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commonwealth. up 47 to 50% on the trading session right now. there's a lot of activity here. there were two rumors that moved the stock. one was it was going to be taken private. the other an activist shareholder has taken a significant stake in the company. ty, we will see. it's actively traded today. back to you. >> have a great day, everybody. that will do it for "power lunch." we'll see you back here tomorrow. and welcome to "street signs," everybody. i'm mandy drury. yesterday in the markets, all roads led to rome. today they are leading all the way back to capitol hill playing the bernanke rally ahead. home prices closing 2012, the biggest gain in years. will 2013 be even better. and the russians are coming to buy a property near you and they have got oodles of cash. something happening in the music

industry that hasn't happened since 1999. we're not talking about cher hitting the billboards again. hello, everybody. welcome. the dow is up thanks to partly to gains in home depot. the index reaching for its third straight triple digit move, either up or down at this stage, of course, it is hoping to be up. meantime nasdaq is trying to avoid a fourth negative clothes in the last five days and hasn't recovered 10% of yesterday's losses. the vicks down. bob pisani and rick santelli. bob, once a dove always a dove. to what extent do you view the rally in the market to ben bernanke staying the course. >> he was very assertive in that there wasn't any asset bubbles. that was a big concern. he was questioned several times.

i think the important thing about today is. let's take a look at the major indexes. the volume is as strong on the upside as yesterday on the downside. yesterday had very heavy volume. a second day of heavy volume. etfs, dow, s&p, russell 2000 all seeing heavy volume. pretty even moves to the upside. let's move on and show you some home building stocks and house building. the best numbers we've seen in a long, long time. in january new home sales biggest gain in two decades. home builders, look at whirlpool up 2%. a big move for whirlpool. doesn't usually have that move. building material names. usg and massco. one thing, managed care groups, stocks around medicare. that's understandable all these related to medicare. the sequester being debated right now, and that likely will happen, will involve medicare cuts. that will affect these kinds of stocks. this is really the only large sector to the downside came.

mandy. >> bob, thank you so much for that. rick santelli, how are you reacting to what ben had to say? >> ben bernanke is defending his policies. there was a bit of a negation as bob pointed out on the upside as to what the minutes opened up. maybe early cancellation for some buyback programs. nobody on the floor i talked to really is jumping into that mode. the big news today is really new home sales. if you look at the chart, it was the best level since july '08. i wish ben bernanke would have addressed that. some markets are hailing rather well. ten-year no yields paying attention to many other things. just consider this, spanish ten-year up 20 basis points today. italian ten-year up 40 basis points today. it may be a while before we sort the politics out. i think the nagging issues of europe are going to continue to give a little extra buying into

the treasury market. back to you. >> more on what's happening there in a second with michelle caruso-cabrera. thank you, rick, bob. by now you should know ben bernanke testified before the banking committee today. steve, you said the rally was thanks to bernanke's defense of qe which is what bob was saying as well. do you think he put up a good defense here. >> if pisani is on my side, i have to be right for sure. i do. i think what we're learning about is the power of the chairman. new situations come along. it's incumbent on investors to learn how to read the fed in each new situation. we knew before the fed chairman led the community, what he thought counted a lot. now we have this new context of open ended qe. a lot of uncertainty about how to read the board. a lot of guys came out and said things. you guys reported it here on "street signs," all the comments from the president. >> deep divisions. >> how wide are they and who do

you follow. there's an iterative process going on right now. how do you read, who do you read, who do you follow. i think what we're learning from the 100 point move, actually a little negative during some of the testimony, is the power of the chairman. i think in this context, the fed chairman did a good job. let's, in fact, play from the testimony here what he said, kind of redirecting the discussion about low interest rates and quantitative easing. >> a long period of low rates excessive risk taking close attention such developments is certainly warranted. to this point we do not see potential cost to the increased risk taking in some financial markets is outweighing benefits of promoting a stronger economic recovery and more rapid job creation. >> i hear him say that, mandy, and i hear him talking to senators who might be doubtful about the policy. i think he's also talking directly to his colleagues. >> he's obviously also saying i didn't see any asset bubbles that caused me concern. of course he's going to say that. he's not going to say, yikes,

