>> you don't generally cut your way to growth. that will do it for "power lunch." street signs begins right now. we begin with three huge stories to start the hour. hp shares tanking on a massive accounting mistake, or does it have the appearance of outright fraud in the latest on the story that is rocking silicon valley today. infighting at the fed. ben ben speaks even as one of his own subjects congress may need to step in to stop the fed's buying binge. the s.e.c. bringing charges in a massive insider trading case. now, even doctors are apparently being corrupted by cash. >> amazing stories, as you say. the major averages moving between gains and losses as they were really trying to for their first three-day winning streak in over a month but three did move learn bernanke's remarks,

the fed did not have the tools to offset the full harm of going over that fiscal cliff. shares of hewlett-packard on the back of the story brian mentioned, currently a ten-year low and now down 54% year-to-date. we are going to break down all of those headlines for you in just a minute. but first, kate kelly for details on what is, by the way, the biggest insider trading case ever, right, kate? >> it is certainly being presented that way, mandy, i guess we will see how things go in court. yes, renewed focus own sac capital today in light of federal and sac lawsuits against a former employee there. matthew martoma is alleged to have used illegally obtained if information about a drug trial to bail out of two big pharmaceutical stock positions in a hurry. it raises renewed questions as well about what sac founder

steven cohen knew about the traced, particularly because a complaint detailing how the hedge fund owner arranged the stock sales with martoma over the weekend and did them essentially in secret. the government appears to be banking heavily on the deterrent affect of these these cases. with enforcement chief saying an hour ago bet october odds your phone isn't tapped is a losers a game there's no doubt this could be a major case, brian and mandy and i will keep you posted as additional details pour n >> we were discussing before the show that sometimes with these insider trading cases, there is a gray area.

>> there is another side of the story, we have the courtroom. the government has a cooperating witness, a gentleman a doctor, expert neurologist based in michigan, who was working with the pharmaceutical companies on this alzheimer's drug that they were developing and had inside knowledge of the drug trials. he also worked at an expert network which it would seem the hedge fund had employed in order to get information, not illegal information, but extra colbert stocks. >> all the kids watching at home, if you get a e-mail that says confidential, do not forward, keep it confidential and do not forward. kate, thank you. >> welcome. other big market store today, ben bernanke speaking at the economic club of new york but may be a bigger fed story today because earlier, the fed's own jeff lacher suggested that congress may need to set congress on the fed's bond buying program. is this fed infighting? all right, steve, we have got the ben bernanke stuff. i want to get to that. lacher's comments not getting a

lot of attention on a very heavy market day. what do you make of them? a little of this going on at the federal veer? i pound my fists together? >> we know this going on at the federal reserves to use your exact metaphor there, brian. what is interesting and perhaps up precedented about this is a fed official going outside the fed to try to went argument. let me go back and give you the tale of the tape here. lacher has been an opponent of what the fed has been doing, quantitative easing, many years now you warned about folks inflation, it has not come to parks he has not suede the board to stop doing quantitative easing. and now to suggest that maybe what we need to do is have congress put limits on fed purchasing is a fed official going outside the confines of the board to ask for help making policy. this is undprentsd. it essentially toys with the fed's independence, if i understand jeff lacher correctly, because one of the things the federal reserve was set up to do was to make monetary policy independent of

the federal reserve so the concept, brian, of limits on fed purchases really is a dangerous game we have not really seen a fed official ever play before. >> the meantime, there's been bernanke putting it out there and saying fix the problem, washington, we are not going to bail you out anymore. >> ben berman kirk at a speech today before the economic club of no he warned there could be recession and no matter what happens, even if you solve the fiscal cliff problem, we are going to have some fiscal drag, not necessarily recession, but there will be fiscal drag next year. also arguing that economic potential could be lower. since street signs i is the home of hopium, i wanted to gift other side of what ben bernanke said, not the threat part >> accumulating evidence

reducing the potential growth rate our economy somewhat, at least, during the past few years. in particular, slower growth and potential output would explain why the unemployment rate has declined in the face of the relatively modest output gains we have seen during the recovery. >> if that didn't sound like hopium, it's because it wasn't. that was the one about lower potential growth to the economy in which fed chairman ber bernanke suggested that gdp foerngts speed limit of the economy could be lower than 2 1/2%. but brian, he did also say, mandy, that if we solve this problem, next year could be a very good year for the economy. >> i think june of 2011, the dow was 800 pounds dish wish i was 800 pounds lower, like kayla,

