washington, the markets are sending you a message. and they won't stop selling until you listen. >> the fiscal cliff is the most pressing. i'm not totally convinced they'll be able to figure it out because this is, as i say, feels like there's one last celebrity death match that's lingering in there. >> and it's not just fiscal cliffs to worry about. >> we've learned that israeli ground forces are on the move toward gaza. comes after markets were fired from been the palestinian controlled region. >> can the regular trader even keep up? >> you know, we've spent 13

years developing a good computer system and developing intellectual property around those trading systems. so the notion that a guy can kind of trade and just kind of do it as hobby and compete, i'm not going to say it's impossible, but yeah, that might be a little bit hard. >> that's what we're here for. "fast money" begins right now. live from the nasdaq market site in new york city's times scare, i'm melissa lee. mastering mobile. it's tripped up many chip makers. we have a conversation with the ceo of qualcomm. "breaking dawn 2" opens nationwide tomorrow. lionsgate vice chairman tells us what the company needs for the bottom line. what the unrest could mean for the markets. but first, our top story. that is the markets extending their selloffs.

the s&p 500 now down nearly 8% in two months. the nasdaq 100 down 11%, firmly in correction territory. the s&p 500 has lost more than $600 billion in market cap since the president was re-elected. so the markets here? >> there's no real reason to rush in. why don't you just wait another month, month and a half or so and see how it all plays out. to me, you're looking at higher taxes and a timeline that is not conni conducive to a fix. the market needs a long-term fix. entitlements are the biggest issue and they don't have enough time to fix it. >> in terms of technicals, another select death match is out there. we're going to grind possibly lower do. the technicals matter in this weird situation? >> i think they matter. i think we've done a decent job identifying them. i was surprised we didn't bounce more than we did. but now i think 1323 comes into

play. we can discuss why that is later. but i can also make an argument that today with the s&p 500 down two, actually worse than yesterday's price action, because today we had a real chance to bounce. i think the s&p 500 went positive midday. it faded from an s&p that's now down about 120 or so handles from the high we made just about a month and a half ago. >> why are we bouncing, though? that's the biggest key, why are we bouncing, other than just technicals. there's no fundamental reason why we're bouncing. >> it seems just like we said last night, and that's been echoed by a number of folks, including austin with the celebrity death match comment. we're going to keep ratcheting down because a deal will not be done in the short term. ultimately the deal will be done, but could it be another 600 billion knocked off? very likely. so should people that aren't in the market wait? yes. should people that are in the

market sell on these rallies anything that they get? the answer is again yes. >> karen, you mentioned yesterday that you're in the market today buying. are you buying almost full positions? are you buying 25% positions at this point? >> probably buying a little bigger than 25%. everything that each of the guys said is true. however, who knows how the market is going to trade on that news. i don't know what's going to happen. so just kind of pick our spots. there are things to buy. i know i'm not going to pick the bottom. realize 500 is the amount that i'm willing to take. i think it's ridiculously cheap there, but i certainly could be wrong. >> so let's get back to the markets here. should you be fading the fiscal cliff freakout? mike is a senior columni isist

at yahoo! finance. with such negative sentiment about the markets and so many reasons people are giving to not be in, it does seem like perhaps the biggest risk is not being in for a deal to be brokered and there's risk to the upside. >> i'm not saying i'm sure that's an immediate catalyst, and i also wasn't saying that the market wasn't going to freak out in advance of all this, because you understand in a vacuum of real progress, that's what happens. but i do think that really you have to bring it down to what exactly are the implications that you're most afraid of the you're freaking out about the fiscal cliff and about whatever halfway deal might get done. does it mean a sure recession next year? does it mean that the tax changes are that radically, economically important to investors? does it really mean that this places us on a fiscal abyss? does the government financial situation that much worse because we don't get this stuff? on all three, i say it's actually not as bad as the immediate disaster scenario makes it seem.

