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tv   Street Signs  CNBC  May 8, 2014 2:00pm-3:01pm EDT

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check out tyco spiked midday. closing 50,000 shares yesterday at $41 a share bringing his stake to more than 60,000 shares. >> thank you very much. that will do it for us. i'll be watching the draft tonight. >> i sure will be, too. the dow is up 64 points, well off our best levels. "street signs" begins right now. well, speaking of sports, even the best athletes run out of steam eventually. so we are asking, is this market run finally done? there may be signs. hi, everybody. plus, what just happened in the bond market that gets a grade of a "d" minus? we propose what some may consider a completely insane solution to help fix the student loan crisis. and $20 million, mandy, can get you a really nice helicopter, so why is the new presidential chopper priced at $1 billion? >> you always ask the right
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questions, brian. well, i come bearing good tidings. the dow is on pace for a record close which would be its second time only this year. the record close on april the 30th, by the way, was 16,580. so we've already crossed it. dow transports also on pace for a record close. the dow and the s&p have now gone positive for the month of may. you know, what is normally kind of a lousy month, right? as for the nasdaq, well, it's also paired its gains, but it is getting a little bit of love today from the recently decimated mo-mo names, facebook, micro, netflix. it is keeping the nasdaq afloat. let's get out to bob pisani at the nyse. rick santelli is in chicago. a and ricky, you're giving today's 30-year auction a "d" minus. what went wrong? >> reporter: what went wrong is a by bit of a buyer's retreat with all the appetite of late, mostly all of 2014, for long
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maturities like 30-year bonds. so indeed we had an auction where, you know, i tried to grade the demand. and this auction right before it ended was trading in what we call one issue around 340. it priced at 3.44. it was a very weak auction and we've seen yields spike. they've already moderated. we don't want to take our eye off the ball here. we're still close to the lowest yields since june. but it really questions, has the run for long-dated treasuries in 2014 ended, or has it taken a pause, or are investors thinking the weekend's coming and there's been enough supply the last several days? >> the weekend still a day and a half away, surely that's not a good excuse. thank you, rick. let's send it over to bob pisani. we are off the highs of the day, but there have been positive developments. >> there have been. four of them, why they're off. first, of doish central banks. i don't just mean janet yellen.
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did you see mario draghi? look at this drop in the your row. we had a great day over in europe. secondly, the signs of life in the retail. we don't have a lot of companies report monthly same-store sales anymore, but those that did had great numbers. victoria's secret had a great month, up 8%. it wasn't just easter in april. numbers were strong enough to suggest there was real demand there. costco had a good month, zumiez, stein mart. a lot of different companies had very good marts overall. number three, mandy, we've got stability in the internet names. these guys have been crazy recently, but groupon, pandora, linkedin, netflix all stable. stable. not a great rally, just a little bit of stability. finally, we've got a tech ipo. this is a chinese ipo, cheetah mobile, priced at $14. that was the high end of the range and it's holding up well. that bodes well for ipos. a lot of pricing below the range recently. and of course bodes well for
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alibaba. don't know when that's coming but it's undo the road. there's four reasons why we're up today. mandy? >> you know what? i would take stability over being taken out back to the wood shed any day. thank you very much, bob pisani. the dow higher again today, but is the rally finally starting to get tired? let's bring in blackrock's russ. i made a chart up and i'm going to show our viewers. basically it's the dow. three times the past year we've hit the level we're at now and failed. you know the more we tend to fail, the more likely we are to fail in a meaningful way. do you think the run is finally done? >> if we're talking about the longer-term bull market, no. i think being sos c-- stocks ca move higher. if the economy improves in the back half of the year as we expect, i do think that stocks can move higher in 2014. >> okay. i hear you on the improving economy because mandy and i have been known to throw out the word
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hope every now and again. unfortunately sometimes the market is ahead of the economy. so if the economy's finally getting much, much better, does that mean, you know, you have to look at the thing and say, well, maybe has the smart money already been ahead of the game? >> there are instances where that's correct. you raise a good point. if what you were worried about was the economy run ago way, causing inflation, causing a big backup in rates, then yes, that could be something that really triggers a bear market. however, i don't think that's likely. inflation remains below the fed's target. we're seeing long-term rates of anything back down near their lows. so we're not in a situation where bonds are going to create any real competition for stocks. at least not in the near term. >> you know you raise a really good point. the economy might be improving, but it's certainly not being reflected in those yields, is it? to what degree in the near-term performance of the s&p tied to what is going on in the ten-year yield, russ? >> i think the ten-year yield -- again, the fact that inflation is staying low and rates are staying low is helping to
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support stocks. but really, the fortune in the market to my mind is tied to a couple things. do we see that expected acceleration? does the economy finally break out at this 2% range where we've really been stuck since 2009. and along with that, do we see some improvement in earnings. if earnings accelerate, then i do believe stocks can go higher, again, albeit not nearly as quickly as last year. >> if i had wings, russ, i could potentially fly. do you anticipate earnings will accelerate? and to mandy's point, i mean top line, actual sales and revenue growth, numbers that can't be fudged. >> well, this is important. we had a decent q1. i have to use the word decent. i put little air quotes out there. you had earnings growth so far about 1.5% does not sound very inspiring. but it was not bad compared to expectations for a 1% or 1.5%
