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tv   Squawk on the Street  CNBC  November 19, 2012 9:00am-12:00pm EST

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and they're putting policies in place. we really need to pay attention to it and come together in a bipartisan way to make sure we put policies in place. it's what entrepreneurs do but there's a role for government to set the context and not just focus on fiscal issue and talent and entrepreneurship. >> join us tomorrow. "squawk on the street" begins right now. ♪ let's do it ♪ >> a holiday shortened week but no lack of news heading into black friday. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim faber, jim cramer at the new york stock exchange. a rally on our hands. whether that's about continued reaction to the meeting between the white house and congressional leaders on friday, maybe some hopes about finance ministers in april or hopes about what bernanke may say say tomorrow in new york. europe also on a tear. most of the major averages up 1%
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to 2% here as we await a big week in europe as well. we start with the markets. new optimism about the cliff. president obama in myanmar saying he's confident the fiscal situation will be dealt with hours after he hit the phones calling top ceos. >> lowe's shares on better than expected earnings. the results renewing hopes this morning about the housing recovery. >> international pressure mounts for israel and gaza to agree to a cease-fire after a weekend of air strikes leave a dozen dead and hundreds injured. brent continues to climb with gold going higher. >> the president and congress will strike a deal to restore the fiscal cliff. over the weekend in asia, the president said he's confident we can get the fiscal situation confident and reached out to ceos including tim cook, warren
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buffett and jamie dimon. after top house and senate leaders say friday's meeting was constructive. we see headlines that may bring news to other companies. intel ceo paul otellini to retire. >> during this period where a lot of companies moved toward mobile, was not pioneer mobile. arm holdings to go a bunch of shares. this may be a positive -- viewed as positive for intel. >> they will conduct a search or process to choose otellini's successor. will consider internal and external candidates. he's been at the company for 40 years. only the fifth ceo in 50 years. a company has had long service from those in its ceo position. again, he will step down at the annual meeting taking place in
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may at which point we'll learn who his successor will be giving them six months or so to figure that out. >> they managed to destroy. that's what they did. in the end they are in a hewlett packard, dell based system. if you go to what jobs said over and over before he passed away. this is not a company i can make a deal with. i can't work with them. rather work with samsung. >> to your point of maybe this doesn't make a difference, we've seen the stock decline. it's at a place in the tech world where it is crucial to many systems but it is not want you when it comes to tablet and mobile. it's not in the sweet spot. it doesn't have competitors nipping at its heels, you see shares are halted right now. that's what i have. >> huge yield. fabulous balance sheet. perhaps the seminole company in
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terms of changing the power of a pc to be equal to a main frame but at the same time linked with microsoft in a product that is -- >> what does a management change mean? how does a management shift compete against a secular change in your business model? >> i think what they have to do is do something they've never done which is go to apple and say, listen, we'll pay to do it. take samsung out. >> does your gut tell you that he's being forced out? >> boy, it's not the intel way. this has been just the worst period i've ever seen for the stock. i knew andy grove had the ability to talk to important for some point in my career. the intel of old is the company that was always on the cutting edge. this intel has tried and failed
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to do communications work. they do have cell phones. they are sold in countries that are not competitive with a lot of other countries. intel is a brilliant company filled with brilliant engineers and makes a problem not able to crack into apple other than the mac and samsung has been able to crush them which is extraordinary. >> he's been ceo for eight years. coming in around the average tenure. six months is indicative perhaps of an agreement that his time was up. it's hard to imagine he was forced -- if you want someone out, you may not want them in there for another six months. that being said, they do promote a number of people. it will be interesting to see -- renee james. stacy smith has also been promoted. >> stacy has been a remarkable job within the confines of a product cycle and a product that while it's just fast and fabulous for networking and for when you go into a data farm
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it's filled with intell. in the end because of the way the cell phone switched to become the device of the future, intel has been left behind. >> no word on whether or not otellini was a cell phone he spoke to over the weekend. he talked to jim at costco. buffett. dimon. does that add to positive vibes we got from friday out of the white house? >> i think so. these are people who for the most part i regarded before the election as people that he wouldn't pick up the phone and call. one of the big black marks against the president versus business is that they didn't speed dial him. wasn't on speed dial. i remember during the clinton administration he used to talk to these guys as a matter of course. he would speak to all of the oil companies. it was a great give and take. these are people who so far other than buffett i felt were not on the short list of people he would give a call to.
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>> i think that's fair to say. many of them harbor hostility. we're dealing with large egos. when valerie jarrett was the person they sent to meet with them, many had bruised egos to a certain extent and felt like they had no ability to forge a relationship with the president during the last term. i heard that any number of times certainly from leaders in the financial services arena which he may have wanted to stay away from anyhow. whether it's one phone call or going to be perhaps a series of phone calls over a period of time which is going to actually create a dialogue. >> costco was founded -- i shouldn't say founded. it's a democratic -- >> it's been a long time democratic supporter. >> what you needed to see is him calling people who gave people to romney. jpmorgan, we don't know. jamie dimon for a long time was a democrat. >> he's been saying for years he's barely hanging on.
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i have no idea who the man voted for. >> he didn't call me and tell me which bothers me tremendously. i would have felt like after you leave the voting booth, you give cramer a call. there are people who people are republicans that are speaking to the president. suddenly you have paul ryan back in the mix. this is like having john back in the mix. i don't know if you remember him. there are still a lot of people, a lot of people in the republican party who are saying this $250,000 and more, i will go to my grave before i raise taxes for the wealthy and i'm not hearing any of these guys saying i used to believe in not raising taxes for the wealthy and now i believe it. >> david has been a critic. problems are going to come along. in light of that, what's today
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all about? what are these futures all about? >> we live in a period of hope where you come in and the last guy you spoke is positive. the next guy -- senator mcconnell, i think what he says is futures you should be up, market should be down. we're not going anywhere. go short the market. that's not exactly what mcconnell would be saying but that's how i would read his comments. favors lower stock prices for all. that's a problem. >> it was interesting that he addresses december selling and notion that higher capital gains taxes, higher dividend taxes are going to increase selling. jpmorgan is also out with a note this morning saying there's no historical evidence that capital gains or dividend tax changes actually prompt people to change the way they invest. we're not selling year end
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because of this. jpmorgan says there's no impact whether it be increased to taxes or decrease to taxes. >> i will tell you one thing that's prompting companies to do. pull up their dividend payments earlier. walmart this morning approving a change in payment data that's regular dividend to december 27th. it was originally going to be january 2nd. >> how convenient. walmart is pulling it in saying to people let's make sure that when we pay our dividend, you know what tax rate you're going to pay on it. >> so is the journal article about companies selling themselves fewuriously or have they not read that or because we're down week after week is because of hurricane sandy? it's because it makes sense to sell. it makes sense to sell. the yields aren't going to be -- after tax aren't that good. if you're a rich person, 250,000 and you have taxable accounts that have stocks, do you think
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apple -- does that gentleman at jpmorgan looked at apple decided is the ipad mini? >> the funny thing is jpmorgan says companies aren't changing the way they pay out dividends. we've seen it with walmart and west lake chemical this morning issuing a special dividend. we've seen it time and time again where you have to think there's something behind these special dividends because they do seem to be stronger than they have been in years past. fourth quarter is seasonally a time for special dividends but this year it seems like we're hearing about them more and more. >> if we were in a great bull market and there's a tremendous cost to selling stocks, is that research may hold water. the truth is we're in the period where we all know we're 2 million jobs if we go over the fiscal cliff. if you were to say if you look at the fiscal cliff, it may change the way people have historically invested during
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alrise in capital gains and dividend taxes. that would make more sense to me. >> let's switch gears and talk about lowe's adding to the upbeat mood on the market. shares of home improvement retailer are going higher with 40 cents a share a nickel above estimates. revenue and same store sales beating estimates. they are inching up same store sales. conference call 12 minutes in but we want to hear about sandy and the impact there. >> people are looking for 1%. there was a creep up on same store sales 1.5%. talking with people this weekend about what needs to be rebuilt, i don't know if anyone realizes the profound nature of the rebuild in new jersey. >> they are razing entire neighborhoods. >> contractors can bring one person in besides the contractor. louisiana national guard with rifles keeping contractors from being able to go in.
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no one can visit these homes. who knows what this will mean. chris christie funny on "saturday night live." i don't think people realize there's national guard from louisiana, state troopers from louisiana with guns, saying you're not allowed here. who knows. once they let those people pass and they build roads, you'll see a rebuilding effort. there will not be a piece of sheet rock in the northeast. you are going to have to pull everything from all of these other areas. this is going to be, i believe, maybe next it hurricane andrew, the biggest rebuild in history and we know that since you can't even get to the homes, you're not seeing any impact yet on rebuild. >> brings to mind what the fed said. industrial production down by a full point. deutch yoi is out saying nonfarm is up. >> they didn't have as many
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stores that were down versus irene. i want to hear about lowe's. i do believe that there is going to be a concerted effort to try to get the federal government to break the rules and pay a lot of money and that new jersey is a populated state. one state can't pull gdp up after pushing it down. what we saw in 1992 in florida with andrew was that it did pull up the gdp. the rebuild did. this is a similar rebuild although there will be tremendous tension. those of house have property down there who submitted our bills to the insurance companies, how much of it was water damage? well, a lot of it. nice to know you. it's good. i hope you don't have mold down there. >> if it got flooded, you should hope a tree fell on top. >> the insurance companies are telling you to read fine print. fine print is very bad. >> when we come back, taking a bite out of apple in bear territory after a slight gain on friday and stock up in
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premarket. is it finally the time to buy? you might remember david shulman now with ucla forecast. he says why you should brace. nice rallies given that dow in the past four of six weeks have been down more than 200 points. more "squawk on the street" is back in a minute.
