tv Street Signs CNBC August 23, 2013 2:00pm-3:01pm EDT
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let's see if she leans forward into that job. >> big check big tech that is it for power lunch for us and for the team. thank you for watching all week. i think it is time to head to the beach. absolutely. have a great weekend. "street signs "begins right now. >> there is no chance the iphone is going to gain any significant market share. no chance. so said microsoft ceo steve volmer back in 2007. and now the 13 year ceo says he will retire in 12 months. 24 hours after the flash freeze we still don't know exactly what happened. will we ever get the answers we need why trading stopped for three hours?
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the incredible story about what they are doing with their money now. and three stock picks just for you. >> happy friday in deed. let's take it up a notch. i'm going to give you a whole week's worth. the dow is now on track for the first time since november. and the nasdaq, it is solidly on track for it's first weekly gain in three weeks and so far today no screw ups to mess things up. >> yeah, you know that noise folks, we are going to have fun here. clippy, every time you try to do anything on moicrosoft thing we are having fun with that today
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clippy says it looked like you are looking for a new ceo. we are having fun with this story. ste steve ballmer saying he will retire within months. digging into the story it shook everybody at 9:00 this morning. it is a big dig is it not? >> i got a call saying what is going on. i want to take this a different direction. ballmer is on his way out but we have to turn our attention to bill gates. balan ballmer is getting the heat for failing to come up with the i e iphone. microsoft has been playing from
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behind ever since. a year and a half ago when we were doing our predictions, i said windows 8 would be such a departure that bill gates would have to come back. but here we are. i think gates has to take the lead in picking the next ceo. he was the tech nickel visionary. he chewed up tech nickel leaders. they didn't last. microsoft needs another leader at the top. that is a person that only gates himself can review the. >> stick around and stay with us because we have an all-star panel lined up. joining us now stephen yackman and walter triprich et and walt
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gre gre greenberg. steve, how do you feel about the announcement today? >> we are excited. it is long overdue. we are skeptical, he has been ceo for the last 13 years and that over, time falls to the board level. we think there needs to be a change there as well. >> do you think they are bomber boys? >> anybody that would leave things the way they are for 13 years, they are obviously the decision making skills you need to question. >> maybe, i'll take the other side, is he being too hard, are we being too tough on steve balancem ballmer? >> we look at windows 8 and the
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ent ent enterprize side of the business has done very well. >> you have servers and you have obviously your word and excell and those sides of the business are doing well. >> revenue has grown by $20 billion a year over the last five years. $20 billion. that is not chump change. we own the stock. we agree but looking at the company as a whole and looking to what the opportunity that was there we think it could have done better. i want to get to you. i understand that you have a buy rating on that stock. has anything changed? it was. in terms of your rating and recommendations? >> nothing this morning. we had a couple of hours to react. what this news does, there is a set of possibilities that the company was exploring with their
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consumer businesses. i think with this news, the sets of constraints that were on those possibilities were likely removed. you bring in somebody new, it makes us feel better about the potential for them to improve their potential. it has been a challenge for the company for the last five or seven years. >> it must be pretty hard for ballmer. the stock goes up on the news of his resignation. >> it must be terrible. >> adding $600 million to his net worth. >> that is not a bad day. >> nonethelessnonetheless. i have seen reports that some have looked forward to this ouch. >> i think people have become frustrated with sort of a lack of creativity on the consumer
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side and the strategy in the windows business has been to keep running against the same wall and investors are excited to see investors on eyes on a problem that hasn't been solved too well. as loyal viewers on this problem new, he named him his number two ceo. he will be stepping down but i'm going to ask you who would be better. do you have names in mind? >> i look at some of the names that have been listed. that is not the issue here. coming up with a better designed product or something. you have a company that has to make sure that when it goes 360 that it can be a player where people are going to be going and they have improved that. look at many corporations just
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on the use of windows 7 are sticking with windows 7. you have a new product out there and on the server side how much of this will be kicked out. there are so many issues that are beyond the consumer side. who is the best person? i said as many people said today. we don't know. we will find out at some point whether that person can turn this ship around. let's start naming names here. is there any chance that gates might come back? >> i hint ed nothing would surprise me. it is his legacy. he could pull off a steve jobs but it doesn't appear to be a steve jobs turn around. they have to restructure the company. they can make good acquisitions.
