tv Closing Bell CNBC April 3, 2013 3:00pm-4:00pm EDT
workers, it would be just over $16,000. maybe he's going to give 5% of his entire net worth. we'll have to find out. still, check out "the kudlow report" tonight, is where larry is off, michelle is off, so they're going with the third stringer, brian sullivan, host of the kudlow report tonight. he's not a bad guy. "closing bell's" next. stay tuned. hi, everybody. we're into the final stretch. welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. tough day for the bulls today. >> i'm bill griffeth. the market taking a hit. some on the floor are wondering if this time, it's something more than just an excuse to sell off. some key drivers that led the rally higher are now wavering in a pretty significant way. and that could mean the much-anticipated pullback may start becoming a reality. >> i'm not believing it until i see it. >> skeptical! >> also rattling the market today, things in the last hour or so getting more serious with north korea. we've got the details.
the u.s. deploying missile defense systems to the area as defense secretary chuck hagel admits the rogue nation presents, quote, a real and clear danger to america. we'll have the very latest and the fallout to your investments. >> in the meantime, reaction to all this and more from former treasury secretary, paul o'neil, will be joining us, exclusively. you do not want to miss his unique insight into all of these events, coming up a little bit later here on the "closing bell." looking forward to see him. >> let's check where we stand right now as we approach this final stretch. off of the lows, still in double digit decline. down about two-thirds of 1%. pulling back from that record high reached yesterday, on the dow and the s&p. technology, one of the leadership groups on the downside, 3223, last trade there. and the s&p 500 sits at 1526 with a decline of 14 points or so. >> one key sector that's been leading the rally this year so far, the transportation sector. that gave the bulls great comfort. but the index is down for the third straight day and it's now
with today's decline below its 50-day moving average. >> and that's something we want to look at, of course. what does this mean for the market in today's "closing bell" exchange? we've got hank smith, from haverford trust, and jim moffett from scout investments. also with us, of course, our own rick santelli. gentleman, good to see you. michael, that old dow theory. one of the oldest technical analysis around, when transports are failing or when they're going up, it really is indicative of what's going on with the market. you've been cautious on this market. does this further that feeling in terms of this transport move? >> yeah, it does. my perspective has been, you've got to be risk on, but you've got to be conservative risk on. maybe you losing a little bit of the upside, but you're basically investing on the assumption this day is going to come. and i think we're in a situation right now with the excuse of what's happening in north korea, with the transports being weak, and with the rally being as strong as it has been,
particularly if you look over the last three years, when the market has essentially grabbed most of its gains for the first three or four months of the year and then pretty much flatlined, i think this is time to be cautious, as i said before, take profits. you don't want to be risk off, but be cautious. >> well, namt, jim moffett, you are not betting on a pull back right now. why? >> well, the market usually doesn't accommodate the people who want to buy on weakness. and that's where we are right now. so just as a contrarian psychology, i think that it's going to keep going. but we think the market's still fairly valued and that the economy around the world, they're chugging along, and the united states is chugging along. you know, maybe the transports are hinting that it's not doing as well as they think, but it looks nice, like it's going to be a temporary pullback. >> and hank smith, you also feel like this bull market's in the early innings, yes? >> yeah, both from a sentiment
standpoint, because, look, we're out of the depression phrase, but we're still kind of in the anxiety skeptical phase, maybe tip-toeing the toward optimism. and now investors, for the first time, are saying, okay, let's look at the return on my investments, and not worry so much about getting my investments' return. so that's why we think these pullbacks will be short lived. people are looking for any excuse to get into the market. they're tired of earning very little in bond funds. >> that's the bottom line, michael. the fed is going thereby. >> the fed's already there. but isn't the bottom line also that when the individual investor starts to become bullish, we start to see flows into the market. >> do you think we're there already? >> we're starting to already see that. don't you think that's really, actually, the start of maybe a bit of euphoria capturing the this market. and the first guest talked about -- the second guest talked about that the market was fairly
