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tv   Closing Bell With Maria Bartiromo  CNBC  April 12, 2010 4:00pm-5:00pm EDT

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announced new deals coming, and you talked about a big name at the end of last week that is potentially coming at the end of the next few weeks. >> well, hca will file, and as you know, bob, there is a significant gap between when you file these things and get approval from the fcc and the market can change. right now, many private equity firms as we have dissihave disc the past say this is a great opportunity to take public some of my better businesses, and they are jumping at the chance as are many companies who see an opportunity to raise capital for perhaps a business in the earlier stage, and we will see how many get to market and it depends as you know, what it likes like in two to three months. >> and sue, in the dow, this is the most unloved rally we have seen in many years and the traders and the markets are moving up and the volatility is low and as a result the volume is solo. >> yes, the rally is getting no respect in a lot of cases, bob. one of the things that also
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struck me today was the fact that a number of analysts pointed out the fact that the momentum is there, but as you say people are not satisfied with parts of this rally, and the retail investor is not in yet. so, we still have momentum, and we don't have the cash on the sidelines coming in yet, so it looks like there is more to go, but this market is hard to satisfy people right now. >> the important thing right now, i think, sue and david, is that we are at 11,000 here, and we are -- >> psychologically, that is important. >> and 1,200 on the s&p 500. >> yes, 1200 on the s&p 500. >> and yes, the s&p 500 that people are looking at closer, because of the run it has had over the last year. >> yes, and 1,200, this means 15 times forward earnings, guys, and that is not bad considering where we were, and the problem is and the guests have said it earlier, that you need to get some real earnings growth to move the market to 1300 on the s&p 500. >> and not to mention rates going up and being what it is and the return getting better on bonds. yeah. >> it is not going to be easy, but remember there is a tremendous wall of worry and they have climbed the whole
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thing in the last year. there is the final bell, closing bell, and you know who is next, maria bartiromo. and it is 4:00 on wall street and do you know where the money is and hi, everybody, welcome back to "closing bell," i'm maria bartiromo at the new york stock exchange and the dow keeping above the 11,000 mark for the first time since september 26th, 2008, and we will have much more on this, and first steve liesman has breaking news. steve? >> well, thank you, maria. the treasury is announcing the plans to auction the warrants it received through the t.a.r.p. program through wells fargo and pnc and other bans as well. the auctions will take place over the next six weeks. other banks are comerica, sterling, valley national, and first national, and each bank has fully repaid the t.a.r.p.
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investments which is a requirement before the government ends up selling these warrants, and the treasury today earned $5.6 billion from the sale of the unique warrants. these are options to purchase the stock over a 10-year period. they have created a market where it didn't exist before, and a lot of the stock options go out two years, these will go out ten years, so the treasury has made a little money on it, and they are proceeding further to be one of the ten banks remaining that warrants in citigroup which is another big piece to come out further, so maria, warrants in wells and pnc and the big news for the markets coming out in the next six weeks. maria. >> and thank you, steve liesman with the latest. 11,000 in the dow jones industrial average as we follow into close. the dow looks like it is going to close solid by above 11,000, and 11,006 for the first time since september 26th, 2008. we will get into terning season coming up in the program as we
