tv Closing Bell CNBC April 10, 2013 3:00pm-4:00pm EDT
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the next one in maui. >> looking forward to going out there. >> mandy, tomorrow we're going to show this show, maybe minneapolis. because we're supposed to be in minneapolis. we want to go to minneapolis. we dona't know if we're going t get there. >> i checked the forecast today and it said ice pellets. good luck with that. thanks for watching us. "closing bell" is coming up next. and we welcome you to "closing bell." i'm bill griffeth here at the cnbc headquarters in englewood cliffs today. maria is finishing up an interview. she will be joining us from the new york stock exchange in the next few minutes. and here we go again. look at this market today. dow 15,000 is not all that far away. all this on a day when the fed blunders with an accidental release of information that we'll be talking about. and that information hints that it may be taking its foot off the pedal sooner rather than later. so there's a lot to chew on
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today, as stocks continue their melt up. very special and exclusive market guests to sort it all out for us today. the great mario gabelli is with us. top economist and noted bear, david rosenberg, who, by the way, may be having a change of heart on this market. and he'll explain why. the great billionaire, sam zell, the real estate whiz is also with us. in fact, sam will be maria's special co-host at 4:00 p.m. eastern. so stay tuned next hour for that. also with us, exclusively, imf head, christine lagarde. she's watching what's happening in our stock market and with our fed very closely. she's also issuing a huge warning about the banking sector, that you'll want to hear later in today's program. also, get this, the kpmg partner who leaked that inside information has put out a statement and now his lawyer is going to be talking to us first. you'll want to hear this, coming up, on today's edition of
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"closing bell." as i said on twitter, who's not on "closing bell" today. here's what the market lacks like. here we go again. the dow was up 152 at the high of the day. now a gain of 139 points is at 14,812. the nasdaq has been the strongest of the major averages since this rally began on friday morning after that jobs report came out. the nasdaq up 4% since that low on friday. it's up 1.76% right now, with a gain of 56 points. the s&p, no small shakes either. a gain of 1.2% or 18 points at 1,586. so what is happening with this market and why? even as the fed hints at tapering down its stimulus in the near future, maybe as early as this summer, bob pisani in the middle of the action at the new york stock exchange with what's going on. robert? >> i want to show you what's happening on a two-day of the s&p 500, bill. put that up and you'll see a big gap right at the open, about five points on the s&p. that's kind of rare. you see that move right to the
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upside. that's because even though there may be people hinting at stopping the purchases, most of the traders look at those fmoc minutes and they concluded that the weak jobs report we saw last friday doesn't give them a lot of confidence in the sustainability of an improvement in the labor market and they made it clear, they need to see sustainability. that's not there and that's why we're getting this rally today. look at four days on the s&p. since the bottom, friday, at 9:31, everybody shorted. that was the bottom of the market. we're up better than 3% on the s&p 500. look at the broad width of the rally. 3 to 1 advancing to declining stocks. that doesn't tell the story. defensive names, cyclical names, it doesn't matter. everything's up about 1% today. finally, bill, it's a little strange, but it seems like there's only two stock markets in the whole world. the s&p 500 and japan. basically, all the other major stock markets in the world are down since the middle of march. that's a little strange, because a lot of people don't believe that divergences like that can
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last for long periods of time. certainly been going for a month now. >> which of those countries have the most aggressive fed defense program? those two right there. >> that's right. let's talk about all of this in today's "closing bell" exchange with nathan bacharach, and chris konstantinos from riverfront investment group, and our own rick santelli. nathan bacharach, we got these fed minutes leaked early. the market took off anyway. you say, don't pay attention to what the fed says right now, right? >> yeah, i'm sorry, i can't hear them, their actions speak too loud. they keep printing money. here's the deal, we had a financial stroke in 2008 and we're going through rehab. and right now i think what the little investment, what the average investor is starting to see, you know, if the fed actually pulls away a little money, that might be a signal that the economy's doing okay and when you have an economy that's not operating off peds,
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that's portfolio enhancing drugs. and when you don't see that, you start to believe the performance on the field. maybe we should have bud selig as the next fed chair, because he seems to know how to negotiate those kind of transitions. i think we're doing better and the fed's not going to take the spike out of our arm any faster than we're able to take losing the medication. >> all right. maria, good to have you with us. i know you came running in to the new york stock exchange today. >> i came because we just finished talking with christine lagarde, and that interview will run momentarily. >> we're looking forward to that. >> i think one thing she was saying is that right now, inflation is not really an issue. but the threats and the downside risk of all of this easy money is really what i would like to get the panel's viewpoint on. so, jim, when you see this kind of easing across the world, do you think there are downside risks? should investors be concerned about how this ends? >> we're still seeing some cautiousness in investors. and although today we're seeing a very broad market rally, if we look at year-to-date,