valued. well, fairly valued is not a discount. i mean, if you're playing a momentum market because of the fed, the fed's not going to be here forever. when the fed goes away -- >> when are they going to go away? let's face it -- >> that's why we're up 10% right now, maria. >> exactly. how much more -- >> how far can the patient run who's dead on adrenaline. yeah, he'll run far -- >> jim moffett, jump in here. how are you allocating capital right here? >> i'm sorry, what? >> how are you allocate ing capital here? >> well, as a firm, we like the united states. we still think that's driving the worldwide economy. >> equities? >> what? >> equities? >> equities, yes. equities. of course, i'm an equity guy, but i think that the comments made about people coming in cautiously, the public, the market doesn't top out when the public first starts coming in. the market tops out when the public's been coming in for quite a while and is basically, they've done their buying. there's so much buying power
left that i have trouble seeing just the hint of the public marking the top. >> right. rick santelli, yesterday we were all puzzling why the markets didn't seem to be paying much attention to the situation with north korea. this is not a new development, although the announcement by secretary hagel that they're going to deploy that missile self-defense system to guam, that is a new piece of the puzzle. but now we have the market seeming to pay attention. or am i missing something here? >> it definitely paid a little bit of attention. i thought bob pisani did a good job of pointing that out. but after the 10:00 weaker service sector nonmanufacturing ism, the markets were already well developed into the current patterns they have. if you look at a ten-year, you can clearly see that. just think about it this way. i know that you're never going to find a stock guy who's really going to go on and say, listen, get out of everything, and run off camera,. it just doesn't happen. but for 2013, we're not going to
have a lower closing yield on tens the than we are right now, even though the last day of last year was a 176 yield and we were closed on the first of january. and i think that's very important. also, it's very important, three central banks tomorrow, and if you look at every one of their currencies against the dollar, the euro, the pound, the yen, they're all doing better, doesn't make sense unless you think about it in the context of how much trading those currency as has already incurred with very little strategic changes. i don't think the ecb's going to actually cut. their blended inflation rate was too high at 1.8. and the japanese, they preannounced the preannouncement of the preannouncement of the preannouncement, so we'll have to wait and see. >> yes. with do have many things to get to this week, that's for sure. hank smith, we talked earlier about where to allocate some funds. where are you putting your money to work right now? >> well, look. rick mentioned the ten-year treasury. it is one of the most overvalued asset classes there is.
>> now the stock's probably -- >> before that gets undervalued. so we like equities -- >> they're both overvalued. >> -- and we would take advantage of this correction, if you will, in some of the sick sibli cyclic names. keep the balance and take now advantage and move some of the money into the industrials basic material areas, with this pullback. >> what about the backdrop? if we are going to see the broad economy slow downgoing into the rest of the year, do you want to be with those economically sense ty names? now, earnings are expected to pick up, but we're also pretty sketchy in terms of the economic indicators, globally speaking. you look at copper, you look at the, you know, the shipping index, we're looking at declines. >> well, look, i think it's highly unlikely that the pull back in transports and the underperformance in materials
and industrials is a reflection of an upcoming recession. given monetary policy, it's virtual impossible to have a recession in the near future. i think it's more a rotation. they have done so well over the past couple of years, and they're just taking a little bit of a -- >> well, recession doesn't have to be on the table, right? even if we have an economic slowdown, the market is already starting to price down an economic uptick, excluding the fed's no. i think that's rick santelli's point, market stocks at this point are getting to be pretty highly valued. if we have a situation where economies start to stumble going forward, that's perhaps what the jobs report is showing and perhaps what transports are showing, what's that going to do for stocks. can we be that optimistic on stocks or can we be more defensive, take profits, those type of assets? what do you think? >> i wish we could pursue that further, michael, but we are way behind time right now, michael, unfortunately. i think you're coming back,
aren't you? >> i don't know. >> well, i don't know either, but thanks for joining, everybody. see you later. >> we'll see you soon, guys. thanks. let's check on today's big movers. to this point, josh lipton those for us. >> a roundup of leaders and laggards today. let's start with hospitals, feeling some pressure here. analysts at crt capital saying investors might be rotating from hospitals like tenet and hca. and the refiners, concerns about the cost of applying for new pollutions damage for gasoline and the rise in the price of renewable energy credits. refiners pulling back here. home builders also have a tough time. pulte, d.r. holton, lennard among your laggards. there were some green on this down day. a abercrombie & fitch enjoying a pop. we'll end here on facebook.