800 points lower. >> also the home of your rose cis, it isn't hopiumy enough. back to the big story, hp bombshell. david fish a, broke that story and also spoke to the ceo, meg whitman on today. kayla tausche has more on autonomy and its leadership. also got herb and bryan white of topeka capital, a hold on hpq and a $13.50 price tag on the stock. i'm going to throw it to you, first of all, david faber. what did whitman have to say? >> of course, we learned this morning when we got earnings from hp, mandy, that the company was taking a $5.3 billion writedown as a result of what it called misrepresentation and the accounting of economiy, bart of an 8.8 billion write-down.

she was not the ceo at the time, though she was on the board of directors. as i have been reporting much of the day and confirmed by the company since we first reported it, they got wind of potential improprieties from a senior executive at the autonomy unit back in may. commenced an investigation. here we are seven months later, preve preve presented a problem why this was the case. they had concerns before they were bought. here is what whitman had to say. >> after we announced the acquisition, a number of blogs that came to the fore about potential issues at autonomy. the former management team ran that to ground. came up with the conclusion there was nothing there often in a cutting-edge company like autoly, if will be rumors like this, but they went through

working with deloitte and kpmg who hp had hired to talk to deloitte about these issues as well as talking to mike lynch and they ran it to ground and said there's no there there. obviously, we know differently now. >> lynch was ceo of the company until fired by whitman for not reaching targets. might have been a lot harder to reach targets without perhaps some of the revenue recognition creativity that they are alleged to have committed before the company was sold to hp. of course, this has been referred to both s.e.c. and the serious fraud unit of the uk. we shall see what they choose to do as they proceed with their own investigation. >> we shall see init deed. david, stick around, bring in topeka capital market, bryan white, kayla tausche. mike lynch is flatly denying

these allegation. >> coming out saying not only did he have nothing do with this but hp for its smart a big grownup company, did its own intensive due diligence here. investors don't know what to make of lynch for his part, he is an interesting character, a entrepreneur at heart. created autonomy you sold it, start to finish, he was their executive. the interesting thing now, after he left auto minomy, raising mo at a venture capital firm. in the midus of raising $1 billion for a fund based out of cambridge, basically the uk's version of silicon valley. right now, raised a fraction of that told he is also going to be contributing some of his own money for that if you look at this company, invoke capital, hattant launched yet, i imagine they might have some problem with this but says we managed uk's success story, from rise to the tech startup to the uk's largest company, acquisition value $12 billion. one of lynch's first

investments, was a fraud detection startup. >> which is -- hold on, i want to back it up a bit that is interesting, fraud detection. snob alleging anything. i will say this i want to make it clear to our viewers the magnitude of this write-down. it was 90% of the company. equivalent to buying $1 million home and finding out a year later it is worth $100,000. you've seen accounting mistakes your whole career, right? have you ever seen one this big, this egregious? urge we don >> we don't know what this is yet, because lynch is saying everything is finism pointed out this morning on squawk on the street, jim chanos was in there shot, the stock 2011.

>> clearly severing not fine. what should you do? you have a hold rating on this stock? >> there's been a series of dramas at hp over the past decade. this was a very bad deal that just turned absolutely horrible. so, we have got an environment that's difficult. we have got a bad outlook from hp today. on top of that accounting imp pro-pry test. i think investors going to continue to shy away. this is a show me stock. it is going to take a while to regain investors confidence. >> you are not saying sell? >> not saying sell. we have got 11.50 price target. we cut this morning. i think investors need a few quarters of consistency from hp. need to get to the bottom of this unfortunately, doesn't sound like autonomy issue is going to be resolved in the next quarter or two. going to take a while. >> i hate to harp on this point, right, but the magnitude of this write-down is staggering.