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await alcoa. the dow jones industrial average up eight points today, and as you can see it, 11,006, and the nasdaq picking up four points at 2457 and the s&p 500 higher by a fraction at 1196. it is merger monday on wall street and a pair of deals in the energy sector consummated and palm and california kitchen could look to get in on the m&a gain as well. and the federal budget posting a huge decline compared to a year ago and coming up, we will tell you why, and of course, we are waiting on alcoa. earning season is about to kick off, and the alcoa first quarter earnings are imimminent, and th team is standing by to break it dun. we will tell you what this first earning report from alcoa tellings us about the demand and out of the southeast asia markets and the u.s. and europe. europe of course has been slow, and that was certainly emblematic of alcoa's quarter last year, and we will tell you what they say about europe this year. looking at how the dow finished
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on wall street, where it did close off of the highs of the afternoon and you can see in the intraday chart, we were at the best at about 2:00 p.m. eastern time today or so, for markets, but since then, we did see some selling going into first quarter quarterly reporting season. nasdaq and s&p 500 did have similar chart patterns as you can see from this one from are the nasdaq, and you can see where we were at 2:00 p.m. eastern and a chart for standard and poors which ended at 1196. bob pisani is our eye on the floor of the nyse, and what do you know, bob? >> well, we got over 11,000 and it is a tough one to get over. 10,000 to 11,000 in eight weeks which is the last time we were at 10,000 or crossed 10,000. we are waiting for alcoa, and expecting ten cents. this is a transitional quarter for alcoa. the big numbers for alcoa coming in the second half of the year where they are expecting a bigger turn around and am llumi
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prices up more, but that is the problem with demand weak, but the aluminum prices are holding. and it is the worst performer on the dow is alcoa, and we will get their earnings in a moment. and looking at other material names, maria and i looked at free portds and other materials names, and there you see most of them finishing the day to the downside. how about the big deal at the independent energy sector? and independent energy producers mirant, and genon and demand has created problems for the independent energy producers and we will keep an eye on that for you. let's move on and talk about the banks of ubs announcing better than expected earnings. and looks like stronger than expected income, and this will help a lot of the banks in the united states including companies like goldman sachs which also had a relatively good day. finally, i want to note rail cars and i don't normally talk about rail cars, but these are
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companies that make parts and equipment for the railroad industry. all doing a little bit better in the last five or six or seven trading session s which is interesting there. is not a lot of news out here, but business is slowly getting better. maria, back to you. >> thank you, bob. with dow at 11,000 and the start of earning season moments away, how should we be investing in the environment going forward? joining me to talk about that is tony dwyer with collin stewart and dan greenhouse, with miller taback, and david faber and sue herera. tony, would you put new money to work right now ahead of the first quarter earnings season? >> no. you could walk in tomorrow and have a two to three percent correction. you have to look at the market dislocation of what we went through in the last ten years and these returns are historically rare. we expect the concurrent estimate is up to $81 for
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earnings this year. and $98 for next year. we think it is over $100, so you put the worst case multiple of 15 times in a non-recession environment with core inflation below 3% and i get 1500 at mid-point next year and i'm being conservative, so if it pull bask from alcoa's earnings it is not relevant to the investors. >> what about you, david faber, what are you focus odd en? >> well, as the earnings season goes along, maria, investors are looking for the top line and signs of significant revenue growth, and we know there are great productivity increases in the last six months and another question is what they say if anything about plans to hire if we get that on the conference calls that follows the earnings, and given that we have per s persistent unemployment for some time out, and certainly a lot of questions about corporate america's willingness not just to hire as opposed to obviously not just to stop firing.