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>> take a look where we are set to open here up 112 points on the dow jones industrial average. a little bit of optimism this morning as some commentary over the weekend and on friday that perhaps we're closer to a resolution of the fiscal cliff. look at shares intel halted right now on news that ceo will retire in may. we understand that intel will have a delayed open. 9:35 a.m. eastern time is the time it is set to open right now last close here 20.35 on shares of intel. we're watching shares of apple. still in bear territory down more than 23% in the last two months. perhaps the worst is over for apple. shares are rising premarket after rising slightly from friday. bank of america reiterated the buy rating on apple but lowered
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the price target. and the bullish outlook on the stock saying that the valuation remains compelling trading 6.6 times earnings ex-cash. you can't deny that. the sentiment has been curious. they also say that the sell-off has been insanely insane. >> anyone who has a big gain on apple may not be up as much now. we have 20% decline. it's a remarkable opportunity to be able to take a capital gain without having to worry about where the rates are going to be. a bounce at 505 and 506 and nice reversal. you have that intraday reversal that's what bulls have been waiting to to see if people have been washed out. i believe earnings will be good. i think as far as i can tell --
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>> you would say two bad quarters? >> two missed quarters versus expectations. >> some say three. >> how much of this is just a source of funds, you know? it's widely owned. >> have you met anyone that doesn't own it? >> yes, i have. >> really? >> they should rise above. i think it's very important to recognize that this is a moment where if you're a tax person, if you're advising, you're an accountant advising people, you're a broker, you must get on the phone and say we don't know where the rates are. i think you should sell it and buy it back because it's too important to let that gain go to be higher taxed because the stock has to go up 10% to 15% before you're right again. that's the call you make as a responsible broker given chaos in washington. >> how should you go long at the beginning of a shortened trading week? cramer's mad dash is coming up next and a look at why p
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a remarkable stock. i usually don't focus on their research. this is not usually market movement. they say it's showing signs of winning the mobile battle. facebook is, i think, not necessarily taking share but seems to have a mobile alternative that can make them more money. this is mark zuckerberg. he's deeply focused on this. everyone knows that his sponsored story initiative is gaining traction. all of the different ceos -- >> notwithstanding what mark cuban said over the weekend, calling it a time waster overthinking what they are as a social network. >> there be many time wasters. i wasted time being an eagle season ticket holder. >> groupon? >> this is interesting. deutsche bank is warming up to groupon shares. david and i often joked about whether it's time to warm up. deutsche says yes.
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they are seeing stabilization of trends. immediately i go and it turns out there are seven manhattan locations offering laser hair removal. if we can get out now, you have that 11:00 to 12:00. will that remove hair permanently from right here? is that a deal? you don't know how hard it is to keep this short. >> we'll take cameras to that. >> it could grow back. i need groupon. >> u.p.s. releasing shipping predictions for the holiday season. we'll get those when we come right back. ♪
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walmart moving dividend up. the head of intel stepping down next year. and who knows what the rest of the day could bring. already have some m & a action from cisco. the eighth cloud acquisition since february for this company. >> interesting. i would not have known that they have done that. cisco has always been active as you know in terms of smaller deals. hasn't done that in many big ones. you have to go back to the box maker scientific atlanta they bought. those are some of the bigger ones. they do a lot of deals. smaller, private companies but they do a lot and they have large m & a practice at cisco. >> they had a great quarter. it was obscured. >> as we await the opening bell, interesting week, short week. claims will come wednesday instead of thursday. a lot of housing data.
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bernanke speaks tomorrow. we'll talk about that later perhaps. there's opening bell. s&p 500 top of the screen. a lot of green today. executives of belgium listed companies celebrating today's belgium equity conference at nyse. as nasdaq, wheeler celebrating ipo today. so with that speaking of m & a, a lot of news swirling around regarding best buy today. the company saying they are going to meet with richard schultz. a story that minneapolis star tribune broke. who knows what they're going to talk about. >> he's one of the largest shareholders. why wouldn't you meet with him if you were the ceo? you need to talk to your owners. the question continues to be whether mr. schultz will be able to bring in partners for this potential bid for the company and of course if in fact he's successful in doing that, what price will he pay. the stock was down sharply on friday. i think largely because of the
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del numbers and the sears numbers. there were other rumors around. they are still working on it. we'll see if they get something together in any way that would be a real bid that could bring to the board and what that board will do with it. people i speak to say you can make a case this makes sense. don't forget it generates free tax flow. you can get it under control. have a smaller base and have something real there. you get up into the 20s, they were 25, much harder to make any sort of a case. this is not saying they'll be successful in raising a billion and a half dollars for private equity to make a run at the company. >> i'm getting these costco and walmart in a fight to the death to sell you a 16-inch screen which is normally where i would go for best buy and they are not giving it away. they are clearly willing to lose money on it. what product line at best buy is taking share and doing well? >> i have absolutely no idea.
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is there one? >> i don't know. maybe the jack. the radio shack. i bought this radio shack. you have to love this. i got one of those shields i bought at radio shack for 20 bucks. i get it home and it's empty. the carton was empty. it's too repulsive to go get my 20 bucks. >> they sent you an empty box? >> i went to the store and picked it up. it was an extraordinary fiasco. i like to shop. this cut into my whole shopping temper. >> i don't blame you. >> i did go to a tesla store this weekend. 9 to 12 month wait for a tesla. >> did you put your name on the list? >> $20 connector cord and $90,000 all in a couple hours. >> couldn't get into an apple store yesterday. couldn't speak to a salesperson. saturday's trip i was able to get a salesperson quickly.
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sunday i couldn't get in. you asked me to shop so i went both days. >> i'm glad you did. >> someone has to shop out there. >> he's going to do it for me. >> financials are trading sharply higher. a couple notes on a couple of them. bank of america gets an upgrade to a buy from a hold. they say they're cutting cash. costs, improving capital position. there is a likelihood for higher capital returns. ie dividends. buybacks and citi news they are eliminate 300 sales and trading jobs by the end of the year. all of the stocks across the board are sharply higher in today's session. >> morgan stanley did the regional call. huntington, bank of america. this group has been left behind. you look at other stocks and different consumer groups and you're just shocked that they have done nothing. they've done nothing. even the good ones. >> layoffs are going to continue
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in many of these firms, many of these companies for quite some time. listen, you have to figure out a way to get it when you have higher capital ratios and you have the transparency coming in as a result of dodd-frank. margin is getting eaten up in different ways. at the end of the day it's either compensation and employment. >> elizabeth warren coming to the senate is not a reason to buy the group. she's very anti-credit card. hidden fees of credit card. interesting capital one is the best performer. it's capital one versus elizabeth warren and it's just a death match. one credit card company and only one leaves and one senator. >> she's the disease and you're
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the cure. >> she's a mike grabber. >> she is a mike grabber. she would walk a mile for a camera. >> do you want to talk to pisani? >> let's do that. bob, take it away. >> thanks, guys. happy monday, everybody. markets rallying on fiscal cliff hopes. did you see over the weekend president obama was in bangkok confident a deal could be made. geithner sounded confident a deal could be made. it's funny. a number of guys this weekend mentioned to me the signs to buy would not come from congress. it's going to come from the irs. a number of guys have been mentioning it's likely the deal looks possible or even very likely. the irs will issue a directive to everybody essentially telling everybody not to change withholding rates if we look like we have a deal. that's exempting the top 2% of
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course. when you get that even if you don't have a deal, that's a detectivi directive that the thing will happen there. keep your book light. a lot of guys play different books. 60% long, 40% short. a lot of guys a good part of their books are now in the cash side right now. the important thing is looking at some of these hedge fund returns, most returns are up 4%, 5%, 6%. somewhere around there. the s&p is up 8%. most of them are still under performing on the year. you mentioned the impact on sandy and manufacturing. this certainly makes sense. we should see sales go through the roof and profits go through the roof. you have not seen this comment from the companies themselves. i was waiting for a comment on this last week the cfo said we don't expect any kind of material impact from sandy. he said this on a conference call late last week. i think they're trying to
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downplay this in hopes of not seeming like they are profiteers from this. i find it hard to believe. i tell you where the difference is going to come. prices for everything. you'll see dry wall, lumber, insulation, sheet rock, all go up because the capacity has been dramatically constrained by these guys. their production and their facilities for producing these materials are down because of the housing business. they have been waiting to see some signs that we're getting a real convincing ramp up in housing. forget about sandy. they've been waiting to signs to see ramp up before they bring in new production facilities. they would like to see housing starts above 1 million before they ramp up production. they are 870,000. we'll get that this week. that will be important to see how numbers are. by the way, i don't expect to see huge impact from housing starts from hurricane sandy this month because they collect data in the first two weeks of october. it's not through the end of
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october. you'll see it in the november numbers certainly a lot more. that's the important thing. guys, back to you. >> if they had boots on the ground they would know there's not enough supplies. they are still tearing down. when they have to build up, they have to get rid of mold. you'll see remarkable numbers in wall board. i want to be long usg. let's shift bonds in the dollar. go ahead, rick santelli. >> thank you very much, jim. no supply this week although we do have ten-year tips on wednesday. if you look at a two-day chart you can see unlike friday which in front of a weekend a lot of things going on like the middle east, rates went down a bit. if you look at the way they're moving up a bit, we have about an eight basis point spread which is a wider spread on intraday basis low to high than on closing yield basis which if you look at the next chart clearly you see this 160 levels a major pivot and for the most part the last week and a half we have settled very close to that
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area. if you look at the dollar/yen, one of the big trades in foreign exchange. monster trade. almost a 3% move on the dollar versus the yen. you can clearly see today reverse just a bit but it doesn't diminish the magnificence of this one-way move and a lot has to do with politics with what's going on in japan. if you look at the last chart, this is fascinating. the fiscal cliff issue is a reason for many markets to move in the u.s. it's also big reason in europe and as it overlays several months going back to june with dow jones industrial average, you can see that our market was impacted more by the election but both charts are highly correlated and it's the fact that we are talking potential solutions to our fiscal cliff. melissa lee, back to you. >> thank you very much, rick santelli. just a note here, we're waiting for intel to begin trading
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again. a delayed open because of news that ceo will be retiring in may. we're awaiting that opening trade. 9:45 eastern time is our latest indication. meantime, will we see a massive correction even if there is a fiscal cliff deal? that's what david shulman is saying. find out why the senior economist is making such a bearish call. brewing job creation. what the folks at sam adams are doing to get food and beverage entrepreneurs a lift. stay tuned. [ male announcer ] introducing the new dell xps 12.
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officially in bear market territory down 11% prior to today's open. big gain here across the board. we should note for shares of intel we're still awaiting first trade on that for the day. intel shares had been halted. have been halted on this news that ceo is retiring effective may. so as we await that trade as we get it, we'll bring it to you. meantime, got more to cover here in the markets. >> markets saying a deal is in the wind. that would be rather remarkable. deal in the wind. we minimize the defense contractor jobs loss. those are jobs that are in republican areas. pressure from the contractors could be great here. a deal can be made. i don't think anyone thinks a deal can't be made. the calls this weekend clearly helped. i do caution from taking too much of it to the stock market when the president isn't back
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and we haven't heard from people on either side. >> biggest intraday gain here since september 13th. a speech at 12:15 and words of r.j. o'brien we expect him to -- i think intel has opened for trade i'm being told now. news that paul otellini is stepping down in may. talk about challenges the su successor is going to face? >> look at microsoft. it's not like it's been a standout. look at dow. our friends at hewlett packard. these are all part of the same complex. intel needs to break out of that. not enough credit for server business. otellini a long line of good professionals. as steve jobs said you can't deal with them. they're too slow.