saying we bought as 10 billion company that may or may not now be worth just $1 billion, okay? you talked to bankers. you talk to ceos, how do you miss $9 billion in allegedly now phantom value? >> it was 11.1, written down 8.8. 5.3 billion of that write-down is due to -- they don't use the word fraud, we have been because every word they use is fraud. a will youful effort to mislead investors it is fraud. harvey pitt said that earlier.f investors it is fraud. harvey pitt said that earlier. we haven't seen that evisceration of value in a long time. there are worse deals, aol/time warner, sprint/nextel, countrywide purchase by bankamerica i argue cost share holders a lot more over time. this certainly was no good.

>> oracle posted a press release and said you did talk to us about as 6 billion deal. we thought the price was too rich even at that. to sell to hp for 11 billion and change, tough wonder what oracle knew about this and what they were thinking in valuing the company at 6 billion only to have the price nearly double a couple months later. >> people were questioning it at the time. they were questioning hp strategy, seemed out-of-the-box, the short-lived ceo made that decision, at the same time he was talking about splitting the company in two something reversed by current ceo meg whitman. you are right you kayla, was there more due diligence that could have been done? they relied on deloitte. >> david, this is herb. on this, deloitte has to be on the hook somewhere along the

line on why they didn't catch it. i kate haight to keep harping on the same old thing. they didn't catch it yet others out there who caught it prior to this. something -- something's off and somebody isn't telling the truth. >> get back to the stock, because i want to continue on mandy's point with bryan white. you mentioned it, you answered mandy's question. in ten years, had phone hacking, board leaks, infighting, ceos coming and going, short-lived ceo ouz, the palm dahl deal, remember that one, i know it's not meg, she is knew.

we made changes in 2011. let's make further changes. i think meg will be a good ceo. she is in a tough position now and should be thankful to have her. >> wouldn't want to be in her shoes today. thank you very much for all of your comments. the meantime, huge news day just keeps on coming. market, not liking the two big stories, markets punishing hp, ben bernanke as well. later on, from bad to worse at best buy. can anything stop the bleeding? we will talk about it. [ male announcer ] how do you trade?

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way and the to bring your attention to breaks news regarding the new york attorney general. eric schneiderman, reported he might bring a charge against credit southwest over $11 million in mortgage bonds. he has just done that the ag's office setting out a press lease now, you will forgive me for looking down to read it filing a martin act complaint. eliot spitzer famous for reinvigorating that you 1930s law to use it against wall street banks. new york attorney general saying basically they deceived equity buyers and mortgage-backed securities buyers to the tune of $11 billion. credit swisse, the news just

crossing. g we have fear of the fiscal cliff over here versus hopium on housing over here. what is likely to matter more? joining us, john lynn happen, director of u.s. equity at t rowe price. before we get macroon the stuff, i want to ask about hp. mandy and i talked about it in a previous block, you probably heard something. another huge blow to investor confidence? a dow component writing off 90% of the value of a deal it made last year. >> it is a blow to investor confidence and a blow to hp. in hp's case, they tried get out of a box by going ahead and making a transformative ac sichlgs i think we have seen the rules of that decision.

you will see, at some point, resolution of the fiscal cliff, we can debate it all we want. over time you c, the necessity prevail. both have -- >> then what? resolve the fiscal cliff so many other fundamental issues we need to get through next year. is the u.s. still the best place to be for our equity money next year? >> i think so. i think if you look over time you can the ti, the time to invests when others are fearful. in 2000, euphoria. the stock market revaluation reflected it. markets trading at attractive levels. 13 times next year. s & p dividend yield bofrt u.s. treasury ten year only the third time in the last 50 years. >> can the question housing

recovery, stronger every month, supersede any concerns that you just talked about? >> i think the housing -- green shoots from the housing recovery. if you look at corporate balance sheets, very strong. net debt for companies de lat t lowest level in 40 years. potential buying power on behalf of corporation. u.s. consumer is deleveraging. the value of their collateral is increasing given the housing market and signs of the market becoming better and investors confidence increase. >> i certainly hope you are right. you sell that hopium if you can. john linehan, thank you very much for joining us. the other side of that battle is house. there is a lot of hopium out there. to our point, is it enough? and we take to you -- we take you to one of the hottest housing markets in the country. home prices there are up 114% year-over-year. we are giving you a little sneak peek of where that might you can. can i help you?