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year-to-date, it's still the defensives that have led this rally. it's a very defensively driven rally. and what we now need to see, which lagarde is also alluding to, which is we now need to see growth coming through. and this could be a tough quarter, a tough earnings quarter for companies. and the reason being that if we look forward to q3, we're still expecting above 10% growth in earnings. and what we're starting to see is a downgrade in -- >> wait a second. when are you expecting 10% earnings growth? because for the first quarter, we have actually got expectations of 0.6% in terms of first quarter earnings. where are you expecting the 10%? is that on a year basis? >> it's year on year, and it's from the third quarter onwards. and what it means is, exactly as you're saying, we've started to see the forecast downgrades in the first quarter and second quarter, we have yet to see that in the third quarter. which means we've got these significant headwinds coming in, because a lot of optimism is priced into the markets. where its growth remains
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elusive. we're seeing a lot of focus on liquidity, which is driving momentum, but not fundamentals. >> and chris konstantinos, all this fed policy, all the fed easing, they want to push people to risk assets. you believe that's still the place to be. and, in fact, japan is your favorite country right now, isn't it? >> that's exactly right. and it sounds funny to have those words come out of my mouth, because for much of 2011 and 2012, i was a pretty big japan bear. but i think that the change that's happened at the central bank there and the clang in leadership, in the prime minister's spot, i think it represents a sea change. and if you look at the actual magnitude of quantitative easing that japan is engaging in, it actually even dwarfs from a percentage perspective, as a percentage of the economy, it dwarfs even what's going on here in the u.s. and i think to fight the quote/unquote fed or the bank of japan there would be suicide. so i think japan looks like the best long, in my opinion, across the world, for the next 12 to 18 months. >> so do you want to be putting money there, then?
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>> absolutely. i think investors should, when they're putting money in japan, i think this should consider doing it in a way that hedges the currency out, though. because i think the pressure on the yen to the downside is going to continue to be pretty significant. >> and rick santelli, gold plunging, nobody loves gold these days. goldman sachs put out a report. they want to short gold. cyprus is selling gold in size right now. what do you make of all of that? >> yeah, i'm sure that goldman call had something to do with cyprus. many reporting, including dow jones, that cyprus is looking to sell 400 million euros worth of gold. keep in mind, five months ago i talked about this on one of the exchanges i do. if you look at italy, they have $140 billion worth of gold. this might be at least an answer to help fund bailouts, bail-ins, whatever you want. but one thing's for sure. the bit coin story shows how little confidence investors have in central banks. but that is no panacea of happiness. they're really crying today. anybody who can see a chart of
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bit coin, get this, it has had a move from 2.70 down to 1.50. the bid offer is now 150 wide. that's a 40 to 50% correction in one day. >> we don't have time to go into the bit coin story right now, but google bit coin is a fascinating story. if you haven't been following this, it's one of the real interesting value stories out there right now. >> but, bill, where's the money? >> exactly. well, it's virtual. >> listen, we might be getting a head fake from the fed, you know. the fed could be saying, releasing their minutes, but at the same time, fed president evans said he's got to see 200,000 jobs a month for six months. well, when is that going to happen? no time soon. and i think what the market really said today, hey, more of the same. we're going to have more money. forget what the minutes say. we're still going to see easing for a long time. >> all right, everybody, thanks so much. appreciate your time today. we're in the final stretch of trading here. we had a high of 152 points on
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the dow jones industrial average. we're still in the triple digits in record territory, but up 129 on the dow, bill? >> question being asked today, how in the world could the fed have accidentally released those minutes from the latest meeting a day early. and did anybody profit from that? former fed governor randle kroezier is with us. we'll get his thoughts on fed policy going forward as well. also, the stock market and the real estate market, how can both go higher at the same time? billionaire investor sam zell will tell us where he's putting his money to work right now. he joins me as my special guest host at 4:00 p.m. eastern. >> plus, you just talked to imf managing director christine lagarde. she wants the free money ride to continue from central banks across the globe and she'll explain why later on the "closing bell." stay tuned. [ male announcer ] you are a business pro.