i actually agree with everybody that we haven't seen in the market action that kind of panic, that kind of run for the hills type signal where you'd say okay, finally people are sufficiently scared, but i do also see -- we've been at this level in late july. the credit markets are very stable. it's kind of a stock market phenomenon right now. not something that is showing broadly the financial markets are signaling to you massive slowdown very soon. >> but mike, when you look at this, if you look at what there's no agreement on, it's top earnings. >> yes. >> it's the same tax rates with the top earnings. studies have been done that it equates to a quarter point in gdp. if we're talking about growth of 2%, that's a huge portion of growth here. that's why the republicans have no incentive to even want to deal, and that's why we'll probably at least go up to, if not go over the cliff. >> to that i would say when as an investor do you have confidence within a quarter point of gdp of what it's going

to be 15 months from now? that's what we're talking about. >> i think even at 2% is probably the best guess. >> 2% real. 4% nominal, perhaps. >> i would submit that this makes for great headlines, the fiscal cliff, i get that, on the evening news. but the problems are far greater. china slowdown at their own hand. europe seems to be by all accounts in a recession. france and germany have gotten dragged into this. earnings growth continues to sloesm and tech slow. and technicals are breaking down. to me, if there's a resolution, it's not binary. >> i think the thing that concerns me the most is that the market didn't have good momentum going into this whole panic about the fiscal cliff. it's an old bull market and profit cycle. to me, that's always been the underlying concern about this

all year. now here you are three and a half years into a bull market when normally you kind of need something else to kick in. either certainty that the recovery is going to be long-lasting, or you get deals and financial engineering and all that other stuff that comes at this point, so maybe we don't see that right now, but i do think that -- you know, like i said, you go back to july. china was already slowing down. europe was already in recession. to me, it's not that different. back then, the treasury yield was lower than it is now. >> and i think the only difference was the fed was -- people had that absolute belief in the fed, and i think the fed's bullets are losing their steam, losing their momentum, losing their effectiveness. >> the market is suggesting that's what it's afraid of. >> mike, good to see you. let's get to a big mover in technology today. apple continues to fall further into bear territory. america's favorite stock, in fact, down 25% from its entry day high set back on september 21st. karen puts in a buy of apple

500. >> which means it will close at 501 or something just to maximize the pain. but, i mean, you know, as portfolio management issue, it's just a question of how much are you willing to lose. doesn't matter what your original cost is, even if you still made money. the question is from tonight, from now. >> right. the question here is do we have to rewrite how we think about apple in terms of its valuation right now, or have we factored in too much. all the negative currents that have gone on lately, whether it be supply constraint issues, and the concern about moving into china, which morgan stanley says is probably going to happen next year anyway. >> we've danced around this. i understand people's affinity towards this. but i also understand that they make products, they're cool, and everybody wants them. some of those products are actually better than apple.

i've been asked this question before and i don't know the answer to it. but when apple loses its cool factor and these products become ubiquitous, which could happen, what happens to the company? what happens to the stock? >> i think part of it that's really been putting the pressure on here, of course you had that misstep with one of those funds recently, not even a fund, but the folks that were trading apple inappropriately. rockdale securities. you've had issues like that, but you've also got 800-some-odd funds, that this is one of their largest holdings. and at every one of these conferences, from the one maria was at today with schwab and so forth, to any investor conference you've been at, people are heading for the exits. if these fund managers who have huge exposure in apple are trying to lock in and/or get out, that's what's driven us down to here, in my opinion. it's not that the products aren't cool. that's not that samsung stole their mojo, although they make

great products also. i think it's because there are so many people who are managing the expectations for their shareholders, if you will, and they're hitting the exits. this is their biggest winner. >> totally agree. this is something so different from the fundamentals of the company. >> everything you're saying leads to the fact that the stock was not overowned. the price actions suggest that that's exactly the case. >> when peel want to hit the exits, they hit hard. >> let's see how the stock is moving, and get back to headquarters where courtney reagan's got a flash transform short answer is where is the stock moving? it's moving down. dell did report its earnings after the bell, missing estimates by a penny on the bottom line. revenues falling as well, coming in short of consensus down 11% year over year.

this also marks dell's fourth straight quarter of profit decline. this looks like it's a continuing issue. right now, for dell among some others as well. coming up next, is a major player to the street headed for splitsville? plus, mike byrnes is weighing in on all the buzz surrounding "breaking dawn 2." plus, he's revealing what else the company has got coming down the pipeline. stay tuned for that after this. >> "fast money" isn't just about a bull market. >> in the blink of an eye, everything changes. you've got to be able to surround the trade. >> we're all doing what we do for a living and we're all together as a team, but we all come at frit a different perspective. >> it's all about moving the odds into your favor. >> it's really what drives up the value of the show.