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decline. it's not necessarily that earnings are going to go to double digits, but you have fairly modest expectations for many sectors. and i do think that companies can beat that both on the bottom line and on the top line. and we are seeing signs of a spring thaw. most of the leading indicators are suggesting that you're going to get that improvement in the economy. it's already happening. and with that, revenue growth should pick up a bit. >> we were just talking to bob pisani, russ. i hope you were lisping iliste that conversation because he was pointing out what we call stability which recently have really had a tough time, right? do you think that they have dropped to a point where they're starting to look attractive as an entry-level? for example, we're starting to see upgrades from the likes of morgan stanley, for twitter and yelp today. do you think that now might be a team that is starting to look good to you? >> i would still be cautious. you know, to me, i think it is healthy that the market has held up despite this big break in the momentum names. mandy, as you point out, you look at biotech, social media, these names have really been
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crushed. yet the market averages have held in there. from our perspective, rather than chase last year's winners, we see better possibilities in some of the value names that have been overlooked both in the united states and overseas. and it's worth pointing out, you know, for example, emerging market names turned around pretty much at the same time that many of the high-flying momentum names in the u.s. got hit. so you are seeing some rotation out of momentum into parts of the market that were left behind last year. >> russ, always a pleasure. thank you so much. >> thanks, brian. now with the nigeria kidnapping story still grabbing headlines. we are going on the front lines of the frontier market. you'll be hearing from one man who heads to the most dangerous parts of the world in search of big investment opportunities and, of course, the risks. and he's going to be joining us next. on a lighter note, it is mystery chart time. all right, folks, get your guesses ready. tweet it in. hint number one, this stock has been a stealth high flyer. high flyer. this week.
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dog: get four years on the entire tempur-pedic cloud collection. get a queen size sealy gel memory foam mattress for just $497. don't miss the memorial day sale. welcome back. quick update on the markets here. in fact, feel a little guilty. when we started, everything was in the green. now the s&p and nasdaq have turned red. the dow is still higher, though. >> there you go. pro-russian separatists in eastern ukraine have decided to go ahead with a vote this weekend, flying in the face of calls from putin.
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let's bring in michelle caruso-cabrera. what might be the price of defying putin in this situation? >> not clear that it's going to be much. i think because putin said i wouldn't do the referendum if i were you, it becomes a sideshow. people are trying to figure out when he was so dovish yesterday, was he really? >> right. >> and why? so there's three reasons, right? maybe to avoid sanctions. there's way too much violence this weekend. maybe it would trigger sanctions. or maybe he also wants to give angela merkel an out because we know germany doesn't want to impose sanctions. she can say look, he's being more cooperative. finally, we've gotten more intelligence in the last 24 hours that maybe he did not have as much control over those eastern municipalities as he did in, say, crimea which went so smoothly. >> it almost feels like he's kind of blowing hot and cold. just to create confusion and maybe undermine confidence in kiev. or do you think there's a greater plan? >> are you suggesting that vladimir putin may spoke speak out of both sides of his mouth? >> i would never suggest that
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about dear president putin. >> tell the truth with every breath he utters? >> he probably thinks it's true at the time. >> that's very comforting. >> that's what i look for in a world leader. >> i think he's very tactical and he waits to see what the best move is at the moment. he's been described as a tactician, not as a strategist. >> right. >> i don't think what he means today is necessarily what he means three months from now. >> obviously much of this has to do with the oil and gas issue. germany buys as much as 34 billion cubic meters of russian gas peer year. realistically what power does germany or anybody have? your next guest might know. he's got an oil business in ukraine. let's bring in managing director of public court and oilprice.com contributor robert bench. robert, good to see you. first time on "street signs," i believe, so welcome. >> thank you for having me. >> you just heard mandy, michelle and i talking about this. is it safe to do business in ukraine right now? >> for the very brave, yes. unfortunately for us, we've been very brave. we've been there -- my business
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partners are ukrainian. we've been operating in ukraine -- i have been there for 15 years. >> do you think, robert, sorry to interrupt, there is a chance that ukraine will be -- i don't want to say overthrown, right, but will roll over and either become part of russia again or go so pro-russian a government that your businesses are at risk? >> ultimately, no. i think what's happening right now is putin is trying to create as much chaos prior to the presidential election. i think he's being encouraged. he's certainly encouraged by the success he had in crimea. he's certainly encouraged by oligarchs that have control. so they're encouraging him. that also allows them to position themselves for the presidential election that's coming up here on the 25th. i mean, the one candidate that's clearly going to win.