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the fed delivered a big surprise to wall street by accidentally releasing the minutes of its latest meeting to about 100 people a full 24 hours early. hampton pearson explains what went wrong. hampton? >> well, bill, we're going to give it a shot. federal reserve officials are telling cnbc every indication so far points to that early release
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of the minutes being entirely accidental. about 100 people, mostly congressional staffers and employees of trade groups, got the minutes in an e-mail that went out at 2:00 p.m. yesterday, 24 hours early. but the oversight wasn't discovered until this morning. that led to the 9:00 a.m. eastern time release. the securities and exchange commission and commodities futures trading commission were notified of the lapse and the fed has asked its inspectors general office to launch an internal investigation. members of the congressional office and banking committee have confirmed getting that e-mail to cnbc. also, a spokesman for the joint economic committee, al fealousenberg told me a short time ago, yesterday we got a release from the federal reserve with a 2:00 p.m. wednesday embargo and we honored that embargo. that may explain why no alarm bells went off for at least one key capitol hill committee. and as we all know, premature disclosure of market-sensitive government data does happen from time to time. last august, you may recall the labor department accidentally
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posted those weekly jobs claims data a day early. maria? >> all right, hampton, thanks very much. let's get more reaction now with former federal reserve governor, randy kroszner, now at the university of chicago booth school of business. he join us live for an exclusive interview. sir, great to have you on the program. >> welcome. >> great to be back. >> thank you for joining us. so as someone with insight as to how things work inside the federal reserve, how could something like this happen? just pure human error? >> i think what the fed has said is probably right. it seems like it was just purely accidental that somehow this was sent out one day early and as hampton had mentioned, it seems like most people have gone along with the embargo. >> i don't want to put too fine a point on it, sir, because i do want to get your thoughts on fed policy right now, but i mean, the release of the minutes so long after the meeting occurred is sort of a legacy of the previous years in the federal reserve. we have a much more transparent fed now, you know, much more
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forthcoming with the chairman holding that news conference now. why not just release the minutes like the day after or two days after. why do we have to wait so long, do you think? would you change it? >> well, the fed minutes actually used to come out after the next meeting. they used to be kind of useless when they would come out. now they come out with a three-week lag. it takes a little while to actually put the minutes together and make sure they accurately reflect what the discussions were. i'm sure there are discussions about the optimal timing of this. but at least it's much more rapid than it used to be. >> let's talk about the mechanics of what's going on here. a lot of debate, in terms of when the fed should start pulling back stimulus. you know, recently, there have been a lot of federal reserve governors and former presidents speaking out about the fed's action, when they might pull back. when would you deem it appropriate? should the fed start loosening things up this summer? >> i think it really depends on the data. and i think that's really what the minutes kind of reflected,
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is that they really want to see robust, sustainable recovery of the job market. and i think the most recent employment report that came out after these minutes, after the meeting of these minutes are of, suggest that we ain't there yet. >> so you, so you think that if they had seen that jobs report during that meeting, they would have had a very different discussion than the one they did, where they were talking about it starting to taper off this summer? >> well, i don't think any one number is going to change the direction of the ship. i think they want to see sustainable job growth. but i think that would probably have changed the tenor of the discussion a little bit, because i think people were getting fairly optimistic. much as like we'd gotten optimistic in a few springs in the past. we've had these spring and summer slumps where the job market goes back down. >> what about the dangers to all of this? do you foresee any real damages to all of this free money? and i'm not just talking about the federal reserve, but the ecb, the boj.