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>> pardon? >> yeah, john jump in. >> stephen elop at nokia. >> no. no. >> john, i know. >> let him state his case. >> he is sort of outside, but he used to run the business division one of those that has continued to do well. say what you will about nokia's current position. he was right when he came out and they are actually gaining share these days unlike blackberry and others who are trying. don't know how that is going to turn out. he took the company that used to be a leader and make a strategy shi shift and plus he knows microsoft. >> i have to say something here. >> john likes the phone. he likes the camera on the phone. >> i know this it is a great
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phone but 3% market share from 2? >> i watched earlier when jeff was on with you brian. and even for the past two years jeff would tell you about best and worst ceo's he would have put him on the worst years. does he have what it takes? >> john, i love you guy but no. >> let's get to the practicality. >> is there anybody out there if they were announced as ceo that you would go out and by more stock in the company with? >> i haven't had time to think of. we have been waiting for the inevitable and seeing a change being done. we haven't drafted a list of ceo's that we want to see. >> he is on the company and
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owned the shares. he should remain on the board. he is still there. >> right. i mean, i think you need a change in the board. i think changes on the product side. i mean a lot of the errors have been on the product side. go back and look at windows vis vista. i think if you had had, i don't think you don't need to say much that that was a disaster. and it wasn't that it needed new strategy. it needed to be a better product. and then you could point again to the surface. i think it has a lot of good things about it. but there are a lot of miss steps there. look at the new xbox. again, it is not relating to the consumer very well. i think putting somebody at the top of the company that had, and i think that one of the things that steve jobs, one of the things that he did. and i met people like this
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before that are empassioned about development they feel it and touch it. how does it feel in my hand and understand what people want. >> but to give the final word. i understand that you rather expect microsoft to focus on looking for an external candidate who would you like to see externally. >> i haven't put together a list. but i do think it is something, this isn't an operational person here. this is somebody who has a firm grasp of technology. this is somebody that others have identified here and it is a matter of making decisions with conviction. if the company is in great hands they don't need somebody with
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that skill set. >> is theville of the sum of the parts greater than the current? >> yes, there are peetss that have to be together. if you look at windows even. enter price wcprise windows has the priz. which makes it difficult to make the big break up of the company that some of the people talked about happen. we think there are pieces that could be structured in a different way but a big break up that some were talking about is difficult to do. that is the best performer the 4th best performing stock this year. >> this year was quite the come back. >> thank you for joining us. >> up next, two other big stories that we are following for you on this friday a housing
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headline that has watchers worried plus a lot of unknowns about what happened at the nasdaq yesterday. >> if kid s aren't shopping at ambercrombie and finch where are they shopping? (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. otherworldly things. but there are some things i've never seen before.
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welcome back. under the agreement efl pxproce travel travelocity -- >> thank you very much. new home sales tanked in july. down more than 13%. one of your guests says blame it on the rain. amika kahn and dan greenhouse help me out here, as our viewers know, i've been more optimistic on home sales, what is your take? >> i'm a mili vanilli fan.
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joking. >> but, you know, right, so the rise in mortgage rates, we think it is still too early to tell. and if we look at just the under lying components of the report, it is a monthly number so we are going to get some volatility so the jump was large. we will get a bit of a pay back in the second half of the year. >> i find this interesting. so, in light of that, maybe a little bit of moderation isn't a bad thing? >> never has a more stunning revelation been made than her saying that she was a fan. i give her credit for that. >> and we have the tape to prove it. >> if you ever run for saufoffi that is going to come back to haunt you. >> right, you don't have to
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worry about that. we have had a strong run in housing. the issue for those of us that debate the state of the housing market going forward, is not whether a 100 basis spike in mortgage rates would have an effect at all. the question is what happens there after? the third quarter is not going to be the best for housing. but after you settle in and go about your day. >> dow want you want to respon? >> we are seeing upward momentum in the housing market. if you look at existing home sales and builder sentiment it is at a high level existing and starting to show more healthy biers and healthy market with
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strad traditional buyers coming into the market. sales activity is slowly increasing. one month blip is not going to be enough to change the sentiment. we still are very -- >> when ever a company comes out and blames the weather, we always say that is an excuse. to what degree can we blame the weather. >> i think you can. specifically in the south, there are roughly half of the activity happens in the south and it was very damp in the most recent months. we will know exactly but again we are leaning on the economic indicators to show. on the flip side we saw some of the other indicators and starts did come off on the month. so that is something to continue to watch. but again, as far as mortgage
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rates are concerned it is still too early to tell and it will have some impact but we don't know that it is going to have the impact that many naysayers are looking for. >> 30% of people buying homes right now are paying cash. 30% are invest evers they want to rent the place out. so there is actually a smaller slice of the population that is families trying to buy a home. how do you analyze the housing market. >> the first point is people that are paying cash or investors a lot of that has to do with the forecast for prices. if you look in today's report prices are up 8% every year. so you are seeing prices decline and in theory that should impact
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on the people that are investing or paying cash. this is really hard. there are not too many instances where mortgage rates have spiked to a degree. as we are living through today. that said if you go back and look at housing instances, higher mortgage rates tend to cause people to buy smaller houses. mortgage rates go up and the housing market in the universe did not implode. the second shocking rate of the hour it is hard. we are launching something right now we are calling it the big threes. a lot of things going on next week. earnings on the 27th and pending home rates on the 28th and what are we missing?