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>> well, dan greenhouse, having said all of that, do you want to be putting money to work in the environment as well, even after the big move we have seen on the upside for stocks? >> well, i think that to tony's point in the immediate term, things are setting up that suggest that perhaps the market is due for a little pullback here, but timing those are, timing that is impossible, although one i would cite is since the end of the last earning season the s&p 500 is up around 11% or 12% so far which is the best intraseason earnings appreciation for the market, but in the longer term for the next couple of months certainly, the bias is higher, but i'm not ready to get on board of tony's 1500 call. but certainly, our theme has been economically and investing wise what worked yesterday is working today and working tomorrow. >> all right. so what do you want to be avoiding then? >> certainly the sectors lagging, they are k k l k laggia reason. the consumer indexes, and miller
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taback analyst nailed a couple of the stocks in the retail which have done very well, and look for the immediate future to continue to do so. >> sue herera, any idea why we saw a weakening at the end of the day today nerms the of the material names? alcoa had been high earlier in the day, and then toward the end, in the last hour we saw that group deteriorate. >> we did, and some of it is linked to the sell-off in the copper market, and, maria, china with the latest data with the imports of copper gave the market a big boost in the beginning of the session, but then as we saw the link to the currency markets, and we saw some of the material stocks sell off a little bit. you know, that i don't think that there is anything particularly extraordinary to linked to the currency fleckations in the currency for a while, and that coupled with the big move in the precious metals today, and we have interest rates now at the
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highest level on the yield curve we have seen in a year, so all of that put together took the steam out of not only alcoa, but a number of the other stocks. >> that is the exciting part, maria, the steepness of the yield curve and demand for corporate credit is what is going to fuel the corporate balance sheets not for the next quarterer or two quarters, because we are at historically fundamental backdrop situations for the market and it is amazing, because nobody wants to play. you cannot blame them. you have had a negative return for ten years. ten years ago, you had to be a fool not the invest all of you money in a 401(k) aggressive equity and now you have to be a moron to do that, and it is not bad. >> well, tony to, the point of the individual investor sitting out, they don't want to touch the equities after the last two-year period and the rates going up, can we expect they will or stay in fixed income? >> that is a great point. >> it is a great point, but they
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won't stay in fixed income just like they would not stay in t-bill only money funds which is ha they were buying 18 months ago. >> well, tony, they will get into the market at the top where the market will turn. >> sue, a great point, because the consensus is only wrong at that .01%. when i look back at the 90s it was not easy all of the time with the asian economic crisis and the russian debt crisis -- all of these things, but you had a strong corporate credit and steepness of the yield curve and federally funded backdrop. that will continue to go up. >> and what is it going to take for you the believe that in fact, we are going to see end market demand? yeah, we want to see revenue growth, but at the end of the day, is that going to be enough to actually indicate a change in fundamentals? >> well, let's be clear with respect to the consumer, you are already seeing a more accelerated turn in end demand
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than a lot of people, myself included, would have forecast. and when you come out of the environment where companies cut so rapidly inventories and cost of goods sold and labor, you don't need the same turnaround in top line revenue growth to feed through and drive the growth on the bottom line, but a more modest growth in the top line, and that is what you have seen so far. >> alcoa is out, and we have the numbers ten cents of shares on revenues of $59 billion on the first quarter earnings. the ten cents a share eps is right in line with the estimates and the revenue $4.9 billion for the first quarter. over the matt nesto who is looking behind the numbers with more information. matt? >> well, thank you, maria. appreciate it much. you look at the continuing operations number and the 19% per share loss, and back out the rnlg chas, charges, and you will get right in line with the numbers. there have been a hit, and some whisper numbers higher and the stock was trading higher in the
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regular session, and now you see it closing at 1457 with only a 1% gain on the day. the revenue was up 19% year on year on a sequential basis, and we saw a 10% decline in the revenues, and higher prices the company says were offset by lower shipments. they also say that the markets are gradually improving, most of the markets are gradually improving, and they say that they are seeing aing growing nur of requests for product, and that is an important stock to watch for placement in the earning season and in terms of the waiting in the dow, and 1%, but in the s&p 500 it is .01 and it is the same market value as a broad com or newcor to put it in perspective. but this time, it is an inversion of what we did in the fourth quarter which is a top line miss, and the revenue coming in light, but the earnings per share getting it done coming in, in line with
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expectations. maria, back to you. >> okay. instant reaction to the quarter. joining me is david silver from wall street strategies. good to have you on the program, david. it is right after the numbers but your knee-jerk reaction to the alcoa quarter? >> not as good as it could have been. revenue not as good, and it shoufk stronger and you heard them say that the lower prices were offset by the lower shipments, and that is lower demand. if they need more demand, they need to put together a better quarter. the strength in the airline industry and the auto industry has been baked into the stock, and baked into the numbers, so any upside surprise, you won't see it. >> and david, you had special charges in the quarter here, and what is that telling you in terms of how that may change the outlook for the company? the stock did rally just as soon as the numbers were released as you can see, but came off of the highs. >> well, the charges are dealing with the health care, and two centers they closed and that will improve the efficiency in
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the quarters ahead, but the fact remains they are firing people and not the point where they are hiring yet. they are not seeing the higher demand and not expanding the production, but working with what they have. >> now, does this give you an indication of seeing the demand slowdown in places like china, which of course, is critical to the aluminum story? >> well, we saw earlier the import data for copper showing it is strong. they have billions of dollars of construction projects that are on hold for all of these supplies to really come through, and a lot of it still in the pipeline, so that the demand in china and most of the southeast asia continues to be strong, but where the demand is really lacking is in the united states, and we are not seeing as strong a rebound as we could and most notably in europe which is moving forward pl the next few quarters will be weak, because the auto industry is weak, and the eads is not as strong with production. >> and of course, those are the main customers, alcoa's. and bottom line, more money to work in alcoa? >> no, not yet.