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they're too big. and you rather deal with someone in a quick fashion like samsung. >> a company in 45-year history proved itself adept at reinventing itself when it needs to. >> i wouldn't sell stock on this. intel is cheap. i would not sell the stock on this. >> still has exact problems it had before and the fact that he's going to stay on for some time for there to be a transition to be well in place seems to be a good sign. contrast trading of intel, it's not a bad print but contrast it to the way the rest of the group is trading. we've seen very sharp gains in the likes of the texas semi. arms holding hit a 52-week high and philadelphia semiconductor business is higher by 1.5%. intel is a lagger. >> intel will consider external candidates as well. doesn't mean they will not promote from within. this is a company that's typically promoting. >> always promoting from within
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from its founding. >> interesting to note in the press release they are going to consider external candidates which would be a big cultural shift in some ways should that actually occur. >> people felt they should have bought arm holdings. middle east tensions having an impact on energy markets. let's go to the nimax. >> oil prices with a risk on day in the energy complex today. as you mention tensions in the middle east are a big issue. it's not so much the conflict that we're seeing in israel and gaza but you have the surrounding areas that are oil producers and post-arab spring it's a timber box that people are concerned could be ignited by conflict that we're seeing and there's no sign that conflict is easing up. impact on oil prices reflecting that geopolitical premium and it's winter so we'll see demand increases in the u.s. and china as well. wti up about 2%. same thing that we're seeing in brent. brent prices driving the heating oil and gas price higher.
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we're seeing a dip this morning in natural gas of course the e geopolitical issue not a big issue there. traders talking about the fiscal cliff this morning hoping to see some sort of a compromise. back over to you. >> thanks for that. if you think planning your black friday will give you an advantage this year, watch out. it turns out people are already starting to line up for black friday deals like these folks outside some best buy locations. some in tents. that brings to us this morning's squawk on the tweet. complete the following sentence. instead of camping out best buy days in advance, people would be better off -- blank. tweet us. we have responses throughout the morning. something tells me they will be quite sharp. >> you are missing the point. best buy has terrific geek squad is very good. best buy mobile has been terrific. tremendous amount of size. a lot of firepower.
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i have been notably negative because i think that it would be bad but there are people that like to shop there you need the product and they've got it. >> good point. >> they generate a lot of key cash flow. that's the key at a price. everything is worth it. depends on what the price is. >> we're not talking about a $26 deal anymore. >> unless you want to pay 100% premium. >> the new york post says the number is 90. i'm not sure who they are talking to. that's what they published today. >> 19, 18 -- we'll see. >> it's the battle of the home improvement retailers. lowe's steps up to the plate better than expected numbers this morning. is it a better bet than arch rival home depot? first -- >> coming up, how many stocks can you talk about and how fast can you do it? see if you can do it better than cramer. six stocks in 60 seconds when
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six stocks in 60 seconds. >> people have been killing these hotel stocks basically betting there will be a recession. >> i know you said things about pet smart in the last couple weeks. >> the best quarter in terms of surprises. when i saw it wasn't able to go higher after that, i was shocked. >> upgrade at dean foods. >> commodity worries have passed. >> an upgrade. >> emerging markets talking about china expansion. one of the attempts to get technology going here. >> marathon this time. >> important to talk about
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israel and gaza. this company has unique american assets. oil and gas will be great here. >> a final upgrade. >> this is my favorite international company. they are moving it everywhere. india, china, people drinking whisky like mad. >> big deal with india in the past couple of weeks. >> i met with my friend johnny walker black over the weekend. >> how is johnny doing? >> it was at a wedding. he is always there. >> he's a great guy. he should meet by buddy jim beam. >> what's on mad tonight? >> we'll talk about fiscal cliff saying, listen, here's what happens if we solve it. i think this rally today is about solving it. and i'm going to present the world view that is going to be just unbelievable if we get this thing solved which would make a lot of stocks go up dramatically including apple where we would finally get a sense that maybe it's not worth selling because the capital gains tax may not rise that much.
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>> on friday night intraday was 505. this morning we're creeping up to 548, 550 here. >> i tried to get into the apple store yesterday. apple does have products you want. do they have i-tv? you don't need it because stock is down 20%. i think that apple is a clarity stock. that's the big issue that i'm using for fiscal cliff. we get clarity, you may say i don't want to pay taxes this year. i'm already paying enough. i'm not going to take that tax gain this year. >> cnbc has built model portfolios. one is built on the idea if we go over the cliff. one is built on the idea that we avoid it. are there obvious stocks that lead both of those models? >> lockheed martin. $100 stock tomorrow if we get a cliff. lockheed martin, great yields. you would realize maybe after tax of the yield wouldn't be so bad. that's my favorite pro
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resolution cliff stock. especially with new management. this is the one. this is the one. >> we are going to talk bernanke speech tomorrow. some believe he'll lay groundwork for qe-4 after minutes last couple weeks showing the board committee was ready to do something if jobs don't improve. >> bernanke will say washington, i can't help you unless you help yourself. t this is a guy in a sweet spot to say i've given -- i'm giving her all she's got, scotty, moment. we need this. we need to live long. right now we need to prosper. >> taking a hit, captain. >> that's good. >> we'll talk about ben. great job today on the "today" show as well. when we come back, get ready for a double dose of breaking news on housing. existing home sales and some home building sentiment at the top of the hour. ♪
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the street." i'm diana olick. breaking news from the national association of realtors. a double dose of news this morning. existing home sales for october and home builder sentiment from november. we're just waiting to hit that 10:00 mark. existing home sales rose 2.1% to a seasonally adjusted annual rate of 9.7 million homes. sales still up 10.9% year over year. this marks the 16th straight month of year over year sales gains. median home price 178,628 up 11.1% year over year. it's median price so it's about mix of home selling. homes over $500,000 have seen 40% gains in sales from a year ago. inventories at 1.24 million. now to the home builder sentiment number up five points. a big jump to 46. that's the highest reading since
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may of 2006 for the home builder sentiment number from national association of home builders. 50 is the line between positive and negative. a big jump and the segment that current sales jumped eight points. that's the highest level in six years. also sales expectations jumped two points so sales expectations in the positive. big news for the home builders seeing much more confidence. back to the existing home sales numbers, the only region that saw a drop month to month was 1.7% in the northeast. gains everywhere else. 4.4% jump month to month in the west. that's because you are seeing foreclosures, investors out there getting in there quickly. investors made up 20%. that's higher in october of existing buyers. distressed sales making up 24%. all cash. still one-third of the market at 29%. short sales 12%. foreclosures, 12%. equal there. a slightly higher than expected number due to downward revisions in september and that home builder sentiment number is a
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big one. >> market adding to gains on those numbers. thank you for that. a lot more data to come later in the week with housing starts tomorrow. want to get to our road map for the next hour. president obama in myanmar saying he's confident the fiscal situation here will be dealt with. markets reacting today with large gains across the board. biggest number since september. how much longer can the optimism last? morgan stanley's chief u.s. strategist adam parker here to give us his take. >> big news out of intel. the ceo announcing he'll step down in may. shares just opening for trade moments ago. we'll get analyst perspective on what it means for the stock in the short-term. >> from tech to home improvement trade. lowe's reporting solid quarter. in battle of home improvement retailers, who comes out on top? >> u.s.p. releasing shipping projections for the holiday season. we'll sit down with the company's president of u.s. operations. we certainly have a nice rally on our hands as carl mentioned. all three major averages up more than a percent today as continued signs of optimist
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signal a deal could be reach before the new year. adam parker, good to see you. >> good to see you. good morning. >> is this what we're seeing? we're seeing the markets reaction to a deal being baked in? >> i don't know about that. i think they're talking and they want to signal they're talking but i'm not sure they're doing anything other than kick the can down the road. we'll have to see. it's positive if you get more belief that repatriation of foreign cash would occur if you get more progress on tax reform. there are positives that could occur. i wouldn't say it's solved by any stretch. >> what do you make of the notion, adam, that the selling that we have seen is fueled by uncertainty surrounding capital gains and dividend taxes. are you a believer that people have been selling in order to lock in gains? >> that could be part of it. i would suggest to you it's also corporate earnings. i mean, we've seen basically no earnings growth in the s&p 500 at all during the october, november earning season. think about that. the entire s&p is not growing
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profits at all. year over year. that's an earnings recession without an economic one. corporate earnings are partially responsible for the pullback we've seen over the last few weeks. >> in terms of your overall view of the markets, let's say that fiscal cliff uncertainty was removed. you would have that dismal earnings picture. where do you stand? >> you know, when you say it's removed, i feel like i got to duck a couple unicorns flying around. it's written in the law 500 basis points fiscal cliff next year. the bold case would be to remove 350 basis points. so the bull case is a big headwind. if the economy is only growing 1.5% in the u.s. right now plus or minus, i have a 1.5% remainor from the fiscal cliff, i may have no economic growth in the first half of next year. there are things improving. so our economics team at morgan stanley is keeping the gdp forecast around flat year over year 2013 versus 2012.
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the same growth rate. that's not bullish by any historic perspective. >> how do you characterize what we've seen right now in terms of the pullback? oppenheimer technical analyst came out with a note saying that any bounce that we'll see is a rental. it's a rental bounce. short-term bounce we see within a broader pullback in the market that has been about average when you take a look at the past 12 corrections that we've seen since the bull market began. is that what we're in right now just sort of an average run of the mill pullback? >> i don't know. i'm not a technician because half of that stuff is predicated on momentum continuing and half predicated on momentum reversing and knowing when to apply what is where i don't see it will pick up in the fourth quarter or first quarter. it can improve after the april earning season. i don't see corporates really signaling they are optimistic
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about things recovering very much. i want to keep conservative in the portfolio recommendations until we get more clarity on fundamentals improving. >> so what does at that mean in terms of where you're recommending investors put their money especially if you have this dismal outlook for the economy where we won't see growth for the first half of next year. >> economic forecast is growth will be the same next year as it is this year not improving is it's not no growth to be clear. the two sectors overweight are technology and health care. they are two sectors that have the most cash on the balance sheet and therefore could benefit from tax reform or certainly any grand bargain that included things like repatriation of cash. to me the sectors trade at discounts to the market and in some cases grow faster and have better balance sheets. i want exposure to that sort of quality in an uncertain time. >> when you talk about the trough to corporate earnings next year, assuming it's not a first or second quarter phenomenon, is that contingent
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on any development regarding the fiscal cliff talks between now and year end? >> it's a good question. between now and year end not really. i think it has to be that they made some resolution by the middle of february otherwise i think it would be more negative. we take a pretty wholistic view of earnings. a farame work for the markets. we look at the data predicting earnings in the past. things like manufacturing data or the unemployment data or consumer confidence. when we look at that analysis, it tells us earnings for s&p should be around $99 for 2013. the street is at 114. i think the problem is earnings still have to come down a lot. the question is how does the market act when they come down. do people view it as healthy reset for future beating or worry that it will fall off a cliff so to speak? >> when you talk year end 1,167. are you envisioning a situation in which all of the promises of a deal by christmas time begin to quickly fade and investors
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almost panic sell into the last week of the year? >> i don't know about that, carl. we set the target january 1st of '12. we say what's view of 2013 earnings and how will people feel about it on december 31st of 2012. what's the next meaningful move in the market? we think it's down. the frame work for thinking about the market is take a view of earnings and take a view of what makes the multiple. that ratio move up or down. if i told you on january 1st of 2012, ten months ago, no earnings growth for s&p and the most extreme ten-year yield in the history of the united states, we thought the market would trend down a few percent from where we were at the beginning of the year. turns out we were right about the earnings and not right about the multiple. it's because of things that have driven it. the market isn't going to get down to my target. i don't think it's helpful to
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revise that. what is helpful is what's the next meaningful mood? this certainty grows and makes the market tend lower. i'm not positive i'll get better economic news out of europe either. >> you're right on those two. we'll see if you make it three out of three. always good to have you. >> great to talk to you. have a good day. >> you too. adam parker at morgan stanley. the looming fiscal cliff and more. we'll find out what's catching the attention of oil traders on this shortened holiday trading week. >> here's a name you might remember. i do. david shulman. he's here to tell us why a massive correction is headed our way. we're back in two. i always wait until the last minute.