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>> i think to watch is durable goods. giving you an idea of what is happening in the manufacturing sector. we have seen durable goods increase over the last three months. we will get a bit of a pay back on that number. a lot of the head line gains have been in aircraft defense. we will get a bit of a pull back there. i assume manufacturing has been solid. personal income and spending we think that the numbers won't be robust, however, we are still getting a little bit of an increase in those numbers. the pay roll report shows that average earnings as well as the workweek came off. we will see soft numbers on the income side. >> lots of things to watch out for. >> and she didn't leave me anything. >> you are a big boy dan, we have run out of time.
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>> i'm not worried thank you. >> thanks guys. just ahead, the nasdaq black out is actually leaving a whole lot of people scratching their heads. >> we are rolling out another new segment two and two. two stocks that we are highlighting as big stories. street seigns right after the break. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price --
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it was line the scene out of the movie "airplane". >> there are still a lot of unknowns out there. what can you tell us? >> nasdaq is sending out a trader alert. with the postmortem information. they have now said that it was a software issue. it wasn't a squirrel on the wire. there was no indication that there was hacking into the system and no indication that there was a large volume of trade. what they are saying is that there was a problem with one of the exchange participants on this data feed. they don't identify them by
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name, but we all know in the morning, their electronic platform was having problems with connections to the nasdaq. in the midst of those problems had started people to route their trades away from arka and were declaring self help. what we don't know is where this software problem originated and the question is, did the cascade and the down fall of the entire system happen while they were trying to fix the problems that occurred in the morning since they happened an hour later? >> thank you very much. when you are on the tarmac in a plane that is not going anywhere. and the pilot says nothing you
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are annoyed. any information is better than nothing. >> all right we are kicking off our second new segment here on "street signs". two big names making news this week. let's kick it off. my pick for the week is lows. it is up 31%. same store sales are up 9.5%. that was less growth but the gap was the sloclosest since 2010. it could be a double edged sword. >> my pick is your last year's pick and it is bestbuy. it has had a 16% gain. the stock has nearly striple tr.
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and it seems as if it has had dividends. he has slashed jobs and cut costs. the question everyone wants to know is of course is it all sustainable and going to last? >> so far, so good. so my pick was best buy. >> there you go. two and two. you have heard the big movers this week up next the big movers today. sports and cars. >> plus we are going to meet a college kid who has made a mint off the street. how he did it coming up. your trading to a higher level,g tdd#: 1-800-345-2550 then schwab is the place to trade. tdd#: 1-800-345-2550 call 1-888-284-9410 or visit schwab.com/trading to tdd#: 1-800-345-2550 learn how you can earn up to 300 commission-free online trades tdd#: 1-800-345-2550 for six months with qualifying net deposits. tdd#: 1-800-345-2550
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despite the fact that they came out with a disappointing out look. ility it was upgraded to $42 a share. already had a heavy volume day. other shares up 9%. >> why don't we take a look at an upgrade. >> upgrading to a stock from a buy to a shoeld. revenue as well as better than expected that stock is up 3% today to $88.09. and we are going to talk about an ipo. it has doubled. look at that. $38. and it is up 1% today. the stock has joined the nasdaq. revenue rose to $622 million. sales rising year over year. big move up.
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and the stocks are up. >> okay it is friday let's close out the week with old stock picks. michael, we are going to look at facebook. this is one of your picks and one of our top concontenders. finally, how long did that take? >> well, since the ipo i think. but yeah, it is a great long-term holding. that is the way that we look at it. they have an incredible asset. the stuff that they have the question is how do you monetize that. i think it is going to be a choppy ride. but we think over the long-term, they are going to monetize this information that they have in a tremendous way. we think it is a great long-term
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holding. this one is one that i call one of the most important banks that we have. what is it that you like so much about sgt? >> they have very little residential real estate in general? >> they service the asset management industry. not only that but they have an asset management business as well. they pay a healthy dividend that has room for growth. given the longer term, and if you believe that asset values will go up and the condition of the u.s. economy has been one of growth in the long-term, they should benefit from that.