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so what the other candidates are doing and what the oligarchs that are from that region, they're attempting to weaken the leader at this point going into the election. as they weaken him, right now it's looking like it's possible that he won't have to have a runoff, but if there is a runoff and he was the second candidate, that weakens him. that means he now has to start negotiating with him and the other oligarchs. >> have you had any discussions with names like chevron, exxon mobil, halliburton? all of them are interested at getting into ukraine. what do they say about the situation and whether or not it would shake their confidence in investing there? >> ultimately, they have an extremely long-term view. they also have integrated assets with regard to russia as well. so they need to be very careful as to what they say. the wise thing for them to do is absolutely nothing at this point.
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they should not take a position. they're in business. they're not politicians. with regard to our group, we are a ukrainian company. we have no assets in russia. we have 500 people working for us in ukraine, the company that we own. so we're full in. we're going to continue to acquire additional assets. >> and the ukrainian currency. michelle knows has collapsed. >> it's gone down quite significantly. >> do you do any exporting? it would help you. >> you can't really export. >> 14? >> okay, i've said this to anyone that will bother listening, which is probably my wife and one or two other people. >> and us now as well. >> well, thank you. but right now it's $14 in mcf in ukraine, and the net back is $9. ukraine, in spite of everything that's going on and what we're doing is we're trying to acquire additional oil and gas assets because this is not going to last forever. >> if you have capital, now's the time. >> when you have a $9 net back,
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and that's what we had last quarter for our public company, cub energy, when you have a $9 net back, this is the greatest place to operate. >> and are they going to force them to pay more for the product now? >> no. and ultimately, the reason for that is the reason that they're having this problem and the reason that germany is vacillating with regard to how to handle russia is there isn't a country within europe that has any energy independence whatsoever. >> 34 billion cubic meters a year. robert. >> from russia. >> and this is why you're having this problem. because you have 34 billion cubic meters a year coming primarily from turkmenistan and russia. russia controls all of that supply. they're going after ukraine for who reasons. one, they need the control of the pipeline system. >> yes. >> and so if you have control of the pipeline system and you are able to bring your product into europe, you have a compliant europe. you have a compliant ukraine. and this is what putin is going after. >> okay. we've got to leave it there,
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robert, but you know, you're seeing opportunity in this crisis. thank you very much for sharing your story. >> thank you. just very quickly to remind people that the s&p and the nasdaq are now negative. the dow is just holding marginally in positive territ y territory. but we've been talking about crises. let's go to another one, the nigerian kidnapping of nearly 300 schoolgirls is yet another reminder that investing in frontier markets comes with a lot of risks. you don't usually face in the western world. private equity firms are well aware of that. and that's when they call someone like our next guest. bob kent is a former u.s. air force intelligence officer who assesses risk for investors in some of the most dangerous countries in the world. he's also about to go to nigeria in a few days. he joins us from virginia beach. bob, what would you advise people who are looking to invest in nigeria or who are already invested in nigeria right now? >> in a country like nigeria, most of the political and social risks start with local dynamics. so i would ask three questions. one, what are the local risks or
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the social risks where the company is operating locally? two, does that company have social license to operate in the areas where they're currently producing things? and three, what is the company doing to manage social risk and monitor their stakeholders in the local areas? >> well, when they're kidnapping hundreds of girls, bob, you can assume that the rule of law is not exactly front and center there. >> no. well, nigeria's human trafficking has been an epidemic for year. it's a global problem, not just a nigeria problem. nigeria is almost the perfect storm for human trafficking. they have an undeveloped rule of law, a culture of corruption. they have well, well-established illicit trafficking routes. and they have a large impoverished population. also gender indifference to women in nigeria leads to a lot of this problem. >> is it getting better or worse, bob? >> it's getting worse. nigeria has had a bad reputation for years, but human trafficking