our policies create asset bubbles. do you believe that? no asset bubbles we should be concerned about? >> i think there are asset bubbles out there. i'm not sure at a point we should be concerned about them. i don't think the stock market is too high. >> are his policies to blame. >> let's be careful when we talk about an asset bubble. we talk about a quantity of capital being in an asset, the unwinding of which can create systemic risk. markets can be overpriced. is there one where it's too much and unwinding would create systemic risks. i agree with the chairman, there isn't one now. >> steve liesman, thank you so much. ben bernanke weighing in on political deadlock in italy following elections. let's get to michelle caruso-cabrera in rome. what's the very latest on what's happening on the political scene. michelle. >> reporter: well, it's still incredibly confusing, mandy. we don't have any conclusions yet on whether or not there's

going to be a government formed. the situation is so problematic, led to a deep selloff in italian markets and debt. ben bernanke was asked about it because the situation was so problematic. he made clear from his answers he had to spend time figuring out positions of political parties here, which i can tell from experience is a thankless and time consuming thing. he was at least happy about the fact that none of the parties here are endorsing leaving the euro. he reacquainted himself with level of u.s. bank exposure to italian debt in the hypothetical case in some extreme scenario italy couldn't pay it all back, a writedown, doesn't think it will pose systemic risk in the united states. meantime here political theatrics continue. essentially a runoff or tie between three different parties. the leader of one of those parties or movements, a comedian, was seen in public for the first time. chased down the street by

italian reporters and asked a lot of questions. he doesn't like italian press so doesn't normally talk to them. wanted to know if he would form a coalition with the other parties. he adamantly refuses he's the opposition. this is the party, throw the bums out, anti-establish men, hates all the current politicians and thinks all of the main political parties are essentially the same. we've also heard from the theoretical winner. the guy who got the most votes. he didn't get enough to control a majority. he didn't get a win. that's why we have all this confusion. he wouldn't answer any questions either about whether or not he would form that's called a coalition government. what that means is there's a lot of horse trading going on right now and more confusion. back to you, mandy. >> feels like a political circus rather than just gridlock. thank you so much, michelle. i'm sure we'll be checking back in with michelle later in the day. meantime between italy, bernanke, sequestration, let's throw that in as well.

how do you play the market. joins us louise cooper founder and analyst and chief global strategist and contributor. let me start with you. italy. are our markets right to be fearful of the situation in italy or has there been some kind of overreaction? >> well, clearly political risk has increased. the risk of a euro car crash or implosion has also risen. what we're seeing is risk premium rising for italy. it has a very large debt market, 120% of italian gdp. that's what we're seeing. interestingly, i think you could view italy in an alternative way. i think what this is is for the first time a real fight back from imposed austerity from the

imf in brussels and germany. if that is the case, then possibly long-term, i realize it's a controversial view, but possibly long-term that might be a good thing, because austerity hasn't done greece or ireland or portugal or possibly spain much good so far. in fact, that's the lessons we learned from 1930s. austerity on collapsing economy is a bad idea. >> dan, what about you? to what degree do you think u.s. market should pay attention to what's happening in europe or like we see today, fed is fine. fed there to backstop us. we can move on and let that be a side show. >> from s&p earning standpoint italy isn't an important destination of u.s. goods. certainly a minority but significant minority of s&p is done in overseas markets. italy, western europe isn't the primary place. asia would be a larger concern. it's something to be aware of as louise pointed out. risks premiums rising. risk of euro destabilizing event

is certainly higher that. from a u.s. investors perspective all that matters is stream of stock flows under lying stock price. what happened in italy doesn't kneesly in the short-term or long-term impact that stream. >> you think the path of least resistance for u.s. markets is still up then. >> this is something, one of the smartest guys in our office, we've been talking about this for several days. certainly feels like there's a bias for higher prices. we're looking at a number of internal indicators. some we've talked about on air in the past that suggest for the immediate future the path is probably sideways at best if not lower. >> i would also like to ask about currency, louise. what do you think the implications are for the euro. whas bad for euro means a strong dollar. a strong dollar can in its turn wreak havoc in certain sectors of the u.s. economy. >> absolutely. you've seen the euro fall like a

