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tv   Street Signs  CNBC  April 14, 2014 2:00pm-3:01pm EDT

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z financial services. it is retail to the rescue. how the american shopper just might save the stock market. hi, everybody. mandy is out for a bit. the great melissa lee joins us today and all wee. is this like the internet bubble all over again? an incredible statistic by twitter, you have to hear to believe. the tax bill you may have coming that you will not want to believe. >> but first, let's take a check on the markets. what a relief compared to what we saw on friday as well as all
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of last week. off the session highs last year, so we'll be watching. right now the dow is up by 112 points, triple-digit gain on the dow. the nasdaq up by half a%. it had been up, and the s&p 500, the broadest measure up almost 12 points right now. bob pisani, and sheila is here. but bob, you kick it off. >> three things moving the stock market today. number one, i think the most important thing, strong march retail sales. that's what matters the most. end of tax season, wealthy people pay a lot more than they thought they would have to. i think that was reflected in the selling last week. >> citigroups better than, all the other groups reported all on the up side, including the regional banks how about sectors? oil, gold, steel, a lot of stuff that's up earlier the year.
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kind of looks like january. how about something that worries me. did you see what's going on with the biotechs? intraday slowly falling to the dow. trying to move to the down side. airlines another leader also weak. pricing tonight, ipos, two that were postponed last week, will they be able to get to it. we'll tell and find out tonight. the biggest to watch out is paycom. and what you want to watch here, the important thing is whether it prices in that range 18 to 20. below that, a sign of weakness. we'll keep an eye on that. standing by at the nasdaq where it's certainly a better day than last week. >> that's right, it is a better day. we are hanging on to gains, but we have lost considerable steam in about the past hour or so. now only up about half a%. so bulls losing some momentum here, boy tech certainly a part of that story. what is working here today? edward life sciences, the
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biggest gainer on the nasdaq after winning an initial battle, also the semiconductor, showing nice strict strength today. google, facebook amazon seeing nice leadership from the large 47 cap tech players, but one company that's keshlly out of today's rally, apple. that stock is in the red, everyone cease earnings is what everyone is watching for. >> thank you very much. we have argued that the weather will not kill retail sales. the commerce department saying retail sawing boasted their biggest gain in a year and a half. the death of retail was overstated just a bit. >> we haven't had a the lo of encouraging commentary. we just had same-store sales.
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terri lundgren did say he's seen some -- i'm still. >> the stocks have been sitting out of any you name it. except for the likes of a macy's and ko are. s. >> i thought all along it was the weather. i still think it's the weather. i was surprised march was as strong as it was. because i thought the weather would hurt march more than it did. we're running into easter. easter is always good in retailing, so we'll see -- >> so half glass full. is that going to translate into a bounce in these retail stocks? all we have seen it the best in class seems to be gaining, and the others are laggards. >> that's going to continue, continue because you have to win against the internet to win, so
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best in class in you're costco, dick's macy's, you can win if against the internecessarily. we'll see winners. >> your trailing is to win, you must win. >> that's your strategy. an omnichannel retailer. >> let's back this up one second. anyone who's bet guess the retail and american consumer long term has been left for dung, okay? if you bet against the american shopper, you will never win last term. >> that will happen one more time. we'll see strength, the weather can't possibly be as bad in the back half as it was last year. >> it can be too hot. >> it was the worst weather in years. >> bad weather means you buy chamoises and knee-high rubber
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boots. what are people just dying to get? >> they're buying for their homes. we'd like to see more in the apparel side of the business, as far as i'm concerned. but that will happen when the weather changes and will happen through the back half and partially weather driven. unless you play omnichannel, you do the whole gap ultimate, get it wherever you want, take it back to the store, you've got to been that. if you're not that, you'll lose to the enter in the. >> the probably is that doesn't help the retailers we're talking about, the ones that sell clothing and shoes. are we going to see a much more promotional activity? >> at least the ones you can easily compare, all of the gap brands, this time this year than what we saw last year, 40, 50% off as compared to 20% and 30% off. they're just going to have to