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i mean, should we be worried about how this ends? >> this is uncharted territory. and so, i can't easily say, oh, well, no problem. the exit will be easy and smooth. certainly, when i was at the fed, and i'm sure it's still the discussion now, a lot of focus on how to have a smooth exit. you can see from the minutes, a lot of discussion about the cost and benefits of this program and different types of exit strategies. so i think there certainly are dangers. there are risks ahead. the fed, i think, is very much focused on those. the bank of japan is now taking up a very bold move forward. that's even more uncharted territory, because they could get their central bank balance sheet to be 60, 70%, even 100% of gdp. >> all right. which of the dangers or however you want to characterize it, which one worries you the most? is it the pileup of the debt? is it the inflationary possibilities, the bubble that might be building in the stock market. whatever it might be, what worries you the most? >> i think what worries me is if
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there's a chance that the central banks could lose credibility. and that is, people could suddenly say, well, you know, i kind of trusted these people for a while, but now i'm not so sure. and that could lead to a spike in interest rates, disorderly movement in the value of the dollar, and that could have repercussions throughout the financial system. that's why it's so important the fed try to manage expectations. i often call it open mouth operations rather than open market operations. it's more important what they say about what they're going to do, or at least as important as that as what they actually do. >> do you think they're doing that rate now with all these federal reserve officials coming out and telling us about it, is that what they're doing, managing the market's expectations? >> i think they are certainly expressing their own views and certainly we've heard views anywhere from, we should have stopped this program long ago, to, we're not going to stop this program until the cubs win the world series. and as a longtime chicagoan, i know that's going to be a while. so there are differences of opinion. and i think there should be, because this is -- i don't think it's completely clear what
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should be, what should be done. i'm glad there's a public debate t on it, but i think the chairman and vice chairman have been fairly clear and consistent in their message that until they seed steady, sustained job growth, the punch bowl is not going to be taken away. >> governor kroszner, good to see you again. thank you for joining us today, sir, with your thoughts. >> great to be with you. >> randall kroszner there in chicago. >> bill, i'm just getting an e-mail from rich peterson over at s&p capital. he says by his calculations, worldwide equity valuations on all global exchanges are up $2.4 trillion in 2013, bill. that's up from $48.4 trillion to now $50.8 trillion. so valuations slowly, but surely, moving up on this market. >> it is amazing. and this rally just does not want to give up. we're up another 125 points right now. the dow was up 152 at the high of the day and we still have 40 minutes left in this trading session right now. >> yes, we do.
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meanwhile, goldman sachs cutting its outlook on gold for the second time in two months. find out whether it's time to get out of this precious medal if you haven't already or if this is a golden buying opportunity. >> and later, the president's budget out later today targets top earners. how much are they expected to pony up in higher taxes, you ask? we'll tell you and get reaction from white house economic adviser alan krueger, still to come, after this. zap technology.
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bearish on the prospect for gold today. kate kelly with the story. over to you, kate. >> thanks, maria. anyone who took goldman's to go long gold in 2010 would be up about 16% today. now and now the firm is hoping to make some clients money on downside to do. in a strongly worded note, goldman recommended going short the yellow medal, starting now, why the bearishness, because the broad market has shown an unusual level of resilience so far this year, despite a barrage of negative factors. think cyprus, our weakest non-foreign payroll report in quite a while, the equity rally has gone on undaunted, and gold, which is normally the fear trade, has traded lower. with that backdrop, jeff curry, the analyst behind today's report and other gold traders are now saying we're comfortably in a bear market and the softness continues today. one indicator of gold's growing weakness is the acceleration of outflows of gold back to etfs. from january, the amount of gold
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backing the etf and its peers have fallen dramatically, bill and maria, suggesting that retail investors are lacking to other assets instead, either as a safe haven, or maybe they're just abandoning a safe haven. >> thank you very much, kate kelly there. so is goldman right? gold tarnished? let's talk numbers today on gld, which is the gold etf that she mentioned. on the technical side, it's richard ross, and on the fundamental sigh, it's peter schiff. and peter, you've long pounded the table for gold. what do you think of goldman's call today? >> well, first of all, i've been telling my clients to buy gold since 1999. so it was under $300 at the time. but the fact that goldman is telling the muppets to sell their gold, i think the smart money is going to take the other side of that trade. in fact, i'm very curious about the timing of this call. if goldman really was this negative on gold, whyn didn't they so on thursday before we got the friday jobs report, which is extremely bull issue for the price of gold? so they should be less bearish now. in fact, i think they're trying
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to drive the price down. >> isn't that the point, though. is that it's not reacting the way it normally would to certain data points. and it's just not acting the way gold typically would. so they're saying get out now. >> it started to. it had a very good day yesterday. i think goldman wants to knock the price down, either because they want to buy more cheaper for themselves, or maybe they're trying to help out their friends at the federal reserve. they have a pretty cozy relationship. the federal reserve does not want the price of gold to go up. because it invalidates everything that they're doing. so they might be manipulating the market for that reason. but i think it is an excellent opportunity for people who understand the fundamentals to buy goal. >> so, rich, he likes gold, obviously. what about the jld chart? what's it look like? >> bill, i would say in this instance, the technicals are any a li alignment with peter's fundamental call. i think the risk jsh reward is rather compelling. and this could be a buying opportunity down here on the very low end of a well-defined 18-month trading range.