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israel is ready for a ground invasion but the country prefers a diplomatic solution. oil is moving higher this morning. joining us live from gaza now is ayman. >> good afternoon. the sun is setting and they have been for every night over the past six 9nights palestinians brace themselves for a violent night. it's during the coming hours that there's an intensification of israeli targets throughout the gaza strip. yesterday on sunday there was an incident that many describe here as a massacre. one that targeted the home of a senior member of hamas' military
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according to the israelis but inside that residential house were families. 12 people were killed including four children and four women. it's created a sense of anger among many here in the palestinians of gaza that the international community is not exerting enough pressure to stop the assault on the people of the gaza strip. palestinian faction says they are prepared in the event that israel launches a ground invasion here. they are willing to defend their territory with their lives. in egypt the focus has shifted a bit because politicians are trying to broker a cease-fire or truce between israel and palestinian factions. there are sticking points but there are signals or at least some early signs that a truce may be on the horizon that would be welcome news for people certainly in gaza and also in israel. back to you.
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>> thank you so much for that. reporting through the weekend and today from gaza. oil prices rising as fighting between israel and hamas does continue. could this be the beginning of a bigger price pop and where should you park your money in the complex? we have the senior energy analyst at raymond james. good morning to you. >> thanks for having me. >> the conventional wisdom last week is because it doesn't directly involve iran, maybe the impact on the complex not as dire as it might be under other scenarios. do you agree with that? >> there should be no impact at all from what's happening currently on the israel/gaza border. none whatsoever. the reality is that the oil market is very jittery as all financial markets are these days. and as we saw, for example, with the egyptian revolution in 2011, which also had no impact at all on oil market fundamentals, but did push all prices higher for a
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period of time. the concern here is contagion. will this very localized war lead to a broader regional conflict and the odds of that are just exceptionally low because egypt is not going to go to war over gaza. syria is already having its own internal conflict and not a major oil producer in any case. iran as you mentioned frankly is, i mean, clearly would want to help hamas in this conflict. of course it's in no position to do so. for one thing, it's too distant from israel. it does not border israel at any point. it wouldn't be in a position to do anything besides maybe provide some equipment through the egypt/gaza border. >> that's the point. we do have longer range rockets that are now beginning to endanger tel aviv which most analysts agree are being
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trafficked into gaza at least with minimal help from the iranians. you don't think that's going to weigh on the minds of israeli lawmakers and defense ministers? >> the issue in relation to iran that certainly weighs on the minds of israeli politicians is the nuclear program. what is currently happening with gaza is going to stay localized with gaza. there is no -- i think any possibility that this will by itself turn into a broader war between israel and iran. there may well be war between israel and iran down the road, but it wouldn't be in relation to rockets from gaza. it would be directly in relation to the nuclear program. that's the threat to israel, not the rockets. >> so in terms of the increase that we've seen in the price of wti and brent and i would like to focus on brent, how much of that do you think is the middle east premium but also we've had major production disruptions out of norway.
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about 8% of their output at this point. >> look, clearly the market is concerned as i said last year during the egyptian revolution same thing. no fundamental impact on supply but there is this fear that something will get worse. no one really knows what. there is this fear any way. i think the norwegian issue is more substantive. there have been outages in brazil that have weighed on supply. let's remember one very important thing. the united states alone is adding more to global oil supplies this year than any other country and maybe more to the point, the u.s. is growing its oil supply more than the entire world is growing demand. by definition, that speaks to an increasingly oversupply and not undersupply, oversupply oil
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market heading into 2013 barring some type of event risk like a war between israel and iran but even that would probably have less effect on oil supply than you might think because iran is already under sanctions and has been exporting considerably less. >> interesting point of view. let's hope it stays close to the way you see the things working out. only time will tell. thanks so much. >> thank you. intel shares hitting a new 52-week low after news broke at 9:00 a.m. eastern that the ceo will be retiring in may. he's held that seat since 2005. of course given the company six month's time to figure out who will replace him. john joins us on the phone and he'll look at who that person might be or at least give us some sense as to what we can expect. john? >> it's an interesting situation especially because paul wasn't facing mandatory retirement for another couple of years at least. taking a look at the late of
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executives who might replace him, a couple of the more obvious ones were promoted to executive vice president positions. brian runs the process technology business that's getting the chips manufacturing if you want to continue along the track intel has been, he would be a key choice if you believe x-86 will break through in mobile and there's stacy smith also the chief financial officer. if you think they're going to go through acquisitions, he would be a key choice. and then you have a couple others. renee james was promoted head software. if you think that software is a key piece of your future and entrepreneurial bench going in a different direction, she would be a pick. a name not in the press release is the one who runs product. a hardware engineer at heart. a chip engineer at heart. he would be a choice if you think they need product innovation in order to grow.
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someone could argue they need all of those things but it's a choice that the board has to make over the next few months. i would say interesting legacy mixed. he's a guy who's responsible for intel going forward with wireless laptops. he's been an amazing operational leader clearing up lawsuits, getting chips delivered on time, covering the natural mistakes that happen with any company over time but then intel missed that key product transition to smartphones and tablets. that also happened on his watch, guys. back to you. >> jon, you mention many internal candidates for that top job but the company has also said it will look external aext. that's not typical of what intel has done in the past. are those just words in a press release? >> i can't say either way. i haven't heard either way. if they are looking externalally you have to think about a company like ibm that has a full
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stock of hardware and software and engineering folks. that could be key for them. qualcomm is a possibility. we've seen intel go to qualcomm. we haven't seen any notable executives come the other way recently. >> all right, jon, thank you. >> lowe's shares jumping after the home improvement giant upped its guidance. is it a better buy over home depot? you think you have seen volatility in the market over fiscal cliff fears. wait until you hear from david shulman and why he's calling for a massive correction in the very near future. back in two.
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the nasdaq is up by almost 1.5% in early trading. let's check on some of the moves within the tech heavy nasdaq. >> we are kicking off monday on a strong note. tech sector posting notable gains this morning. nasdaq up 40 points. apple shares making big strides this morning coming after eight straight weeks of declines. has the stock bottomed? that's the question. shares of apple lost 10% and over the last two months the stock has dropped about 22%. now, aside from apple, the semis are in focus. intel shares underperforming the pack of course with the news the ceo will retire in may. the board will consider internal and external candidates. we have our eye on cisco in an effort to secure a position in cloud computing space, they acknowledge an acquisition. cisco shares gained 8% over the
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last week. that stock has had a commendable run over the last week. >> thank you very much. it was pointed out the big move in shares of apple, bank of america, merrill lynch reiterating the buy rating but cutting price to 780 from 840. we have topeka saying the sell-off that we've seen down about 22% from highs insanely insane to use that analyst's words. we're up about 4%. i got a chance to speak to your friend on friday on "options action." he's known for being short on apple. >> it didn't look good for a while. >> it turned in his favor. he said on friday that he did expect a $50 gain in apple short-term. he was seeing a bounce here although longer term he is still bearish and sticking to his short. >> listen, it's interesting. jeffrey is an expert when it comes to fixed income. he's making a name for himself
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in the equity markets with the continued call on apple. he's a smart guy. he does see things differently than many others which afforded him a lot of clarity in the past. >> meantime from apple to best buy, if you think planning your black friday will give you an advantage this year, watch out. turns out people are already starting to line up for black friday deals like these folks outside of some best buy locations brings us to this morning's squawk on the tweet. we ask you to compete the following sentence. instead of camping out of best buy days in advance, people would be better off -- we'll get to your responses later this morning. they kept moving the door opener earlier so you would expect lines to formerlyie earlier. >> there are only five people in that line in reality. it's two tents. >> the fact that there's any line at all on monday morning. >> are there going to be significant bargains for the
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first -- do we know? >> camp out, david, and let us know. >> that would be interesting given i never even go in a store i might as well start camping out. i do like having canopy. i like to take that with me wherever i go. >> look at that guy. >> i don't want to know what he's about to do in there. >> look at the size of that thing. all right. >> why are we showing you this? because battle of home improvement retailers who is coming out on top and what impact did hurricane sandy have on the numbers in we'll talk lowe's versus home depot next. ♪
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you're the commander-in-chief of your own life. ♪ welcome to the world leader in derivatives. welcome to superderivatives.