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stay that way to move the merchandise. can they maintain the margins? that's the tricky part. >> courtney is right. 45% off is the new 35% off. >> 45% off? >> and it will be right through the back end of the year. that's not changing. full-price retailers already 45% on of. >> so if you're buying a stock based on gross margin income, you might be out of slouk. >> we -- >> or if you look at gap, they have really good expense management, so gap can actually do a bit better with their margins, but to see how quality is to beat. stocks higher today as we manipulationed, but last week's volatility has many investors wondering if this could be the start of something bigger. dom chu, what can history tell us at this point? >> we want to put it in per
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spect. we like to show how it relates. let's start with big market stats. at current levels, the s&p 500 trades at about 16, 17 times earnings. that's your benchmark, so to speak, also trades at about 1.6 times per sales. >> how did that rank? back in 2007, the situation was identical the market was trading at about 16 times, and price to sales about 1.6. so it's a far cry from what it was like to the tech bubble in the 2000 peak where at times the s&p 500 traded at 27 times earnings, so nowhere close to that level, but it's interesting. the question then becomes, what's different this time around versus last time around? if you look at the sectors that have been helping to lead the way higher in this latest bull run, check this out, because consumer discretionary and
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health care stocks are now about 54 to 66% above where they were during the last peak in 2007-2008. so they've done very well, but here's the thing. two important sectors, telecom and financials, financials because it's the second best -- second biggest sector in the s&p 500. it's still 40% below where it was during the 2007-2008 peak of the market meaning if those banks can get back to where they were become, this mark could be higher. because they still have to play catch-up. so there's some similarities, but certainly some difference toss pay attention to as well. >> and it's very smart. i loved your piece, dom, but "if" is not a strategy. >> you're right. we're going to get to our market panel in a second, but you just saw courtney reagan with parent breaking news for you. >> check out shares of google. if we can pull up that chart. we have the company saying it
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has agreed to buy titan aerospace, a start-up maker of high-altitude drones. it was being courted by facebook. you can check out shares of our google class c. the goog right now up about 1.2%. >> actually i went on the air a couple weeks ago, melissa and said the deal was pretty much done. i broke the news about titan aerospace. and i have contact there, and he said basically all signs pointed to a go. they make high altitude drones to beam enter net access around the world. they can stay in the air -- they flay in the -- basically the stratosphere, so they can fly for a long, long time on electric and solar power. if this is true, this is google going right after facebook, outbidding facebook and taking an asset away from them. >> it will be interesting to see what -- there aren't too many
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publicly traded drone focused companies out there, but in general whenever we have talk about drones, whether it's amazon, we do see a pop in other names, so watch names like avav, that's the ticker play. it could increase the valuation if it's seen that drones are the next hot thing. >> because google had been looking at the balloon idea, the wizard of oz theory. just go up and say there -- >> balloon sounds like a terrible idea. >> they sound so 1974 considerable. >> can you imagine it with a pointy beak? >> let's bring in we do appreciate your patience. >> i love what you did. you highlighted how many sector valuations had just gotten way out of whack. maybe they weren't 1999, but
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they weren't far off. about the rae pullback pull us back to more intelligent valuations. >> i think it helped bring us more towards intelligent, but there's always a heightened -- it was trading 158 times over earnings for the space, and of course biotech, which didn't get as aggressive, but still trading 44 times the earnings, so at the end of the day you'll get these crowded momentum type of trades in the market. does this show a bottom we've reached because of all these hedge fund delevelages? under the circumstances not necessarily, about you it realized at this point risk/reward probably favors getting long these names, as opposed to being a net seller. >> at the same time, matt, i'm curious on your take. what wove seen in particular, let's take for instance biotech, which has been a sector that had been so punished in just the past month, you look at the valuations. they're not nearly the same as the likes after twitter or those
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in the internet space. the forward ep is 25. the p.e. right now is 35. this company has a pipeline. this is just one of the many biotech stocks severely punished. what do you actually make of sort of what we have seen the money come out of and where it's going to? >> well, part of the problem with what happened with biotech and all high flyers is there's so much leverage in them. these stocks ran up for, you know, well over a year, basically in a straight line. so a lot of leverage was built up. so as they, you know, as they had a decision here made by some of these risk managers deciding to take off some risk, probably because of janet yell en's comments. whether it was accurate or not, it doesn't matter. they decided to pull back on risk. when leverage is unwound, it causes forced selling, and valuations kind of go out the
