande is not that different from politicians. he campaigns from the left against the status quo. the reality is going to confront him. he well not have a lot of flexibility to get out of the 3% debt target and frankly france and germany have way too much invested in the euro to walk away from that. and merkel had a setback as well. >> two questions closer to home
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and basically based on your piece about the financial cliff in the economist this week, being the sequestration that takes place of the first of the year and the exierry of the so-called tax cuts also at the first of the year. what does it mean if president obama wins in november? what's likely to happen. >> we're all talking about austerity in europe, we're heading for perhaps $700 billion, unless this time during the lame duck. here's what i think happens and, if obama is re-elected, no way does he sign on to full renewal of all the bush tax cuts and that is a powerful negotiating leverage he has over the republicans. my guess is that the republicans bend. you get some sort of framework, but you need like a one-year extension of this duck just to give them negotiating time. it's a bit different if mitt romney wins.
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the republicans have no incentive to negotiate with a lame duck president and obama has no -- or to extend those tax cuts and i think it's almost guaranteed in that situation, all that austerity hits us at lease for several months. >> if romney wins, does it likely mean the republicans will take the senate as well as the house quickly? >> you've got to believe that it happens that way. whatever pull that romney has at the top of the ticket filters down to the senate races. the democrats could get lucky, things could break the way on key states. but most people think if romney wins, you have unified government. >> it's headline, time. hedge fund third point beginning the process relating to the hiring of yahoo's ceo. saying they need to except responsibility quickly for the latest debacle. they are down about almost 3%.
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the treasury loading more of the stake aig will buy back 2 billion of that. and intel boosting it's quarterly dividend to about 22 cents a sure. when we continue, buy and sell or buy and hold? we're talking about how to play the big cap stocks next. on the list, johnson & johnson, pepsi and chevron. up next, warren buffett's story about princess diana. [ male announcer ] this is the at&t network.
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buy? we crunched the numbers and we are ready to guess. warren buffett also says gold great to look at but not to invest in. and as a facebook ipo road show kicks off, we look at how much of the chance the individual investors will get to play in the stock. those stories and lots more coming up next on "street signs." >> very attractive for the long term and they may get more attractive in the next week or month. i didn't know when bottoms -- but he can wities have been a great thing to own over several years in this country. >> well, much like mr. buffett, the folks over at edward jones don't believe in chasing the latest fads. they favor proven long-term investment strategies for their
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clients. with nearly $600 billion under management. kate warne is back. >> how do you deal with the volatility, especially the average investors? the thing i hear more than anything else really is that investors do not have any kind of summit for the volatility. >> many investors don't but most of them have learned they have to ignore what's going on in the market short-term because otherwise they react emotionally and that's usually when they make mistakes. while people feel uncomfortable they've learned to stay put and learning to buy a little bit when we see those small dips. >> there are those out there that say given the different environment out there, volatility is here to stay. so if you find volume u in these stocks, how do you play them and what stocks would you play? >> one of the things we think
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many investors can feel more comfortable with, even with the volatility in the market is owning stocks to pay dividends and the stocks with potential for dividend increases. you're getting paid while the price is moving around and if you're looking for income or to reinvest over time, those increases can provide a really good way to do that. so we think that those dividend increases can help. >> you've got a list here, johnson & johnson, pepsico chevron and dover. let's start with j and j. the company has had to jump over a couple of hurdles. >> we like it because we think the valuation is attractive, trading at around 12 times erngsz. we also know the yield at around 3.8% provides good income and it's got a 50-year track record. they've had some troubles, particularly in their consumer products sector. we do think they're fixing that
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but we also know that many of the patents that every one has been worried about for years have already expired so we think there's better growth ahead and that's why we think it's an attractive opportunity today. >> you picked pepsico as well is that a global play. >> yes. and unlike warren buffett who does own j and j he of course owns coca-cola. but we picked pepscy because we say there's a good healthy snack business, they're a little less international than their biggest competitor and we think the opportunity for growth is there. they're a company that stumbles a little bit. we think the opportunity to fix that really is attractive: it appears as a strong dividend yield, we think about a 6% dividend growth rate over the next few years. >> you've got a couple of picks in the energy field, but we're highlighting chevron but that's not the only stock in the energy that you like. >> no. we like many of them.
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chevron is one of the we certainly like sun cor, we like conco. with oil at a little less than $100 a barrel, this is a time that investors need to add energy to their portfolio. with chevron the yield is around 3.4%. we think it's going to raise that dividend about 8% per year. >> thanks kate, appreciate it. i up next, apple may be looking to go low end. reports of a cheaper mac book ahead. plus oprah struggling to build her tv network. has co-owner discovery bitten off more than it can chew? it's very important to understand
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how math and science kind of makes the world work. in high school, i had a physics teacher he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies.
