tv Street Signs CNBC September 2, 2014 2:00pm-3:01pm EDT
2:00 pm
he cequity flow into the market. a very busy day ahead, of course. we have received these reports that another american journalist may have lost his life at the hands of isis. we'll be monitoring that for you through the remainder of the afternoon. sue? >> "street signs" begins. we'll see you tomorrow. if you have been away since memorial day, welcome back! you missed the s&p 500 hitting another record, but don't worry, we're going to give you the four biggest stock market questions as we head into fall. next, the big apple story that has nothing to do with kate upton, what wall street may really be saying, and what gm is doing that may make you thipg twice about buying one of their cars. >> don't you hate it when you
2:01 pm
have a justifiably bad hate for something? that's what september is saying, because it has a rep for being a bad month in stocks. it has been up in four of the past five septembers for the dow, the s&p and the nasdaq. as for today, the s&p hit an all-time high. the nasdaq holding steady. >> there's a lot going on with russia, isis, geopolitics aside. we're going to put those aside and talk about the markets. that's what we do. we're going to present the four big stock market questions as we head into fall, at least according to us, and the smart people here to help you with them. number 1, what will the feds say, three meettle leings left year? question 2, will europe woes hurt or maybe help the u.s. markets? could a huge round of money printing boost everybody.
2:02 pm
here's the sec here to answer that burning question. will there be a mid-election hangover. with ten weeks left until voting day, it is going to get nasty. will it be so nasty it scares the american consumer? and question number 4, will 2014 be another year without a collusion in the stock market? we have not had a downward move until late 2011. >> now that we've set up the questions, let's get to your answers here. steve, first, what will the feds do or say? anything, steve? >> you have to figure out what the general consensus is, and that's for qualitative easing to begin in october and for rate hikes to begin in 2015. this is a big week to figure out the federal reserve because there is a lot of jobs data this week, and what the feds do is really tied to jobs. we have the ap meeting on thursday, along with jobless claims and we have the payroll report on friday, which is
2:03 pm
looking for a plus 200,000. we'll be north of 200,000, 120. watch hourly wages. i think the debate is whether or not it's going to be spring 2015 or summer 2015, so those three months, not a huge deal, i don't think, in the grand scheme of things. >> over the past few months, we've been getting increasingly better data. a manufacturer shows a road to recovery. people are saying zero interest rates don't really jibe with that kind of economic indicator. what do you think? >> i think what i'll be watching this friday is the participation rate, the number of people in the work force. that's been growing. people have been coming back into the work force and that's why the unemployment rate ticked up. if that's a trend that continues, i think the wing of the fed is going to be okay with the current policy. if not, if we keep soaking up
2:04 pm
the slack at a faster rate, then the feds will have to move faster and the federal reserve is going to be behind the curve. >> okay, elizabeth cabrera, will you help or hurt us? >> historically we've seen, mandy, the company that has the easiest central bank when it comes to the stock market, so if the fed is going to get tighter and the cbc is going to get looser, maybe the use uls provides some competition to stocks. the question is, does the cdc have the tools and political backing to do what needs to be done? because they are in a lot of trouble right now. italy is at ground zero. if you look at what that company has done since 1999, it's zero. it is not growing. there it is, a green line there. we've compared it to the united states. it's essentially flat, yet its debt keeps rising. a rising debt needs more gdp so
2:05 pm
they have rising taxes with their debt. the cdc can't fix a broken economy. if things get really, really ugly, it could be detrimental to the stock market like we saw in 2011. >> but would it be so bad that they go to the money printer like they did in japan in 2013 and it lifts it all temporarily? >> the cdc did print money in 2007. they bought italian debt, they bought greek debt, they did quantitative easing way back when. if you bought those in 2007, you made a ton of money. >> all right, question 3. the midterm elections. amen jabbers. are they going to have an impact on the economy as people get spooked? >> people are going to see a lot of campaign hats out there, brian, and the reason is you
2:06 pm