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keep in mind, we've now tested and held this key 150 level on that jld, the bench marc etf on three separate occasions after the past 18 months, with a very well-defined downside and upside of as much as 10%. we think this is where you want to be a buyer, with a very tight stop, maybe give this trade 1% to 2% on the downside. i think that's all you're going to need to be a winner. you want to be long of gold down here. >> peter, he's in agreement with you. how about that? you have no one to argue with this time. >> it's rare that somebody agrees with me on cnbc, but i'll take. you know, earlier, you mentioned the retail buyers, you know, maybe the etf buyers are selling. but i own a gold company. and our sales, we're having a record month in gold sales to retail clients. so the real buyer of physical gold, the demand is rising all around the world. i think it's the big speculat speculators, the hedge funds, the hot money. they're the once that are getting cold feet. but the real fundamental buyers are still there. >> since we don't have an argument on our hands here,
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gentleman, peter, before i let you go, let me ask you about this virtual currency phenomenon, this bit coin phenomenon that's going on right now. what do you make of that in the scheme of things here? >> well, you know, bit coins have gone straight up in the last couple of months while gold has been trending down. look, people are searching f ii alternatives to fiat money. when central bankers all around the world are printing money like it's going out of style, people are looking for alternatives. some people are jumping at bit coins. i don't know if this is another bubble or a sustainable alternative. i still prefer the real thing. i still prefer gold, something with intrinsic, tangible value than something, you know, on a computer. but i know this. when he need alternatives to dollars, to japanese yen, or euros, and the free market is going to sort it out. you're going to have a gresham's law taking place, or a reverse gresham's law. good money chasing out bad. and one of the worst examples of money happens to be the u.s. dollar right now. >> all right. good to see you, gentleman. thank you both for your thoughts
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today on gld, on gold. >> bill, do you think i could pay you back with that money i owed you in bit coins? >> i figured you were coming at me with that. >> we've got 30 minutes before the closing bell sounds on wall street. this market is on the fire again, up 154 at the high, right now, with 30 minutes to go, we're up 141. >> wait until an up day in bit coins. >> constellation brands is on the verge of becoming the third largest beer company in the u.s. as a result of that controversial deal with other booze companies. rob sands lays out his company's strategy for brewing profits and gives us an update on that coming up. >> and don't miss an interview with the ceo of flipboard. it's all happening at bigdata.com. bigdata.cnbc.com. follow all the action on twitter @bigdatadownload. back in a moment on "closing bell." tdd# 1-800-345-2550 you should've seen me today. tdd# 1-800-345-2550 when the spx crossed above its 50-day moving average, tdd# 1-800-345-2550 i saw the trend.
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welcome back. big day on wall street, but a bigger day at the nasdaq. the nasdaq composite at a 12-year high, up better than 50 points. this is the second best day of the year. seema mody is all over it. >> strong day for the nasdaq, the composite up about 60 points on the day. traders wondering if this is a turning point for tech, a sector that, as you know, has not participated in the rally this year. and it shouldn't be a big surprise that it's the tech names that have defensive qualities. high dividend yields, stable earnings growth, that are leading this index higher. names like intel, microsoft moving to the upside. now, another tech story on the radar, there are reports that yahoo! and apple are discussing ways to expand the amount of content that comes preloaded ton iphone and ipad and companiies like yahoo! are dealing with a decline in web traffic and analysts say, bill, this may be one opportunity to really get those numbers up, especially as we see more consumers shift to
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their phone and tablet devices to consume news and read articles. >> it's all about mobile. see facebook for an example of that. that's for sure. seema, thanks very much. the nasdaq has been very strong the last few days. all right, let's get to josh lipton and a quick market flash on this much talked about bitcoin story. josh? >> that's right, bill. the question, is the bitcoin bubble going bust? the price of a single bitcoin, the virtual currency, grabbing all those headlines, nosediving. today's high was $266 per bitcoin, but it plunged to $250 per bitcoin. that is a 44% drop from its intraday high. i just spoke to art cashen, of course, the legendary director of floor operations for ubs, calls bitcoin a pop psychology thing that feeds on itself. people buy into it without thinking it through, mr. cashen says. still, bitcoin up over 200% over just the past month. maria, back to you. >> all right, josh, thanks so much, josh lipton. we are in the final stretch of trading here. 25 minutes until the final bell
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sounds for the day. we have a market off of the best level, but nonetheless, in uncharted territory, if we close here, and up 138 points on the dow jones industrial average. nasdaq on fire, 58 points higher. >> do you know the nasdaq from the lows of friday, since that low, the nasdaq is up roughly 4%. think about that. >> not a bad return in two days, right? >> incredible, incredible. so how high can this market go? we have an all-star panel ahead. >> and after the bell, sam zell is my special guest host for the entire hour. get his take for the recovery in real estate to president obama's budget proposal. that's coming up right here on "closing bell." the battle of bataan, 1942. [ all ] fort benning, georgia, in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve the military, veterans, and their families is without equal.