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fact or fiction, will citigroup break up? from pension funds to nuns, calls of splitting up the bank are growing later. a split could actually unlock tremendous value. >> we think that upside could be as much as 50%. so that's really the reason to get them. there's lots of variations on what they could determine is the best way of doing this and the outcome. >> on the behalf of the sisters of the saint benedict team has sun mitt submitted the proposal to break it up into four different companies. that would be credit cards, retail, investment banking as well as the trust business. so could citi actually split at this point? >> basically undo everything that they did. >> yeah, exactly. they cobbled together a giant

financial supermarket. >> that sandy actually benefited from. >> and sandy actually denounced later on. >> split off the travelers side of that business, because at one point, when they put those together, that was part of. this. >> i would say. this i've talked to people -- city is going to earn close to $4 a share this year. i think four and a half or so next year. i've talked to a few people who think the number by 2015 is going to be anywhere from $8 to $9. so even if you put on a seven or eight multiple, this stock is cheap here so. if you believe this is just a correction here and this is just a pause in a larger bull market, i think that city, for the number of reasons you've just given, is a pretty interesting play. i don't happen to believe that. i think the banks are scary here. >> fiction? >> i'll go fiction. it's too hard to take this apart again. i don't think that anyone could figure out. he doesn't even know how they would split it up. so i'm not sure. i'm sure he has some suggestions, but i think it's sort of just pie in the sky.

once you break it up, it doesn't go back. >> a new ceo here, the inclination of a new ceo to actually split the company and yield power to three others or however many others, probably pretty low at this point. >> i don't know. if you think about the board as being somewhat active here, you've had a lot of turnover in the board and you've seen them take a somewhat radical step with the not choreographed firing of vikram pandit. i believe the nuns are irate. >> they are. >> i believe that. i think it's not crazy the idea that they split this up. it's hard to say when the stock is trading at about 2/3 of back value, that the supermarket synergy is really working. it's not. so i think there shouldn't be any sacred cows here, including the structure of being this unwilling conglomerate. >> so the nuns might be on to something. >> they might be. >> leverage was the problem with all these banks.

so let's get to tomorrow. tomorrow is a very important date, money that is marked very prominently. the nationwide release of the highly anticipated conclusion -- i know guy is sad -- to "twilight:breaking dawn." the -- lionsgate's chairman joins us now. always good to see you. >> hello, melissa. nice to see you as well. >> the analysts are already pretty bullish. they're saying that pre-sales of tickets have already exceeded the first "twilight." what's the read on this? >> it's very encouraging. i can tell you that the movie opened actually -- it's the number one movie of the year in both france and italy. it opened yesterday, and we're very encouraged with those numbers, and the pre-sales. so we have shows starting at 10:00 tonight, and i guess to take a turn, we're highly

confident that this movie is going to be very well. >> i know where steve grosso is going to be tonight. >> that's right. i will definitely be there. >> this is supposed to be last one in the series, but already there are some thinking that perhaps this is not going to be the last. there was a note out saying this might not be the last we hear from the vampire love story, and taylor lautner said to mtv, how about a musical? he even suggested reality tv. what can you tell us about the possibility of some sort of follow-up to this "twilight" franchise? >> that really is up to stephenie meyer. remember that we inherited the "twilight" franchise from summit to develop that property with stephenie. it's really up to her. we are hopeful that she'll consider another set of books, but that's her call. >> i'm a little upset at you because you had an opportunity to preannounce this on our show, but you didn't do it. where did it come from?

eps was five time what is the street was expecting. did about 100 million more in revenues. went through the roof. it's a tremendous quarter. you must feel vindicated. can we expect more of this hopefully in the quarters to come? because it seems like everything is turning up roses for you guys right now. >> i like your euphemism, guy, of selective disclosure. what did you call it, preannounced earnings? >> yeah. to the upside. >> i guess i'd be talking to you from a jail cell right now. >> it's not select fif yive if it on tv. >> anyway, there's a nuance there. but i'll tell you that we're very encouraged that we actually had a terrific quarter. the reason that we do not give quarterly guidance is because we talk about a three-year plan, and obviously, that quarter was a very good one, way ahead of what the street was looking for for the quarter. but we've given the directional guidance of $900 million over