have a perfect recipe for a nasty campaign season. they only need 60 to take over the senate, and this money that's pouring into the campaigns as a result of the lessening of the rules. a lot of people have made up their mind, so it's going to be a very tough battle for the last few voters out there who are reachable and persuadable. that's why you'll probably see a very ugly season. is it enough to upset the american consumer? probably not. consumers tend to tune this stuff out, but in those battleground states, they'll see nothing but campaign ads going through the fall on tv. zlz w >> wow, great viewing. jim, i've even forgotten what a correction is these days. remind me, what is a correction and will we see one in the next 6 to 12 months? >> i think we'll see a correction, but the corrections we have now are much more
2:07 pm
shallow. steve said what the markets are worried about when the feds can shock us into moving into a more hawkish stance. they are more hawkish when you compare them to the cbc. it remains low. when people are lending portugal at 3.2% up from 3.0, then our stock market still looks good. i think if it gets anywhere near 10, we'll start to hear delish talk. >> the whole price is basically this. without a correction, it loo looks -- i just get nervous when i see ray market that goes up, up, up and the declines we've had the last few years have been smaller and smaller all the time. >> there's no doubt, if you look at the actual realized
2:08 pm
volatility of the nasdaq over the last 20 days, it's the absolute lowest it's ever been. financial engineering has taken the volatility out of markets. it always ends badly, i just don't think that's on the near term horizon. to put a point on what you're saying, absolutely that makes me nervous, and i think if we did get a 10, 11, 12% correction, then people would completely freak out and might hit the sell button at an alarming rate. yo i don't think that will happen, but the table could be set for something in the future. >> i know we should be starting to get some better volume from this week onward. my question is, how much better? remember last week when it was like the lightest day of the year, and they said it was light even for that season and it been in decline for several years. doou do you think we'll get more volume and is it a good thing? >> no question we'll get more volume, but we're turning to
2:09 pm
lower volumes and drive those people in from the sidelines who are still enduring what they had before. i think that will happen probably now and the next three months. >> i'm going to throw amen a stock market question. >> are you ready, amen? >> you covered dark pools extensively. i hear mandy's point on volume. with all these dark polls out there, should we trust the volume statute anymore? do you think we should read whaet actually being done? >> that's a good question. yo i don't think we do. so many of the transactions are happening off the tape, and what you're seeing is a world in which we can see some of what's going on but not all of what's going on. the question is how much is out there and it's sort of an unknown-up kno unknow unknown-unknown at this point.
2:10 pm
>> thank you for listening. >> ilts not so much what we just did, but it has words. you can go do. wep we all have some questions about eric cantore. the question is, would you want to buy a car that bakely tells you to pay attention and does stuff like this. >> just remember, this is business, not pleasure. >> you're about as much fun as a divorce, which is not a bad idea. >> i want custody of me. sdp >> i should have gotten rid of you before i turned you on. now i can't shut you up. >> have you ever noticed all the hollywood people are played by
2:13 pm
welcome back to "street signs." the dow is now off its session lows. oil prices are hitting lows, but the big losers so far is home depot saying it's investigating a possible data breach. on the flip side you have shares of nike after signing pro basketball player kevin durant to a $10 million a year reported contract. predominantly the energy stocks are the down side. back to you. >> indeed. thap thanks, dom. eric canter is lanti ilanding o
2:14 pm
feet. what do you make of this? is this sort of a bit of a reward? >> it definitely is. i mean, eric canter is a guy whose political base was wall street, and he was criticized that he lost by being too close to wall street. and this move where he's going to get paid millions of dollars over a several-year period just confirms can'tter was too closeo wall street at the time. he has every right to go out there and find work. what's interesting is what ellis is doing by hiring canter, they really haven't had an aggressive presence. one firm has reported no activity on their behalf so far, so this will be new for the firm and see if they can bring the heftier to town that they're
2:15 pm
hoping for here. there is a rule that limits individual contributions. that rule has been struck down. is there more money than ever. >> we're going to see a ton of money coming into the campaigns this fall because of the unlimit spending you can have right now. we'll also see the influence of big stories writing enormous checks that they were limited to before, so fundraising now has been transformed from going out and fishing for cod where you put a big net in the ocean and try to catch as many fish as you can. now they're hundreding for whaelz. they're looking for one big donor or to sponsor candidates. a lot of what we're seeing now is a change in the. you're probably a big janet jackson fan.