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use the ford service credit card. who doesn't enjoy value? welcome back. with big dealing brewing in the alcoholic beverage industry, shares of constellation brand are things investors have been toasting. that stock up by 37%, as they are poised to acquire other brands and that stock has swung as the deal hit speed bumps and overcame those obstacles. it's been a rough ride. >> but constellation's profits did move lower, 21% in the fiscal fourth quarter reported today. joining us today is rob sands, ceo and president of
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constellation brands. good to have you back. >> good to be here. >> earnings slipped in the fiscal fourth quarter. was that largely a tax issue? how would you characterize actual end market demand? >> yeah, the earnings, earnings per share were down, but our operating income was up for the year and actually, it was a pretty strong year. our eps was slightly above street expectations, and yes, it was down due to different tax rates and interest related to our transaction that's coming up. >> yeah, talk about that. you're sort of in the sweet spot, it's a very interesting situation. m modello on one side and anheuser-busch on the others and they've got to sell assets to be able to merge so they sell assets to you guys. how much will that contribute to your earnings down the road and when? >> well, in actually ity, it's
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$4.75 billion in terms of purchase price for the assets, which primarily consist of a big brewery down in mexico and the modello brands in the united states, corona and modello. earnings wise, our eps for our just-ended fiscal year were $219 and our guidance for next year, which includes a partial year of the newly acquired business, our earnings guidance is $2.55 to $2.85. >> so what are you expecting from the year? this most recent quarter, we know, included the holiday season. that's probably a game changer a bit. what are you expecting for 2013? >> well, you know, we're seeing pretty robust sales growth in all of our businesses, which is wine, beer, and spirits. we ended the year with about mid-single digit sales growth, ie, around 5% across all three
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segments. and i think that we expect very similar growth rates going into our current fiscal year or what we call fy '14, which our fiscal year ends in march of or actually, february of '14. >> you know, the anheuser-busch/modello deal points to all the consolidation that's been going on in your industry. is it over? is there more to come? are you going to participate beyond what you're doing right now with these two companies? what's in the future? >> well, i think that there's some consolidation that will continue to occur. primarily on the wine and spirits side, where those businesses or industries are much less consolidated on the beer side. i doubt that there'll be significant additional consolidation in the united states on the beer side, due to the fact that it's a fairly consolidated industry. >> right. >> as it stands right now. >> what can you tell us in terms of pricing right now?
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how's pricing looking for the year? >> well, we took some, we took some pricing on the beer side back in october and, you know, that's worked pretty well. it was, you know, below an inflationary increase, but nevertheless, some pricing. on the wine side, in our segments, which is the premium plus segment, there hasn't been much pricing and we don't really expect much to be taken. it's pretty fragmented and competitive business right now. and in spirits, in the segments that we participate in, not much pricing either. >> all right. we'll leave it there. good to have you on the program, sir. thanks so much. we'll see you soon. >> 18 minutes left in the trading session here, we're heading toward the close and the gain's hanging on. the dow up 145, at the high of the day, it was up 152 points. >> bill, would you want to get in front of this train? i mean, don't fight the fed!
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can anything stop this rally? we're going to take a look at the options, next. >> i'm sitting between liesman and insana. i'm very afraid right now. stop the presses. famed bear david rosenberg explains why he's now optimistic today. he's here exclusively coming up later on the "closing bell." stay tuned. please. [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪ ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind...
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welcome back. about 15 minutes left in the trading session. still no sign of this market backing down, even though the fed minutes were released earlier by accident and it seemed to be hinting that it may cool on the stimulus program sooner, rather than expected. the dow continued its march higher toward 15,000. joining us with their thoughts on all of this, paul mccauley from global interindependence center. we've got cnbc contributor, ron insana, and cnbc senior economics reporter, steve liesman. thank you all for joining us today. paul mccauley, how the heck are you? >> good, good. yourself? >> nice to see you. what do you make of all the job owni i jawboning behind closed door by the fed about the pulling back on the program? what do you think is going to happen? >> i don't think it's a big deal. in fact, it's fascinating that they're talking about what potion to put into the bunch bowl.
