tv Street Signs CNBC July 24, 2012 2:00pm-3:00pm EDT
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them tomorrow. >> all right. that will do it for this edition. thanks for watching. >> street signs begins right now. ty and i will see you tomorrow afternoon. have a great afternoon. welcome to ""street signs"" we have another triple digit dive for the forecast, earnings keep getting worse. can we hope to overcome europe's slide? the report card straight ahead. there are 21 trillion bucks being sheltered from taxes around the world. who, what, where and why? minutes away. will counting calories crush buffalo wild wings and the real reasons david einhorn is bowing out of best buy.
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thee straight days of double digit loss. if that holds up, they're having the biggest one day slides of july and tote tal up all those loss, they're having the biggest skid in three months. let's get to courtney reagan and then to bond man rick santelli. we've had in terms of monday, eight. we used to have turnaround tuesday and i don't think we can call it that. >> i think we've broken that streak and the bad monday streak. down about 158 points and it happened after the european close. europe still a worry. we cannot get out from under it. all major certificates lower and financial sectors in official territory meaning we have loss. and we will keep an eye out until the end of trading today
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for earnings. and we heard about earnings season so far, it's taking jobs. investment banks are stepping up their job cuts in asia due in part to a slowing economy and some names include morgan stanley, credit suisse, deutsche bank. they passed out pink slips in the past few weeks. but a couple positive reports from zillow. fha talking about rising prices. the broader is getting better on houses. perhaps we can put our hopes on that. >> we do like hoping on streets signs. we'll be debating in a second. rick santelli, you're a busy man. i see the yield is back above 1.4% but it was below the record lows, wasn't it? >> there's a good chance we're slip i slipping on 140. everything on the yield curve
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three years and longer flirting on record territory. today, we had 22 basis points, a record auction yield and many maturities have that dynamic at their auctions. the two year around i don't know september 19th 2011 had a historic low settlement of 1515 basis points, still about six basis points away from that. and if you try to decipher what a minus basis point two year in switzerland means and add that to the rates here, there's one conclusion. low rates are showing us the global economy seems to be slowing more. >> waving the red flag and leading the way. rick santelli, thank you so much. >> speaking of hopium and nopium, if you have been watching "street signs" and note we have been the glass half full program highlighting positives hidden under the negative
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headlines. we're also not pollyanna. there have been more and more worrying signs of late but doesn't mean everything is negative. with that in mind, here's our scorecard with the good news. hope i hoping still out there, the fed feds, i get that. there has to be signs of further weakness. but don't fight the fed, i learned that and the start of a recovery and as courtney mentioned zillow with a report prices creeping higher nationwide, the first uptic since 2007. and we're on track to hit 14 units on an annual basis, the best pace in five years. now for the glass half-empty. nopium, as mandy said. the euro crisis. trading from negative to stable. u.s. corporate earnings
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certainly was in the hopium column until this quarter, many investors blaming europe and see the worst outlook in a decade. do not forget the uncertainty created by the so-called fiscal cliff in washington n. this you go, mandy, hopiumvnopium. i guess the balls is on my side given my weight. >> i'd love to put my money on hopium but who knows if i would win or lose. investors in the shadow amid fiscal cliff fears. the president of the financial planning association and ceo of leta capital. how many times have we heard talk about problems with a
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slowing global economy, particularly europe and asia and a stronger dollar. this chorus is getting stronger and stronger. is this something we will be hearing not just this quarter but quarters to common. >> i think so. it goes to the issue american companies are probably in the best shape they've ever been in and the fact their angers are a little flat and many companies worried about congressional in acti action, i think you will see a quiet period the next couple of months. >> would you agree? >> i do. i think the bank will stop trying to play central bank sooner than later and europe will hit a point of diminishing returns. although i think the dollar will return with dollar repatriation, it will subside. >> it's not like a few months of risk aversion putting money into