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seems to be on the rise. accurate data is very hard to come by because there's lack of reporting and research. but the international labor organization estimates that currently worldwide, there's over 20 million people enslaved and about 1 million more people into the market every year. >> have you been to subsaharan africa before, bob? >> i have a few times. >> yeah. and you know, i just came back from the milken conference. i've never seen so much bullish on sub saharan africa than i have at this conference. is this going to stifle this? do you think that unfortunately nigeria, the largest economy and largest country in africa will fall back into just complete and utter chaos, or is this horrific incident really isolated in the eastern part of the country? >> i think this is an isolated incident, but i think the situation in nigeria is going to become increasingly unstable. but human trafficking, whenever you have an incident, a horrific incident like this or an abduction, it seems to get a lot
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of attention and then fades to the back burner. it's almost like people don't think about it. joseph kony is still running around uganda and abducting children. even though we sent in assistance to try to capture him, very little says has been done. i think you're going to see the same with nigeria. yes, a couple of hundred women have been taken, but there's thousands of women and children and boys and men that go missing in nigeria every year and enter into the human trafficking market. and very little is done. there is very, very few prosecutions. >> it's a really sad state of affairs, but you know what? i know that china has been investing heavily in nigeria and other countries, and china has even pledged in trying to hunt for the boko haram militants. they can basically say you know what? i'm not going to invest anymore. you're not going to see any more of my money that should help you economically until something is done about things like slavery and corruption. is there a role to play that you see? >> nations absolutely have a
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role. and this is an international problem. transnational criminal organizations move a lot of these people internationally. the women and children that are trafficked from nigeria don't just go to the neighboring western african countries. they wind up in places like libya. they wind up in different european countries. they wind up in saudi arabia. recently they've even been appearing in south america. >> bob, it's a real pleasure to have you on the program. listen, be safe. okay? >> thank you very much. >> all right. student loan rates are headed higher even as bond yields move down. so we have kind of a wild thought. why doesn't the fed start buying up more than $1 trillion in student loans instead of mortgages? good idea? we'll debate it ahead. plus, know what else is going higher? food costs. so is edible arrangements. mother's day is this sunday, folk. if you haven't gotten her already something, maybe getter an edible arrangement. the ceo joins us next when
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whon a certified pre-ownedan unlimitedmercedes-benz?nty what does it mean to drive as far as you want... for up to three years and be covered? it means your odometer... is there to record the memories. during the mercedes-benz certified pre-owned sales event now through june 2nd, you'll get complimentary pre-paid maintenance and may qualify for a two-month payment credit. only at your authorized mercedes-benz dealer. been to the grocery store lately? yeah, food costs are on the rise, right? that could have a big impact on your next guest's company. let's bring him in, the ceo of edible arrangements. terry, thanks for joining us. thanks also for bringing in the
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goodies which i'm sure the team will love later on today. how have rising agricultural products affected you? >> we buy products a year in advance. so we do lock in prices. having 1200 loadings helps us to have the buying power to be able to prevent some of these spikes and everything. so we've been lucky. we've been able to control costs, and we really haven't had any increases. >> you haven't had to pass those increases on. when is your next one-year period of negotiation for price? >> different products are happening throughout the year. i would say within the next three to six months, we'll be doing it all over again. >> so you might then have to pass the customers' cost on. >> yes, yes. i mean, if it increases, if it keeps going the way it's going, yes. but again, the buying power goes a long way. and we're very lucky that we do only a certain number of fruits. it's a lot of strawberries, cantaloupe, pineapple and lots of chocolate. with that, we are focused on