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my price targets are higher at $19, and i think that we are seeing much of what we are seeing is baked into the stock. so i would not commit new money into it, but not selling on the news. >> thank you, david silver, injoing us for alcoa. and next up, the ceo of adobe systems and he will tell us what the new creation means for bottom line. and how apple's decision to go flashless is impacting the business. and will you have to shell out more money in the government closes corporate tax loopholes? we have answers. you are watching cnbc, first in business worldwide. (announcer) we're in the energy business.
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but we're also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron.
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welcome back. chances are if you have used the internet to watch video you have used flash player and in fact, 98% of all internet-connected pcs have flash installed on them. well, today, adobe who owns photo shop, and flash, unveiled another package. joining me is the ceo and president, shantanu narayen.
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>> thank you, maria. >> the product is huge within web designers, but also within the bottom line, so can you tell us about the importance of this product announcement? >> well, maria, our goal is to help every creative person to bring their ideas to live which is happening in print, newspapers and magazines and on the web through graphics and video. and the launch today is meaningful for three real reasons. the first is it is a major operative to photoshop, illustrators, in-design and flash professional which creates designers and developers to create great content. we will upgrade flash player 10.1 which is the most ubiquitous piece of software to allow publishes to distinguish their software. and it is also great because we have allowed amateur technology
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to analyze the product, and it is coming out in a good economic environment as well. >> so, what are you seeing in terms of reception here? we know that the consumer is sloeshgs and the -- slow, and tt in general, and what are you thinking about it today? >> well, we had a strong q1 and we said as long as the economy continues, adobe will have a good year and if it continues, we will have a great year, but the pent-up demand in the creative community to have tools to create at once and deploy it across multiple devices is increasing, because there are a new number of smartphones emerged and more tvs now capable of displaying the internet content as well as new tablet devices, so it is an exciting time for us. >> and adobe has been making headlines because of criticism from apple, and the apple ceo steve job said that the flash player is too slow and not
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supported by the ipad or the iphone and apple's products are extremely popular with the consumers, so tell me about the spat with steve jobs and what does this mean for business? >> well, adobe has been in the business of providing great software working across multiple devices, and what you are seeing is the a battle of the open internet and the closed internet. we believe in the open internet and believe in bringing our technologies to every screen on which people want to consume the internet. what we are finding is that apple is not allowing to us provide flash which is the most popular pieces of software on both the iphone and the ipad, but we will continue to deliver flash 10.1 and we announced the open stream project and you will have providers like google and palm and rimm all committed to providing flash on their devices starting this summer. >> will we see flash on apple products in the future? are you moving toward that? >> well, it is not a technology
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issue right now. it is more of a business model issue, and apple has chosen to keep their systems closed, and so, at this point, what we are focused on is bringing it to all of the different partners who are enthusiastic about having flash on their devices. >> what about cloud computing which is touted as the next generation of computing, web developments, developers are developing products that anyone with the internet can access from anywhere in the world which is good for consumers, but what does it mean for software makers? >> well, it is really a tremendous opportunity for a company like adobe to deliver new services through the cloud. we have done that in many ways. the first way we are doing is that you have a new set of services called cs life which is part of suite 5.0 and increases the functionality of the desktop to update at a much more rapid pace that we can do with the desktop products.