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door, so when they swing too far to one side, they tend to swing too far to the other, so there could be some more downside movement. if we continue to see some of that deleverages. >> one of you two needs to answer your fax machine. >> and who has a fax machine? >> one of those two guys apparently. >> we've heard a lot about hedge funds loading up, maybe throughal go rhythms, machines, man, whatever it is. how much of this is investors actually selling, because they believe the names are overvalued us plus some computer algorithm. 50 times earnings is a bit much, let's sell it. >> well, you know what? >> i think matt hit it on the head. this is more of a function of deleverages. whether it is tax season, whether it is that reversal of that big chinese carry trade, or whether it's a resumption of what the fomc is going to be doing, at the end of the day we've watched growth outperform
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value only three times since the last meeting. that's a seismic shift over what we've been seeing the last year. now we have they drawdowns going on with hedge funds. the market is going to do whatever wounds the most participants. biotech and internet retail was very crowded where you look at the sleepy tech areas, the ibms, ciscos, thee all benefiting because it was a crowded short for the hedge funds. they are shorting these names to raise capital. so this unwind is benefiting a lot of what we're seeing in old tech. bear in mind, guys we have a light week going on here. spring break going on. passover kicking off. good friday on friday, and then of course a four-day weekends because of marathon monday. so don't take too many cues off what's happening today, but the longer then with what we're seeing. >> kind of sad what you want there, but it is true. the market will go where it can wound the most participants.
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eve eve three years of winter, spring is finally in bloom here in the northeast. if you're thinking of buying a
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newly built home, because you're afraid the prices will keep rising? our next guest says not so fast, are you say the new home market mike soften a bit? >> we're cautious. >> this afternoon, continued dislocation, which is impeding household formation. that's a real problem. >> so there's a drag on the recovery, which isn't gaining momentum like we anticipated. >> what do i care about how -- >> you're a happy stockholder if you have it that indicateers to the luxury occasion. very strong, robust demand. on wednesday is 975,000, we don't think we'll surpass a million this year.
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we have severe head winds. investorses need to note this ichblgts you buy a homebuilder etf -- >> well, that one is particularly -- you have mattress makers and home debo. >> that's one of the most terrible etfs out there. >> you're saying toll may be one of the good buys -- >> but the question -- investorsivities whose that? >> they do cater to the market, but they have great exposure. what we prefer to highlight, which we think is more important, you have some good values, investor sentiment has turned decidededly negative. >> like the new ceo, pivot point for this company, a lot of up side. we love best in class operator fortune brands. >> we think mohawk is a great value. >> so mohawk, for instance and
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masco, they've been underperformers in that particular sector so far this year. >> that's been a crazy performer. >> so we think there's a lot of headwinds on nonresidential construction, so first quarter will be a write-up. usg is one of the best ceos i've ever met, backed about i warren buffett, so long term there are growth initiatives. >> this is a high quality company. they're just running into soft demand. the key message here, the recovery is choppy, uneven, and it's not gaining traction at this point. we're flagging that for investors. repair and remodel. easier -- >> big turn, a couple years ago, you came on your bullish, now you're getting cautious. masco and fortune brands, we're keeping an eye on those. >> thanks a lot. >> meantime, a big management
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shake-up at general motors, the head of communication and hr both stepping down on the heels of those safety recalls, and an internal investigation. the stock is up about 2% today, so is gm a buy at this point? let's bring in michael ward. he has a buy on gm, and $50 price target. phil lebeau is here. first i want to go to you, phil, in the context of what has happened, and the internal documents that were revealed. >> officially gm will say, hey, both of these people have left the company, pursuing other opportunities, but let's be honest. i think you're seeing mary barra and the management team becoming much more aggressive at least in trying to convey the tone of we are going to change this company. whether that means they're going to be more aggressive with her coming occupy and speaking publicly remains to be seen. i don't think they'll get too aggressive. >> i think they'll no longer be
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played. >> they say not the good direction. >> the head of communications, also, by the way, mary barra was the head of human resources when all of this was going down? >> yes, her previous job was head of human resources. >> she advanced up through the ranking, but had been. >> this is just conjecture. what you're trying to send a message we are a different company, the people we will employ will operate by a different set of standards. >> mike real, you have a buy rating on the stock. the stok is down by about 11%, so at this point, what do you think the company needs to do.