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more, you know, a little on the product line. >> i certainly don't see any limes here. that would be weird. but you do have some drink offerings that use lime. i believe you've temporarily taken them off the market. >> we have. we've had to because of the price increase. but we have other drinks. we have some great offerings. so we're just focusing on that and we'll bring them back. >> you're in 13 countries, unfortunately not australia just yet. >> not yet. >> the holy grail, china. you're looking to get in. how? when? >> we are in china. we've just gone into china. >> oh, just gone into china, okay. excuse me. >> we'll be building ten stores. and great growth. and i see amazing possibilities in china and everything. and our stores are doing great. the reception of the product has been great. so it's probably the next big wave outside the u.s. for us on growth. >> give us some guidance on what 2014's going to look like and beyond. >> we've had a great year. we've had a great ride. we've been very, very lucky. we have 1200 franchise locations
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and amazing franchisees. a lot of them are now opening their second, third or fourth store. and then we just started opening up in malls with our edible to go concept. our dipped fruit concept is really growing. so it's been a great year. it's been a great ride, and we will look to continue that. >> quickly before we let you go, mother's day is this sunday, okay. how many of these are you going to make for mother's day? >> we'll do about 225,000 orders. you know, and we're ready. we're ready all throughout the weekend. we're at the ultimate last minute for those guys that haven't placed orders yet. get on the phone or internet. call us. we'll be here on sunday, saturday, delivering for moms and very special holiday and everyone must take care of that. >> lucky moms. thank you very much for joining us. >> my pleasure. >> thanks to tariq fareed. your mom also might like one of these. >> absolutely. put it on her head and dance around the room like she used to when i was a kid. thank you. free coffee to the rescue for mcdonald's. we're talking numbers and whether or not mickey d's shares are worth your hard-earned cash
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ahead. another chance to name our mystery chart. your first hint was it was a stealth high flyer. your second hint, the 404. the answer when "street signs" returns. ♪ ♪ (man speaking chinese)
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it's 2:30 which means it must be -- >> "street talk" time? >> "street talk" time. >> or 11:30 in california. >> or halfway through our show. analysts' recommendations. we are starting off with twitter because it's get be an upgrade to neutral at morgan stanley. >> listen, this has been a good call by morgan stanley. at this point investors will take what they can get. what monahan is saying is user growth remains a problem, yes, but he thinks twitter will meet expectations over the next couple quarters. it's not exactly a wild push of confidence, mandy, but he's been underweighting it and he's been right. yelp up 1.5%. but they have a $69 target. it's about 30% upside to the current price. they like their competitive
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positioning. it all provides nice visibility are to the investor despite morgan stanley being bullish, keep in mind the average price target is $86.50. >> fedex getting a downgrade at barclays at equal rate. that fedex is going to start to charge by next january by package size and not just weight. >> it's a big story. a giant thing of dog food, it may be light. >> imagine toilet paper in a massive box but very light. you'll have to pay, i think, 37% more on average for a big box like that. >> yeah. and so the call is what a difference a year makes. the stock had had been on fire. barclays likes it over the long term. so it's not a negative long-term call. but barclays saying the company managing near-term growth and probably the fallout of the story you referenced as well. >> watch whether u.p.s. follows
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suit. under-the-radar is the provider of modular office space in california. >> yeah, livermore, california-based company. they like the valuation as well as parts of the core business. the stock target, $41. mcgrath recently missed earnings. the stock down pretty big this year. but key bank coming out and defending the company. basically if your school or office is too big, it's kind of like a mobile home for a school or office. that's what they do. >> very useful. >> now to "talking numbers," our daily look at a stock and a technical perspective. today that stock is mcdonald's. shares down a bit. sales coming in flat in the u.s. in april. rich ross with the technicals. r.j. on the fundamentals. r.j., flat, hardly good. but at least the stock is up more than the dow this year, unlike last year. do you believe the worst is behind mcdonald's shares, and does it deserve the hardened cash of our viewers? >> i think that it's still going to be a transition year in 2014.