tomorrow, facebook will be hosting an event to unveil its, quote, new home on android. also, today, jpmorgan out with a note telling their clients they would be buying on recent weakness. maria, back to you. >> thank you so much. we have breaking news right now in washington. john harwood with the details. over to you, john. >> maria, this is part of the sequester battle this is symbolic. you had president obama at the white house confirming he's going to return 5% of his salary since the beginning of the sequester, which hit on march the 1st. now, the president makes $400,000 a year. that's a little more than $30,000 a month, which means that 5% of that for a month, so far, we're just in the beginning of april, is less than $2,000. not a consequential amount of money, but this is part of the president's attempt to get the high ground, especially as some of the sequester effects kick in. i wouldn't be at all surprised,
we heard a similar thing from chuck hagel, the defense secretary, because a lot of the defense cuts are coming in defense, earlier today. i wouldn't be surprised if we hear that from some members of congress, with the question of leadership as well. but principally, only for those who like president obama, don't actually need that money, maria. >> john, thanks so much. john, let me ask you this, while we're here. how much specifically are we talking about in terms of the president's money. >> well, as i said, it's less than $2,000 a month, if we're talking about the month of march, which is the first month of the sequester. and it would be about that much every month through the remaining parts of the sequester, which runs out, of course, when we get into the new budget year on october 1st. >> all right, john. thanks so much, john harwood. heading toward the close, 50 minutes left, if you're just joining us. a down day, otherwise. some of the economic data this morning, not that great, and we get the announcement later this afternoon from defense secretary hagel that the u.s. is deploying that missile defense system to guam in defense of north korea.
so right now the dow is down 96 points. we were down 118 at the low point today. >> they used to say, bill, i know you know, they said, don't confuse a bull market with genius. you wonder, are there great investors out there or people like warren buffett products of the favorable market conditions? pimco's bill gross is making bold statements about himself and other legendary investors today in his new "man in the mirror" piece. we'll hear from gross and find out what other heavy hitters say about that. >> it's very interesting. and we get ahead of the dividend curve with five stocks the that are likely to hike their dividends wbig-time in the future, this year. our special guest reveals the names that are most likely to put more cash in your pocket soon with bigger payouts. >> and later, don't miss my exclusive interview with former treasury secretary, paul o'neill. we'll find out what he says is the number one risk to this market and economy. is it north korea or is it something else? join us with paul o'neill, coming up.
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percentage loss we've seen in the crude oil market here at the nymex since november of last year. the worst day of the year for oil, and that was not the only ity that was hard hit. of course, we're seeing some technical selling as wti futures broke below the 52-day moving average. we're seeing multi-day lows in many of the metals and traders point to several factors that have contributed to the slide. we've gotten the weak economic data, you add to that the tensions in north korea, what does that mean for energy demand? and also keep your eye on what has been happening in terms of the inventory levels we've within seeing, for oil inventories. that is something that has also pressured prices. so we're likely to see if the technical selling continues, more weakness in the session ahead. back to you. >> sharon, thank you. pimco's bill gross says warren buffett, george souris, even himself, may not be that smart. instead, they just benefited if favorable market conditions. he's laying that out in his new report, "man in the mirror," and he spoke about this in the last
hour on cnbc. listen to this. >> over a short period of time, luck plays a substantial part. you can flip a coin, you can get head two, three, four times in a row and all of a sudden you're a genius at coin flipping. i think it needs 10, 20, 30 years and perhaps even longer to prove that an investor has the ability to change with its environment. >> so is he right? is it less strategy and more luck here? >> joining us, a fellow who i believe you're the same generation, dennis gartman. he couldn't agree more with bill gross, he's cnbc contributor, editor of the gartman letter, and we have the younger generation with as well. trader joe greco says that he's selling himself and others short. basically, bill's premise is that we've come to a period, through a period of credit expansion, where asset classes just did an incredible job of providing wealth to those who were savvy enough to invest in those and maybe we're coming to the end of that.