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in order to clear this cloud? you like it, but you liked it 11% ago, two? >> and i'll continue to like it. so i think phil is right. i think when you clear away the disgust, you'll see the $5 of earnings pourer. if gm is five-plus on earnings at $33 a share, that's a pretty cheap stock, particularly with a 3.7 yield to give you support. >> and based on your numbers, it's not that hard to get to $5 in earnings power unless all of this will mean mom and pop who are thinking about a cruze, silverado and change their mind. >> it's not showing up in the data. the most recent today thea we have is the production. if you look at march production,
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it came in 110% of plan. every unit produced to a dealer or order. that says the dealers have confidence in the order. the ultimate as we look at it are the dealers. >> do you think there would have to be high-level departures in order for them to get free from this? >> michael knows, we've talked about this. is this dead money? this will be overshadowing the stock. at some point, though, the dust settles. does it settle in the second half of the year? i'm not sure how concerned you
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are, but. >> it's always a concern to the market. >> so catalyst, whether positive or negative are the things that look at the market. i think at some point fundamentals do matter. when you dig through all the rubble and all the headlines and the repeats story about gm and their safety issues, the bottom line, it's a much different company today than three, five, ten years ago. when you look at the product momentum here globally, balance sheet, dividend yield, earnings momentum, it all points to a pretty cheap stock. if at some point price becomes a catalyst. >> michael, thanks so much. always good to see you. still ahead, more on the google drone news. >> and time for today's mystery chart. this name, among the top performing stocks in the s&p, and also among the worth performer in the s&p this month. do you know who it is? you probably don't, but we'll tell you, coming up.
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time time to reveal today's mystery chart. one of the best performing stocks for the s&p in one of the past 12 months, one of the worst this month. melissa guessed micron. >> i was trying to guess based on the axises. >> i know, the xs and ys. you were close, e-trade. like the third-best performer and one of the -- i think the worst performer so far in april. you wonder if there's a michael lewis effect, like the flash boys, but -- >> all these guys get rebate, right? so if the rebates are taken away, that could impact them. schwab is reporting earnings tomorrow. >> i have to say, though, i'm embarrassed. you are the host of "fast money", very smart show, and you
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didn't get the answer. >> you're embarrassed? you're saying i should be embarrassed. >> i just read the script. you didn't even know. up next, morgan stanley out with a huge call -- get this. small-cap stock, they see 430% up side. that's not a misprint. 430. plus an upside surprise from citi, lifting the financials. is now the time to buy the banks? first traders keeping a close eye for the crop report. jackie deangelis has why this matters to you. >> the usda coming out with this report, the first estimate on corn plantings for the year. they have revised estimates for 2013. this is the first forward--looking one, that is why people care. rich nelson expecting a 2% plant, that's below consensus estimates of 3% and below the five-years average. nelson and dennis gartman saying we could see price movement, but
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a lot more planting still to go. more "street signs" after the break. [ hypnotist ] you are feeling satisfied without standard leather. you are feeling exhilarated with front-wheel drive. you are feeling powerful with a 4-cylinder engine. [ male announcer ] open your eyes... to the 6-cylinder, 8-speed lexus gs. with more standard horsepower than any of its german competitors. this is a wake-up call. ♪ afghanistan, in 2009. orbiting the moon in 1971.