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although we haven't had confirmation yet earthquake the fact that a hamas official was speaking about it that egypt. has been involved, that secretary clinton is going there as well, that is something that is definitely really circulating you around these markets and has caused oil prices to dip significantly. we still have wti oil prices right under the $87 barrel level, but brent crude fallen here below $110 a barrel. as we monitor what's happening here, we are looking at the geopolitical risk premium that had propped up these markets coming off across the board in the petroleum complex. heating oil and reformulated gasoline down once again. as you mentioned, good news for consumers, as heeding oil saw a bit of a bid in the previous section. >> thank you very much for that, sharon epperson.

just in, usa airways flight attendants authorized a strike against the airline. the 6700 flight attendants want management to finish the u.s. airways america west merge we are one single contract for all flight attendants. the union says contract talks have been stalled since the merger seven years ago. the national mediation board will now look at the dispute. much still ahead, including goldman sachs popping widely owned stock with an upgrade and r.i.m. shares doing something they have not done in six months >> it is a good thing. plus, more on the continued housing recovery. meet a miami developer putting big money into big-time project. lamborghinis. that's all we need to say. we are going to show you more of that. that's enough of a reason to come back. frank, instead of scratching your way to retirement,

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

cliff's natural is falling off the cliff today. >> down to a sell. goldman concerned about a delay in a project expansion. cut the target from 25 to 33. this stock down 49% year-to-date. >> whole foods, an upgrade u. >> goldman sachs, $106 target on this baby, see 16% upside. said they are well positioned for the increased transition to

healthy living. who knew. also think margins will be helped by increased sales productivity and if i canned cost leverage, whatever that means. >> talking of healthy living, i thought the season to be unhealthy, krispy kreme up today. >> a gooding is way, reason we did whole foods to krispy kreme. share there is soaring, up 23-plus percent. same-store sales up 7%. that stock is almost double what duncan bra dunkin' brands is up. >> spicy stuff, mccormick. >> hitting another all-time high today, highest since it began trading back in 1999. under-the-radar names, like to pluck out, lick gizzard. >> someone else we like to pluck out a big story, pluck out our

herb greenberg. lots of stuff going on in green mountain coffee. investors are kind of encouraged by announcement of a new ceo, breed breathing new life into this stock. >> investors maybe encouraged. company bringing in brian kelly, top executive from coca-cola this is what i want to know. why did green mountain wait until today to announce this news when s.e.c. filings say the deal was actually signed on friday? based on that nearly 10% pop in green mountain stock on monday, appears somebody knew something and why is the old ceo leaving now when in february, he extended his contract until the end of next year? not that any of this matters. today, we get one analyst after another analyst upgrading green mountain because of kelley's hiring. yet, the only thing that has changed at green mountain is the ceo. everything else is the same. the say. the ongoing s.e.c. investigation is the same. the class action lawsuits that

former employees making scurrilous charges are the same. this says it all. in a nutshell, in boosting the stock to a buy today, is up trust analyst bill chappell says kelley brings experience and credibility to green mountain. of course. you could have said the same thing about ron johnson at jc penney and leo apot that canner at hewlett-packard. >> you want the best of everything. you want both worlds to be true, my friend. this is the problem. everyone is blaming a poe techer the problems of that crummy deal with hp. ceos matter, now you are saying ceos don't matter. everything else is the same. >> matter when the business mod itself is potentially challenged, an s.e.c. investigation? we have seen time and time again where a ceo has been brought into a troubled company, the stock is lifted on it and then