what do you think? was it more luck than anything to make that kind of money over the last 30 years? >> well, i'm not sure, bill, that it was luck. but i have very -- i shouldn't say i have very little, but i'm not very respectful of just long-only fund managers, who by definition are long only, who get the benefit of the fed, easing monetary policy over the course of the last four, five years. people who owned bonds and were simply long bonds over that long, protracted period of time. my respect goes to the guys like dan loeb, paul tutor jones, lewis bacon, the hedge fund managers who really run hedge books, who are long, who are short, who make money in bull markets, make money in bear markets, and are not simply accruing wealth just because the fed is flooding reserves into the system and sending share prices higher. somebody who has to be both long and short, those are the guys i respect, and therefore, it's the paul joneses of the world that i look up to. >> i think that's a great point. and joe, isn't that really partially true there?
i mean, if you're just long this market -- and look how great etfs have done. it's not active management, that's passive, you know, indexing. and of course you're going to be up. you're in a long bull market. but who are the guys that bet against housing in 2007? who were the guys that bet against dot-com in the 1999. you can't say that's luck. >> and those are the standouts. it's great about bill gross to come out and acknowledge that obviously credit expansion led tremendously to what happened in the market, and made it a lot easier, perhaps, and paved the road. but at the end of the day, if it was so easy, everyone would have done it and everybody's portfolio would have been up or maybe it wouldn't have been, because there wouldn't have been another side to the trade. in my opinion, it's a little bit of a humble bread. it's a great time to put it out there, because everybody's probably in agreement that the winds of change are absolutely upon us and the ease at which we can say, up forever, are not necessarily going to be the case going forward. >> who do you look to as a mentor? do you look to a bill gross or
warren buffett or jack vogels who did cut their teeth on vale investing, good old-fashioned value investing. are you going to be able to make money that way in your generation? >> absolutely. there's always going to be money able to be made. there's still an opportunity out there. you just have to find it. the ease in which you find it may become a little bit more difficult, and in varying degrees there, baffeck and fort. but i look at it as hollywood. you have bill gross and guys on that echelon that are like the directors. you don't really see them, but they have their hand in on what's going on in the screen. you have the leading roles, perhaps those are the guys that may counterpart, mr. gartman, pointed out, the loebs and the rosensteins that are really sticking their neck off and taking activist roles, and moving long and short every day. >> now that we have a 10% rally year-to-date, from here on out, it gets tougher, doesn't it?