stone, as we got the italian election results came out. you literally watched it fall from buying $1.33 preelection result to $1.30 now. and what's interesting is, from my perspective being based here in london is one would hope that sterling would benefit. clearly sterling has been a terrible currency year-to-date. it may have risen slightly. but actually not so much as one would have hoped. so yes, clearly we talk about currency wars all the time. currency's rate is highly political in this kind of climate. >> thank you so much for joining us, louise and dan. i'm going to send it now to josh lipton for quick market flash. >> hey there, mandy. two names i want to point out. commonwealth cwh, skyrocketing higher. a hedge fund and investment firm saying they sent a letter to commonwealth threatening to push to oust the board and acquire

all the company's shares, quote a significant premium if the company doesn't respond to its demands to call up a planned stock offering. ticker cwh. up nearly 50% right now. we'll certainly keep you updated as we get more news. also check out apple today. impressive intraday spike for that name now in the green ahead of its shareholder meeting tomorrow. still worth knowing here, today marks the 95th consecutive session. apple shares trading below their 50-day moving average or short-term trend line. that is the longest streak since may 3rd, 1996. the other time apple traded in a similar way back to the financial crisis. of course that was the start of a monster rally. mandy, back to you. >> indeed it was. josh, coming up next on "street signs," is the housing turn around for real. all signs point to yes. could rich russians be driving that recovery? the story behind how they are

gobbling up u.s. real estate. later on something is happening in the music industry that hasn't happened in nearly 15 years and it could be music to the ears of investors. we'll tell you what that is when "street signs" returns.

check out shares of home depot. they are having their best day in six months after reporting better than expected earnings. hd having the most positive impact on the dow as well, that's why the dow is the outperformer of the day. it's the sixth best performing

blue chip year-to-date. despite that, let's bring in consumer retail analyst. what are you seeing that maybe the market isn't, laura? >> well, what we're seeing is a ten-year average multiple of 16 times. this should be the fourth year in a row that home depot reports mid single digit growth in same-store sales. tough to argue on the fourth year you're anywhere other than mid cycle. the housing numbers are strong but home depot issued disappointing home guidance today. 337, 16 multiple gets us $54 price target, which is a lot lower than where the stock is trading now. >> the talk about home prices having the best year in 2012 in about six years, i would have thought increasing home values would have encouraged more people to get out there, to do some renovations upgrade their house. wouldn't that all benefit home

depot? >> it should. we'll be watching that to see if more good numbers follow case-shiller numbers, very strong, 7% growth, as you mentioned, strongest since 2006. but home depot also this quarter has to lap beautiful weather last spring. last february, march, the country didn't feel like it's in winter. >> what about lowe's, its competitor. >> it's a tough position, we have a sell reagan. line reviews, store resets. they have a lot of change. they have underperformed home depot in terms of sales trends for a while now. we're not sure what turns that around. >> got it. lowe's is also having a pretty good day in sympathy. thank you very much, laura. as we've been saying a whole flood of news on housing. let's get to diana olick. give us the numbers. >> the numbers are coming in very strong. we need to see what's driving them to see if it will last. s&p case-shiller reported prices

up 5.9% and 6.8% annually for the top ten and top twenty housing marks respectively. remember three-month averages. really looking back where prices were last fall. that said biggest gains seen in the formerly hardest hit, phoenix, detroit, las vegas where the foreclosure first started but now largely worked through. investors have been driving demand and prices alike there. the weakest prices in new york and chicago where foreclosure rates still around double the national average. now, short supply pushing big gains for the home builders. contracts to buy newly built homes jumped 15% in january month to month. the biggest monthly gain in two decades. that pushed prices of new homes higher by 2% and supplies lower to just over four month supply. inventories at lowest level since march 2005. while sales rose in all sectors, seasonally adjusted they were strongest out west where investors again have pushed

other buyers out of that distressed market. builders are simply not building fast enough to meet the new demand. they are constrained by lack of land and labor and higher material costs. we've got all this on the blog, realtime check.cnbc. check out interactive map on the recovery watch for data, we just added several new markets today on cnbc.com. >> love direction. thanks diana, let's bring in susan, director of finance at the wharton school. 2012 was good. can 2013 be better, susan? >> absolutely. recovery is in place and fundamentals in place for the recovery to be strong and to strengthen in 2013. tick off fundamentals in place. household formation, inventories low, job growth, not strong but it's a positive. so we have every single thing in place. most importantly interest rates. looks like they will remain lo