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the u.s. dollar. the u.s. dollar will have a multi-year run. >> i don't know about that. we're at 15 trillion, approaching 104% debt to gdp. i think that that's going to have its limits there. ultimately, i think the dollar will go higher here. by around september, i think that will dissipate. >> paul, way in on our scale there. hopium, nopium, housing has to be a big one for us here. you factor in what we showed our audience, what camp do you come in at? >> i think housing has nowhere to go but up. >> is that enough to overcome the negative side of the scale we showed? >> i don't think so. the worry we have is banks aren't lending, people are having a hard time getting mortgages. i live in florida, one of the hardest hit states in the country yet people ready to put 30% down on a house can't get a mortgage. follow that changes -- >> it's not enough. you follow in the worrisome
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camp? >> i do. >> if we see a significant recovery in housing, will it start to lift all boats, lift the wealth effect, thank goodness my house is starting to make me money and i might have the ability to move somewhere and change jobs and spend more. is it possibly going to create a wealth effect? >> i think -- i think i have to -- i have to say, i don't think so. i think there's 3 million foreclosures, people in foreclosure or behind on their mortgages, i t it will take another year or two to get that overhang out of the way. i get the short term blip because people don't want to sell their houses, there's a supply shortage. that's a long term trend. >> you're a top performer among your peers. maybe that's why we have you on. there's an article about another value investor, mark l arazry, s
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investing in europe five years out. are you? >> we are. we have everything in our portfolio, everything from telecom spain, medralia, remember, we're an all dollar de nominated, the caps between $18 billion and $60 billion. for one and two year investments we're getting between 5 and 6%. >> hedged against any currency risk? >> not taking currency risk. all dollar de nominated. i agree europe is a risk. >> years out. >> you're buying years out? >> we only buy one and two year paper and if it continues to go well, we'll continue to invest there. >> you're patient man. thanks for joining us, paul and john. >> many believe a stronger currency means a stronger dollar. a stronger u.s. dollar may not be what we need now. come on, people say a stronger dollar means things are good
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here! >> look at the chart. >> i love charts. >> we don't have to wait for dollar parity for problems to show up in the u.s. economy. here already the euro has fallen sharply in may of 2011. weaker u.s. export numbers and weaker u.s. corporate profits. exports have been a bright spot on the u.s. economy since recovery began in the first two years of expansion and gdp by a full point average. and only half of what it's used to in growth. see the smaller numbers. the decline in this growth, euro pressured u.s. competitiveness. parity may be the way to help the european economies but could come partly at u.s. expense. jpmorgan says the ultimate
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effect depends why the currency declines, if it's because of moves by the european bank to help the economy, that could be good for both. if it falls amid recession fears are worse, no one will be a winner. >> that's a really good point. look at the absolute fundamental reason why it is strengthening. the u.s. dollar is at its highest since september 2010, isn't it? >> absolutely. it's been a bright spot for the economy and if it falls off, we will have one less. maybe it's replaced by housing. we would like to have the export cylinder firing housing cylinder and get rid of the fiscal cliff and maybe we can talk about serious hope rather than daliing you're doing. >> u.s. exports to europe only 1.5% of our gdp. >> true. >> only 1.5%. a lot of people look at it from a psychological privilege and say if the dollar is up, it must
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mean things are getting better, a nice headline feel. >> andnize psychological one. >> i don't think that's the truth. >> in other words, it's a pile of -- >> i don't think it's -- >> has something to do with my initials, perhaps. >> b. -- right. okay. i'm a little slow on the uptake. if the dollar is strengthening because the u.s. economy is stronger, lower inflation, whatever reason it's strengthening. that's a different reins than it's strengthening now and we will get the negative aspects than stronger. >> where's larry kudlow when you need him, king dollar. >> i was thinking about him. i disagreed with him about that a long time but he is a smart man. >> he is indeed. secret bank accounts of politically powerful americans, breaking details into americans who could be hiding money. not just a little, lots of money in swiss bank accounts.