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time now for today's power rundown. and joining us are jon r. john karny and jane wells. investors seem very weary of getting back into stocks despite the market and a strong recovery since 2009. john and jane. see john, see jane. jane, you go first. why are people staying out of
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the market? >> john and i were talking about this last week, they don't trust the system. people i know out here would rather go to vague as. it's gambling money, it's a game. they know the odds are against them but they know what the odds are. the market is not a game and they want to gain wealth and there are team people who can get a better price. facebook has announced e trade as an underwriter and also the nasdaq is going to open up high speed options market just for retail investors in june. so maybe that will bring some people back. i'm not sure. >> john, what do you think? >> i think there's two things going on. you have younger people who have lots of debts. they have to pay bake their loans. you have older people who are getting ready to retire. they can't afford to have a masstive down turn in stocks every five years. so. >> i agree with both of you there. i think people have been burned one time too many and they're just not buying it anymore.
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>> let's turn to apple. it may cloft a cheaper mak book air. is this a smart move for them to compete with the pc? >> i think it's a smart move. the products from apple are like the gate way drugs. if you buy one for cheap, you think i'll get this one, and a couple of years down the road you realize you've got a more expensive mac book and an ipad, an iphone. it worked on me and it will work with these. >> mac book below a brand is this a good move? >> this post steve jobs, apple is changing. when you have zoey doing cutsie ads, this is not what steve
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would do. i'm over zoey deschanel. >> some people may be over oprah. could it be her last chapter? the one-time queen of tv struggling to grow. so who's is it worse for, oprah or discovery? >> obviously it's worse for discovery because she's using someone else's money. oprah and fail in the same sentence is a rare thing. but you know what? cable is hard and we know this. i don't even know what her channel is on my direct tv. i've got like 800 channels, i watch 10. it is too hard to seek out new channels unless they got a lot of buzz. >> i think the problem is she can't clone herself to be on 24/7. >> too hard to find absent a
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very big break-through show. you've got to have that and then people will find it. we're going to turn to michele cabrera. >> the leader of the right wing party has been able he has not been able to find a government. we don't necessarily understand here in the united states how the system works but because he got the most votes he has the right to try to form a government to get a coalition so they can rule. he has announced that he has failed to do so. he hasn't had enough people to go along with him in other parties so now the president of greece hands over the option to the second-place party which is an extreme leftist group. that individual will have three days to try and form a coalition government as well. this is a painful process very different than the way we work in the united states. a lot like what simon said. it could mean if they don't get anything done, they have to do
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elections all over again in june. >> thank you very much. to the tv business once again. lg len tron i cans plans to start making internet tv with a google platform. it would allow users to access google services on their tv. that's one of the many changes. julia boorstin now on the future of television. >> anywhere, any time with services like hbo-go and xfinity, they're now taking a page from traditional tv networks and investing in their own shows. >> you're fired. >> both netflix and hulu are trying a new strategy. creating their own content. hulu's first original series is
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"battle ground" about a struggling campaign. >> we take a look at who or customers are, what they're watching. the stories that we know would like to be told but aren't being told, and that gives us confidence as to what to invest in. >> reporter: in 2012, netflix loun muched it's first original series called lily hammer. hbo got new people to sign up for the service with the lure of sex in the city and "the sopr o sopran sopranos". >> i think our original programming will play a role why people join in and stay on netflix. >> to see what the ceo of comcast, time warner andy any go to cnbc dam.
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be sure to catch this tonight at 9:00 p.m. eastern. >> to jim, now. if you want to play the media sector, give me your best pick. >> first of all, disney. and i'm not just choosing it because of the movie over the weekend. that plays into it, though. people seem willing to part for entertainment right now. they make money in a lot of different ways besides movies. netflix, i don't particularly like netflix and it's mostly because the market over the long terms seems to hate them. i wouldn't say short it right now, but if it breaks under that 60 level that was the low from a couple of weeks back, i would want to be short. the third thing, comcast, which is the parent company of this network, to me that seems a better play. because of their size and ability to bundle things together to more gradually take people from tv to live-streaming
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video. so comcast would be my pick there. >> coming up next as we continue, the sexiest man alive.
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as you know, we've been monitoring the facebook meeting in midtown manhattan. ceo mark zuckerberg leaving just a few minutes ago from the sheraton where he had been talking to potential investors. the meeting is ending at this moment. lots of questions were given to mr. zuckerberg. in terms of the markets, the dow, the s&p and the nasdaq have been trending towards the up 150id. we're keeping on track on that. >> that must have been his dress hoodei. vernlthsz this one has been under the radar and caught our eyes. he told becky quick about his encounter about the late princess diane athe athe white house.

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