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about an hour into trading, 7:31 on the west coast and 10 1010: 1010:31 on wall street. tyson foods the biggest gainer on s&p up almost 8%. posting better than expected quarterly earnings issuing fiscal 2013 sales guidance above forecast boosting dividend 25% to a nickel a existing home sales up more than expected according to the national association of
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realtors. >> shares of lowe's were up sharply. the home improvement retailer reporting higher than expected quarterly profit. lowe's also raising full-year same store sales forecast. we should note this lull we see in today's session is a two-week high in lowe's. bud, always good to see you. >> good morning. >> it seems like the stock really gained altitude on the conference call. what did they say that made people so bullish? >> they started to show they're getting traction in some of the initiatives that we've been watching with lowe's in terms of product line reviews, value improvement program, and so i think the call went very well for them. the company is starting to perform pretty well and has probably some brighter skies ahead. >> 26 basis point improvement in margins pointing to signs of the turnaround gaining some traction
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at this point and i'm wondering if you think at this point it might be wiser to be invested in lowe's versus home depot given difference in valuation and notion that the gap between them should narrow if lowe's is in fact on the way to recovery. >> well, given the action in the stock this morning, they are both selling at very similar valuations within a couple of basis points in terms of the forward earnings multiple and in terms of in our work which we do value analysis, they are selling reasonably at their value if not a little bit ahead. so we are neutral on both stocks. we went to a neutral last week after its terrific performance. we couldn't justify enough upside to the existing price to our corridor and we have the same issue with lowe's so they are both terrific companies but the market is already granting a lot of that improvement in the stock price in our view. >> there is a notion out there that there will be a massive
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rebuilding on superstorm sandy and there's been so much damage that there will be massive buying of plywood and i'm just wondering sandy made landfall four days before the end of lowe's third quarter. how much impact do you expect there to be in the fourth quarter. did management say we will see that continued boost in sales because of sandy? >> the management went through a very reasoned conversation on what the hurricane impact has from preparation to impact to cleanup to actually rebuilding and restoring and right now we're in the cleanup phase. they quantified about 30 basis points of improvement for sandy and another 30 basis points for isaac. it also was comparing against hurricane irene last year so it was about a wash when you look at it on a comparative basis. quite frankly both home depot
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and lowe's have done incredible jobs in our view of making -- to help those communities that are impacted. everybody is, of course, very concerned about the people that were impacted by these storms. both companies will improve on that. i think that the way you should look at it quite frankly is that this is going to be an extended impact of rebuilding and seeing that in the numbers is going to be one very hard to quantify and it's going to happen over an extended period of time into 2013. i think that that's the right way to look at it. investment impact is obviously built in a little bit on that but to quantify it would be very, very difficult. >> people today tried to today compare lowe's 1.8 comp versus 4.2 that home depot put up. i wonder did they fall short relatively speaking when it comes to average ticket or total tra transactions or anything like
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that? >> the average ticket has been higher than lowe's almost always in our work. and most of the comp was based on ticket improvement. i think that when you look at this, depot has outcomped lowe's for almost about three years if i remember right. it's been a period of significant comping for a number of quarters. that probably turns around sometimes in the middle part of 2013. we said that we thought by the third quarter of '13 we might see a reversal of that because of the good work that depot has done and just the way you compare comps. >> all right. we'll leave it there. thanks for your time. >> thank you very much. >> meantime, yahoo! ceo have held talks about extending collaborations with facebook.
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to what degree. >> neither facebook or yahoo! commented on the report that they are in talks for a search deal. because both of the companies have long standing search relationships with microsoft, it does not make sense for yahoo! and facebook to create a new search engine. facebook coo and ceo have talked publicly about the revenue potential in search. noting that the company is getting a billion search queries a day and isn't even trying. yahoo! signed a deal for binge to power search results in 2009. a deal tough for yahoo! to get out of it. facebook has a long standing relationship with microsoft which invested in facebook and the two also have a social search partnership. the big question now is whether a tighter partnership between yahoo! and facebook with microsoft's binge at the center could perhaps prove a real threat to google's dominance of search. google has two-thirds of all search traffic. we are likely to see facebook
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and yahoo! look for new ways to work together but a new search engine would face a number of road blocks. david? >> all right. thank you very much, jewulia boorst boorstin. shares of one energy company hitting a new high. let's send it over to kayla tausche at hq with a quick market flash for us. >> that name is cabin oil and gas. cog. it was up 3.5%. now up by 82 cents. and pretty good trade for the day. look at it this year. it tracked natural gas closely and has exposure to natural gas and recent rally is a reason why we see it up today. back to you guys. >> thank you so much. when we come back, what can brown do for your holiday shopping? last year u.p.s. delivers 480 million packages between thanksgiving and christmas. will they beat that number this year? we'll find out with the president of their u.s. ops joins us next. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest,
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the ceo of toys "r" us says shopping on the internet is "very ungreen." the store told the financial times he believes that people fail to account for the carbon footprint particularly shipping products to consumer homes. he thinks the novelty will wear off and shoppers will begin to see the benefit that stores provide. >> traffic acquisition costs are high and not that efficient. i've been hearing that in terms of retailers talking like he is. >> still have to drive to a mall. meantime, the world's largest package delivery company u.p.s. announcing it will deliver an estimated 527 million packages in the weeks between thanksgiving and christmas
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surpassing last year's total of 480 million. good morning. good to have you. >> good morning. thanks for having me. >> beating 480 is a big deal but going to 527 sountds like you ae beating it with a mile to spare. why so much strength? >> as the american consumer is more accustomed to shopping online and you have the advent of more ipads, mobile telephones, people areaccustom ed to shopping online in their pjs. >> mental image of someone in pjs shopping is sticking with me. are we in the early days of this or have we settled with growth rates may flatten out in years to come? >> we should expect this will
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continue. shipping patterns changed over the last five years. we really expect to have two peak shipping highlights this year. just after black friday and cyber-monday and three days after thanksgiving weekend as well as the nine days before christmas when we expect to have the highest shipping period. >> we just ran a story about the ceo of toys "r" us saying he thinks the novelty of e-commerce will wear off and shoppers will return to the store and return to the malls. what would you say to that? are you getting any indications that consumers are in fact worried about the carbon footprint and notion that shipping one package with one book inside is not very environmentally friendly? >> we don't see any change in the current shipping patterns happening any time soon. one of the hottest items for this peak shipping season and
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christmas will be electronics of any kind. particularly led by the use of mobile phones and tablets as the hottest items and as i mentioned earlier, we think that will continue moving forward. >> last week your company ceo gave an interview to marketplace asked about the fiscal cliff. as head of u.s. ops, how closely are you watching the progress of those talks and if it appears that they break down at any point between now and the end of the year, what sort of contingency plans do you have built in? is there a plan to strip out a lot of capacity in a short period of time? >> carl, thank you for that question. u.p.s. believes that congress does need to move very quickly to get this done and we don't need to go up to the deadline. we work with over 9 million customers on a daily basis. they are telling us that there's a reluctance on their part to
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invest or hire more workers. it's a simple equation for u.p.s. fewer packages shipped means less jobs for our u.p.s. workers. we would like to see something get done very quickly. >> more and more sites are offering free shipping both ways for a certain size order. i'm wondering how that impacts u.p.s. do they get a flat rate or do they pay the same as any other person? >> we work with major retailers who we have set contracts with. certainly as they ship more, we're willing to work with them. >> have you noticed that as a trend in terms of more and more companies reaching out to the likes of a u.p.s. to set up these contracts before the holiday shopping season? it seems like there are more offering this feature. >> you really don't get into renegotiation of contracts based on the time of the year.
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our contracts are based on annual or three to five-year rates. but we do see higher shipping at this time of the year so certainly for those larger companies they would enjoy a better discount and a pattern of consumer expecting free shipping will continue but i think it bodes well for u.p.s. as we have spoken about e-commerce and more people that are shopping online and that equates to move packages for u.p.s. >> it equates that you have to hire more people. we've seen 55,000 is the number you anticipate adding. is that in process? have most of these people been hired and are you sticking with that 55,000 person number? >> we're still sticking with that number. it's in process. we'll hire all of the way up to ten days prior to christmas but quite frankly technology enabled us to be more efficiency and productive with the same number of workers year over year.
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>> as online shopping becomes more of an impulse and more of a habit, you order something, maybe you just order one item and the packages over time get lighter and lighter and lighter, is that a challenge for margins or have you found ways to charge for a package even though they're not maybe as heavy as they used to be on average? >> you know, carl, i just spoke about our use of technology and u.p.s. as you well know invest over a billion dollars every year in our information services. it allows us to utilize technology to make sure that regardless of the size or weight o of the package, we put it in the right mode of transportation to ensure that margins are kept intact. >> can't wait to see you do that 527 million times in the next few weeks. >> it's an exciting time for us. >> thank you so much. >> thank you. >> coming up next, just how far could the u.s. fall if we jumped off the fiscal cliff? could it send the economy back into recession? steve liesman has the answers next.
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first, rick santelli, what are you working on in the next big hour of "squawk on the street"? >> well, they say, melissa lee, that imitation is the sincerest form of flattery. i don't think it's a big reach to consider that the u.s. seems to be striving to be more european in many ways. a topic for santelli exchange today is going to be bending it like europe. fizzle and sizzle cycles. what have we learned? what should we expect? top of the hour. ♪ [ male announcer ] 'tis the season to discover the kid in all of us. enjoy free shipping and great values on your holiday shopping from l.l. bean. [ male announcer ] you are a business pro.
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>> want to draw your attention to the euro. reuters is quoting some officials saying the eurozone is likely to give a tentative go-ahead tomorrow to disburse the $44 billion. there has been a lot of discussion. some say in-fighting as to the target, 20/20. 2020, 2022. see if had can reach a short-term agreement. right now the euro seems to believe they will. >> two-week high here. >> as we have been mentioning throughout the show president obama stepped up his lobbying efforts around a fiscal cliff
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resolution thing weekend before leaving for asia. making calls to jamie dimon, warren buffett, tim cook, several other notable luminaries in the world of business. we know jumping off the cliff or falling off the cliff would impact u.s. gdp. but how much? who better to ask than steve liesman. give me the answers. how much. >> i'm going give you two answers. i will give thank you broader answer but we are also going to take a look now at something here's not been done before. how the fiscal cliff goes down to a state level and county by county level as well. take a look at the overall numbers. p this is the question david asked. here is the 2013 impact. drilled down here. nondefense spending $40 billion comes off. defense spending, $24 billion. bush taxes, $42 billion for the wrelthy. that takes a drop of $503 billion. we sandt studded can't saw how exactly it spreads out but we
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can say where federal jobs are a big part of the economy and practical spending. let's take a look. this is going to give u us insight into politics of solving the plif problem and economics. here's a map that's color coded by the impact or amount of practical spending per capita by county. first of all, when you look along the east coast, you can see the huge fema funds that are out there as well as when you go down into places like florida, social security. come over here and into the middle part of the country. you can see things like drought relief, coastal subsidies, and crop insurance. if you drill down here, georgia, you take a look at places like ft. stewart. i don't think that active duty military person sell going to be a big part of the problem. what about the civilians attached with it, 3,000 civilians will. about $5 billion economic impact to libber downty in georgia which, by the way, 24% of their
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federal -- employment is federal government. let's look now at the next -- at a look at federal spending as a percentage of state gdp. maryland, washington, d.c., big part of it is nondefense and a big part is defense. come on down. hawaii, 16% of their state gdp comes from the federal government. most of that is the defense spending. all the way down to places like colorado and georgia where 6%, 7% are practical spending. one more way to look at this, guys, is on a state level. what you see here when you go to the next map, if we can go to the next -- fabulous, is federal jobs as a percent of the total by state. what you see is some red states like texas are red in this map and they have a lot of people. then there is a lot of federal employees there. and even blue states like california, they show up red because they have a lot of federal employees as well. so -- what you find, guys, is bottom line, it is going to be hard to get democrats and republicans onboard because it ends up affecting both equally
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as well, guys, it is the economic impact places like california and high unemployment. so that's a double hit to them. >> wow. not all cliffs are created equal. that's for sure. when we come back, tweet time. turns out people are starting to line up for black friday deals like these folks outside some best buy locations. we are going to ask you on to complete the following sentence instead of camping outside best buy days in slaadvance, people would be better off doing what? get your answers after a short break. bob, these projections... they're... optimistic.
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productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.