2:16 pm
you might remember the only thing she said was nasty she liked was a groove. >> it's going to be really tough, because like we said before, there is still a lot of stake here with the senate happening in the. there is a fear factor of what's going on overseas. it's going to hang over these lex and the states there. all of that is going to make us see a lot of contentious campaigns, a lot of researchers trailing people with iphones and cameras to catch a gap or two. now that we're back from labor day, the campaign seat is really starting to heat up, and we'll see if there's humongous turns. still ahead, august brought
2:17 pm
a dell ha rauj. how not stopping apple from hitting an all-time high. back after this. dad,thank you mom for said this oftprotecting my future.you. thank you for being my hero and my dad. military families are uniquely thankful for many things, the legacy of usaa auto insurance could be one of them.
2:18 pm
if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. whenwork with equity experts who work with regional experts who work with portfolio management experts that's when expertise happens. mfs. because there is no expertise without collaboration. cozy or cool? exactly the way you want it ... until boom, it's bedtime! your mattress is a battleground of thwarted desire. enter the sleep number bed. right now, all beds are on sale. he's the softy. his sleep number setting is 35. you're the rock, at 60.
2:19 pm
2:20 pm
it is still hot enough for your kids in the neighborhood to open up an old-fashioned lemonade stand, one glass 50 cents. >> it should be at least a dollar. thipg think of all the squeezing of the lemons, the sugar, the ice. they have to turn a profit for this. at least a dollar. >> a dollar. >> 50 cents is too cheap. >> but you're in new york city. i live in the burbs. >> some charge 2 and even 3, but my kids charge 1. remember the story about the guy in florida who called the authorities on the little kids' lemonade stand down the street? he ratted them out because apparently they didn't have a permit? that story made a lot of you
2:21 pm
mad, as it should. we're going to have the latest chapter on this story and it may make you crack a little evil smile about what happened to mr. lemonade stand here. okay, let's get back to business. gold falling to eye new two and a half month low here today as the dollar is hitting a one-year high. >> good, you can afford your lemonade stand. >> hedge funds are hitting an all time high in four weeks out of five. the energy sector is the lagger today, which, by the way, brian, trend sports hit another record high today. while we're talking about commodities, what commodity did well today? >> palladium. >> palladium. why? >> what is palladium number one
2:22 pm
used for? catalytic converters. it's the crazy thing you always get rejected in car emissions for. higher dpaemand, lower supply - >> equals higher prices. high-tech companies are often known for the perks they supply their employees. but now those bonuses have gotten attention of the irs. is this a good use of the irs' time? >> a lot of people would argue there is no good use of the irs' time. but this is an issue they said over the past few weeks they're going to take a closer look at this year and issue some guidance about what companies should do about these perks. one possibility is employers will get this taxed as income, and they'll wonder, should i gross up for the employee, should i start charging, things like that? but these meals in particular --
2:23 pm
there are a number of other perks like massages, as you mentioned, even a housecleaning in the offers -- but the meals have become part of silicon valley. google did it early on, facebook does it, yahoo as well. apple doesn't give away free meals, by the way. you have to pay in apple's cafeteria. but it certainly could turn a number of silicon valley techies who like to contribute money to political concerns against any given administration. >> there is no such thing as a free lunch with the irs, i guess, then, john. stick around, though. there is a little story that broke this weekend about hackers and icloud and kate upton, jennifer lawrence and justin verlander's rear end, apparently. by the way, it was a picture for the detroit tigers, and kate upton's boyfriend.
2:24 pm
is the iphone 6 launch going to cloud, so to speak, apple? >> we don't know to what extent this is just an apple issue, is it a drop box issue? people don't know exactly how their photos got onto the cloud and where they were stolen from. apple and other companies and the fbi looking into this right now, what appears to be the case. this is from a security expert looking into what happened in the past, is that a user name and password combination were somehow stolen and discovered by a hacker. not an issue of attacking apple servers and cracking them open. maybe they were bad passwords, a password used multiple times. >> like kateupton123. >> dawn, you just heard our dialogue.