the next three years. we're more comfortable with that number. obviously, when you have a bunch of movies and television shows that are working. >> and speaking of that, the pipeline is very good. that's what a lot of the analysts believe given "the hunger games" series coming up and all your hit tv shows including "nashville" and "weeds." you're going from $1.1 billion in debt to about 500 in about two years. some are saying that possibly you could be using some money to pay a small dividend. is that in the cards? would that be considered by the board? >> i saw that note. actually alan gould had that note out. we are going to spend our money on what we think is the best use of capital for our shareholders. the question i get often is what's the right amount of leverage for your company. the answer is whatever drives the best equity returns for our shareholders. could we pay a small dividend? sure we could. our priority at the moment is

to, as you said, to deleverage quickly. the nice thing about that $900 million number that i gave you earlier is that does not include a lot of the revenue and profit from the third "hunger games," "mockingjay 1" nor any of "jocki"jock i -- "mockingjay 2." the risk on that deal was that the "twilight"s weren't going to work. certainly "breaking dawn 1" worked very well and we're quite confident that starting tonight domestically that "breaking dawn 2" will do well. so my sense is that delever first. not go out and make giant acquisitions. we believe, when john and i came over here 12 years ago, the whole concept was to build a foundation of blocking and tackling of a giant library that could -- you know, you flip the

light switch on and a bunch of your overhead is paid. we've achieved that. the television business is a great bread and butter business, but the film business gives you enormous optionalty when they work, like "hunger games." >> look forward to getting those weekend box office numbers. i know you are, too. >> starting tonight. >> yep, starting tonight at 10:00. lgf. the pipeline -- it's amazing how you can say the movie business is predictable. because it's not. and yet this pipeline of movies is predictable now. >> and the stock has been somewhat predictable. it's back and filled a number of times. it just recently sold off. i think right here, this is a name i think you want to continue to own. >> and could they pay a small divide dividend? yes. >> another reason you take a look at what carl icon does. he wanted these guys at half the price. coming up, guys in the hot seat tonight. >> what?

huh? >> as we hit the good, the bad, and the ugly. find out how he could be so wrong yet so right all at once. later on, a dive into rising tensions in the middle east. we'll break down what the latest conflict could mean and how to navigate what it could mean for the markets. you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade.

welcome back to "fast money." shares of gap are trading higher, up by more than 3%. gap reporting better than expected earnings. some pretty strong same store sales numbers, which is good going into the holiday season. gap also sees that its guidance is actually being upped as well and operating margin, something important for a retailer. take a look at sears. sears also posting a smaller than expected loss of $1.99. same store sales did fall more than 3%. we know that sears has been struggling and is no longer a member of the s&p 500. >> speak of struggling retailers, we were just noting jp penney, the decline in the credit. >> in the credit, which is

interesting. starting to get somewhat scary. yields are spike, even shorter term yields. tells you it's a situation in flux. >> they're going to need that money. >> that's not going to happen in the very short-term, but it's not hard to see 18 months. >> we spoke about the other night. those are the ones with the most profitability. 90% with still left for him to redo. >> sometimes our traders hit it out of the park and sometimes they swing and miss. let's play the good, bad, and the u the ugly. first, the good, because of this call on netflix. >> we cautioned about this a couple weeks ago. today, big volume day. a lot of the short is covered. i think you can actually get along this stock tomorrow, stock below 55. >> of course, the stock has rallied since then, but that call you made well before we all knew that. you looked into your chris call

ball and somehow you saw it. >> it was on halftime. i think doc was on that day. for some reason, netflix was trading higher and sort of seemed odd. sometimes the price action tells you a story, and sure enough, it wound up being carl. i still think it has room to 84. >> let's hit the bad now. about a month ago, guy drilled up a trade on the refiners. take a listen. >> we talked about the refiners for a while now. this stock had a huge run-up. pulled back nicely. i think it will trade north of $35. >> not so. valero is down about 7% since then. what happened? >> just sort of faded with the rest of the refiners. maybe the storm had something to do with it. i'm not sure. the corner at the end of october seemed to be fine. it seems like it held 28. it held a couple times. so if you're looking to get back again, if you believe the tape is going to sort of find a bottom here. i'm sorry for my timing on that one.

not good. what's the ugly? >> that's what i was wondering. just me and steve? >> nice. >> it's the inverse etf of good looking. coming up next, turmoil could mean turmoil for the markets. we'll tell you how to navigate it coming up. plus,al come ceo paul jacobs goes on the record about the company's plans to stay one step ahead of the situation. and mobile is a must-see interview and that is up next. l] want to spend less and retire with more? then don't get nickle and dimed by high cost investments and annoying account fees. at e-trade, our free easy-to-use online tools and experienced retirement specialists can help you build a personalized plan. and with our no annual fee iras and a wide range of low cost investments, you can execute the plan you want at a low cost. so meet with us, or go to etrade.com for a great retirement plan with low cost investments.