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trading at a market multiple. >> you have two more picks but we have time for only one. >> let's talk about freeport. we like them both ofiously but free port has been a name that has been undervalueed. given the copper prices. growth possibly slowing and the deal they did with the energy business with a lot of investors didn't like. it is cheap and something like nine times earnings less than a market multiple. so you know we look for these longer term holds that we think are going to be great businesses over a longer heard period of t. we will see you soon. all right on deck. street signs the next generation.
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mall rats, kids these days are buying up stock options. if he aren't hitting the mall who is buying at the teen rye tailors. but bill griffiths what is coming up? >> coming up a different final hour of trade than we had yesterday. we will look at the impact that the trading freeze had on future ipo's like twitter. and maria goes one-on-one with walmart ceo and from baskets shack o'neal is going one-on-one. kelly evans is with me today. we will see you at the top of the hour. "street signs" is back after
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they call it a pop over. it is made from 35,000 criticals and sequins and right now, it is only available in preorder. >> what a week it has been for retail. she is filling in today but forget that. let's talk retail. what is the biggest retail story to you that emerged this week. >> it has to be the teen retailers. but over the last couple of months we have been seeing surveying talking to the teens and they said ambercrombie is so not cool anymore. american eagle what is that? >> they are going after names like urban outfitters and fast fashion. a lot of the teens are looking at the fast fashion players plus a pop of a high end accessory.
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i'm not totally surprised at the bombs of the teen retailers. the trends may not be turning around. i mentioned the changing preferences. you have the pay roll tax that hit parents and teens. american eagle ceo said his median customer saw a $30 average in their take home pay. that is a lot of money that you don't have to pay with. and that is the issue going forward here. not looking so hot. >> thank you very much for that. if the teen retailers are struggling what do they really want what should they do to get their bot matom lines back in check? that is some title.
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i have been told that you are a cool cat yourself. what are they buying and where are they going to get it? >> teens are looking to shop online and are looking for cheap, fast fashion. so forever 21, h and m are huge right now. so is brandy melville and nastygal and gypsy warrior. >> what do you think? >> i was in brandy melc iville yesterday. it is the new cool thing. i think that is the kind of place kids are going to. she left out love culture. u n uniclo is going to come to the states. >> these companies can live or
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die by trends. sounds like you are suggesting that they can be cold for a while. >> there is so much more competition than there used to be. we have seen growth in forever 21. but we have seen skate, surf and retro surf come back as a fad with seteens and that is not wh they sell at ro, aro and a and f. that is what they sell at pac, sun and zumiez. >> maybe the teens are more focused on saving up their money on electronics and gadgets and not clothes as sort of the cool definer in that are life. if you are a retailer that has a handle online. is that going to be a big plus? >> absolutely. so many teens as specially
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stylish teens are looking to in s stagraham if you have a hot account like gypsy warrior does they can see what they have. >> do you think the american eagles can they make a come back? are they going to be cool again? >> i think they would have to change their tactics. i feel they are out of touch with how teens are finding out what is cool. they would have to lower their price point because their clothes are really expensive and they would have to identify with teens again. they don't want to wear brands that they don't understand and
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don't understand them. >> once you are out of favor with the teens how hard is it to win them back? >> that blog site i was on one that a cool teen has and she is talking about the brandy melville product. the kids have to believe it is cool and therefore the person you are selling it to has to believe it is cool. but you can rebuild cool it is just hard. a and f was cool for a long time. it became less cool three or four years ago. part of the problem is now you have to be cool at a price. >> be careful you don't know whether any of these people on instagram are being compensated for look at this bag. thank you very much. >> appreciate that. >> before i let you go. >> yes?
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>> just got to talk about jc penney. >> was that okay? >> yes, thank you very much. >> cool. >> we'll see you soon. >> we can all hear you still. >> take care. >> if you can hear it, i want to address it. >> you said they will have positive same store sales. by the end of this year. >> well in the lead of our bet you walked onto the set and said you are guaranteeing victory. what are you seeing that makes you so confident that sales will increase before the end of the year. that will be an achievement. >> yes, it would. they are up against easy numbers in the 4th quarter. the second thing is now in the store, there is more saint john's bay than i have seen in the past two years and they will only half way there. it is selling.