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people are already lining up outside best buy. getting ready in advance for black friday. request this morning involves instead of camping outside, people would be better off doing what? exercise those thanksgiving calories off. we haven't evenen those yet. they should teach the rest of us how to buy those deals without going to work. too much time. we were just doesing that. we got a wheat from best buy themselves. we have some in-line at best buy surprises and fun planned. can shop our black friday
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online. >> are you going to do it? they have pun surprises plan. >> yes, that will be the last day of my life that i would be on that line. >> at 11:00, what's coming up at 5:00? >> we are going talk muni bonds. if we go over the fiscal cliff they lose their tax exempt status. which stocks do you buy if there is a deal? traders are going to give you their shopping list we will see you tonight. >> headed to best buy. >> right away. >> zblents meantime, let me know what you want me to pick you up? >> here is what you missed if you are just joining us welcome to hour three of "squawk on the street." here's what's happening so far. >> my feeling is that when there is a deal, we are going to see a how point rally in one day. over a period of days in the dow. >> i think the next four weeks will determine the next four years. our r people going to start working together and in a bipartisan way. that was the real mandate of the
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election. >> paul otellini to retire in may. >> $250,000 and more, i will go to my grave before i raise taxes for the wealthy. and i -- i'm not hearing any of these guys coming out and saying used to really believe in that, not raising taxes for the wealthy. now i believe it. >> how many of this, though, just a source of funds -- you know, i mean, most widely owned or certainly -- heavy percentage ownership in so many portfolios. >> yes, i have. >> there is the opening bell. >> entire s&p and not growing its profits at all. year over year or sequentially. that's an earnings recession without an economic one. i think corporate earnings are personings partially responsible for the pullback we have even the last few weeks.
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>> good morning. holiday shortened week at the new york stock exchange. let's get a check on the markets. rally mode. dow is 161 points. the s&p adding 21. back to 1380. nasdaq, of course, having been laggard for much of the past couple of weeks. it is up about 45. bank of america, biggest gain other the dow. stock get an upgrade to buy from hold. price target of $11. and intel announcing its ceo will retire in may. paul otellini. the board will consider internal and external candidates for his replacement. road map this morning markets, as we said on the rise thanks in large part. more optimism about the fiscal cliff. then one of wall street's legendary market strategists comes out of retirement to warn investors that were only halfway through a correction. david shulman, former chief skits strategist are join us
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live. apple bounce back after falling into correction territory. we will talk to one analyst that says investors should buy apple now if they want the take advantage of the gains that he sees coming. creating american jobs with beer and ice cream. it sounds strange but it is being done. we are bogey to tell you how. we will start with the markets. all three indices in rally mode. dow, s&p, up more than 1%. joining us this morning, chief investment strategist at bmo capital markets. michael is the chief u.s. economist at jpmorgan bank. good monday morning now good morning. >> brian, what's today about? is this about the good vibes we got provide? the eu and imp coming to terms on greece? is it what bernanke may or may not say in new york tomorrow? or a combination of all these things? >> sure looks to us like it is a combination of all those things plus calmer heads prevailed. we are in one of the situations with investors where you fire, ready aim, reek active to any
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negative news that comes on. people jumped to con including was respect to the fiscal cliff situation. nobody really missouri exactly what is going to happen. but what we do know is that something is going to happen before the end of the year. i think what we have seen the last couple of weeks in terms of an overreaction from invest wrors created another buying opportunity. we are still very bullish near term and longer term with respect to u.s. equities. >> when you say something is going to happen, what do you mean by that? >> well, you think about the three legs of the of the stool of the u.s. economy. two out of the three have done the right things the last ten years. meaning cut costs, building new revenue, rebuilding balance sheets. now the job of the government to do that. we think it is going to happen. why? because it has to happen. because fiscal cliff happens on a mere-term basis. go over the cliff, runs into recession. everyone knows what's happening. now is the time for everybody to get together and play mice in the sandbox. and bipartisan effort to get things done finally.
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>> you obviously have confidence in congress. that's a good thing to hear. not everybody shares the sentiment. michael, meantime, we are coming off of a week philly fed disappointing, industrial production, claims noisy. sit being offset completely by what housing said today? >> i think you are right that the data is going to remain noisy for a few weeks still. i think seeing through the sandy noise will be difficult. i think what you are referring to on the fiscal cliff, we have been viewing a deal it is a most likely outcome. i think what we heard last week from the leaders coming out of the meeting is that a deal remains on track. so -- there's still a lot of details that are unknown as brian said, you know, no one really missouri what's going to happen. we will get some deal. there are deals that you can get that have a lot of fiscal drag. there are some deals that don't have as much fiscal drag. we feel like we are moving on the right path towards getting a deal. we don't know what that will look like. >> we mentioned this bernanke speech tomorrow.
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12:15 p.m. in new york. the economic club. after the minutes we got last time, michael, do you expect him to lay a platform for some additional accommodation given that so much of the committee seemed to be in favor of doing more and if employment does not improve? >> i think lit leave the door open to that. throughout the tenure bernanke has not been one to front running the committee, not two weeks ahead of the meeting. we expect the door to be left open. he may talk a little bit more about some of these changes and strategy towards talking about the thresholds. i'm not sure he will give us a silver platter. >> all right. finally, brian, in terms of sector exposure, if one follows your view that -- congress' staffed with rational actors and get in a primary work agreement by year end what do you buy first? what is at the top of the list? >> let me tell you, carl, our basis is really common sense.
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sometimes common sense doesn't apply to politicians. let's be honest with that. when you look at analysis and where the economy is, where the business cycle is, we clearly believe that technology and industrials and energy stocks in particular the next three to five years will lay the foundation for the next great bull market as we transition finally out of bonds and into stocks and think those three areas in particular in the u.s. economy will benefit. >> all right. we do have the ten-year back above six. baby steps. we will talk to you later. >> thanks. let's go to capital markets. gary kaminski is at hq. talking markets today. what's on your mind? >> good morning. very short term i think this week we will see higher equity markets. you mentioned the bernanke speech. i pointed that out two weeks ago. there was a lot of hope and -- praying that he was going to say qe forever again. we will technically oversaw -- technicalities.
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probably into thanksgiving. no major sell-off expected. i will say something. i think those folks at "the wall street journal" must be listening to this phone line. they must have tapped in here above --? how. if you saw the front page of the journal today, headline story investment falls on of a cliff. as you know from two weeks ago were we together post-nine i told from you the consumer standpoint the real question is how we are going to avoid a recession early 2013. and this piece basically echoes exactly the conversation is have i have had with people, sit on public boards, and -- you can basically go back to the old peter lynch mets dolly of -- companies. don't get too scientific. you can dumb it down and ask anybody you know that works at a company or sits on a public board what is happening now. the answer is simple. they are looking at new initiative dollars as it relates to the 2013 budgets and they are cutting the -- 20%, 30%. you know when that's happening whether it is because of the plif or in spite of the fiscal cliff, real question as it relates to equities, maybe not
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this week but certainly starting next week, it is going to be will we be in a recession in the early part of 2013. if you have the insight in that then have you tin sight into equities. let me throw it back to you and say i believe that unless the budgets are being cut as a result of the fiscal cliff, therefore, resolution means the budgets will be reinstated and if you are cutting the new initiative dollars, the spending just won't be there. "wall street journal" echos what i have been saying the last couple of weeks. >> people say -- the level of specificity, people are going to demand on the cut side. may be more -- definitely more than they have given us so far. even off the record. even though some of the back ground reports, that's for sure. >> listen. again, if you -- just use the methodolo methodology, viewer here, investment in the market, ask anybody you know, middle management in a company, ask them when they are being told from their senior -- people they report to. they are being told find ways to cut the budget of 2013. don't make it more complicated
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than that. it is almost impossible to see won't be in a recession early next year. >> gary, see you in a few moments spend it back to kayla who is back at headquarters with a mash it flash. >> check out shares of tyson foods. up about 9% today. missed revenues, beat on the bottom line. tyson was hurt by drought related costs. fiscal 2013 will be equally or more challenging. tysons has been able to raise prices to a point they can deal with it effectively, profit rose -- profit nearly doubled this quarter compared to the same quarter last year. that's helping food stocks across the board. pact that tyson can deal with that problem. >> thanks so much for that. let's get to the cme group. rick santelli at the santelli exchange on a monday. good morning. >> good morning. i have to stop watching movies late at night because it gives me so many different ideas for the santelli exchange. i think today it is very appropriate. bending it like europe.
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i think we are definitely trying to get this soccer ball, curve around some very important facts. i think that as we look at the stories of the day, it is -- so fascinating. we see that -- eurozone, again, seems to be in a mode to give greece whatever it demands. 44 billion euros. most of the stores stay it may happen relatively soon. let's look at the news of the day regarding spain. close to 11% in terms of bad loans. that's big number. and it is the biggest number going all the way back to early '60s since record keeping has -- been taken down on that country on their bad loans. and if we look at the unemployment rate getting very close to 26%, that doesn't matter. okay. reform avoidance. how many stories have we seen about greece or spain or the eurozone proper? doing the fundamental labor reforms that make a big difference or tax reform? they have huge underground economy. it seems like in all these
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instances, and -- even health care, how many comparisons do we see in health care? they are not accurate comparisons. we look to canada. we talk about canada. they have, what, 34 million people? we have 330 million people. you look towards uk. they always talk about their health care. they have 60 million people. these are just small bits of what our 1/6 of the economy will look like. in the end, red tape, over market blues. i think that whether it is in this country or it is in europe, the common denominator is what makes markets move seems to be words. listen, intellectuals, we have a boat load of intellectuals on cnbc of smart people. i have learned something today. yes. on this monday, november 19, i learned that intellectuals are gullible people. that's what i have learned. whether it is in europe, whether it is spain, whether it is greece or whether it is the u.s. in a lame duck session we all do want to rise above and everybody
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hears that roar shack the way they want it, vicinity heard anything that leads me to think that we are ever going to get to the proper conversation. let's not talk about 80 billion. let's talk about trillions and trillions. let's get off the tax issues and talk about reform issues. it let them see cake, not eat cake. >> we are bogey to have that discussion a lot more about what exactly are the tough choices and whether or not they are being made. rick santelli in chicago. intel's ceo paul otellini announcing his retirement. he will step down in may. we will find out how the company plans to proceed and how it can affect the stock which is not moving a lot today. after double digit losses, all-time high in september, apple's trying to make a comeback. we will talk to the analyst who says investors should buy stock now if they want to make a profit. lot more "squawk on the street" after the break. [ male announcer ] it's that time of year again. time for citi price rewind.