as well. >> what could bring us undone. >> we could have an unknown surprise crisis. this is a predictable recovery. this is a classic predictable recovery. if we have, you know, sequester out there, a roogs coming out of that. if we have slower growth that's not going to derail the recovery. >> feels like the tide has turned. hopefully it's turned for good in this cycle. when we think about it, on average, 30% below peak prices, is that right? how long getting back to the peak? >> the tide has turned. going to take a long time for the tide to roll in. this recovery is a process. it's a process that's not going to be over this coming year. i think it's going to be a good year. >> certainly hope so. susan, diane, thank you very much. just ahead on "street signs," is detroit falling asleep at the wheel. new stats on why the big three automakers might be slipping. in the most amazing video of the

day, quite a laugh from all of us. stick around to find out what sparked this epic meltdown at a chinese airport. ♪ ♪ [ male announcer ] it was designed to escape the ordinary. it feels like it can escape gravity. ♪ the 2013 c-class coupe. ♪ starting at $37,800. ♪ a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is,

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today's most amazing video

comes to us from the great land of china. you are looking at security camera footage taken inside an airport as a prominent member of china's communist party has a full blown meltdown. apparently it all happened after the man and his family missed their flight. they were rebooked on another flight and they missed that one as well. you can see him basically slapping his hands on the camera, smashing keyboards. chinese police said airport police are investigating the incident. is detroit falling asleep at the wheel? that is our question. detroit says big three are slipping when it comes to reliability, fuel economy and overall value. let's get to phil lebeau, is this concerning? >> a little bit. this the first time since 2007 that we have not seen a big three model among the top ten picks for consumer reports. that's a start of the news. take a look at the five worst brands. worst brands according to consumer reports. dodge, jeep, lincoln, ford and

chrysler. again, as i mentioned earlier, consumer reports in this year's latest annual auto issue picks zero big three models to be amongst its top ten picks. the big problem, reliability. rolling out so many new models, rushing to get to market. the quality is slipping for detroit automakers. compare that to what we're seeing from detroit automakers. we're showing toyota prius, this is among the top picks. they picked eight among the top ten. when you talk with consumer reports, they say it's very clear japanese and foreign automakers are raising the bar on quality. >> it is really, really tight out there. there's some great choices. foreign competitors, japanese cars, they are raising that bar. even if foreign cars are improving, they absolutely are, to be the best in category, it's

harder every year. >> what are the top five brands according to consumer reports, lexus followed by sub are yarsu toyota, acura. we'll see these issues pop up over the next several years because we're at the beginning of ramp up in the number of new models coming to market. if you bring these to market if you're the big three or our automakers, have you to make sure they launch without problems and that has not been the case over the last six to 12 months. >> do these reliability results jibe with sales numbers? are american consumers wanting reliability and going more for reliable brands? >> it hasn't gotten to the point where people are going in and saying, wow, i'm not going to buy a ford or chevy because reliability is slipping. we're not where we were in the late '90s and early 2000s. even though we closed the gap with the japanese, at the end of the day consumers will ultimately make a decision based

on reliability. that's a key factor with fuel economy. >> absolutely. drive it for longer as well. thank you so much for that phil lebeau. coming up on "street signs," six strikes and you're out. the new and frankly strange attempt to crack down on online peersey. all the details when we come back. don't go away. keep my eye on her...to but, i didn't always watch out for myself. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine...

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josh lipton joining us for the first time on street talk on "street signs." first, natural resources, isn't doing a whole lot today but a whole lot this year. >> not a lot but that's a nail that's been hammered. part of what you see is china. if you see china policy tightening. china consumes 65%.

that's the name down 30%, 16% in the past 12 months. deep in the red there. >> deep in the red. radio shack is another company we've been watching in terms of the red. it's been higher. >> you've got a nice pop. analysts said if you look through earnings, kind of poor, smartphone deterioration. a volatile stock with a bit of a pop. monster moved. radio shack up. >> a real comeback there. >> huge. >> let's hope it can continue for radio shack. let's look at cracker barrel old country store. quite a long company name. >> look at that move. i realized i've never been in a cracker barrel. >> i want to go into a cracker barrel. >> listen, i can't attest to the steak and biscuits dinner, on the fifth consecutive quarter, comp in sales growth, operating margins improve, that stock up in the past 12 months.