2:25 pm
there is a lot of concern about security in the cloud, but if dawn is right, it's a good old-fashioned hack, i guess, to your password? is that really a possibility? sdplz rig >> right now apple is looking into it. hopefully we'll know more today from apple. apple takes this quite seriously. what may have taken place is there was something percolating around the internet called ibrut. computer program to make multiple attempt at cracking people's passwords. up until this market, they have unlimited access. that ended this weekend which would surbingly curb that
2:26 pm
appetite. >> there were not unlawful attempts, but my understanding is you could attempt to enter an e-mail address multiple times. so if a hacker has an e-mail address and they're wondering, does this person have an icloud account, and they try it and it tells them how you're -- >> they're also trying to paint this security as a ruvulnerabil right? if i was going to use iwallet, i probably wouldn't do it knowing my information wouldn't be 100% safe. does this totally tarnish kohl's as being secure.
2:27 pm
people didn't even know they needed anti-nof. the problem is we don't know wha hae what's happened here. we kind of have to wait to find more. >> if this is literally johnford@aol.com. is that really hacking? >> it's still hacking. it's called social engineering where -- >> global economic. >> one important thing, apple has nearly 800 million credit cards on file right now, and what we haven't seen is some, i
2:28 pm
can't be kplaetd sks too much with other symptoms. in the consumer's mind and they see hack, so we want to hear more about what did or didn't happen here from apple's perspective or any other company that might be involved. >> excellent point. >> legalitit's move on, dawn. andy mentioned the mobile wallet. what may apple surprise everybody with? i'm already bored with the iphone 6 and it's not even out. >> the iphone 6 -- apple doesn't, obviously, like to announce its news before the big splashy news event that's coming on the 9th of september. we can guess it might have some new features that are appealing,
2:29 pm
even to you who is potentially bored. it might have new applications, so putting it all in one place. w one thing i'm interested in is how this would work with home automation. what if we could walk up to our door and have the money automatically unlock the door, or automatically adjust the temperature in the house? there is some interesting innovations that apple is exploring there. and similarly, as we reported over the weekend, apple is making a move into the wallet space, so i can just go to starbuck's and buy my latte without having to fish out my credit card or some cash. >> i'm curious whether it's an iwatch or some other wearable. how apple haflz with the trade.
2:30 pm
apple might surprise us with how this thipg works and operates. it might be a little kind of watch and wear. >> they're considering it. we don't thipg tnk the device i going to be out until january. they're still deciding on a price for it. >> thank you very much for joining us. coming up, in street talk after this break, an extra pat on the back from last week. >> it's only the first trading day of the week, and we already have a candidate for what might be the most confusing analyst. stick around. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get.
2:31 pm
do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm. we're changing the way we do business, with startup ny. we've created tax free zones throughout the state. and startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. thanks to startup ny, businesses can operate tax free for 10 years. no property tax. no business tax. and no sales tax. which means more growth for your business, and more jobs. it's not just business as usual. see how new york can help your business grow, at startup.ny.gov
2:32 pm
with the top speedou compare of comcast the top speed of business dsl from the internet... phone company well, there's really no comparison. why pay more for less? call today for a low price on speeds up to 150mbps. and find out more about our two-year price guarantee. comcast business. built for business. ♪
2:33 pm
eenie. meenie. miney. go. more adventures await in the seven-passenger lexus gx. see your lexus dealer. welcome back to "street signs." check out the cyber security stock that got a post on a report that home depot was investigating a possible home security breach. you can see just after 1:00, they went up about a dollar in trading. you can see they're just off session highs. interesting you would tie data breaches and cyber security
2:34 pm
stocks, mandy, brian, with the same story. >> what's not being breached? >> you have to get used to it, like we said a moment ago. this is the world we live in. you have to get used to it. you're going to get hacked. try to stay one step ahead. >> there's naked pictures of me floating around. look at them at your own risk. >> yeah. be careful, everybody. put on the rose-colored glasses first. time for "street talk." named a second half top pick in the retail space by stern agy. >> lower cotton prices all should help gap their target. 52. 90% to date. one thing to know, the average target on wall street is exactly where the stock is now, so half the people, mandy, or a lot of them, see no upside at all.