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>> what is really wrong with best buy. being amazon.com's showroom is not the real problem. it's something else. we'll tell you what he thinks that is. coming up. take the privileged investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
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and disappointing earnings. look at the collateral damage and the rest of the stocks. everything coal related is getting hit way beyond the market here. arch coal, 8% and alpha natural, 8%. >> it is no secret the super rich have put money in swiss bank accounts, always have, always will but cnbc has learn ed exclusively a handful of politic politically connected americans had exclusive accounts. ayman javers has details. this is a really big deal. >> that's right. we had not known previously there were american connected figures. there has been a lot of flap about mitt romney having a swiss bank account and said he paid taxes on time on that account. these other political figures may not have, a source telling cnbc that uvs, the swiss bank
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turned over a handful quote a handful of american politically connected individuals who had those swiss bank accounts. the reasons ubs would know about american "politico"s inside their banks, with banking regulations, banks are required to keep track of politically exposed persons or peps in banking parlance and subject to due diligence. typically thought of rogue world regimes and they also track american peps. i had a chance to sit down with bradley burkenfeld, in a federal prison, a former usb banker that came clean and serving a sentence and this is what he told me. >> there was an american pep desk out of zurich. i knew that for a fact because we had people who knew it
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economisted. it was so cloak and dagger, held in secrecy, beyond secrecy. >> we don't know the identities of those american peps. it is anybody from heads of state to members of parliament to judiciary or military, could be a wide category of people listed as american peps. we contacted other banks with operations in switzerland and none would confirm they had american peps. >> thanks for breaking that for us, ayman javers. >> you bet. >> a new report says the super rich are hide iing 3$35 trillio them, trillion with a "t." joining us james henry, a cnbc economist. before you get to that report, what do you make of what aymi e
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javers just revealed. >> this is not new. this is what financial institutions have been doing for years. i remember there were reports president nixon had offshore accounts at the castle bank and trust in nassau and bahamas in the 1960s and '70s. it's not a partisan issue. it would be nice if romney revealed his offshore activity. there's lots on all sides of the political spectrum engaged in this, if they are wealthy enough. the global banks come after them for their international private banking assets. >> it is being politicized. i don't know if you saw the obama campaign's latest ad pointing to romney's cayman island account. it's not just a u.s. problem, a global problem. is there anything inherently wrong. i know it's unseemly to many, is there anything wrong, anything
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we can do to restrict it. >> you asked a lot of questions. first, appreciate the size of the problem. we've take an shot at using three independent methods from the capital world 9 trillion out of 21 trillion and we looked at individual financial institutions active in this, ubs and hsbc and credit suisse, these institutions, the top ten alone manage international assets of 6$6.3 trillion. in the top 50 global private banks manage 12$12.3 trillion. what can we do about it? one thing the same about the international airline ticket tax, levy a simple tax a year with holding tax on anonymous capital so at least some of this dirty money gets taxed. another thing is crack down on pirate banking. we just had hsbc which got the
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justice department to give them a parking ticket of a billion dollars versus their $20 billion a year profit. they could have been taken out of business. they are on the same scale i'm told by the investigators involved on the 11 committee on the same scale as dcci. they're serial violator, laundered $14 billion in cash. you're talking about in your political candidates thing or political exposed persons, i think that's the tip of the iceberg. >> it really is. there are millions of people engaged in this right now. >> especially if you say there are high end banks facilitating. amazing, $21 trillion squall to the gdp of japan and the united states combined. it could be a lot more than that. just ahead on "street signs," if you want to literally park your money offshore, you
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disaster de jure. sorry who picked the stock in the stocks draft. radio shack getting whacked again. down more than 3% today. the company reports earnings tomorrow before the bell. we have abs downloading it from sell to neutral. morgan stanley lowering price target from 3.60 to $4.50. radio shack is down now 79% over the past year. >> in the meantime, today's sunshine stock. up nearly 12%, an apparel maker, hit 6% the past quarter a cent above estimates and revenue above forecasts. the country raised its full year forecast, the stock up 35% over
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the last year. herb, i wanted to bring you in and you said, if you dig a little deeper there is more to this. >> i do not want to rain on your sunshine parade. >> but you're going to. >> look at the numbers. look at the trend. if you look at net income growth, you look at margins. if you even look at revenue growth even though it was up last quarter, they're all going in the wrong direction. i want to point out something my friend, tommie from stock diagnosi do nost sticks pointed out, revenue increas increased a million dollar a year ago. no, it didn't. they do this big rounding of numbers every single quarter. it's a small item, maybe, but something i certainly do not like because it gives optics to thing being better than they generally are. >> isn't there always going to be a perceived premium of under armour being bought out by a
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competitor? >> at what price? >> the market in this billions, nike the obvious one that can afford a company like this. >> i look at this, jim cramer looks at this, technology, a very good point. you look at numbers, you see a company running faster to sort of keep up and stay in place. you have to keep playing attention to this, look at the balance sheet. don't let it out of your sights. not saying it's a bad company. look at the numbers and trends. >> literally look under the arms of it. >> from under arms to under radar. we're trying to find your under radar in street sign. a company used to transfer and store data at high speeds, mellanox, hit its highest level last week, it's up 178%. it begs the question, who is mellanox and what do they do?