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omniture is a cloud-based service and we process 1 trillion transactions a quarter, so we provide every marketer with who is accessing their information on the internet to better optimize that content. we know that all businesses are going to move online and if you can create the content and monitorize it, it is a terrific business proposition for the customers. >> so what type of year are you expecting for 2010, and are you hiring? everyone is talking about job creation, and are you done with the cost cuts? >> yes, we are. at that point, we are really planning for the upside. we demonstrated in a tough year last year that we were able to make the appropriate cost cuts to continue to deliver great value no the shareholders, but given the opportunity ahead of us as every business moves online and every business is moving digital, we are focussed this year on capitalizing on the opportunity that we see ahead of
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us. >> all right. we will leave it there. we so appreciate your time tonight. thank you very much. >> thank you. >> we are looking for the products and certainly the manifestation of that big announcement. we will see you soon. wall street may have some tax loopholes close, which could put a new tax burden on your wallet. we will tell you about that coming up next.
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welcome back to the white house reporting a big turn around in the budget deficit. steve liesman is digging deeper into the numbers to see what it is saying about government spending. >> yes, and the issuance of government treasury coming out of the notes coming out of treasury. maria, here is something we were looking at, the march deficit came in line with $65 billion versus $62 billion which is the estimate, but this is the largest improvement in the deficit on a monthly basis year over year on record. and my data goes back to sometime into the 1940s. the march deficit is a $126 billion turn around from '09. the receipts were up $24 billion and outlays down by $101 billion. don't expect it to continue, maria, those kinds of numbers or that magnitude, but there is the
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question that has to be out there in the fixed income market as to whether or not we are passing through some sort of threshold when it comes to all of the debt issuance coming from the treasury? i can tell you that all of that is going to be contingent on what is happening right now all across america which is people putting their tax returns together for the year 2009, and if those numbers come in the way they are expected, we might see some of that debt issuance coming down, and that is going to be big news for the market and both stocks and bonds. maria. >> yeah, sure will, steve. steve liesman. and now a look at the other stories we are following on the ticker. palm has hired goldman sachs and frank petrone's partners to explore possible sale of the company. and the rival smartphone maker htc and lenovo are both interested in bidding for palm. the stock has been rallying for the speculation up 17% again today. and texas instruments upgraded
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from a neutral over credit suisse which is raising the price target on the stock to $32 up from $24 due to strong demand for chips and over blown demands for lead time. and merrill lynch, the analyst doubling the stock to $22 on the fiber optic gear maker could have substantial upside to earnings. ciena is ahead of the earnings release up 17%. is china closer to letting the yuan appreciate? we will talk about china's trade surplus and the potential benefit being overblown. answers coming up. and we will explain how you could feel a pinch if the government closes tax loopholes, and fine out how much money chicago cubs' fans are paying to watch the long suffering team. >> here is a look at some of today's winners and losers.
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but we're also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron.