2:35 pm
>> about 20% upside in this morpg's price. they think dish spectrum is u d undervalued about 40%. >> staples happens to be my number one pick from last week. it would be like next up is staples. but wait, it was your stock of the week last week. >> i should say, that was your stock of the week last week. staples jacked up to 11. they think anyone would okay it to happen. it's the greatest stock in the world. >> i like to see it coming back because it's a really tough world. by the way, i like staples. i buy all my kids' office supplies and school supplies there. >> great stock of the week. >> stock number 4, our weird
2:36 pm
call of the day, groupon. getting an upgrade? >> they upped the target on groupon to $6. look at the price, this is why it's a weird call. the stock is $7, okay, but why upgrade a stock and have a lower target price? let's be fair to mark mullhaney. he downgraded the stock in february because of the stock tank. i just don't understand the upgrade with the lower target price. >> right. like 20% lower right now. >> that call is just wield. sdp >> i'm going to wield under the radar, akilian pharmaceutical. >> boosting their target to 15
2:37 pm
on. we'll call it three. let's talk numbers, let's talk nike. rich, i'm going to start with you on the tech kalz. under armour has been getting all the taepgs, but how does nike look to you. sdplz the shares are up less than 100% even though under armor has stock with more than $600. the shorter term, chart brian, you can see a nice little uptrend but still con skanld. normally, i don't like to buy stocks into resistance, brian, but when you zoom out and look at the weekly chart, you can see
2:38 pm
a bullish pattern, the bull isha sending triangle. it suggests if we do break out of that $80 level, we have more from $80. down from 76, that's going to be your protect ty stock on the trade with the chairs 79 toda$7. that's about three from current levels. i would like oz. i'm going to take a chance on nike, here. >> what about you, paul? do you see any. well, the thing about nike is ex for the general population. that's why you're seeing the valuation so high. right now the p.e. is about 26 times -- i've got it a little overvalued on my list. it is something called a wide a company that makes a lot of
2:39 pm
return on capital. we like the business, we like the company. >> paul, rich, thanks so much. i believe we've got more news on apple. wha what's happening? >> we talked about hacking before, apple is providing an update on its situation where allegedly a lot of celebrity photos were taken from apple serv servers. apple provided an update on the situation. they said they were out rachblgd by the newly mobilized engineers didn't discover the issue. they discovered certain celebrity accounts were compromised by a targeted attack on just user names, passwords and security questions. it's important in many cases that they have investigated, they have found no breach in apple systems, including icloud or find my phone. so again, they were saying this
2:40 pm
was ray very targeted act on securing celebrity. a lot of people were saying, maybe they breached icloud. . >> and that's important, these hackers found weaknesses in individual users. . remember, matthew broderick guessed. it sounded like that's what was. they just rip something over and over again. it was user ffgs that was half of what we got. >> i give gool he will a hard time sometimes, but i'm going to give them two forms of you dpet
2:41 pm
a text me say sanl and you have to enter a 6-dinl it code as well. >> all the e-mail services do it as well. >> i think it a smart thij to go. even at the gipg of the day when with high, sips he was gone when we started. >> apple is trying to quell any concern about their own security and say, listen, somebody just guessed. if you go after somebody enough, know their dog's name, kids' names. don't put your guessing on that.