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let's find out. the president and ceo of the company joins us from new york. when i went into capital iq and i looked at your growth rate. $30 million, $50 million, $150 million, it's eye popping. how do you attribute that kind of revenue growth? what exactly is driving that? >> it's simple. we're focusing on multiple very high growth opportunities for us. the markets we're playing in high performance computing building super computers and the architecture can be used for the web, too, cloud, data, storage. we're benefitting from the high performance computing market and seeing the web to cloud and this is a huge growth in front of us. >> it's interesting to see in your results, you have this demand for your products despite the economic softness around the world n. to what extent is your company and products immune to
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economic cycles? >> that's a great question. we today only have less than 10% of the market we can grow into. even if the total available or total number of services decreasing, we can still grow because from 10%, we can grow to a multiple 10% of markets and that's where we expects to go in the future. >> we have to leave it there. thank you for coming on. next on "street signs," another big f for one of herb's most watched for profit education stocks. >> are people really browsing best buy and buying on amazon. david says that is a whole bunch of burnink. and the first trade route to the west. we built the tallest skyscrapers, the greatest empires. we pushed the country forward. then, some said, we lost our edge. we couldn't match the pace of the new business world.
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thanks for staying with us on "street signs." we were talking about the apparel maker under armour hitting a 52 week high. herb, you said you have to dig a little deeper. you heard us talking about under armour, right? >> i ran out because i want to congratulate herb on erasing a stretch graduation call. the sales are ahead of inventories and they are a technology company. then you look at the price
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earnings multiple, they're valued more highly than any technology. what was so funny is mellanox is the company i've been saying is extensive. it seemed like a remarkable coincidence, you have a value company and under armour is more expensive. >> what about the issue brian raised about a company big enough to take under armour out. >> that's always been a -- >> you're right. >> there's going to be a little additional premium on the valuation priced in as just an expectation. as it gets bigger, i'm assuming only nike and maybe adidas? >> it would make so much sense. i remember when reebok, no one thought reebok would get bought and the momentum peeked and considered to be a great brand. it still is a large brand more
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than market cap. it's dangerous. i got caught up in the brand a larger market bran in chipotle. stuck with it for 300 points and netflix. at some point -- >> management has to come and say, it's not what you expected. that's when you get the cmg, not what you wanted. >> kevin plank, a fabulous executive. >> amazing american story, started in a dorm room in american and ran it with credit cards. >> i like that kind of story as i like david novak. i get to a certain point had he said there is some economic sensitivity, that stock would be down 15. >> they're stretch their payables a little bit, things you have to watch. >> it's great you bring it up. >> at least we bring it up. >> it's trading at 7 1/2 tangible book value and nike
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trade i trading over tangible book. >> four to five times earnings. >> chip potly was 44 times earnings and sticks in my head last night and you get to a level everything has to go. >> we're trying to call attention to new names for our viewers and you obviously know the company and probably think too rich to buy? >> wall street has been wrong. the earnings estimates were so radically low you could not get in front of this thing. intel seedcreeded a particular to them. a remarkable company. >> over three years, 543%. >> that and the pharmaceutical have been part of the first have. >> it sounds like it is. >> therapeutics. >> you're doing fabulous work under armour is important and
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otherwise, you could be blind to it. >> we want to bring in the for-profit beat. >> if you own them, aren't they not-for-profit? >> the big question after dev e devries disastrous earning last night, something talking about hewle hewlett-packard. m devry, 20% off for a total 70% down the past year. education management down 80%, apollo group, 50%, itt education, 50%, getting hit by combined impact of new regulations that attack for profits and all the higher ed and the economy. are they bargains? not according to my go-to guy. brad saff low of paa research. brad called these stocks a disaster waiting to happen before anybody cared. now, he said his industry checks
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show what happened with devry, which had an unexpectedly significant dropoff in summer enrollments could be consistent with overall industry trends. he said analyst estimates for the industry are still way too high. as it continues to reset itself, there's still quote meaningful downside. >> three points i want to make a and, jim, chime in please. drop in enrollments. why? because the economy is better, people are finding jobs? b, these schools are having a credittation problems, meaning they can't get loans or c, people going to these schools, realizing they're graduating and not able to get a job. fundamentally losing faith in the model. >> i got an e-mail from berkeley today. they're offering online courses. >> brad points out the online competition from a variety of schools even though we were trying to check it out and didn't quite find it, it's