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welcome back to "fast money." we are live at the nasdaq market site in new york city. qualcomm with its annual analysts meeting today. paul jacobs with an idea on what is the plans for the future. john? >> paul, thanks for joining us. you had quite a few analysts in there. you've given some guidance, 20% to 26% revenue growth for fiscal 2013. 14% to 21% operating income

growth. but i want to talk about this balance. your average selling price in emerging markets are lower and you're predicting that over the next five years the average selling price will dip down a bit. it sounds like you expect the growth overseas to be a stronger force slightly than the shift to smart phones. what does that mean for the broader smart phone market? >> well, the smart phones are going strong in the emerging market as well. and the prices at the low end are coming up, but we are trying to drive the prices down into kind of the sub hundred dollar range. so that does have a difference in the developed markets where you really do have that very high end phone, sometimes selling as much as $600. so it's that mix that we're really seeing there. if you look at the numbers, right now we're at about 1.9 billion connections on 3g and 4g

networks today. if you look to 2016, we're talking about more in the emerging market. so the growth will be tremendous. >> part of the reason why i wonder about that is implications for a company like apple, which tends to cater to the high end, hasn't been able to really crack the mainstream in a market like india. of course, we're all watching as that stock gets closer and closer closer to $500. talking to analysts here about whether they need to come out with a cheaper iphone to maintain momentum over the next three years. >> well, there's clearly a lot of opportunity in the low end of the market. now the question is if you're looking at a market like india or africa where it's very, very price sensitive, you're talking about phones that are in the sub-$100 range. we just cracked $100 and now we're pushing toward $50 on a phone. so that's probably not same-the-same kind of phone that a very high end manufacturer is going to go for. i think they'll probably try and stay at the top, but it's very hard to tell. obviously they are going to play

out their strategies as it goes. >> something else you talked about today, i believe you mentioned it, qualcomm mentioned it in berlin. something called small cell. the idea that the tower model for how people get wire lesser vis is going to shift over the next three years to five years to something different, where maybe that home router that you've got is actually becoming a bit of a cell tower and your chips become what's enabling that. so instead of a tower per neighborhood, we've got every house having a little, in effect, mini tower and that's what enables us to get to the next generation of wireless speeds. when does that start to impact qualcomm's revenue if indeed that comes to pass? >> we're starting on that already. it's not even just one per home, like the multiple rooms in your house, because really, to get the highest data rates, it's almost one cell site per phone. if you used the lte systems when they just came online, you probably were the only one that was running on that cell site

and you were getting ten, 15 megabits per second and really happy about it. that's the kind of experience we want to be able to deliver to people. i think over the next five years, we're going to see a shift in the way the networks get rolled out. we're really trying to solve what we call the thousand x problem. give a thousand times more capacity, a thousand times more throughput for people and at the same time, drive the cost down at the same time so that consumers aren't paying huge bills to get these high data rates, to stream hd videos and get maps and get all this access to the cloud. we've really got drive the cost down and that's where we're focused. these small cells are built more like a phone, but they don't have the screen, the memory, the battery and therefore they're very inexpensive. >> thanks for talking the time. two important trends, emerging markets and small cell thing that could power future growth for qualcomm and others. back to you. >> jon fortt and our thanks to paul jacobs. trade on qualcomm here this is one that no matter where you are in the phone market, samsung,

apple, other players, htc, qualcomm has a piece of it. >> a lot of people got themselves caught trading on the wrong foot. i think a lot of folks shorted qualcomm as am was going lower, figuring apple is going down, qualcomm will follow. clearly they're much more diversified than that. i think qualcomm is on the sweet spot for their company. i think they're right smack in the middle of it. they're not impervious to the tape, but i think the valuations are reasonable. i think the stock is fine. >> they also have a press release today about this location service, which is something that -- you know, that's what facebook needs to monetize. that's what all these guys need if they're going to do that location for everything from hospitality to travel and all the rest. they make that and izat location, they announced that one today, that could be a boost as well. the energy markets on high alert on a major escalation in tensions between israeli and