2:42 pm
gentlemen! get ready to start your engines because the car-heavy segment of the show is about to begin. we'll be kicking off a story on how california has probably lost its chance for a big tes. >> gm is coming up with a car that will practically boss you around. would you buy a car like that? comely up. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge
2:43 pm
tdd#: 1-800-345-2550 of your trading. i have moderate to severe it's tough, but i've managed. ♪ in fact, i became pretty good at managing my symptoms, but managing my symptoms was all i was doing. ♪ so when i finally told my doctor, he said my crohn's was not under control. ♪ he said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. and that in clinical studies, the majority of patients on humira saw significant symptom relief. and many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. before treatment, get tested for tb. tell your doctor if you've been to areas where certain fungal infections are common,
2:44 pm
2:45 pm
a cruise line buying highly prestigious cruises for $3,000. norwegian, michelle and bill, he must be pleased with the big jump in his stock price considering he's the buyer. >> you don't normally see that, the buyer's stock normally goes down. but clearly the market is impressed. >> prestige is owned by apollo management and apollo owns 25%
2:46 pm
norwegian. they're essentially holding onto their holdings. but what you're seeing is consolidation in the high end of the cruise line industry. prestige would get apollo to cater to the higher end cruise lines. they catered to a group that was immune to some of the economic problems out there. >> still, they're much smaller than some of the other players out there, so they have a lot of room for growth if they decide they want to compete. >> exactly. jump in any time. we're looking forward to comments from you guys, too. >> by the way, may i just say, welcome back, bill. >> thank you. we'll get kelly back here sometime, too, as well. nobody likes a backseat driver, somebody nagging at you about what they think you might be doing wrong. manual if your car started doing that. phil lebeau joining us now. details on what gm might be
2:47 pm
doing with a car coming out soon. >> let's say general motors is not confirming this report that came out over the weekend out of the u.k., but a company called seeing machines limited, which is a tech firm in britain essentially came out saying, look, we're working with another auto supplier and we're working on a vehicle with general motors. it's basically going to have software that will allows them to track the driver's head and eyes, alert them if the driver is disdratracted looking at his her phone, detect whether the driver is getting sleepy. they're going to keep you from being distracted while you're driving. a lot of people will say, do we want this? i think a lot of people do want this. it's clear we can't control ourselves when we're driving. therefore, let's see what's
2:48 pm
possible. >> just a moment ago, i thinking it's an australian firm. wups the cameras are there, they can be expanded to other features. it sounds like big brother. >> spare me the big brother, mandy. do you really think there is going to be somebody in some control room somewhere saying, what's mandy doing? let's control mandy? >> no, we can call the show's producers. thets a bad example. >> we are terrible drivers and this is all about making it easier for us to be on the road and not be distracted. >> okay. i will spare you the big brother, but just this once. phil, we also wanted to ask you very quickly about tesla. it looks like the new battery plant will not be going to california after all. >> there's no final announcement, but we do know that california's legislature couldn't work out an incentive package before they went into recess. so the question is could california possibly put
2:49 pm
something together in the last second. that's certainly a possibility. the government certainly wants it and the leadership on both sides of the house there, they want it as well, it's just a matter of whether or not they can work something out. remember, there are five states in the running for this gigafactory, and there may be more than one. we know they broke ground just outside nevada, they may be breaking ground in a number of other states. this is a big deal, guys, because you're talking about 6500 jobs. it's time to get back to the markets and we have some stock picks just for you, coming up. last week we asked you if a security guard caught on video abusing a dog should be fired. we of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier.