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clearly coming in as competition. you have the entire de last tisty of the entire higher education group. >> are berkeley online courses really a competitor to schools. no offense, berkeley, i assume you have to get in. >> they offered it to me. i didn't apply. >> can anybody take the courses? >> they pushed it to me. >> i also want to mention, you mention b, the accreditation. that's a bridge point issue, a little separate there. >> fascinating. these guys keep reiterating. jpmorgan came out today. they like apollo. >> i know some people think apollo has a lot more to go, too. depends who's doing the analysis. everybody won't be right. >> we know you're an extremely busy man. if you want to stick around, you can. >> you have a lot of great stuff on your show. >> we love you. stick around. we're the honey badger show. we move about freely. >> ew, larvae, stupid bird.
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>> house of bees. best buy has struggl struggled -- speaking of house of bees, best buy has struggled this year, been stung, stock down 22% and got a vote of confidence after invests davor einhorn, and notes he sold it at a loss. r.j., you have a full house. we will all join in on this conversation. was it a mistake for einhorn to sell best buy? was it turnaround around the corner or a great sale? >> it was a great sale in my mind. i think best buy has a lot of issues ahead of them and consumers will go in and take a look at products best buy and take a look elsewhere at amazon or another lower priced competitor. it gets to one of the negative points of this company, a lot of
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their vend apple and microsoft have found aot of channels to distribute their products, in this case, their own retail stores. what's the motivation for apple to sell through best buy when they can control the profit through their own store. i think it's a trend that will get worse in periods to come. >> looking at einhorn's note, if you forgive me, despite the consensus view, our store surveys repeatedly show there's no price incentive to browse at best buy and purchase at amazon, debunking this showroom concept. must have items bringing people to the stores and china's economy may have hit a wall. is the showroom concept complete burning? >> there's some truth to it. the fact they don't have that hot product supports the view they're showrooming.
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consumer electronics manufacturers are finding it's easier to distribute online or through their own stores. what's the motivation to go through best buy and not give them the product when they can command the economic profit from that sale in-house. >> r.j., radio shack. you have to talk about radio shack. it was the great value trap. somebody said is it too early to buy radio shack. why isn't this radio shack, a company that really was quite good at one point? >> absolutely. they were a great company especially back in customer centuriesty days, did a great job identifying what brought customers into their stores and capitalizing on it in a store by store basis. we are seeing a shift in how l are bought by consumers and they weren't prepared for this and not managed this.
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there aren't a lot of answers and don't have a lot of strategies at the midterm level and may be the same as circuit city or same conversation as radio shack. >> if there's no turnaround in sight or no answers, is it going to go out of business? what is the end game? >> end game is they have to take a hard look at their real estate portfolio. look at what's gone away, cdc, dvds, a lot of that is moving digital. that was a third of their store square footage at one point. that's a starting point at the square footage they need to look at. take a profit from the store reductions and invest in a better customer experience and broadening awareness of price parity with amazon and other players out there. they tried to market themselves as being a service leader in consumer electronics business, low price always wins out.
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until they dispel that myth or bring the pricing of amazon in check, it will be an uphill battle. >> we have to leave it there. best buy down by 23%. up next, we will go private island hopping. >> sounds pretty good. >> yeah. >> we will look for bargains among the vanity properties. the super rich apparently need to unload. if you're super rich, why would you need to unload an island? we'll find out, mr. roark coming up next.
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coming up at the top of the hour on "closing bell," stocks down for the third straight day, we're all over the sell-off and what can be done to jump-start this market and am earnings report after the bell. somebody here says we'll bankrupt america unless congress stops run away federal spending. the latest with brian shactman. >> thank you very much. take a look at lockheed martin. it shows you even in this market with great numbers, they had strong numbers, it's hard to get traction.