the trouble sort of rears its head down the road. >> we got to move on, a good twitter question, right? @mandy cnbc, at herb greenburg, do you think ceos matter, a change in ceo, cause you to buy or sell the stock? >> depends on the company. >> you said ceos don't matter. >> you are putting words in my mouth, and do not put words on my mouth. >> put words on your screen and they come out your mouth. >> tweet he is? >> he is brian. he will do what he wants. turning now to best buy, what i want too do one word can sum up the quarter, bad. very bad. stock down more than 12%. the reality here, folks, time running out for bby? bring in the president of sw retail advisories, cnbc contributor, to our previous point, do ceos matter? >>? this case, i don't think so. >> in the general? >> in general, they absolutely matter. >> boom. >> a broken business model is a broken business model. >> thank you. >> you know exwhether it's ron johnson or hubert jolie,

sometimes you can't fix what's truly broken. >> best buy is broken business model? >> no going back? this is gonna get worse but not better? >> i think for the foreseeable future, this gets worse. we think about it the business you can the gross margins right now are a race to the bottom, people are buying small-screen tv united states, not buying attachments, no margin here. what is the solution here? going to price match. what does that mean? means gross margins get even worse. so, where does it stop? it's basically all the retailers are in a race to a profitability bottom of the pond here. >> see that in the fourth quart earthquake the fourth quarter is going to prove whether the margins -- how much they take a hit, whether volume replaces the margin, in the end, let me ask you this though, there are those who believe schultz will do a deal, former ceo will do a deal, deal can be done north of this price. once it's a private company, they can do all sorts of things and the company potentially could survive in a different way. we couldn't care, won't be a public company. >> a take it or leave it.

>> doesn't have to worry as much as about quarter to quarter and do this stuff under the radar. >> if you have got the cap tool continue. >> if he gets -- >> your point. you could only race to the bottom so long. >> also, you have to think about it. there has to be a solution here. so, what's solution here with the consumer electronics? a product that doesn't have margins. >> isn't there a market , i sai amazon could buy best buy, tuesday for warehouse iing hand on, electronics especially? it is, a lot smaller market than we have in terms of a footprint out there i think the footprint needs to be smaller. all fairness, there has been a lot of execution issues with best buy, especially online. >> sorry about that, mandy, go ahead, ladies first. >> the footprint needs to be smaller, first of all, think they will exit their international operations? a big drag on this company for some time now? start shrinking down? >> china's negative, canada is

negative, europe lymping around, margins down 300 basis points, yes, need to exit. >> do you think they are going to -- the best buy near my house, right, is usually pretty crowded. i went in there recently, it looked like they were transitioning some kind of a move. half the inventory was gone. it was a lot of open space and no -- i was surprised. tried to get somebody to give me an answer they didn't know you think they are going to make the move and suddenly say, all the stores are -- locked into leases? >> the problem is as they updated us on the analyst day you 71% of stores six years left on their lease. >> 71% have -- so even if they wanted to -- >> oh oh. >> hello, jim cramer. >> we got trouble. >> stacy is absolutely right on what she is talking about. i have a problem with this guy here from this other show. >> okay. >> which is what? green mountain? >> different. best buy is maybe not fixable. but when you compare best buy to green mountain and you say, first of all, there's an s.e.c. version you know what you do you

bring a guy from coke la cola who is whistle clean, listen, those were the old guy, i want to make a settlement. second what is some guy doing from coca-cola, he has to go into a -- >> he makes $11 million right off the bat. >> good for him. >> you know what, would you do that, too. so he has got less to lose than anyone else in this deal. so that's an important thing. >> so, therefore, he goes and gives up his whole reputation. >> right. >> cashes in for the money, 'cause, like, you know what -- >> seen this over and over. >> no, we haven't seen this over and over. best buy is very different. >> no, here is what you need to ask in the green mountain situation, the business model seen its best days and now sort of a mud letter? >> no you need to think does this guy have some idea cities in came into best buy, i don't know what i would do, i don't know what i would do amazon wants to kill me. green mountain has a brand. kurig a brand. >> increased competition. increased promotion. increased margins. >> coca-cola had competition forever. maybe he has ideas. why do you think it's the same?