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straight talk time. the daily rundown of calls and news and notes. we kick it off with akeba. i gave you gulf, because it's a micromini cap stop. >> it's not micromini, but it is tiny. we normally don't talk about caps. this market cap is 325 for akebia. the reason we're talking about it is morgan stanley, not a small fmpl, slapping a $90 price target on a stock that is currently trading at around $20 bucks. >> 20 bucks. >> after the 17% pop. >> okay. i asked for the note. i want to confirm it. the analysts there. is seeing a $2 billion anemia drug opportunity. so throwing the number, if it occurs. it's a small company, be
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careful, but the fact that morgan stanley had that target, we had to put it in street talk. >> and -- i'm checking it out, $255 for visa. they say the risk/reward is more attractive. advice improved eps. i think crepic liked both, but i thought he said he liked visa move are more. >> you seem like a blooming onion kind of guy. >> why? because i usually co-host with an australian? >> this is the apparently company of. >> outback steakhouse. >> home of the blooming onion. >> $27 target, they beat analyst eps by a penny in the most recent quarter. >> td ameritrade, an update. >> target remains $36, but 26%
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higher than the current price. kpw, by the way, saying they are not worried about the hubbub around high-frequency trading. >> my word, not them. >> i was 234 virginia for a couple days, so i'm using words like had you been bhub. >> y'all. next week is now. now is the time to bet on financials. let us talk numbers the carter wirth, as well as brian stevens. carter, i love a sector clearly defined as a leader of the market. they're more likely to go up, if they go down, probably likely to go down. will financials lead us higher? >> i think the two things that matter here is that financials, as is sector, second biggest in the s&p, they have
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underperformed the market in six of the past eight months, underperforming again in the month of april. the relative strerngt is deteriorating. the purpose is on the bull to suggest that this waning momentum is not more serious. just looking at the chart of the price itself from the lows of 2011, we've ascended into beautiful channel, when you get to the top of the channel, it's ripe more often to buy it. we're likely headed down to $20 on the xlf, which is 5%, 6% down from here. >> so we're sellers. >> carter is a seller, john, what are you? some analysts say -- also the possible catalyst that citi will resubmit their c-card and actually get approval next time. >> i think they will. this is a phenomenal sector the warren buffett loves it, so if he does, why isn't everyone betting on this?
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i think this group of financials has become the most hated group of all the sectors on the s&p, but that belies the valuation. these things are trading at 8 1/2 times to somewhere just below 10 times, and yet the historical long-run average over 50 years, you're gaining things at an incredible discount. these are capital return stories. citigroup is case in point. part was reserve -- and as time goes on, the litigation risk is going to dissolve, and the regulatory headwinds that people have pointed out with the volcker rule, et cetera are all in the rear-view mirror. i think it must be bought on valuation, improving consumers trends, look for good retail sales today. housing, this is definitely a group you want to own. this is probably the biggest weight in terms of the bets. >> i believe we just made a market. >> that's right. >> in the financials. carter and john -- i can't wait for your sequel to come out.
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john carter 2. check out the online -- thanks, guy, in partnership with yahoo! finance. google swooping in to buy a drone company. what is goog's motive here? later on, why this year's tax bill is giving america's wealthiest a serious case of sticker shock. does anybody besides america's wealthiest actually care? >> maybe they should. >> that was a segue. >> was that a question to us? >> that was not a segue to "closing bell's" tease, though i hear that kelly evans is starting campfires these days. >> shall we take it? >> yes, police. >> thank you so much. stocks make a comeback. is the rally back on. you knew i was going to ask that. kelly was telling mu how excited she is about the all-star panel standing by. >> some excitement in the biotech industry. we're going to talk about a new bear market, keeping a close eye
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on the nasdaq as wellhead into the final hour. tomorrow is tax day. we're going to hear from someone who says the recent stock sell-off does have a lot to do with investors getting said. >> and yes it's true, shaquille o'neal, mr. shaq, as he preferring to be called, will be right here on on on the floor of the new york stock exchange skts he's suiting up for a big deal, a clothing line at macy's. we'll talk about that and whatever else he wants to talk about. >> i want him to debut a women's line as well. big and tall, i would be first in line. a lot more on "closing bell" at the top of the hour. we'll see you there. n the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades.