>> who doesn't like steak and biscuits. >> nobody i know. >> really, i love them. there are reports on this one. >> best buy report on thursday. that stock up 40% this year. a blistering run. also on thursday not just getting earnings but headline there, mandy, is really richard schultz. the founder, that's his deadline to offer the proposal to take that company out. >> the last ones are saks and macy's. both of these companies at least last time i checked moving in different directions. now moving higher purchase i thought the interesting one was actually macy's. i'll tell you why. outperformer, comps hold up well. i spoke with stacy, really well respected, smart retailer. >> she comes to "street signs." >> a surprising thing, she said actually they are going to disclose less now. what she heard on the conference call, sales growth, online sales growth, not talk about as much, disclosure moving in the opposite directs. >> thanks so much for that. thanks for joining us today,

josh. in the meantime let's look at big news on oil and get to sharon at the nymex. >> the lowest close of the year. oil prices settling at 92.63. this is the lowest close of 2013. a number of factors contributing to the slide. down almost $2. a lot of concerns about what's happening in italy. also traders say geopolitical risk has been a little alleviated with the talks in iran and western nations over nuclear program. we have a number of refineries restarting, port arthur restarting its gasoline making unit. that has helped send gasoline down in the session. perhaps some profit taking in the gasoline market as well. back to you. >> got it. thanks for the update. sharon epperson. jamie dimon, annual investor day. she's in the room and will bring us headlines as they happen. meantime shares, take a quick

look at what's going on. just down a fraction at 47 and 58. of course financials really got slammed yesterday. up next, the music industry breaks a 13-year losing streak. why this could be bad news for pandora. we meet the man who closed the most deals in manhattan. most expensive risk. where is the money coming from is what i want to know. what are the rich buying? ♪ [ male announcer ] how do you engineer a true automotive breakthrough? ♪ you give it bold new styling, unsurpassed luxury and nearly 1,000 improvements. introducing the redesigned 2013 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. through mercedes-benz ♪

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things are getting really nasty in the martha stewart battle macy's and jcpenney. one wall street analyst warning bank stocks could be devastated if the government's massive cuts kick in friday. chairman responds exclusively to

talks his exchange. we've been talking a whole lot about housing on "street signs." but there's something very interesting going on that really hasn't been getting a whole lot of attention until now. it is the russians. they are bringing cash from the motherland and pumping it into the u.s. real estate marks. joining us ed, u.s. real estate attorney. he's done more deals than anyone. described as the most expensive site in manhattan thank you very much. our reporter rob frank is here. ed, welcome to the show. first, i would like to know, is it always cash these russians buy real estate with? >> typically it's been cash over the last decade or so. but we are seeing very much in the last year and a half the interest and getting a mortgage and leveraging the property to some degree. >> i'm going to follow up, with all due respect, is it always legitimate cash they are buying the property with? >> part of the job we do is to

vet our clients, so we make sure anyone that appears in front of a developer or seller or bank, they are cleared to buy. >> how are they getting the money in, robert? >> this is a fascinating point. part of what's happening is russians are seeing real estate in the united states a safe-deposit box. we see poout trying to attract the wealthy to russia yet they are putting money out of the country as fast as possible. what's motivating these buyers? what are they afraid of in keeping their cash in russia? >> at this point, robert, i don't think there's much of a fear. russian economy is doing quite well. it's more of a diversification play. they are looking to spread the wealth, for lack of a better way of describing it, all across the globe. so new york is a great place. many other parts of the united states is just as popular for the russian market as paris, london, et cetera.