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it doesn't take more than that to get the positive comps. the other thing they are doing, i was in the store yesterday, knowing i was going to be here today and they are reorganizing the home department. they have things inaisles. they brought in basket, put thing in the aisle to impulse sale. >> before you go, because i know time is tight, are we going to find out that ron johnson's strategy was brilliant? could ron johnson be vindicated? they're gaining customers according to the latest data. >> ron johnson was right in this respect. penney's gained more new customers last year than they'd gained in the last decade in a year. however, they lost more existing customers than they made up the difference with. so was he right? yes. millennial customers came, they liked the pricing strategy, they liked the product. there wasn't enough one of them. if he had one store, starting from ground zero, it would have been fine. >> i'm going to give you both 20 bucks, send you to jcpenney's store with a cart, and see how
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much you can stick in your cart for 20 bucks. that'll be the judge. >> in my cut? >> cart, cut. >> my cut can't fit that much stuff. on deck, we'll meet a young tesla fan. at a dry cleaner, we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello? ally bank. your money needs an ally. what you wear to bed is your business. so, if you're sleeping in your contact lenses,
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ilan musk making big headlines this week, what's new. but, phil, what do we know? >> you know, we spent the day with him out at the tesla factory in freemont, california, and i think the most interesting comment we heard from him, it came to this question. where is tesla going to be in five years? and he talked about, you know, mass production of a third-generation of vehicle. and then i said, will you be the ceo in five years? here's what he had to say. >> my absolute commitment is to be ceo until we are in high-volume production with the affordable, compelling electric car, and that's been my goal since the creation of the company. and -- but a lot of people may think that -- i think that -- i think people think that my life is a lot more fun than it is.
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not that it isn't fun, but there have been many fun moment, but if you take anyone's job and say, you now have to do that job, but do it twice, in two different industries, simultaneously, and you've got a bunch of kids, it's a difficult thing to do. >> are you getting tired? >> i'm often tired. >> elon musk saying he's often tired when i asked, because he's not only ceo of tesla but also of space x. going back to the ipo of tesla, i remember people saying, hey, if it becomes public at 28, if the stock will get around $50 a share. it's quaint to think about that now three years later, and the shares up again today. hitting all-time highs. >> wow. it's tiring being a genius. just ask brian, right? patrick, he poured his life savings into tesla when the shares were selling for $32.
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he's estimated he has made $250,000. you have been right on this one, but could you have been wrong. what made you do it? >> i'm just a big believer in their battery technology. i think it's really defensible. >> and what do you want to do with the money? >> i'm probably going to do a start-up when i graduate. >> i also believe you eventually want to buy a model s. you have the money. why don't you buy one now? >> i probably will at one point. it's a great car. >> i want to ask you, we're talking when newly minted tesla owners, because you're not the only one we've read about and heard about out there. do you know of any others? >> i don't. i do have friends that also invested in the stock. >> okay. well, they normally say it's good to have diversified basket, but as they say, you've been right on this one so far. good luck. >> thank you. >> risky bit. checking the markets when we come back. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550
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okay. brian, i understand you are getting on a flight right after this show, so how do you feel about this one? a small-budget carrier owned by singapore airlines is now offering child-free zones on planes for an extra 14 buck, not very much, flyers can upgrade to a no-kid zone. the seats are, i believe, bigger, and no one under 13 years old is allowed. i have kids myself. i actually think it's a great idea. i would pay to not have to sit with my children sometimes. >> i would pay not to sit next to your kids, too. thank you for watching "street signs."
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we have breaking news. everything is up. have a great weekend! we'll see you everybody on monday! >> "closing bell" is next. yes, and we do welcome you to "closing bell" a little early. i'm bill griffeth at cnbc world headquarters. >> and i'm kelly evans down here at the new york stock exchange in today for maria bartiromo. we want to get right to it. steve liesman out in jackson hole, wyoming, and he brings us breaking news. steve? >> reporter: thank you, kelly. i'm met manager director christine lagarde, worrying about spillovers. she said the exit from the policies present, quote, serious risk to those countries that do not have the policies, principally those emerging market countries. and really what she's talking about the current fluctuations we've seen in the last several weeks when it comes to what's been happening with market expectations for the federal reserve and other exits. she's saying some currency market intervention could help for some of the tr
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