and then ron johnson. ron johnson blew up the company for heaven's sake. he rolled the dice. >> by the way -- >> rolled the dice. >> to quote our friend, herb here, moody's downgraded, jcp deeper to junk status. >> did they? >> b 3 from ba 3. >> i saw the preferred. >> take the other side of best buy you not because they are my stock's draft pick. >> it is okay. >> i will have facebook. >> thought you would. tvs aren't going away i right? they are slowing perhaps. smartphones, they sell a lot of them, okay? i understand that they have got a lot of physical space issues but let's just find the bull case if we can, which is circuit city's gone. remember tweeter, not twitter, tweeter, they are gone. really, walmart around amazon are their only competition. >> hh gregg in the south. >> indianapolis maybe. hh gregg. can there be three -- frye's out west. can there be three major -- why not? find a spot to work. >> how many stores do they have that they actual do well on?

i asked eddie lamp the b sears and kmarts that do well. keep those and close the others. >> right. they have announced 50 closings. it's not enough. we have too much capacity in the market and that's the answer here. you need to shrink not only the size of the store is but the amount. >> 71% have a six-year-plus. >> you can start the process. >> yes. i agree. >> rolling them off. >> a private entity, they can do it much better. >> true you who wants to lend them money? >> that is the issue. look at t remember circuit city, blockbuster. >> deals where people lent people money. look at hostess. look at that situation, private equity. >> you can't compare hostess to best buy. >> completely different. >> i can't get angry like this. it is near the holidays. >> i will compare anything i want to >> three words, my friend. three words. >> hubris. >> free cash flow. >> remember. [ overlapping speakers ] #

>> i saw the guy and said coca-cola, green mountain not as bad as i thought. 11 million, like the french foreign legion for you. everybody is a beau jest for

you. >> we need a postshow web extra. >> aka, we louvre. >> i'm ready. >> he said sullivan was hand sand intelligent, i would take the other side of that trade. wait. >> ain't ever heard of a tie? >> shuffling. next up, housing hopium, the home builders quite a run. still time for you to get in. and some eye candy time. we take you inside the biggest lamborghini dealership in the country, folks, in the country.

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on closing bell, there is a fiscal cliff fight brewing you in the republican party, whether to raise tax rates or close deduction. we are going to look at whether that could end up derailing any deal. famed fed critic james grant explains why ben bernanke's policies may be a bigger threat to our economy than the fiscal cliff itself. in the wake of hp's disastrous deal for autonomy, can the company be saved or should shareholders push for a breakup? marie yaw and i look forward on seeing you on what has been a very newsy tuesday. see you at the top of the hour on closing bell. it is a newsy tuesday. try not to break it for you. thank you very much, bill. foreign super rich are

power, the super car business. get this. in miami, on another one of his incredibly difficult assignments, cnbc's wealth editor robert frank visited a best-selling lamborghini dealership there. how did you survive, robert? >> somebody those do it. the overseas rich are flooding into the u.s. and remaking many parts of our economy, especially at the very top. one of the businesses being reinvented by this new wave of wealth is the a lamborghini dealership in miami. let's take a look. this isn't just any car dealership. in a town defined by flash and glam, lamborghinis are as much a part of miami as palm trees and bikinis. lamborghini miami sells more than just about any dealership in the country, with more than $30 million worth of cars on its lot at any one time. brett david is the company's owner and ceo. he has been selling lamborghinis since he was 14 years old went

company was owned by his dad. today, brett says wealthy foreigners have replaced the locals as his biggest customers. >> i haven't sold a lamborghini to somebody that spoke english as their primary language in months and months. everybody from mexico, brazil, venezuela. >> one reason this $400,000 car has a waiting list a year long. >> people walk in with the flip flops, short and a t-shirt. >> lambeau miami is marketing not just to the miami crowd but the wealthy around the world. their latest campaign is the au 79, a gold-plated lambeau what has become a global celebrity with its own facebook page, twitter account and online move very episodes. and given the right price -- >> some cars are meant to be sold, not driven. somebody came with the right offer, i would probably let it go. >> robert, that was fantastic. >> thanks. >> what color is yours? >> i don't have one yet. i like the gold p

>> i like your enthusiasm. nch>> up next, miami housing is enfuego, people making big bucks and buying lamborghinis, apparently. ♪ ♪ [ engine revs ] ♪ [ male announcer ] oh what fun it is to ride.