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when i retired two years ago, it was all about, when are they going to take it away, the exit strategy. now it's a matter of, how big of a spike do you put into the punch bowl. and i think the market is engaged in a logical levelation. the fed is going to be friendly for a long time. >> well, the stock market is engaged in a logical levelation, because where else are you going to go with rock-bottom rates. but now given the fact that we have seen a little bit better signs on the economy, the housing markets are bottoming already, should the fed try to wind that down by this summer? the new debate is at this summer or some time in '15. >> well, i think they're debating about whether or not to take it down from the standpoint of entrance strategy. remember, they're still entering qe -- >> by buying $85 billion a month. >> they could buy $75 billion or $45 billion, you're still entering. we're not talking about exit. >> so begin the exit this summer? >> absolutely not. i don't think the exit is going to begin for years. >> 15? >> could be 15, but really will depend upon the combination of the economy and the financial
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markets. notably, the unemployment rate. this is the sweet spot. because the fed has promised us they are not going to take away the bunch bowl as soon as the economy gets better. >> steve what about that? the minutes we got today came before the latest jobs report. do you think they would have had a different discussion if they knew what the jobs number was going to be? >> yeah, i think that would have definitely changed the discussion. but i know some fed guys are looking through that jobs number, saying it really wasn't a sign of broad weakness in the jobs market. and they think that it's probably going to come back. >> will be revised. >> i kind of disagree with my good friend, paul mccauley a little bit. i have no idea what the right level is for the stock market, but if i was making a trade today to sell or buy stocks based on the fed being tighter or loser, i thought they were a little tighter today. i thought there was a marginal shift towards, that there's a little more support toward a summertime tapering. now, if the market doesn't care about that, that's up to the market, that's fine. and i'm not here to tell you that's wrong.
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but, ultimately, there are two reasons why the fed might taper here. the first reason is going to be that the economy improves faster than we think. but the other one is this cost/benefit debate. and it seems like it's a little wider. i thought sandy penalto from cleveland was a little more worried about that. i think it's something to watch out for, and we may be in the sweet spot, but there may be an end to that sweet spot sooner than we think. >> ron, are we at a point now where maybe the markets are saying, gee, if they start to pull back, maybe that means the economy is doing a little better, and we won't have these heavy restrictions on us and we can move ahead. >> bill, i think the market's been saying that to us for quite some time. if you look at every measure but unemployment, the economy has improved quite considerably. gdp is above its pre-recession peak. and housing, as maria suggested, is turning. i want to disagree a little bit with my good friend, steve
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liesman, which is, i would be on paul's side here, which i don't think they're going to do anything. the holy trium vant are the only people who count. and until they are convinced that we are past the point that we require $85 billion a month in purchases, i don't think anything happens. >> paul? >> i think it's very interesting you introduced a new word into the lexicon, steve, taper. you're tapering the amount of stimulus. it's not about taking away stimulus. >> but that's what you said, in so many words. you just said, $85, $75, $65. i mean, that's what you said -- >> i was just giving steve credit and also saying i don't disagree with him, that we're all talking about how much stimulus. we're not talking about taking away stimulus. >> i agree with that. i agree with that. i could see myself reporting when the fed does taper that the fed will say it's still being accommodative, it's still being easy, but i'm just not sure the market will take it that way.