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intel's ceo paul otellini announcing he will step down in may. the company will look internally and externally for his replacement. >> good morning. shares of intel off the lows since the news paul otellini will leave in may. he has been with the firm 40 years. it was noted during otellini's tenure intel generated $107
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billion in cash from operations and made $23.5 billion in dividend payments. board of directors will consider internal and external candidates for the job. bernstein analyst says chip makers makes an external higher, less likely especially given challenges now threatening intel's semi sector dominance. that's some analyst reaction for you. of course, it will be interesting to see who intel picks especially during a time we have seen more than one management shake-up in the broader technology space. >> indeed. this is a big one now. given the number of ceos they have had the past 30, 40 years. thanks. he has been a giant on wall street for years. david shulman, former chief equities strategist for solomon, is here to tell us why we are only halfway through a correction. that's coming up next. can i help you?
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♪ markets ral twlg morning. will the rally last? our capital market senator gary kaminski joined -- >> there is an interesting story with this. i did a piece talking about what straig strategists are doing versus what they are saying. he said i completely agree with you and see the same scenario you see. old-timers like myself know david was responsible for one of the great equity calls ever when he called the japan market top, 20-plus years ago now. lot of people think what's happening here in the united states, bernanke, qe infinity, setting ourselves up for a japan-like skwat market. five years into a 20-year slide. is that something you have a thought on? >> there are a lot of similarities especially with qe
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and slow economy. there are also a lot of differences. main difference with the japan was facing demographic collapse and we are not facing a dem zbrafic collapse. japan was going through an unusual structural adjustment where hit to switch from export to consumer oriented economy. china has to do that now also. the we have a smaller structural adjustment to do compared to japan. i don't think we are japan. >> in terms of the u.s. equity markets, you reached out to me and do think we have much more of a correction here ahead. tell us where do you think these equity markets go? what are the driving factors behind that? the fact we have an up market today, where do you see the rest of the year? >> i think as -- i think we are about halfway through. i thought that friday. up today. maybe a little bit more to go. you know, 1250 is as good a number as only, golden call. that's hard to really quarrel with 1250, 1230, somewhere around there. the thing is that -- going to take a long time to resolve this fiscal cliff.
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it is not going to happen this week or the week after. probably i go down to christmas eve and the fact is the president may have to call congress back into the special session p they decide to -- decide to adjourn. the other thing is we are doing have a substantial increase in capital taxation. both in dividends and capital gains. and stock market is beginning to price that in. p you go back in history, the previous times we raised capital gains taxes we had poor decembers, and my guess is december will have some problems as we price in the increase in capital taxation. >> are you somebody that believes in individual investors are, in fact, selling? they have been selling the last couple of weeks because of capital gains? do you buy into that? >> individuals as well as hedge funds. they are taxed -- you know, flow through -- mediums, i think people are selling. >> let's talk about a recession. let's say we -- your scenario at -- we get resolution to the fiscal cliff. i don't know if you heard what i talked about at the top of the hour, can we avoid a recession here in this country? early 2013. >> i think if we solve the fiscal cliff issue, late in
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december, very, very early in january, i think we will miss a recession. that said is -- fourth quarter growth is probably between zero and 1. first quarter growth is probably below 2%. we are going to get fz cal contraction coming out of whatever deal they come up with. we have slow going. if you want to call the economy 1% to 2% in the first half that's probably where we are going to be. i don't think we have a recession. >> 1250 on the s&p. lets say i can't short stock, let's say i'm not a hedge fund. what do i do with my money right now to protect my wealth through the remainder of this year? >> the thing is that if you have big gains and you are not comfortable with the stocks, probably would make sense to sell some of those because -- chances are you will be taxed higher on it next year. >> you sit in cash? idea of cash being the negative arbitrage associated with cash. what do i do? do i put the money in cash and forget about it n. >> i think -- opportunity for one month, it does not matter. no real opportunity for one month. >> you don't see any -- any scenario where we can have the
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equity markets between now and year end? >> no. if you get a deal much quicker, the equity markets higher. i don't think that's going to happen. the other thing is that i think if we got a deal, it isn't clear to me how much we will rally. the people of -- putting way too much into the -- solving the cliff problems. i think we may get a rally. still have to deal with flat corporate earnings next year. >> before we go back, i mentioned you called me after i mentioned about what strategists were saying as opposed to what you were doing. what do you make of the strategist on wall street today? you were a -- i think we called a you a legendary strategist. somebody put that in the prompter. you were a strategist who actually -- had skin in the game and you -- advised clients back in the salomon brothers days what to do. we hear strategists all day talking about how attractive equities are. what do you make of what the viewers are hearing? >> i think most strategists are naturally bullish and will be upbeat, i think the -- real issue is if you go back to 2007,
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the real -- beginnings of the financial crisis happened in august. >> right. >> the market made a new high in november. people tend to for goods get that. then went straight down and a lot of happy talk between august and move time period before we really fell off a cliff. i don't think that's going to happen now but i think it is -- have you the -- certainly have risk in the system. >> okay. great. thanks very much for joining us. carl, i guess some sobering but maybe some straight-in-your face from somebody that calls it like he sees it. >> few moments left in europe's trading day. a quick break. when we come back, we will get the close on that. some of the details surrounding the headlines pivoting important meeting.
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minute away from markets close something the uk and across continental europe rallying today on open tichlism not only about talks regarding the fiscal cliff here in the u.s. but also some headlines that suggest that the eu and imf might reach an agreement regarding the next bailout payment to greece. maybe some agreement down the road regarding the target for their fiscal situation. here is a look at the major european markets. london, ftse, dax, italy, spain, looking at gains between 2% and 3%. they have been on a tear most of the day. euro also getting a lift. reuters as we said reporting that tomorrow, european finance ministers are likely to give tentative approval for emergency loans to greece, totaling 44
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billion euros and aid would be contingent on greece showing it as fully committed to reforms aimed at reducing the country's debt. we will see how europe trades tomorrow. for the meantime we are left with the afternoon session. with that we turn it to rick is an tell write who was in chicago. >> tell you what, it is a fascinating day and for all the reasons that you just depicted, carl. what's going on with greece looks as though they are going to receive their $44 billion in euros. we continue to see that there is a lot of deterioration in their economy. we see continued deterioration in the spanish economy although -- always seems to look at the bright side. there is nothing wrong with that. are we getting close to the bailout request? when i look at the nonperforming loan ratios, when i look at their unemployment rate, when i look at the general dynamics of all their economies, their stock markets year to date, outside of germany, one has to get a little nervous. that's why my guest today is -- mark grant with this southwest securities and i'm always interested to hear what he has to say. mark, are you there?
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mark? >> i'm right here good. great. listen, mark, let's keep this simple. i'm in a very cynical mood today. i was read something of your research. guess what. you are in a cynical mood as well. does greece deserve this payment and have they really done what they promised to do to get it? or is this once again putting wall pain over termites in europe? >> no. rick, i totally agree with you. wallpaper over term mights is a good expression. in the first place, greece couldn't pay back its benefit -- spit olive oil into the mediterranean. the only reason that europe keeps egging them along is because they don't want to see a collapse of the entire euro region. one of the interesting questions is going to get who is going to fend this.
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austria, netherlands, and also finland and said month more money for greece. so tomorrow while they -- talk about this two-year extension, it will be very interesting to see who is going to put up the money. >> now let's get to brass tacks. let's rye to highlight some quantitative points. half the greeks in your opinion done reforms that we have seen requested along this multiyear trip. if, yes, give me concrete examples and if not, i would like to hear those as well. >> basically, rick, they have not lived up to what they have promised to do. they were supposed to have the sale of state assets, they haven't done it. but it has been encouraged by the europeans that have -- helped them bury this. for instance, when you look at the -- debt to gdp ratio, you are looking at a number right around 460%. that's just counting what they actually owe. in other words, the guaranteed bank bonds, guaranteed corporate
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state debt, $90 billion in derivatives, europe doesn't want to count this but it is there and then you have the issue of the imf and what miss lagard will do tomorrow because she says she is not going along this two-year extension and they have to hit the 120% number by 2020. it is going to be a very interesting meeting to see if they get down to brass tacks, what they are really going to do. >> now, do you think spain has learned something from the greek ordeal? in other words, i see their unemployment rate approaching 26%. i talk eed before how the nonperforming loans reaching close to 11%, historic high since record keeping on this topic. how can this possibly work out well? when is the bailout coming? and can we draw any con clungss between greek, spain and the lame duck session and the rise above we are hoping for out of
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d.c.? >> to answer your first question, spain will be force flood a bailout. it is just a question of time. i think that what they are worrying about is they deal in what's called dynamic provision and -- which allows them to move around the reserves and it is really a way of playing funny money with the books. spain is going to be forced into it. it is going to be about $350 billion to $400 billion if you include the regional issues and bank issues over there p. it is a question of when it will happen. spain is trying everything it can to put it off and to have them just give them money for nothing. >> mark, we are going to have to leave it there. i always appreciate when you are on. in terms of the topic of -- what we can learn in the u.s. and in terms of dealing with our own issues and the sizzle versus the steak, i think we have lot of time to bring it back before it is solved. back to you. >> thank a lot. let's bring in bob pisani with a look at what's happening.
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broader market. some individual sectors adding on to prior gains, too. >> yeah. amazing what you can get with a little bit of hope on the fiscal cliff and a little bit of hope on what is going on in greece. i want to point out one sector that's been making a comeback the last -- three, four trading sessions and that's -- insurance stocks. i know. sandy and all that made a mess. it is a disaster. we are up again today. this is the third straight day these insurance stocks have been up. put up allstate. this is one of the companies that's most exposed to the hurricane sandy. and, of course, we went from $42 down to $38 as -- we got a day or two after hurricane sandy. you can see in the last few days, we are back up here. we have gone from 38 and now knocking on the door of 40. the key component here -- none of the big guys have put out their actual loss estimates yet. you about -- the indications are that they are going to be manageable and, in fact, there are other add-on effects that are occurring here. put up the -- what's been going on since wednesday with these companies. look at ait, allstate travelers,
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commercial insurers that have the most exposure. that's a mice bounce. in some cases beating the bounce in the overall stock market here. take a look at what has been going on here. i talked to a friend of mine this morning who trades these insurance stocks there is a lot of estimates floating around. even -- assume a very high estimate of 20 to 25 billion, high estimates floating around, look what happens. of the 20 to 25 billion, commercial lines of insurance, allstates and chicago cubs will pay out 13 billion to $15 billion. reinsurance kicks in after that, though. they pay the remainder of perhaps $7 billion to $10 billion. what else is going to happen, here is why people are more optimistic the losses. higher rates are definitely coming and the demand for more insurance. one of the major problems that's now occurring is uninsured or underinsurance. you go down to the store and you have a house that is destroyed, 300,000 to rebuild it you may get $150,000 to $200,000 because you didn't have enough flood insurance. that will be a midge or problem.