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they're doing a lot of things on the menu inknow vaenovations si looking to expand breakfast and coffee. also starting to do ownership changes in china. i think share has really been popped on more of a capital allocations story where the company is committing to improving its dividend, increasing number of share repurchases. at this point i think, you know, shares are worth in our view $105 per share. not a huge discount to where they're trading. i would look at it because i do think it offers capital allocation as well as a fundamental improvement story over the next couple years. >> what about the charts there, rich? what are they saying about what we call in australia mack as? >> i do like mcdonald's. i'm going to show you exactly why i think mcdonald's would be a great place to weather the coming storm in the broader markets. first we're going to look at a one-year chart. you see the stock's been an outstanding performer. not only up 10% from february
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lows, up 5% on a year-to-date basis and perhaps more importantly, you're outperforming that consumer discretionary sector which is the worst performing sector on a year-to-date basis, down 4%. so that's outstanding relative and absolute strength. you see that bullish base breakout taking out that downtrend. but mandy, when we zoom out, the story gets even more compelling. you look at that longer-term chart for mcdonald's, of course it's been a huge success story, but i want to focus on that 150-week moving average. that's the line that's coarsing through the chart. it's held for over 11 years. each time we've tested it has proved to be an outstanding buying opportunity. and just back in february, we were on the show, we discussed the importance of that test at $93. once again, it works like a charm. i think absent a break below that key long-term moving average, you want to be an owner of mcdonald's. >> break out the big macs. thank you very much to both of you for joining us on mcdonald's. you can check out the online edition of "talking numbers" in partnership with yahoo! finance. buckle your seat belt and
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put your tray table in the upright and locked position. our mystery chart next. we've had very interesting ceo interviews on cnbc in the past 24 hours. did these executives actually help or hurt their companies about i going off the usual script? herb greenberg will be weighing in on that one. first straight out to bill griffeth for a preview of "the closing bell." >> what do you call mcdonald's? macers. >> i heard some guy in canada say i'm going to scrawny ronny's. what's that? mcdonald's. that's not a compliment, i suspect. >> that's not going to show up on their next commercial. as we know, the dow is trying to close at a record high. stick around. we'll find out if that can happen in the last hour. how you should be putting your money to work. also, listen to this. they say warren buffett should seriously break up berkshire hathaway to unlock billions of dollars in shareholder value. now, before you laugh, you'll want to hear what is a pretty
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time to reveal our mystery chart. your hints were as follows: it's been a high flyer this year, and the 404. the answer, delta airlines. ticker, dal, more than doubled in 12 months, mandy, but it is not the best performing airline over the last 12 months. it's the second best. do you know what the best is? your favorite, hawaii, ha, 154% change over the past 12 months. >> it's really easy for air hawaii because the weather is nice. they don't have to deal with snowstorms and all those things that cause delays and cancellations and complaints. >> nothing i can add to that. we sometimes complain they're that ceos are really tight-lipped to the media when given the chance. that's not quite the case over the last day or so here on cnbc. take a listen. >> i apologize to you if you feel like you lost, you know, faith in me. but i'm going to work hard for you.
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>> i am absolutely sure that athena health is a $1,000 a share stock. i have no idea when it gets there. >> those were the ceos of fire eye and athena health. are these guys going off the reservation just a little bit? let's bring in herb greenberg. ceos gone wild. what do you think? >> when jonathan bush was on this morning and he was going through his presentation, you should have seen the twitter stream. people were saying, you know, boy, you know, he's making david einhorn's case for him. einho einhorn, of course, made a presentation against athena health. and that's where the $1,000 came from. i like candor, all right? you can't not like candor. i don't like someone sitting there saying of course my stock's going to be $1,000. heck, i'm going to live to be 100. i don't know what i'm going to be like, but i think he was going a little far with that because he wasn't basing it on anything. and to me that smacks of a promote. as for the other guy with fire eye, i think it was kind of
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interesting. you know, he makes the apology. he wasn't expecting the question. what's he going to say? however, when you look at the amount of stock he sold, even though he claims he has 90% of his wealth tied into this thing still, he made a heck of a lot of money, and he sold stocks subsequent to the first sale that brian was talking about. so, you know, he's been there for just two years. so he's apologizing. it's not like he was taking money out because his wife was, you know, staying with him through all of this. and now it's time to cash in a little. >> in general, herb, do you like it when a ceo comments on their stock price? i mean, also, 1,000 bucks would be ten times more. >> no. >> $40 billion company if that happens. unless they, you know, buy back all the stock and there's two shares outstanding. >> i think i and many others would prefer a ceo talk about how his business is doing and let the market work the rest of that out. i think that becomes highly promotional. so no, i don't like it when a ceo tells us what his stock price is going to become. >> most of the ceos we talked