syrian forces. a possible ground offensive. the region is a global flash point that's seen revolution and civil war over the past couple of years. for more on this story, let's bring in george friedman. thanks so much for coming by. we appreciate it. >> pleasure. >> it does seem to be a lot of sabre rattling there between the ground forces moving closer to the border and the israeli defense minister saying that palestinian militants will, in fact, pay for the blood that was shed in israel. is this sabre rattling? because the interest of israel is not to get into a real skirmish with gaza. >> the problem is that hamas now has a missile to reach tel aviv and that's unacceptable. that's a red line for israel. the israelis probably don't know how many they have. they don't know where they're located. therefore the attack is very complicated. you can't do frit the air. you'll have to go in on the ground. it's going to be bloody and miserable. the israelis would rather not do that.

the palestinians want them not to do that. but hamas really has put itself in a position where it has a weapon that will compel the israelis either to step down or go to war. the israelis are giving every sign that they're going to war. >> if they go to war, though, that brings in also egypt, its new president supports hamas as well as iran. iran funds and arms hamas. so that doesn't seem like anything that israel would want to do. so at this point, where do you place the odds of there actually being a conflict? >> pretty high. firstly, the egyptian president decided that he wasn't going to -- he was going to go and support hamas. on the other hand, the egyptian army has sent forces to the gaza border, putting a blockade in position, and seems to have been carrying out operations against islamists in sinai. so that tells us that the army is a lot more powerful than the president, and also is kaumg. as for ir

-- calming. iran has a long way away, having problems in iraq with its financial situation what it is. they're not worried about this. this is going to be israel and hamas and that's tough enough. >> so the f the odds are pretty high in your view, is a disruption to oil supplies, is that pretty much a foregone conclusion? >> only if the trade rers as rational as they usually are. this is not going to be spreading through the region. it should not cause any disruption to oil supplies, but they like to get excited, so who knows? >> okay. george, thanks for separating fact from fiction on this. george friedman. it's funny, because the oil markets are sort of telling us that maybe this isn't such a good deal. maybe this won't have the impact that people might think it would have. >> i think george hit it on the head. if iran gets involved and they're a long way away, right? if iran gets involved, then you're going to see a supply disruption. then you want to maybe play the tankers off it. i think two days ago, we did see crude jump up on the idea that maybe you were going to see other people get involved. but if this is a one off or a

quick isolated incident, i don't think you'll see it. >> let's get to jane welsh. she's got a look at what's coming up next. >> hey, melissa. taxes here going up. unemployment kind of coming down. how do you solve a problem like california? we talk about it next when we come back. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. you walk into a conventional mattress store, it's really not about you. we have so much technology in our store to really show the customers what's going on with their bodies. you can see a little more pressure in the shoulders

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welcome back to "fast money." let's take a quick look on shares of nike. after hours, shares are moving up, about a percent after the company announced it is going to split its stock two for one, also increasing the dividend to 21 cents per share. the shares will trade on that split adjusted basis as of december 26th. >> thank you very much. in terms of the footwear trade, karen, where do you go from that? >> jimmy choo. >> as value investor, i love a split, because it just seems ridiculous. however, i understand. you get excited about that. the dividend increase, that's something real. we have finish line and foot locker. that's sort of my play in the athletic footwear space.

>> can california bounce back even if there is a major tax hike? jane wells joins us with an update in the golden state. jane? >> hi, melissa. yes, the nation's largest economy is finally bottoming. that's at least according to the california legislative analysts office, which says the golden state could actually move from deficits to surpluses in two years. but voters just passed a tax hike, which will make the richest californians the highest taxed in the land and democrats now hold a super majority in sacramento. so, here at the milking cow here in california, i asked mike milken, and ueberroth says you've got to be aggressive. milken says you have a lot of research resources. you have the beach and yosemite, and it's not all about taxes. >> i think i'm in the 60% tax bracket, i figure, between federal and state. it's something i have to deal with and figure out how to operate more effectively. >> is that fair?