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people are going to be demanding more insurance and trying to rebuild and the insurance companies are going to give it to them at a higher price. more premiums and at a higher prays will be helping the insurance companies out. allstate, i want to show you something here. losses for allstate. we don't know. we are waiting for it. but maybe it is a billion, maybe it is $2 billion. they made $700 million in profit in the last quarter. obviously the current quarter's profits are out the window. we don't know what they are going to be like. this will be a loss. the important thing sing they will be able to cover it quickly. that's why we are up on the insurance companies. let me show thank you other side here of the -- banks and financial stocks have had a very, very tough time of it. it is a very simple point here. they are up today. first time in a while. baings bank stocks put them up on the outer loop side. most of the people that trade the bank stocks right now say low interest rate environment and no growth or low growth environmentment in 2013. reason they are not particularly optimistic. today these stocks are bouncing back. carl, they have been beaten up
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badly in the last couple of months. >> thanks, bob. bob pisani. send it back to head quarters and kayla. she has the market flash. >> watching diamond food. the stock tlaubled for the last year a half. down another 11% today on a downgrade from jefferies. jefferies saying there is a -- 33% more downside for this company to go. last week it restated earnings for the last two years. wipe out about $56 million in profit. they had problem was their accounting and with the payme payments. >> meantime, tensions rising in the middle east. senior official close to binyamin netanyahu is ready for ground invasion in the gaza strip but prefers diplomatic solution to that conflict. >> reporter: hello there. in fact, it is nighttime in g .
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gaza. the attention is shifting south of where we are. focusing more on cairo, egypt. that's where intense negotiations are taking place as we understand it. egypt is trying to mediate a truce between palestinian factions and israel. hamas made clear it feels it is in the driver's seat here. it says it will not lay down its arms or stop firing rockets until israel blocks on the territory. it is securing guarantees from israel lit not target hamas or any other palestinian leaders as it did on wednesday p when it killed senior member of hamas' military wing. the israelis say that it is in the driver's seat. it would not stop its aerial assault and not stop possible ground invasion unless hamas halts all rocket fire into southern israel. obviously you can imagine difficult road ahead. right now egypt is meeting with other key players in the region. including the prime minister of turkey, u.n. secretary general moon as well as the prime
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minister. intense negotiations to avert a ground war in the coming day. >> entire world watching. thank you very much. when we come back, one analyst says the recent sell-off in apple is insanely insane. he is going to rationally explain why next. later, what do beer, bicycle and vegan ice cream have in common? lot more than you might think. we will explain why it is all about investing in this country. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade.
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♪ coming up the top of the hour, names to buy now as stocks soar on a fiscal cliff deal. is apple a generation alibi? are traders and top analyst go head-to-head over america's most valuable company. and we are tracking the oil trade as tensions escalate in the middle east. we will see you at the top of the hour in 15 minutes or so. >> scott, thanks so much. meantime, as scott said, apple coming back after its recent sell-off. many investors still very cautious. one analyst says throw that caution to the wind. buy now. brian white is a senior analyst at to pea can a capital markets. buy on apple and price target you may be familiar with. $1,100.
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welcome back. put out a note this morning calling the sell-off insanely insane. and we are -- go back a few years before you see a multiweek sell-off like the kind it had. >> exactly. we are really in the strongest quarter of the year for apple. december quarter is usually up 15% quarter on quarter. we are down 21% quarter to date. in october, general there strongest month of the year. up 10%. we fell 11%. if you look at the valuation here, you look at the cash balance, look at the product portfolio, this is insanely insane. it does not make any zblens you would probably agree that a lot of the selling has been fired by concerns that don't revolve around apple's performance in and of itself. >> exact. >> i fairly or unfairly? great gains. what's wrong with taking them now before -- you are victim to change of tax policy? >> exactly right. i think it is one of the reasons that you have seen the sell-off. but let's take a look and
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compare apple to the s&p 500. and -- really get a gut check here on what's going on. i mean, this stock traded as of this morning at 7.6 times cash. s&p was 12 1/2 times. if you look at the growth rate of apple, 92% a year versus 7% for the s&p. this is madness. >> yeah. at a time where -- corporate profits are beginning to -- now people worry about profits recession. not apple's problem. at least in the near-term future. >> exactly. i just -- remember '08, '09, apple grew 40% in '08. 20% in '09. most companies in tech saw 30% declines. if you are worried about a recession, apple is a bet are way to play it. especially with this valuation. >> do you think friday was the low for a while? >> i think it -- i think it was. >> 505 train day. >> exactly. i will give you an anecdotal story. last week we put out a note on apple. i got a ping back from a friend
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in china. far flung place in china telling me to be aware everyone is shorting apple. when it is out to people in china that they should be short apple, it is over. the bottom is in. that's the way i feel. >> brief bit on the dividend. pays about 2%. right? little less 2%. you think it will go 3% to 4%? >> that's reasonable at this prays. 16 to $21 dividend. 1060 it currently has. look at intel and payout ratio, you would have over 4% dividend on apple. >> are there signals that's imminent or coming in the next few quarters, months? >> yeah. the exact rate we don't know. but i think -- i would be shocked if we don't see different dends continue to rise over the next six to 12 months for sure. >> finally, any lingering concerns on your part regarding supply, whether it is with an iphone? all sorts of chatter today about the iphone 5s coming in the middle of next year. are they still able to deliver on promises they make?
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>> so, you know, swreenl changed numbers for december quarter on iphone 5. we have 39 million. but i will say apple stores are starting to get shipment and we talked about it briefly when i had -- ipad mini came out. that was at any time case month or three weeks ago. starting to prove for sure. i think what's going to happen is there will be a penitentiary-up demand for iphone mini and iphone 5 for sure. >> thanks for coming in. your report got a lot of play today. brian white from topeka capital. how is beer fueling more than happy hour in the united states? jane wells is live in l.a. pedaling her way to the answer. >> as usual i'm working really hard. going nowhere fast. up next, it is a new world. new jobs, new economy, new lending. were sam adams thinks this is a good investment. hey don't worry. e-trade's got a killer investing dashboard. everything is on one page. i'm watching you. oh yeah?
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jim cooperated get finance when he started making sam adams beer 30 years ago so now he is providing millions of opinioning in other beverage and food start-ups that cannot get traditional help. jane wells is live at one of the start-ups pedaling a bike i'm told you have been on for almost 20 minutes. >> 25 minutes, carl. this isn't going to last much longer. i scream, you scream, we all scream for jobs. can't get a traditional job anymore, you create one. can't get a traditional loan, you find creative lenders.
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>> right now we are going to make vanilla. >> edward has an unusual dream. >> all right. lock and load. >> reporter: he wants to sell ice cream. organic ice cream. with vegan options. >> ready to ride. >> reporter: churn it sustainably on a bike. sound crazy? the banks thought so. but jim cook didn't. >> first of all, he has a great product. second of all, he's got a lot of passion for what he does and real commitment. >> reporter: nearly 30 years ago cook founded boston beer company maker of sam adams. >> nobody would lend me money when i started sam adams. >> reporter: now he is trying to help other food and beverage start-ups. his samuel adams brewing the american dream fund has provided over 200 loans, averaging $8,000 apiece. claiming to creator saved 1300 jobs. >> i received $15,000 loan. and i'm going to be paying it over the next five years.
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>> reporter: interest rates average 8%. and cook says the default rate sunday 5%. the fund teams with local economic developers to find the right start-ups. >> we have 250,000 entrepreneurs here in l.a. it has been said lay slay a small business capital of the country. and it is. >> check e-mail. >> edward is using his loan to open a storefront with plans to hire up to eight people. in an economy where traditional jobs and loans seem harder to come by, jim cook wants to support promising people scooping out a new path. >> while you have your ups and downs, you know, if you really loved what you do, you never work a day in your life. >> all right. now 8.5% is higher than you would get with a government backed business loan. but this is higher risk. it is also cheaper than starting a business on your credit card which is a a lot of the smart new start-ups do. providing more than just money. providing consulting. i have been build my quads. i made this, carl.
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this is really churned by me. >> how does it taste? >> peppermint. mmm. >> good? >> wow. back to you. >> and guilt-free after 20 minutes on -- 25 minutes on the bike. jane, as always, thanks so much. >> this will even out. >> jane wells in los angeles. art cash will drop by in a moment and weigh in on had morning's market. the dow up almost 154. back in a moment. n you take a c. the best schools in the world... see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... they can inspire our students. let's solve this. sven gets great rewards for his small business!
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we have a very quick, very early triple digit move to the upside on the dow. of course, that's been hold for most of the morning. art joins us at post nine. good morning to you. >> good morning to you, too. >> we are at some important levels, key levels. not a mistake we are at 1380 you are say. >> no. as -- wrote in my note this morning, it is -- key resistance in the s&p at 1382, 1385. that's right around where the 200-day moving average is. everybody made a to do about it breaking below. and now it will provide resistance because it is getting that notoriety. and they brushed up against it a couple of times this morning. haven't been able to punch
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through yet. >> i really think the -- market is rallying because -- washington is a ghost town. the president is out of the country. congress is adjourned. they are not come back to town until almost the middle of next week. so there's going to be nobody there to be quoted saying something to break this mood. and -- the folks in media, the file film they will have, is that kumbaya moment where they came out of the meeting. traders looked at that and said nothing on this side of the punch, it hurt us. >> as you said that's the only game film we have to look at now until everybody comes back. similarly, across the pond, ecofin meeting tomorrow. very similar broad brush strokes of optimism. nothing in terms of fine print, though. >> no. it is very fine. on both sides of the pond, you are hearing these statements we know we must cooperate. we must get something done. and that is inspiring a little bit of a rally. europe initially would just catch up to the friday rally. they stayed with it.
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my concern is no details. we are missing details on everything from payroll taxes to my other manifestation in what this package is going to be. and as -- gary's guest said even if you get everything agreed to, there is an austerity built into this. for now, it is party time and everybody around the punch bowl. >> thanksgiving is usual lay good time. were? >> yes, it is. you get people confusing the beginning of thanksgiving with nd olylylyly santa claus rally. thanksgiving, the wednesday before has a mild upward bias historically. that -- the day after, although it is usually now, a half day, used to be a full day. has an upward bias. but -- if you are going with history, you might want to be flat going into the weekend. because -- the monday after, maybe it is the leftover turkey or something. but -- things don't quite work out.
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>> tryptophan, negative effects. i mean, it is always impossible to read into the minds of congress. but there was a point made on friday when they all came out together. last time they did not come out together. as you said in your note the cameras did not reveal one black eye in the bunch. does that make you feel better about the process? >> well, i -- i think that and maybe it is -- my natural cynicism but i think they would also -- were chasing. they looked at what this market has done since the election. knowing that the fiscal cliff was an important thing. realizing that the wrong word, for example, president's press conference. when he seemed to take somewhat of a hard line the market sold off. i think that didn't get lost on washington. they remember the talk and remember when they saw 700 points melt from the dow because of something that happened in washington. i think that they said, look, we will go before the cameras and -- we may be general but we will be there. if you actually go back and look at what they said, they each gave different closing dates f


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