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welcome back to the presencef two of the most powerful nations coming face-to-face which happened earlier in washington in the sidelines of a nuclear summit with president obama expected to bring up currency peg with his counterpart hu jintao. he thinks that too much emphasis is placed on china appreciating the currency, and peter fisher is with us, and he is vice chairman and head of fixed portfolio investment management at blackrock. he kicks off the going global week on "closing bell." thank you, peter, for coming in, and nice to have you back. >> yes, nice to be back, maria. tell us about how hu jintao and president obama held that meeting on the sidelines, and how would you characterize u.s./china relations in the last several days? >> well, it is terrific that it
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looks like they are moving together to iron out the differences. we want these two big economies working cooperatively than at odds together. that is a positive. however, i don't think that the china will depreciate the currency as a favor to us, but they will do it when it is in their best interests, and right now they have to tighten policy and the economy is picking up speed, and you can see inflation showing signs in china, so it is a time for them to firm the policy, and this is one way they can do it. >> what about the friction going on? you know when i was in davos, that is the number one conversation that we will have issues with china, and how does that manifest itself over the years or months in 2010 in your view? we already know what went on with google, and that is an uncomfortable situation between the two nations, and google saying it is going to leave china. do you expect that we will have more friction? >> well, i fear we will have more friction, but i ap hoping
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we won't. i mean, obviously, there is are these issues like google coming up from time to time, but both countries know that the global recovery is under way, but fragile especially for us here in the u.s. i don't think that we want to see a trade war break out or even a war of words between the two economies. now, what i am worried about is too much hype. the japanese yen used to trade at 360 to the dollar and now it is down to 80, and now we trade at 93 where we are today. that did not do much to adjust our trade imbalance with japan, so we can overhype how much we can get out of exchange rates when they move. so i am worried about it more on our side than their side. i think that they know that they have to adjust the exchange rate to the right direction to cool the economy, but it won't be the cure-all for us on the trade policy and i'm worried about the hype on our side. >> so, i guess some of the hype has been around the currency and one of the sore points of the
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relationship is certainly the treasury currency, and the meeting last week with secretary geithner wanted the yuan to appreciate, and you don't necessarily think so. can you tell about the impact? >> well, it will cool down the economy by putting that in. we don't want them to have a big inflation problem or asset bubble. what but it is not likely to do with a modest exchange rate or modest one is to make a difference in the trade relations or trade deficit. as long as we in the united states run a current account deficit we will have a trade deficit with somebody, so it will shift to somebody else. it was principally with japan and now it is shifted over to china, so what might change is the savings pattern. we may save more here and they save less which will have a bigger impact on the bilateral
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relations than a modest adjustment in the exchange rate. >> interesting. will more market-driven yuan help with china's trade surplus then? >> marginally, but not profoundly. we will really address it with consumption going domestically. if they can get the domestic economy to pick up with consumption, that will work it off, and some evidence it is happening, because modest tightening of the exchange rate will help move it in that direction. >> what is important about the china story. some people come on the show, and they are afraid, afraid that the u.s. is losing momentum on the global stage, but others will say, it is not necessarily that the u.s. is losing momentum, but other nations are increasingly important, particularly, as you look to the east. >> well, yeah, i would agree with the latter sentiment. it is terrific for the world economy for this much wealth to have been created in china over the last 20 years and it is a good thing for all of us and good thing to have strong trading partners and we need
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better balance, but we have the address the balance at home. we are expecting a lot from china, and they are low gdp per capita and a low economy and we are expecting a lot from them, and that is right in the sense of the rapid growth and successful over the last couple of decades, and we have to be careful to not expect too much of what they can accomplish. >> as we switch gears as we wrap up here, peter, any thoughts of investing in the market. we have a market at 11,000, and fixed income is a place to be over the last couple of years, but now people are talking about perhaps that part of the market is being overvalued? >> well, we don't believe it is overvalued and we are not expecting the returns we had in fixed income last year, but we are not afraid of the long year. this is a good year to clip coupons and look and hold some credit and high ig and high yield and stay up in the quality an clip the coupons going along. the economy in the u.s. is going
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to do okay, but not brilliantly, and inflation is going to come down, and i think that is going to leave the rate where is they are through the year. we will have a little bursts of volatility while we get anxious of whether the fed will tighten, but with unit labor cost falling and unemployment still this high, we think if the economy does okay, it will be sideways in rates and investors will like to pick up the coupon at the long end. >> peter, it is always wonderful to have you on the program, and we appreciate your time today. peter fisher joining us today, the vice chair of blackrock, and former treasury undersecretary. and closing tax loopholes is a president obama administration priority, but what will it mean for your priorities? more debate after this break. does two jobs... at once. one: kills weeds to the root. two: forms a barrier, preventing new ones for up to four months.