>> i think what's the question is fair. i think as long as you have tubt r opportunity, the number one issue i don't believe is the level of taxes, it's are you business friendly. can you open? can you be responsive to business? >> private sector jobs must stay here. we're not taking any out, but we need to have incentives to have the growth of the companies that are here over the next ten, 15, 20 years, keep their jobs here. we need to work on that. it won't be perfect, but we'll get a lot of them. if we keep them here, it will absorb our work force and the private sector will grow, because for the state to be healthy, the private sector has to grow. >> now, milken says the democrats now hold all the cards in sacramento, and more taxes, which they could pass without a single republican vote. but he says sometimes when it looks like the end of the world, it's actually the beginning of positive change. he hopes that's what happens

here. and guys, he does not think the fiscal cliff is going to happen. it's not an issue that's bothering him. we've got a whole lot more on the web right now. lieutenant governor gavin newsom says he's losing no sleep. >> california lost people going to texas. they lost 50,000 alone there going to texas. so this is about taxes. >> well, what peter ueberroth is saying -- arizona is now coming in. peter ueberroth is saying this state has got to be aggressive and start going to texas, virginia, north carolina, nevada, arizona, and say no, you've got to come to our state. has to make a case that it's never going to be cheap to do business here, but there are other value propositions that make it worthwhile. you don't want to just have intel head quartered here and then 90% of its jobs are somewhere else. >> all right, jane, thanks for that report. coming up next, you got to

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welcome to the world leader in derivatives. welcome to superderivatives.

let's see what's been trending on twitter. >> this is a tough topic to research today. we all know beer and sports go hand in hand for spectators and businesses, but what happens to those lucrative sponsorship deals if the players aren't on the field, or in this case, on the ice? tomorrow marks the two-month anniversary of this season's national hockey league lockout and that's causing problems for one of its sponsors. morningstar calls the lockout a short term headwind but expects its long-term sales will be restored once players return on ice. most say coors, miller light, bluemoon also brands that should continue to make money. industry consolidation, focus on pricing over volume and limited capex means brewers are becoming machines like tobacco. he's watching his stock portfolio go down each day and it's causing him to drink twice the amount of beer that he

normally would watching hockey. so what's your favorite stock? not beer. >> all right. it's funny, because there have been many articles saying that people have consumed even more alcohol during the time in order to get them through. they had few comforts so they turned -- you don't want to do this at home necessarily, but they turned to alcohol, wine, and beer. >> i know i'm upset about this. i'm more inclined to grab a beer now with hockey over than i was before. >> i can see it. you're wearing a hideous shirt and tie combination. >> i don't even know how to take that. that's not even funny. her point, though, about beer stocks, i like budweiser, because the diverse lines -- so i'd go with budweiser over coors. >> pretty much twice in the last year or so. might be worth a look, also yields over 3%. got to know when to hold 'em, know when to fold 'em.

mcdonald's falling 11% from a year ago to 52-week low. what do you do here? >> it's interesting, the most active option today -- down another 3% from where it is. it's interesting, though, to me, that at some point i might actually be inclined to buy this one, getting to the lower end of its valuation. at some point, if it starts to rebound even just a little, it might be worth trying to grab it. >> is replacing the head of mcdonald's usa enough to give you a glimmer of hope that things will turn around here? because, there was a memo sent out by the mcdonald's usa ceo essentially saying it's time be aggressive. don't let october -- the decline in sales in october be a distraction and don't let it be a trend either. go out and heavily promote. >> true. heavily promote is going to help. but if you ever saw "how to

succeed in business without really trying," one of the things they warn you about is if you end up being the head of advertising, and in this particular case, if-the-thing these guys have to worry about is the comps are going to be exceedingly difficult going forward for whoever. so if you aspire to be the ceo or the u.s. president this is a really tough one, although i agree with mike, i think at 82 to 80, i'm in. >> i mean, the stock was at a 52-week high a year ago for a reason, and that is the sales were strong. coming up next hour on "mad money," cramer's got a very strong show. it's a secret. we're going to find out. >> a great show. >> always. without a doubt. but in the meantime, stay tuned. [ male announcer ] the markets keep moving. make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks,

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final trade time. >> risk reversals in apple. >> yahoo! has been acting perfect. >> lgf, lgf. >> karen? >> foot locker. >> vod. >> it says pete on the prompter.