mario gabelli was named in the "man in the mirror" piece. he responded saying that bill is right. if you look at the last 400 to 500 years of history, you go through bubbles, things change. the biggest element that provided a tailwind for me besides graham and todd were the champions of capitalism, like adam smith, who have helped me to flourish. that's from mario gabelli. he says, things will change in this market. when do you expect that to happen? the bottom line is, going forward, how do you make money in this market, knowing that you had a great tail wind going into where we are right now. >> that may be dissipating right now. >> the tailwind will dissipate when the tailwind dissipates. again, i have great respect for the guys who run hedge books, who in bull markets are probably only going to be up 6%, but in down bear markets, where stock prices go down 40, will be up 6%. >> but here's the point, though, on that, dennis. i get what you're saying on that. those are the guys that are able
to pay attention, close attention to the market and make some money for your investors in those very risky hedgefunds. but what about the average investor, who would look to a warren buffett or a bill gross or, you know, a jack vogel, and try to emulate their style of investing. are they still going to be able to make money the way they could 30 years ago. >> mr. buffet went through a period of time, too, eight or nine years ago, when he was down almost 35%. >> and he missed tech. >> during the dot-com bubble. >> yeah, he was down dramatically. and i thought that was unconscionab unconscionable, to give back that much money. and you're going to have those times again. the public will suffer through those times again, and i think it's terrible, on our part, that we have denigrated the hedge fund guys, who are only up 6% this year, only up 4% this year, because the stock market's up 10%. i think those guys have done yeoman's work, because the next time we're down 30%, and we shall be, they'll be up 4%, 5%, and 6% again.
that's an important concept. those are the guys i respect. those are the guys i look up to. >> you have to do your homework. buy and sell the things you know and either like or dislike, really know what the product is. know who the leadership of the company is. you know, it's really fundamentals, but i'm sure when all the surfs in the kingdom were buying the tulip bulbs, that's when the people who were in it from early on knew how to sell. when the taxi drivers start talking about that big stock, that's the time to dump the position. >> do you think that's where we are right now? the taxi driver's talking about stocks? >> very interesting you bring that up. just this week, we started to have those conversations. and i don't think that's the case. i think we're at the end of the quarter, we're obviously at a precarious, you know, recovery inflection point for the economy, both globally and domestically, and there are a lot of things that are on people -- that are in people's portfolios that perhaps are being shed in favor of new, you know, undervalued opportunities. i think that's where we are right now. i don't think we're at that capitulation point. >> agree with you.
thanks, guys. >> love that kind of stuff. >> 35 minutes before the closing bell sounds for the day in a market that is under pressure, down 102 points on the dow jones industrial average right now, s&p and nasdaq weaker as well. >> as we mentioned, a pair of weaker than expected economic reports this morning raised red flags on wall street. coming up, former treasury secretary paul o'neill weighs in exclusively on whether we are starting to hit a speed bump on the road to recovery and for this rally. >> and then, 40 years ago today, motorola's martin cooper changed the world by making the first-ever cell phone call. up next, we'll game out which company will dominate the cell phone industry over the next 40 years. is it apple, google, which now owns motorola, or is it somebody knew? back in a moment. revolutionizing an industry can be a tough act to follow,
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well, happy birthday to the cell phone. >> whoo-hoo. >> yes, today marks the 40th anniversary of the first motorola cell phone, which was an astonishing 9 inches tall and took ten hours to charge. bill still has that phone, actually. >> yes, i do, as a matter of fact. >> but the world's most popular gadget has come a long way since that debut. motorola, now owned by google, of course, feverishly competing with leader industry, apple. but with google shares up almost 14% this year and apple shares down 19%, which of the two is a better buy for your portfolio? we're done talking numbers now on the cell phone companies. on the technicals, jesse o'hara is with phoenix partners and on the fundamentals, jeff killberg, good to see you, guys.
j.c., you look apple over the short-term? what's your strategy? >> i do, maria, these two stocks are very similar, and yet they're completely different. they're similar because, if you look at a chart going back to january 1 of 2011 to today, we both see that both stocks are up right around 33%. now, the interesting thing is the path, how they got to that 33%. google, two steps forward, one step back. nice, slow, steady advance, and we think that's going to continue. apple, on the other hand, everyone knows this story. this took a giant leapfrog higher, parabolic move, pulled back, and now it's resting on a very crucial area of support, where thing we're going to bounce higher. not only on it's 150-day -- >> j.c., i want you to print that apple chart off the top of your head, because i'm about to go william tell on you. apple is going lower. i disagree with your thought here. look, a lot of focus here have said, oh, the 50-day moving average. that was only three trading sessions ago, it traded above the 50-day moving average.