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welcome back. the u.s. budget deficit is on the rise and taxes as well. the obama administration is considering a number of options to increase revenue and closing what it calls corporate tax loopholes which means among other things that american companies will pay more taxes on overseas' revenue, and will that
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hurt u.s. competitiveness? john burrlaw is with us from the competitive institute. and from the nonprofit organization tax analyst, and he is also a former treasury economist. gentlemen, good to have you on. >> good to be here, maria. >> this is one that gets the ire of corporate executives. what is raising corporate taxes means for the average american, john? >> it means that we have among the highest corporate tax rates in the developed world, and these taxes are passed on of course, and job creation of course would affect the company's ability to expand and through consumer prices and also through americans saving and investing for the retirement, and the dividends and also we are one of the few countries that tax corporations twice through dividends and those taxes are going up, and so in a lot of ways, it will affect the
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average american when it hits main street. >> and i want people to understand what these big stories mean for them, because when you talk about corporate taxes they think they are not involved in it -- but we have news that alcoa is trading again. i have to go to breaking news on alcoa with matt nesto. >> thank you, maria. it took half an hour to get it going again. i want to go to a little change here, but remember, we gave back a lot going into the close with 1.25% gain on the day, and regular trade close, and in the afterhours you are around that price right now, but by some measures, it is surprising because of how high the bar is raised for revenue growth this quarter. they did manage to come in line with the profits, although they still posted a net loss of over $200 million, and it is smaller than the year-ago figure, but the 19% year end growth in the
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face of aluminum prices in an 18-month high saw them coming in short of the revenue number and in fact, by our estimates and calculations and the good friends at thompson reuters it is the first time they have missed on the top line, maria n 11 quarters. so that would be a disappointment, and also, the fact that the lower shipments were down 15% quarter to quarter in terms of metric tons. also, if i may, a couple of headlines coming out of president obama's nuclear summit, in d.c., chinese president hu jintao saying that the u.s. and china should resolve the economic and trade friction through consultation on an equal footing. he also comments at the nuclear summit that the two countries share the same overall goal in iran as far as the nuclear issue is concerned and at the same time president obama has reaffirmed the need for china to continue to take a look at its currency.
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maria, back to you. >> all right. thank you, matt nesto, with the latest there. we are back talking about higher taxes on a corporate level. marty, you disagree that ta companies will always pass on the cost to the consumer, right? >> right. there is uncertainty as to who would bear the burden of additional tax increases, so itt is no always correct to say it is passed on to the consumer. some of it will be borne by workers, and some of it borne by owners of the company. >> but i mean at some point if a company is seeing squeezed revenue and higher taxes thashg i are going to do something about it, right? so it is either employees or customers or somebody who swallows that cost. >> that is right. you know, we are really at crossroads in the u.s. tax system. we have to raise a tremendous amount of more revenue in the next few years unless we have draconian tax cuts. at the same time, we want to reduce the corporate tax rate to increase competitiveness, so one way to do that is to get rid of
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the loopholes and then lower the rates. so, it's not about raising necessarily raising more taxes, but by taxing business in a smarter and more efficient manner. >> what -- well, that is an interesting point. john, what about that? do you think that if we were to get the revenue another way, this changes the story? >> well, i will agree it is about, you know, in a more efficient manner, but one thing, maria, that is inefficient about our system and one of the things as well as punitive for u.s. competitiveness, and one of the things that we need to fix before we talk of getting rid of the foreign dedudeductions and things like that is that a lot of countries don't tax corporations within the borders, and we are one of the few to have a worldwide tax system instead of territorial and we tax all of the money they earn, so that means that u.s.