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google buying the droin maker that facebook was courting. lieutenant's bring in tom forte. it looked lie facebook had this deal locked up a couple months ago. suddenly google swoops in, does this mean anything to you with regard to google's financials or its stock price? >> sure. if you look at what google and facebook are trying to do, they're basically trying to connect the next billion people
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online. because you're looking at a lot of emerging markets, from an advertiser's standpoint, these are consumers with lower discretionary income. yet it's great they're adding to their services, but on a relative basis, this is a less attractive consumers than today, but both google and facebook are trying to expand their audience. >> do you have any projects, tom, to how many more people can be connected? are they just giving them a fry pass sailing they can spend money because it has deep pockets, it can afford to make mistake? >> no, if you look at both facebook and google, incremental to their growth will be to get everyone connected to the internet. the beauty of the strategy is they're doing it from all angles. if you look at the balloon entries, somewhat similar to this acquisition to google fiber, which i think they'll 34 new markets in the u.s., they're
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working at basically getting connective to high-speed broadband to everybody, and i think that will help. >> getting back to the question, though, tom, how many more people with google connect. with the fiber you outlined the number of households, but what's the payoff here? >> sure. the payoff is basically attracting, or being ability to enable the next billion to come online that don't have access to, that don't have either a connection via broadband or via wifi or wireless. there's these emerging technologies. that's the play here. >> all stads show more people are accessing in that through mobile app.. google could not index many. is their core business in jeopardy because of the smartphone? >> no, i think brian you're pointing out something that is
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core to the bear case, which is what if for the future you could go straight to yelp and bypass google or go to facebook and bypass google. the goodness is they operate the number one operating system in an destroys, so i think there's way for google to connect to the consumer. and people are accessing on a google search, so i think there's still opportunities for google to get the necessary information they need to maximize their revenue. >> tom fort, buddy, thanks for joining us last minute. appreciate it. >> my pleasure. um canning up, we are talking everybody's favorite topic -- >> taxes. exactly. we're going to talk about the raising burden on the rich. is it deserved? it's a debate, coming up. >> later, twitter's being 44% problem. me in now.
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told you about a drone-maker, just this hour take a look at avab. one of the highly publicized drone-makers out there. negative on the news, and here we are up by more than a percent on the back of it, 2% so far. >> nobody certainly, melissa is
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crying for the 1% but many of the face's top earners may be kroig for themselves when they get their latest tax bill. >> remember the american taxpayer relief act of 2012, seems so long ago but many of the wealthy are just learning this month how much their taxes are going to go up. now the average tax bill for the top 1% of earners will be $525,000, yes, they make a lot of. average income, $1.6 million but the tax rate they pay will be 31%, up from 27% last year. the bigger story here is that the wealthy are paying more taxes at a higher tax rate and a higher share of all u.s. taxes. the question now is how much higher can they or should they go? the top 10% pay an estimated 53% of federal taxes. that's expected to grow to 55% by 2017. part that have is due to the tax changes which increase the top tax rate to 39.6%. will the limited deductions and
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added the health care taxes, too, but by 2017 the average 1% is expected to have a federal tax bill of over $827,000. now the bottom 80%, they pay less than a third of taxes, slightly less than their share of national income. guys, back to you. >> all right. robert, thank you very much. so is it time for more to start sharing the tax burden? let us debate now with jimmy p. and jared bernstein. jared, i'm going to guess you will say no. however, you do agree, because i know we've argued about this in the past that placing all the burden on the rich because they can afford it is ultimately unsustainable, is it not? >> i think so. by the way, it's interesting that you know all of my arguments. i think that's a good sign for you. yes, i do think that the unsustainability that you mentioned is there in the longer term, but you really have to consider the following. if you look at where the growth has gone in this recovery, you