i think we'll see that 419 recent low get sliced. price discovery mode, while all-time highs are being made in other indexes is not boding well for apple right now. >> jeff, put your google glasses back on and take another look at the chart. on that giant decline, we had 10% bounces multiple times and i think we're setting up for another 10% bounce here. i think this is going to move like a pendulum, back and forth, and you have to be willing to trade and be nimble in this stock. >> j.c., the news about the new iphone coming out is a big yawn. what are they doing with their cash, and more importantly, what are they not doing with their cash? we need something, j.c.! >> great insight, guys. thank you so much, gentleman. we'll be watching the story. that's what makes a market. >> great to have a passion, guys. breaking news from the federal reserve. steve liesman with the details. kbembargo lifted, steve. >> san francisco fed president john williams saying in a los angeles speech the fed could begin to taper purchases this summer. he says if his forecast is
correct, that substantial labor market that the fed is looking for is possible by this summer. interesting comments from williams, who was one of the more dovish members on the board, but, also, it's one of the earlier forecasts for when the fed could begin to taper, of any fed member. williams says the fed could end the purchase program later this year. he sees strength in the economy in housing, autos, and some in the labor markets. growth this year, 2.5%, he's forecast, next year, 3.5%. so that's on the higher side of both the market and other members of the fomc. he's hopeful, quote, the economy has finally shifted into higher gear. there are headwinds still ahead, budget cuts, weaker foreign economies, and uncertainty. he says a full-fledged european financial collapse is unlikely, but the economic weakness is likely to continue. the unemployment rate, long-term, will remain above what he considers normal, which is 5.5%, until 2016.
he goes on to say that benefits of quantitative easing continue to outweigh costs, by a large margin, and points out that tapering quantitative easing does not indicate tightening since the federal reserve will still be buying assets while it's tapering. it will just reduce the amount, and also, the fed will hold a large amount of securities, even when it stops buying. bill, maria? >> very quickly, steve, is he considered in the hawkish camp, traditionally? >> no. >> is this the kind of statement we would expect from john williams? >> john williams is one of those who argued very strongly for the open-ended quantitative easing. he was very much in favor, and he continues to be in favor of it. i think what we're seeing here is he has a more aggressive economic forecast than other members of the fomc. he did not put a number on what he considers to be substantial improvement, but he did say that he expects it to happen by this summer, which could allow the fed to begin tapering. one other thing, bill, our cnbc
fed survey has the average month, january 2014, when the market expects tapering, so williams' forecast is six or seven months ahead of where the market is right now. >> very interesting. thank you, steve. >> steve, thanks so much. meanwhile, we are worsening in terms of the stock market as we approach the close. 30 minutes until the closing bell sounds and a market down 118 points. >> we're back to the lows and these comments from the fed president may have something to do with that, as a matter of fact. white house, meanwhile, pushing banks to increase home lending to borrowers with weak credit. haven't we learned anything from the housing crisis? we'll have that story, coming up here. also ahead, we're going hunting for potential black swan events that could spark the big sell-off so many on wall street have been predicted. stay with us. we're back in a moment. tdd#: 1-800-345-2550 opportunities are waiting to be found in faraway places. tdd#: 1-800-345-2550 markets on the rise. tdd#: 1-800-345-2550 companies breaking through. tdd#: 1-800-345-2550 endless possibilities.