>> when you try and line them up in terms of where the russians most want to put their cash, is it new york? is it the united states or do london or paris or other places in the world, maybe even asia, look attractive to them right now. >> these individuals, especially ultrahigh net worth individuals, robert knows quite well who we're speaking of, have homes all over the world. new york is one of the capitals of the world. it's a natural fit for anyone looking to have a place whether in london, paris, monaco, hong kong. new york is one of the top drawers. today it's one of the most affordable in a sense. we're a natural fit for the ultrahigh net worth russian buyer. >> the prices these guys are paying, whether it's new york, miami, los angeles, they are incredible, $100 million dollar place in california, $88 million

the russian bought in new york city. $40 million, most expensive home ever bought in miami from a russian. why are these guys paying so much? what do they like for in the u.s. >> value. we're still in comparison to london quite inexpensive. if you look at london prices, you'll realize we're probably anywhere from 30 to 50% below the prices for comparable property in london. so value is one of the first items. new york is, again, one of the most prestigious places for anyone to buy. the russian market recognizes that. they are drawn to sexy locations. new york is as sexy as you can get. >> is it? i would have thought miami was a little sexier than new york. i would like to know as well, are they going for residential property or are we starting to see russians buy commercial property as well for development? >> up to the last few years,

we've been seeing mostly residential investments. but it has changed in the last couple of years where many of our clients are now looking at alternative investments, looking into new developments. they are investing in projects ground up, especially condominiums are very popular these days. they are very comfortable in that area. they have been buying condominiums in the united states over the last 10 years, so this is nothing new for them. it's just an extra layer of risk. that's all. >> for you, robert, wasn't that long ago we did a segment about the chinese, new wealthy chinese buying up a lot of real estate in manhattan and miami and elsewhere. now it's the russians. who is the new heavy in town, do you think? >> you know, at the very top of the market in both new york and miami, it's amazing how much the russians dominate. you and i are joking, pulled the

largest yacht in the world in new york, doesn't have an apartment but pulls his yacht here. could that hurt the real estate market if we see more yachts docking in new york and manhattan. more importantly, do you see, ed, the russians falling behind this year and years to come, or do you think they will still be at the top of this market? >> i think the russians are going to continue in both the new york market, miami market and any of the major u.s. markets in years to come. their economy is as strong as it's been in many, many years. the money is starting to look much cleaner than it used to be. the government over there is doing quite a good job making sure the funds that travel around the globe are funds they can invest anywhere in the world. they have just engaged goldman sachs to do exactly that, which is to clean up their image and clean up their ability to travel and invest all over the globe. >> we'll always welcome clean

money as opposed to dirty money. thanks for joining us today. very interesting. >> my pleasure. >> thanks very much for joining as well, robert. the dow currently up with solid triple digits. let's get to bob pisani with an update of what's going on here. what are people saying about how we're going into the close? remember yesterday, bob, we're-of- we were cruising along and had a real selloff in the last hour. >> the volume just as good on the upside as the downside. the spdr, s&p 500, great volume, 150 million shares that normally does 125 million. already 245. take a look, dow outperforming because home depot has very good numbers. oil companies up, caterpillar up as well. sectors on the risk on side of things. materials, energies, consumer discretionary. finally apple has investor, spiked up in the middle. usual speculation they will find some way to return cash to

shareholders. mandy, this bugs me. i get it value guys are charging into apple, hyper growth gone, i'd like to see more than that from apple. let's not turn it into value. how about lower cost of iphone in emerging market countries for more market share. they are getting killed over there. lower the price of iphone or do an iphone mini. let's do something exciting again. come on, you're apple. >> talk more about apple in a second. glad you brought it up. coming up next, a new warning going out to anyone who illegally rips music or movies off the web. why it has us scratching our head. google goes gaga for streaming radio. will it mean the end for spotify and pandora? in hidden fees on their 401(k)s?! seriously? seriously. you don't believe it? search it. "401(k) hidden fees."

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sharply. roger, looks like the stock is trading on every headline, every tweet ahead of tomorrow. what are you expecting? >> there has been some speculation they might split the

stock, mandy. that would be kind of interesting. i think the idea that they could split it into chunks small intol enough toe ordinary investors could trade it, a continued would be good for liquidity and might be good for stock without apple having to give cash back to investors. that would be quite good. >> what else would you like to hear? >> well, there is a question of all the cash in the balance sheet. they have lots and lots of it, and, of course, they are not getting much better returns for it than anyone else, so i think that the einhorn section would like to see a lot of that distributed, not just them, but a lot of others as well a would like to see a way to get the cash back into the hands of the investors. >> are you sharing some of the concerns that are out there in the market that have brought this stock down from $700 a share back in september? >> well, yes. i mean, i think that apple, it was the golden boy, and had that position for years. a lot of it was steve jobs' aura, and some of that has come apart at the seams lately and people have been speculating