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housing starts were strong today. more evidence of the recovery in housing. let's bring in bob, home building analyst, and craig robins. gentlemen, thank you so much for joining us today. bob, let me get to you. very encouraging data today. what happens if the mortgage deduction disappears? >> it would be extremely damaging. the starts figure was tremendous. the permits number was also highly encouraging. we blew away consensus estimates. it we take away the mortgage tax deduction, it would do significant harm. >> would it do significant harm to your business, craig? >> i don't think it would impact us directly, but it's definitely part of stimulating the overall economy. miami, in a way, is its own pocket. >> what do you mean by that? why do you mean -- you're immune to that? >> we're not immune. we're affected as everyone is, but miami is a very dynamic

city. it's an international city. we have a mixture of different types of commerce that flow through here. there's a strong local community. a lot of people from south america. also, a lot of people from out of town. it all just mixes to make miami a sizzling economy right now. >> it really has been. housing has done great. bob, for our viewers, you made a great call on these names. how much more is there? >> we're going to make the call right here. we love kbh. we love usg. we love fortune brands. these stocks will continue to work next year if the broader market is going to work. >> they will. even with the gains they've had? >> we're seeing big upside in the home builders. we're going to see gross margin upside. >> is it all because of low rates? >> low rates are one part of the story. we're also looking at -- >> are they 80% of the story? >> one-third, one-third. tighter inventory levels. stable pricing environment for the first time in five years.

three, high degree of affordability. we see a strong upward trend. we don't think the investors have fully digested the strength of the sizable beat today on the start snubber. everybody's got to raise start snubbers for 2013 in the wake of today's print. >> it sounds like you're saying this housing recovery is real. it has been recovering in fits and starts. it feels like this is sustainable. craig, the boom in miami, how sustainable is it? >> miami seems to be just going in a great direction. it's really a city of the future. we have more and more people coming here. there's a lot of businesses opening. you can see growth just about in every sector. in retail, there's a lot of new stuff going on. we're going an amazing project in the design district. hotels are booming. their numbers are way up. there are a lot of hotels being built. all the really savvy residential people are starting new condo projects. just about every segment of the market, including the single family, luxury homes, they're also exceeding 2007 prices.

>> craig, history tends to repeat itself, but generally not in this tight of a time period. why is now different than the boom bust of just a decade ago? >> well, everyone says boom bust. cycles happen. there are cycles. if this is another ten-year cycle, i'm happy to be on it. at some point, things will slow down, but there's no real indication at this moment other than a lot of the scary things that are happening in the world. >> we were just meeting with a couple management teams last week, we actually have a very bullish view on a recovery for the sand states. nevada, florida, arizona, and california. so we think what we're seeing in miami and hearing about is also something that's consistent with what we're hearing in other sun belt states, which are also starting to recover. >> so if you could choose maybe one or two cities, where would you invest? >> phoenix, las vegas, and

florida are all ramping up at an accelerated rate. we expect that to continue too. >> craig, you're miami based, but are you looking to get in on some other hot cities? >> i think if we did anything else right now, we would probably do something internationally. i'm very focused on miami. there are enormous opportunities here, and before i start chasing deals in other cities, i want to definitely avail myself of the opportunities that are here. >> they say the state bird of florida is the crane. yeah, that stunk. craig, thank you. >> actually, it was pretty good. yeah, maybe stunk. "street signs" continues after the break. we're going to look at the markets before we go. ] you are a business pro. governor of getting it done. you know how to dance... with a deadline. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above,

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[ male announcer ] 'tis the season to discover the kid in all of us. enjoy free shipping and great values on your holiday shopping from l.l. bean. okay. let's finish up with a quick look at what's happening with the markets. we took a little bit of a down leg after ben bernanke spoke earlier today. a lot of things he said, but the thing the markets really latched on to is the fact he said they do not have the full tools to be able to offset fully any negative impact if we go over the cliff. >> keep in mind, when hewlett-packard, a dow component, is getting walloped the way that it is, it's going to drag down a lot of the index. so hp-q is a big part of the story. it's down more than 12%. huge accounting mess there with a deal they did.