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we're going to show you this market. we're now at the lows of the afternoon. things have been worsening the last few minutes or so. down 122 point s on the dow jons industrial average. a combination of factors going. we are, of course, expecting the first quarter earnings to come out next week and we're looking at pretty slow growth there, about 0.4% growth for the s&p
500. we're also getting headlines, dow jones on north korea, north korea army saying it has the final approval for nuclear attack on the united states. this coming from dow jones, just crossing the wires here. of course, we just heard from the san francisco federal reserve official, from steve liesman, also talking about the economy, as the same time that this market has been worsening, pretty significantly, bill. >> bob pisani is with us here, here. they're piling on the markets today. >> a lot of stuff. >> now these two developments, as well. and, you know, we have to pay close attention to north korea. the u.s. has already announced today, they're going to be sending in a missile defense system to guam, just in case. now you're getting this inflammatory remark from north korea. >> we dropped three separate times today on three different pieces of news. the weak adp, the news from the secretary of defense, and dropped it down later in the day as mr. williams came out and said that asset purchases could be completely ended by the end of the year. that's a little bit of news
right now. now we're getting fed officials coming out and saying, potentially ending, not tapering off. >> and we should point out, that's why i asked steve liesman about his typical view. he's not one of those perma hawks on the fed, that would be inclined to say that anyway. this was a man who, as steve pointed out, was very aggressive in promoting the open-ended quantitative easing program that the fed had pretty much initiated, and now he's saying this could end sooner than later. >> you can't expect rates to spike right away, but at the same time, any move is indicative of where things are going. and that's the bottom line. if you are going to get a real return in fixed income, you're going to take money off the table, because you've made money in stocks. >> we keep waiting for that great rotation to coccur. it's not really happening yet. it hasn't happened to any great extent. this is the kind of thing that could push it in that direction. the market's being hit by three different concerns today, and i think rightfully so.
>> and if you're just joining us, we're just getting that word through dow jones that the north korean army now says it has final approval for a nuclear attack on the united states. that's the news coming out of pyongyang at this point and the dow down 130 points right now. we're at the lows of the afternoon. >> a decline of almost 1% on the dow jones and s&p. >> definitely keep an eye on all of that and keep you updated. also, we've got the names of five big dividend hikes that could happen any day now. four of them are dow components, which could be a bullish sign for this market. we'll see, coming up. >> also, environmental safety concerns. the biggest roadblock to developing massive amounts of oil and gas in many states. now former treasury secretary paul o'neill speaks out. he's leading the charge to ensure this kind of drilling operation is safe. why that could spark an economic boom in the united states. [ all ] fort benning, georgia, in 1999.
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news letter, 24/7 wall street. john, let's start with the two oil companies on your list. you've got exxonmobil and chevron. you think they're going to raise their dividends this month? >> absolutely. they did last year and they've been raising their dividends. they've got to keep raising them. i mean, take a look at exxon. they're way behind chevron. they only pay out about 30% of their earnings each and they've got a lot of room to do that and keep buying back stocks. they'll have to reward shareholders. >> is the market expecting that, or do you think that will be a surprise and move the stock up? >> well, realistically, it's expected that these companies are going to raise dividends. they have to. i shouldn't -- >> you know, we showed all five of -- let's go back to that list again. johnson & johnson, dow chemical, and ibm. i mean, these are companies that have huge cash hoards and, you know, heir doing pretty well in this economy right now. so i guess it is expected.
and they are typically the kind of companies that are going to raise their dividend annually, anyway, aren't they? >> yeah, they generally are. the thing is, j&j and dow, though will probably be nominal increases. but cisco just started paying a dividend in the last few years. so they got to catch up. they only pay out half of what microsoft pays out and the last time checked, you know, ibm's only growth may be because of the fact that they keep reducing their salespeople's commission. >> ibm's a victim of its own success in that regard. their stock has been very, very strong. >> they constantly pay out their free cash flow to investors, whether it's dividends or payback plans. and by the way, that does, in some cases, limit their growth, bill. you're talking about 2% revenue growth, and yet investors could not be happy, because they keep paying out these dividends.