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the chart went to the flatline before bouncing up. look where it was at the open, almost $89 a share. very difficult on a day like today to get any traction, even if your revenue and profits beat expectations. >> thank you very much. if you're putting a private holiday island on your wish list, you're in luck. robert frank, our wealth reporter here on what is the big island sell-off. >> thanks. if you ever wanted to own a private island, this may be the time. prices for private islands are down between 20 and 80%. inventories are significantly more than 600 islands up for sale around the world. i'm not sure how you put an island under a christmas tree. we've done a little shopping for bargains, we start in new zealand for this rustic island,
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originally $3.94 million and now selling for $788,000. a bargain. and leif cay. and you can park your mega yacht in the back reduced to $7 million. my favorite is this island with a cliffside mansion and clubhouses and marinas for fishing, buck island, priced from $50 million to $35 million. the real fire sale is greece. dozen of islands for sale and uncertainty over landownership. a chain of five islands. you can buy all five less than 5 million euros. you know you're rich when you don't just have your own private island but your own private arpellago. >> you sound like a used
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salesman. >> you're not spending, you're saving seven. >> i love it. you're saving seven. i like my island. you have to put in infrastructure, sewage systems, hospitals and schools and restaurants, ship everything in, maintain it. >> hospital and schools for one family? >> manny makes a really important point. >> if you're starting your new society. >> if you're a sheikh with 15 wives. >> easy departmentdarma organizt are you selling here, a new society. >> the reason they're selling is it takes bills to upkeep and you need to be near a hospital because you need to be able to get there quickly. >> and mosquito. coming up, sugary drinks are under attack on both coasts now. will a bold move by buffalo wild wings turn off customers and hurt sales. and robinson crusoe after a
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zlrchlgts all right, if you had your own island, what would you name it? there's a full blown war on fat taking place across north america today. in new york there was a meeting wrapped about on a ban over sugary drinks over 16 ounces. the mayor says limiting the drinks will bring down the obesity rate. >> and el monte, california is looking to tax sodas and other surgery drinks. the city says it could generate as much as $7 million in annual wild wins going to list
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calories on it's new menu. all chain restaurants will have to list their caloric counts. is it going to hurt buffalo wild wings stock in let's bring in an analyst on this. fired off an e-mail to me just on this topic yesterday, bob. i appreciate you being proactive. i didn't know they rolled it out nationwide, and you give them kudos from the move for a citizenry perspective, but you think it's bad from a stock perspective? >> yes, often times it's hard to hide in the pack. one thing we have to give the management team credit for is they have been doing well with managing their business, doing wise things to help sales and easte earnings over the long term. by adding this information to the menu where consumers are
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maybe surprised by seeing their favorite burger with 1300 or 1400 calories, it kicks in on the nag factor that ultimately consumers on the fringe, mom may say too many calories or fat grams, well go somewhere else. >> is there any benefits for doing this? the president of ruby tuesday tried doing it in 2004 and sales dropped sharply. >> we've had the opportunity to be able to see a chain like ruby tuesday do it in the past, i don't think it worked real well for them. the problem today for the industry is that the industry is required under obama care legislation will be required to add this investigation to the menus nationwide. if, in fact, that goes through, a, it's good to have a more
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informed consumer. the risk is that consumer -- >> bob, does it matter, do people change their order because of it? >> studies have shown in new york it has not worked. >> i think ultimately consumers will shift their preference around and they will figure out how to get what they want with a wiser calorie count. >> bob, thank you. by the way they're ref leasing earn i-- releasing their earnins today after the bell. ♪ [ male announcer ] you've reached the age where you don't back down from a challenge. this is the age of knowing how to make things happen. so, why let erectile dysfunction get in your way? talk to your doctor about viagra.
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very happy tequilla day. sales have grown since sales of super premium tequillas, bottles $22 or higher. >> the u.s. buys 80% of all global exports. the leader makers are diageo and brown forman. they're having a bit of a hangover today. >> bad segues here, folks, but ford and gm both down, ford may have the first sub $9 close, and gm a
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