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to, they say, look, we don't comment on the stock price. that's the stock standard answer. that has been plowed into them by all those media trainers. while we have you, you've been negative on solar city, but let's take a look at what's going on today. solar city, have we got the board there? we can show people what it's doing. it's up big. 15% or so. >> 13. >> there we go, 13%. but you're not convinced. you're saying it's still on your watch list with a yellow flag. >> oh, yes, still in the reality check watch list because i think if you take a look at what the company really did is it did something yesterday, it came out with 2015 guidance. that's six months premature for what you would expect the company to put out guidance. when i mentioned that this morning, in reality check, i said that was sort of a classic diversion tactic. because the company -- the guidance is enormous. if they can get there, that's going to be really something. but you're going so far out. when you see a company go so far
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out, whether it's store openings or they announce a new contract with someone when they announce earnings and the earnings are really bad, something to divert your attention. this this case, there was some good news, but there was also some bad news. so if you look at this without that great new guidance to the end of next year, you might say the stock, instead of being up, might have actually perhaps been down. >> unlike my esteemed colleague here who is clearly trying to slam you and soil your good name, herb, i will give you props. the so being is 38% off its high, it's about $30 a share off its recent high of just 2 1/2 months ago. today likely just an oversold bounce. no? >> well, depends on this market. i wrote a piece today to say this is a market that -- that doesn't believe in falling knives. i mean, this is a market that's grasping at almost anything to try to find reason to buy. this is a glass half -- today is a glass half full day. some of the same results that came out three days ago would
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have been glass half full further selling. >> herb, we have to leave it there. and for the record, my good friend, i would never, ever try to soil your good name. >> i know you wouldn't. >> don't use sully as a term. >> i used that on purpose. should the fed do something insane like buying student loans? derek thompson of "the atlantic" says we're insane. we're going to tell him he's insane. it's a crazy segment coming up. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. when csx trains move forward, so does the rest of the economy. csx. how tomorrow moves.
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that corporate trial by fire when every slacker gets his due. and yet, there's someone around the office who hasn't had a performance review in a while. someone whose poor performance is slowing down the entire organization.
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i'm looking at you phone company dsl. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business. we know student loan debt is a huge problem for the economy with more than $1 trillion outstanding. and it could get even worse now that an increase set in the interest rate is set to kick in on the 1st of july. sharon epperson joins us with more. >> with the rise in treasury yields over the past year, federal student loans tied to the ten-year note are going up as well. for stafford loans, the bump in yield, a little less than a percentage point means that the interest rate will go from the current fixed rate of just under 4% to over 4.5%. and for loans that are disbursed between july 1st and june 30th, 2015, that's when the rate hike
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goes into effect. for graduate students, the rate on the stafford will rise from just over 5% to a little over 6%. plus loans for graduates and parents are still the most expensive federal student loans with rates rising to over 7% for the next academic year. but many student loan experts that i talked to weren't surprised by the jump. treasury treasury yields were so low a year ago they had nowhere to go but up. how much more will it cost borers? it will amount to $4 more in monthly payments for every $10,000 in federal student loans based on a 10-year repayment period. even with the increase, federal student loans are still generally cheaper over the life of the loan over private loans. >> sharon, stay here. we have a completely insane idea. but that's what we like to do here on "street signs." let's bring in now our buddy derek thompson from "the atlantic." derek, first off, listen to what fed chair janet yellin said earlier today on yield capitol hill. >> the debt loads certainly are
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high enough that they may play a role, for example, in making it hard for people to buy first homes, to build a down payment, and that may be an effect we're seeing right now already in the housing market. >> so, if student loans are such a problem -- and we know they are, could we propose the following idea that we actually got from a wall street contact, to be fair, this week. why can't the fed use qe or new program to buy student loans instead of mortgages? >> it is not clear to me what this program is for. it is not clear to me the fed will somehow raise the supply of student loans through this process. if we're concern people are -- debt overhang is too much an people can't get on with their lives, we have seen an ople oppression in first time home buyers, the federal government can redecember tuce the interes.