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and b and by the way, the market is very familiar with the taper worm. >> that's the key for the stock market. if, in fact, the market starts to believe that the market is beginning to taper down, slow down the asset purchases, do we get a sizable sell-off in stocks? >> well, maria, i think you have to assume with that that interest rates would back up rather noticeably. in a period where deficits are declining and the fed, if it reduced purchased by $10 billion a month, with the deficit going to $800 billion this year, $600 billion next year, and there are plenty of buyers for u.s. debt, given that they don't want to own japanese government bonds or other securities, i don't really think the bond market takes that big a hit. the stock market would be looking at earnings, which are probably going to accelerate a little bit, as opposed to slow. >> maria, i want to ask you and paul a question. i want to offer you a deal. i want to give you -- >> bitcoins. >> yeah, bitcoins, right. i don't want bitcoins. >> i'm not offering bitcoins. on the one hand, i'll offer you six months of 200 growth a month
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or $85 billion of fed asset purchases. which one would make you a buyer of stocks at that point? are you neutral on stocks in that case or are you a buyer o of stocks on one or the other? >> i actually forecast both, steve, which is why i think the stock market is doing what it's doing. >> that was not a choice, mck m mcculley. >> if i had to choose between those two, i would take the six months of guarantee from the fed. >> i would take the 200,000 jobs, actually. >> well, i'm really posing the question -- >> if it's 200,000 jobs, you have a reason to buy stocks, you see growth. if it's the $85 billion, you're only going to the stock market, because it's the east ugly house on the street, right? >> well, i don't think it's that anymore. i really think the u.s. economy, and look, this is part of a process that i'm beginning to engage in as i hinted to maria in a much more formal fashion, some time soon. i think the u.s. economy is
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becoming the stand-alone economy in the world, that is going to do quite well over the next three, five, and ten years. and i think that's the other reason you buy stocks. we are becoming remarkably resilient and independent, relative to the rest of the world, with respect to energy and manufacturing. >> well, you've also got real strength throughout latin america, brazil -- >> well, brazil's tapered off a bit. >> yeah, they've tapered off, but you still have real vibrancy there. i agree, the u.s. seems like the best story in a global economy, but what about china? what about parts of asia, you know, indonesia. >> i'll bet more money on a hard landing in china than i would on a recession in the united states. i think we're going to at some point not even care what china does. >> they're not as practiced at it as we are. >> they are not. and they're still 35% domestic consumption, 60% exports. we're 70% consumption and 30% everything else. >> very tough to bet against america. >> paul, good to see you, buddy. >> good to see him! >> want that hair, by the way. >> wouldn't we all. >> coming up, we're coming back with the closing countdown for
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this maria. >> and don't miss our special guest host today, sam zell will with me at 4:00. find out how one of the nation's richest man is investing in this historic rally. he's also a real estate genius and was selling when everybody else was buying, right before the crash. has some significanting unsights on that. you're watching the "closing bell" on cnbc, first in business worldwide. i have low testosterone. there, i said it. how did i know? well, i didn't really. see, i figured low testosterone would decrease my sex drive... but when i started losing energy and became moody... that's when i had an honest conversation with my doctor.
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welcome back. time for the "closing bell." our producer, robert home, one of our great statisticians pointed out that since the low of friday, that bad jobs report, the dow jones is up about 7% or so. but the win i want to highlight, the nasdaq. from that low on friday, the nasdaq is up 4% in that time. that's an incredible rally off those lows after such a bad jobs number. we got ben willis on the floor there, as well with us. and ben, you know, we just continue to marvel here. what's the motivation now for buyers in this market? >> you know, when i came in, i thought i was coming to work on the new york stock exchange, but it feels like pamplona to me, running with the bulls. i've been trying to get out in front of them and it's
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unbelievable. this run is absolutely incredible. it defies all predictions as far as what the market should be doing in some sort of correction, as your statisticians points out. we saw a little bit of a correction last thursday. we had an intraday low of about 1540 on the s&p and we have not looked back. >> that's really interesting, ben. what is so extraordinary about it, from your standpoint? you say that the market should be correcting. why should it be correcting? because it's up 10% year-to-date? i mean, what -- if you talk to technicians, they say everybody is skeptical about this rally, all questioning it. that's a positive. and they also say when you look al valuations, you're only talking about 15 pe. so what's so extraordinary that it keeps going up? >> the rate that it's run from, so from the january effects starting last december all the way through what we've seen, virtually no correction. in early february, so about a 3% correction off its run. since the then, we've only seen about 1% intraday moves. so any kind of downside, there's been a rush to buy the dip. the dips haven't even had a chance to have any kind of momentum to the downside.
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all the technicals inside the market, the trim indicators, the fact that the vix is up on a day where you have record highs. tells you that the professional traders are anxious and trying to hedge against a move that has just been extraordinary. it's irrational exuberance in the marketplace. >> you showed a statistic there, a piece of data that this is the best day for the nasdaq since january 2nd. to essentially the best day of the year after this monster rally we had to begin the year. you know, wall street loves round numbers. are we pointing toward round numbers that might cause resistance? is 15,000 on the dow going to be resistance? >> if there is resistance, i would guess that would be somewhere in the realm we're talking about. because the support, like i said, just these little baby steps down about 1%. there doesn't appear to be any resistance. the only resistance is lack of sellers, anybody that's willing to part with stock in this particular venture, it appears that they're hedging somre
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