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companies get double-taxed in foreign countries on because of the foreign country's corporate taxes, so some of these things are for, you know, so they won't get the tax, you know, and they can take credit for what the foreign countries tax them if we got rid of -- if we moved to a territorial system where only they were taxed on what they earned within their borders, i think that would be, then we could get rid of some of the foreign tax credits, but if we do some of that before we move to that system as great britain and japan have recently, we are going to be, we are going to be hurting u.s. competitiveness that way. >> so, as far as the climbing deficit, and really, creating the revenue needed to actually put a dent in the deficit, what are your solutions? i mean, john, if it is not higher taxes from the corporate sector, and looking at the revenues that the companies derive from revenues overseas, what is it? it is all a spending story? because we know that the taxes
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are high already in that segment as well as individual taxes. >> spending cuts certainly have to be a part of it, and as i said, plus, i think that you would get, if we reformed the tax system and made it territorial and as well as getting the rates down, you would see somewhat more revenue as there is more investment, and also i think, yes, i would be in favor of getting rid of some of the credits, deductions, loopholes once we move to a more of a territorial tax system where only the principle tax is on the taxes of the companies earn within the borders and not worldwide tax system of where we are the one of only a few countries to have. >> do you have any solution, marty, in terms of putting the dent in the deficit? >> we have to raise taxes. it is clear when you look at the numbers. we can't raise taxes anymore on individuals with the income tax and the corporate tax certainly can't be raised. so, we have to look at the
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alternatives and the obvious alternative is a value-added a x that would be broader-based and more economically efficient. and i would be in favor of that tax entirely replacing this rickety old corporate tax that we have now. and i think john would agree with that. i think john agrees that the corporate tax is a problem. but we do have to find a replacement source of revenue for that. >> well, i wouldn't agree -- maria, i wouldn't agree with the value-added tax because it's hidden. i mean, we could talk about scrapping the code and replacing the income tax with a sales tax but the value-added tax, the fundamental problem with that is it's a hid entax so people don't know -- >> john, what's your revenue source, then? >> my revenue source is i think cutting spending has to be a part of it. i want to get rid of some of the overall tax reform similar to what they did in '86, lowering the rate and making this -- doing for corporate what they did for individual rates in '86 -- >> well, this is certainly the debate of the day. gentlemen, thank you very much. we appreciate your time today.
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we will see you soon. marty, john, thanks. it's been 102 years since the last world series victory for the chicago cubs, proving you don't have to win to get fans, spending a ton of money on tickets and merchandise. a closer look at the mystique of these lovable losers when "the closing bell" comes back. trading's all about strategy. and strategy... is all about information. so i start my trading day... with td ameritrade's morning perspective. that's interesting... or, look at this... i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this-- pattern matcher... pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it's like pattern radar. pattern x-ray vision. plus, this amazing gadget... called the telephone. i can call td ameritrade anytime
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and talk trades, strategies. anything. that's where the action is. td ameritrade. built by traders for traders. announcer: trade commission free for 30 days plus get $100 cash, when you open an account. at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch. we deliver the salt on precise schedules... and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers.
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well, they haven't seen a world series victory since 1908, and now chicago cubs fans are paying a higher price than ever for their loyalty to the lovable losers. cnbc's darren rovell is at wrigley field with more. darren? >> reporter: well, maria, they don't win like the yankees or the red sox, but they certainly charge like them. the cubs have the highest average non-premium ticket price in the league at $52.56, acourting to team marketing report. that's more expensive than the average non-luxury seat offered by the red sox, $52.32, and the yankees, $51.83. so why are ticket prices the highest? easy. it's what the market will bear.
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>> the cubs' mystique is here to stay. they're always going to get tourists. they're always going to get people who it's their dream to go to wrigley field. you don't see anybody saying it's their dream to go to minute maid park. so it's a little different. >> now, the team says that about 25% of the tickets wind up on stub hub, ebay's secondary ticketing site, and most of the time, probably 90% or more, they're charging even more for those tickets. it's almost like the cubs, despite their 102 world series -- year world serbs drought, the cubs are not charging enough. back to you. >> all right, darren, thank you so much. darren rovell is live in chicago. kfc doubling down that its new sandwich will be a big hit with consumers. we'll explain to you next up. you're watching cnbc, first in business worldwide. earnings season is under way. and "squawk on the street" is the place to turn. tuesday morning see how alcoa will trade after posting numbers. plus a key reading on the state of the american consumer.
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watch the opening bell live on "squawk on the street," 9:00 a.m. eastern, only on cnbc.
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