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>> maybe we have the same answer. also janet yellen talked about housing. we could reduce the debt burden, wouldn't that also do the other fed job of helping housing? >> it could. the student debt problem isn't so much a problem because it is somehow a bubble that's going to and take us down like the economy in 2008. it is a problem because it is insinuating its way into the economy in a really dangerous way. people with huge student debt overhangs are not likely to get auto loans an buy a car. they are not likely to get mortgages and buy a new house. as a result, they delay the trappings of adulthood and the trappings of adulthood aren't important for 20-somethings. they are important to the economy. recoveries historically have been driven by housing and car purchases. these are the big-ticket items. it is absolutely true that the student debt burden is something to look at. i'm just not sure the fed will play the biggest role here. >> i think treasury is looking
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at it in well seeing whether there is a real causation. of course we see a real correlation between the fact that young people are not able to get on with their lives but is it really caused by the student loan debt and how much of that is caused by student loan debt. i wonder what you think of senator elizabeth warren's proposal this week to refinance these student loans and try an figure out whether or not the current loans that people have can be brought down to the low rates that we are a he seeing relatively low rates right now. >> right. students who borrowed when rates were higher want to pay back at the current rates because interest rates fell dramatically. i'm a huge fan of finding some way to relieve this debt burden because i think that the government can withstand this hit to the deficit more than these families can withstand this shadow of debt hanging over their lives preventing them from not just getting on with their families but also contributing to the economy in a meaningful
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way by buying houses and cars. i think by invoking the buffett rule and the possibility of raising taxes on millionaires that almost immediately makes this plan dead in the water. >> we can talk all day about the evils of student loan debt, at the same time you can't avoid the fact that -- i know you've talk about this as well -- over a lifetime, someone who goes to college can earn $800,000 more than someone who doesn't according to a recent study. >> the big picture here is that all the evidence we have tells us that the more you learn the more you earn. people with bachelor's degrees are much less leikely to be unemployed. so we do have lots of evidence that going to college is good for you. the problem is that this is the most educated generation in american history right now. coming out with record-high-student loans into a market where there are no jobs for them. as a result they have high debt and no availability for work. that's the problem right now.
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>> the very important part that i think treasury around the fed are going to try to work toward is to have people learn more about what the debt burden is they are taking on and being able to afford that before they choose the school, before they get into an undergraduate or master's program. that's not really clear and that fine print needs to be bold print for a lot of folks. that goes a long way to helping the situation as well. >> the sticker price of tuition off scares people away from going to college but the net cost of college when you include grants, student loans and other aid is significantly smaller for middle and lower class families. so as a result the mere advertising of these tuitions sometimes scares middle and lower class families away from having their kids apply to schools that would really change their life, change their career trajectory. it is a problem and i think this is a place where the federal government can also play a role by saying these are the new standards. this is the new nutrition libl th label that we need for colleges
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so students and families know what they are getting for this education. >> that's a good point. next time we'll get you on to talk about why college is so expensive. easy credit to everybody? maybe that's part of the problem as well. different day. we have a very big anniversary for coca-cola and also a very expensive new helicopter for the president. that is next. stay with us. ♪ ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck.
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trip down memory lane. on this day in 1886, atlanta
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pharmacist john pemberton inv t invented the flavor syrup for coca-cola. much to the delight of dentists worldwide -- i'm just kidding. it wasn't listed until 1950 but so far this year it's dropped just over 1%. our records are go back to 1968 when the stock was just 67 cents per share. since then it's up around 6,000%. >> wow! imagine paying $3 billion for something and receiving nothing. that can only happen with the u.s. government, right? and it did. the previous contract to build a new fleet of marine one helicopters for the president and vice president was scheduled to cost $1 billion. $3 billion was spent before it was canceled and we got zero out of it. now round two just announced. united technologies division winning a deal to build a new generation of marine one. at $1.2 billion, we'll buy at least two. the sikorsky s-92 helicopter,
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i'm told sells for $21 million. why is marine one ten times the price? throw a couple of missiles on that thing an we're set. >> that is the question. beautiful one like i just showed there. >> sen yours. >> mine's always being used. thanks for watching "street signs," everybody. >> "closing bell" is next. hi, everybody, and welcome to the "closing bell." i'm kelly evans down here ot the new york stock exchange. bill, are you back at headquarters? >> we're doing radio right now. i'm back at hq at the moment. we're watching this market, which early on we were in all-time high territory for the dow jones industrial arch. but we he have since pull back rather dramatically just in the last half-hour or so. the dow at its peak was up 118 points. or

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