2:50 pm
2:52 pm
and file downloads you'd take that test, right? what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. go to comcastbusiness.com/ checkyourspeed. if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. we want to update you on a story that we brought you last week. the seo of centerplay caught in an elevator kicking a dog. the statement by the company says he today resigned, but there is speculation he might have been forced out. when we did this story last week, we sent out a twitter poll and everyone who replied felt he
2:53 pm
should be fired. you said the 1,000 hours of community service, the $1,000 donation and indefinite probation were not enough, and there were protests and calls for boycotts at the company. >> it will be interesting to see if he will be able to land somewhere else. this is the thing, in this digital age now, you don't leave anything behind. >> absolutely. >> it's forever. all right. let's now help you make some money. we've got two all-star stock-pickers with us. barry james is president of james advantage funds and co-manager of the james balance golden rainbow fund, and brian boyle with boyle capital management and portfolio manager of the valley forge mutual fund. now that the titles are out of the way, there is 20 seconds left in the interview. barry, i'm going to start with you, you were tweeting back and forth just now about the railroad renaissance. tell us about greenbrier. >> yeah, well, greenbrier, it's a smaller company, and small companies have not been doing well this year, but they're likely to pick up, we think, later in the year. the next four quarters are the
2:54 pm
best of the election year cycle for small-cap stocks, so that's one thing, but greenbrier makes the tankers. and we've gone from less than 10,000 tankers back in 2008 to over 400,000 tanker loads a year now for oil. and so, they have a big backlog, very profitable company, and they've been on a tear, pricewise. and so, we think it's got more room to go. >> okay, so you like greenbrier. brian, let me get to you. aig. you quote/unquote, believe that aig is just scratching the surface in terms of its potential. lots of love for aig. >> absolutely. when you take a look at peter hancock just took the baton yesterday. bob benmosche had a difficult hand, he played it very well. we feel over the next couple years, aig gets up to a 10% return on equity through underwriting, new business. to look at their property and casualty business today, it drives about $5 million of premium income, little in the way of underwriting profit. so, there's huge opportunity
2:55 pm
there, continued cost cuts. when you look at they're buying back around 2% to 2.5% of their stock annually, we think they get to a 10% return on equity over the next couple of years. and on today's book, that's a $7 per share in earnings at a $56 share price today. you're paying about eight times normalized earnings. we think there's a lot of up side left in this, and we've been in it since 2012. we continue to like aig shares. >> barry, driving up through new jersey, i see more and more capital one banks. is that part of the thesis on why you like capital one financial, far better known for their credit cards? >> exactly. you consider them a bargain. they're cheap with good earnings and they've been going up in price. but yes, the fact that they're moving into commercial and retail i think is a great diversification for them. and in fact, they have some of the highest interest rates for both savings and checking accounts, because they don't have as much brick-and-mortars as all those other people do.
2:56 pm
in addition, they have an offset. if they do get inflation, we see interest rates rise, you know the capital one credit card commercials, and they've just raise rates. so, we don't see any real problems for capital one as we go forward. >> and brian, another one of your picks, birch cliff energy, which you could say is an under-the-radar name, up what, 70% or more year to date? and you say it's still undervalued. >> yeah, we love birch cliff energy, mandy. it's been a big reason why the valley forge fund has done as well as it has so far this year. it has a great management team with a great paper trail of success. it's a low-cost producer. it has significant leverage to natural gas prices, which we think are headed higher over the next couple years. and lastly, we think it's an ideal candidate for l&g players looking for capacity and we think in the next couple years it gets taken out. >> by who, potentially? >> well, if you look at where they're situated in canada, there are a number of l&g projects on the western coast of canada.
2:57 pm
we think it would be an ideal target for a chinese company or an asian company looking to get cheap supply for l&g exports, something that we're very bullish on over the next couple of years. >> barry and brian, thank you very much for joining us. the stock, nonetheless, with a lot of other energy plays, is down today. and has your kid ever held a lemonade stand? well, imagine if some jerk tried to shut it down. one did, but now he's got his o own.
3:00 pm
lemonade, but one man in florida tried several times to shut down his young neighbor's lemonade stand, calling it an illegal business in a residential area. now, karma coming back to bite him. the man's name is doug wilke and now he's being investigated for running an illegal business of his own, according to "the tampa bay times." that's the karma bus, boom. >> kind of like lemon froiter. >> it is. that leaves a sweet taste in my mouth. thanks for watching "street signs." can >> "closing bell" begins now. and we welcome you to "closing bell." i'll reintroduce myself, bill griffeth here at the new york stock exchange. >> i'm michelle caruso-cabrera in today for kelly evans. and summer is over, but -- >> no, it's not. summer is not over. saying that summer is over the day after labor day, pardon me for one second, but i have a thing about this. >> i had no idea. >> this is like saying winter is over the day of new year's day. it's not. we've still got weeks of summer to go. >> it's back to school!
137 Views
IN COLLECTIONS
CNBC Television Archive Television Archive News Search ServiceUploaded by TV Archive on