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know, the economist emanuel size was cited in the "wall street journal" piece that you mentioned. he points out that 95% of the vote in the income in this recovery has gone to the top 1% and very little has gone to the rest. so really the only folks who have been getting ahead over the last three or four years are those at the very top, so while median household income is actually falling in real terms, so i don't think this is the time to think about broadening that burden. i think you have to go where the folks are really -- >> agreed except that you know what else is falling in the middle, tax burdens? right? according to numerous tax foundations, centers for budget and policy priorities, we've seen the net effective tax rate for the middle class dropped to its lowest level ever in the last decade. >> which is exactly why i think when income starts growing more broadly, then the implication of your argument is correct. we can't collect the revenue we
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need simply from a narrow sliver at the top, but that is the right place to start at a time like this when they have been getting all the growth. >> isn't this a band-aid for the policies that don't affect that the lower classes are not getting what they actually need in order to expand their income? >> listen, we have a slow growth problem, and i don't want to raise taxes on anybody right now. i don't want to -- i certainly don't want to raise taxes on the middle class and don't want to raise any more taxes on wealthy americans. at some point we have to figure out when does it become self-defeating and the place where top tax rates are right now, you don't want to go higher. if you need a lot more money to finance our entitlements in the future, you'll have to have a much broader tax base. we have the most progressive tax code among advanced economies, and if you -- if you think you need more money, well then you'll have to do something about it. get a consumption tax, a value-added tax, something like that. >> yeah. you think that will ever happen, jimmy? because we -- >> i do think it's going to happen. >> 10%, 15%.
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economy is underground, cash only. >> i don't know if we'll have a value-added tax, a value-added plus an income tax. our current income tax system where we'll raise taxes on the top 1%, which is very progressive already, that means we've gone as far as we can go with that tax system and will have a bigger tax burden in the future and to do that it will have to be a broader tax base. >> let me offer a solution then, and i think jimmy might nibble as this as well. let's say we agree on the tax rate issue. by the way, i think it's going to be a long time -- we can't tweak the tax code at all so the idea of a flat tax rate or consumption tax, that's way out there in the future, if we're lucky. the problem is we spend about $1 trillion a year through the tax code in something called tax expenditures. alan greenspan called it spending through the tax code, and he was right, so these are all those loopholes. now, if we can start closing some of those loopholes, we don't have to raise rates to get more revenue. >> as far as this being in the
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future, we might even have a surplus by 2016 and then it begins to go up dramatically so these changes need to be made sooner rather that be later. >> closing loopholes, are you good with that? >> for some loopholes. >> mortgage tax deduction. >> i'd get rid of that. >> and get rid of the corporate tax rate. >> jimmy p., you'd get rid that have? >> 6,000 realtors on line one for jimmy p. >> it's official, jimmy p. is not running for office. >> because he'd never win. >> america could do worse. >> yeah. >> all right, guys. >> i would say i'd second homeownership. >> that's a good debate for later this week. >> all right, the walking dead of twitter, next.
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twitter say they do not plan to sell their stock when the lockup expires this month. twitter shares down 35% so far this year. some tech execs have been taking heat. this twitter stat caught our collective eye. a new report claims 44% of the 974 million existing twitter account, melissa, have never ever sent a tweet. some guy on twitter, by the way. >> not a surprise. >> they don't care if the users are not tweeting. how do you know if they are users if they are not tweeting? they may be logged in and gone? >> they may be following in,
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which case they will still get the stream with the ads in it. >> herb greenberg has called them lurkers. if you're out there lurking, just because they refresh their page view once a month. >> that's a monthly active user. all in the metrics. >> bring the argument you just prout in the commercial break. >> later. >> thanks for watching "street signs." we will see you tomorrow. i'll see you tonight on "fast." "closing bell" is next. hi, everybody. welcome to the "closing bell." it's a new week, a new result maybe for the market. i'm kelly evans here at the new york stock exchange. we're seeing at least the dow with a pretty nice rebound from last week's sharp losses of half of 1%, but the nasdaq is up only 7 points after finishing on friday below the 4000 mark and shedding what, 8%? >> and that's because of the sector that's getting hit. >> mr. biotech. >> once again, down 22

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