that they have been surpassed by samsung, for example, and google is filling a bigger ecosystem and all that. they would like to see apple do some invasion as well. they haven't had a breakthrough category since jobs. >> we're moving up by 1.23%. lots of headlines and lots of speculation out there. thank you so much. >> great, thanks. today's thing that makes you go hmm. six strikes and you're out. well, that's the new warning from the nation's five biggest internet providers to anyone who illegally shares music or movies. julia boorstin, whatever happened to three? six strikes feels like no punishment at all. >> reporter: think about it. downloading six songs or streamlining illegally may not seem like a big deal but it is breaking the law. pirates with this new they need to beware because they could get kicked off the internet. the movie and recording industries are teaming up with internet service providers by

stopping piracy by educating and warning consumers before they pull the plug on internet access. people who illegally download or stream illegal content will receive a warning from their internet provider w.each successive warning they have done something wrong, they will have a different penalty, including being forced to watch an educational video or suspending internet service. the new six-strike system is unprecedented in that it brings together five major internet providers, comcast, time warner cable, cablevision, verizon and at&t, all under a single program. they are already required to warn users of piracy complaints by media company, but this clear uniform system is expected to have a bigger impact. now, stopping piracy is, of course, good for the media and content companies, but it is also good for those internet service providers, comcast, time warner cable, they also make quite a lot of money from selling that monthly tv access,

so they will benefit if people don't pirate content, because that, of course, could lead to cord-cutting. mandy, we do have to remember that this copyrighted learn system does not tackle all kinds of piracy, really going after the more casual music and movie pirates. >> at least it got six goes before you're out. on a happy note. global music sales rose last year for the first time since nancy 99. what is behind the turnaround? is it for real? joining us is rich chuolo. have you got answers to that, rich? >> the music industry for a year has been a bushman's hanky for a decade, so it shouldn't surprise anybody that they are up off the bottom. >> will they keep moving up? is this a fluke, or is s this the long sought out recovery that is real? >> well, the industry itself is right for disruption so you have

three music producing companies, control roughly 75% of the content, and until that gets disrupted it's going to be a challenge for the industry really to grow revenues because the way artists need to make a living and the way consumers, you just talked about piracy want to consume the content is different than what these three companies want to do, which is control all the content and make 50% of the revenues for themselves. >> we've got a number -- >> sorry, julia, jump in. >> mandy, i could have to say i do think this is good news. you do make a good point that there are still ongoing challenges here, but this is the first year where digital revenue growth has autoweighed the decline in traditional music sales, and i think it's a testament to the fact that we are seeing innovation and services like spotify and pandora are so good that they are competing with piracy. if something is really useful, really convenient, people will be willing to pay for it, and i think that's what these numbers indicate. >> that's terrific.

>> i'm glad you brought that up, julia. >> here's the thing, the industry is fighting the spotifies and pandoras and the industry came out to testify against pandora in congress so the industry doesn't want this to happen, all right? and if you look. who is the biggest act this year, adele, 8 million in revenue, sold 8 million songs. 2006, she was discovered on myspace, all right? if it was up to the music industry, nobody would have ever discovered adele and we would have been at a loss with a great talent. >> glad you brought up pandora, because i see, rich, you downgraded this stock. it's a great service, strong revenue growth potential, so why downgrade it? >> well, because albert freeh and company, a big boilover in pandora shares and we battled through it. at the time you said why are you going to recommend this stock down 26%? well, that's what we do. we recommend stocks that are cheap and we downgrade them when

they are up 50%. all right, because that's how we feel investors can take advantage of value, okay? so now pandora is a great company. still a little bit of upside in the stock, but are we going to recommend new purchases today after it's up 60%, probably not. we will help this company in congress if called upon because we do have certain beliefs about internet radio freedom and how it can be an ultimate good for the industry if the music producingers, you know, stop fighting change, all right, and, you know, at the end of the day, if pandora gets back down to 7 we'll recommend it again, most likely. >> got it. valuation call and pandora up since its ipo which was in 2011. next, the diet i can drink to. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national.

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