>> and they keep buying back stock. they keep warren buffett happy. >> yes, they do. john, good to see you. thank you for these names. >> thanks, guys. >> important to bear in mind, to see if they do, in fact, raise their dividend later on. >> bill, i thought that was interesting, so many dow components were on his list. >> reason they call them blue chips. as we head toward the close, about 15 minutes left in the day, we're coming back, the dow was down 131 points a moment ago, nown96. >> but this market's under pressure today. increasing tensions with north korea. investors have been pretty much ignoring this threat until now. what's changed? we'll take a look, next. >> also, be aware the black swan. the always-cautious jeff cox breaks down the potential under the radar events that could send this market even mar sharply lower. stay tuned. oh, he's a fighter alright.
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welcome back. we've been reporting today, the u.s. is sending a missile defense battery to guam, as the u.s. defense secretary acknowledges today he is concernsed that crisis in korea could escalate. john harwood now with the very latest details on south korea. over to you, john. >> maria, we've had continued bluster from north korea. there was a report recently that the north korean army was saying
it was prepared to attack the united states. we have in this video that you can see, military rallies taking place in north korea, as they continue to practice under kim jong-un, the young new leader, to try to put pressure on the united states. and chuck hagel, the defense secretary, came out today and said he regards this as a clear danger. >> some of the actions they've taken over the last few weeks present a real and clear danger and threat to the interests, certainly of our allies, starting with south korea and japan. and also the threats that the north koreans have leveled directly at the united states, regarding our base in guam, threatened hawaii, threatened the west coast of the united states. >> but, maria, it's important to point out that american officiaofficia
officials are also aware that bluster and provocation is part of the m.o. for north korea to try to get concessions in return for some sort of halt or slowdown in its nuclear program, which those steps have not been effective so far. the administration has been trying to react to north korea in a tempered way, without provoking some sort of a conventional warfare response or military conflict with the south that could escalate, but as of now, i think the administration does not regard any imminent military action as likely. >> all right, john, thank you so much, john harwood, and of course, this market, selling off today, partly on this news. the dow down, better than a hundred points earlier at the low. we are coming off of that, as you can see, with a decline of 87. >> we've come back about 50 points. what does this crisis with north korea mean for the markets? tom mcclellan has made his way all the way to the east coast.
>> good to be here. >> brian, i don't want to minimize what's going on with north korea. it's clearly a situation that everybody needs to keep an eye on. is it having a fundamental impact on the markets, though, or is it more about the economic data we've been getting lately? >> honestly, this is something that i think a lot of people have known for a while, that north korea was probably going to be doing some more saber rattling and something we anticipated as kim jong-un took over for his father. it's not that big of a surprise. it's unfortunate it's happening. perhaps this was an excuse for people to take a little bit of money off the table. i think we see the market moving down a little bit on somewhat disappointing news, but at the end, we're beginning to come back. >> i'm going the stick my neck out here, bill, i think it's an excuse. i think this market being up 10%, people are saying anything, sort of globally related or sort of that could impact the economy is going to be an excuse to sell at this point. and, of course, you've got earnings beginning in earnest next week. tom, how do you see it? >> we've already been seeing the pain and suffering going on elsewhere outside the u.s.
markets. emerging markets two months ago, so it's finally now coming around to the u.s. i think what's happening to the market today, with north korea's saber rattling, it's just pushing the market a little harder in a direction it was already going. like if you push a kid on a swing. if you push them at the right time, the ampletude gets bigger. >> lumber is down sharply, oil is down. so a lot of these commodities that are so important to the economy have been coming lower anyway. >> copper is what i call one of my dead canaries. it's fallen ahead of stock prices since about 2007, copper has been behaving more like a financial asset than a commodity. but when it disagrees with stocks, copper is usually right about where both of them are headed and it's been heading down. >> all i have to say is, i love copper, i like the shipping index, i even like the transports as far as indicators. but guess what, they've all been
wrong. unemployment has been improving. >> and i think that's a good point. if you look at 82 to 85 or 95 to 2,000, copper moved in directions that are different than the overrule market. when i did a correlation analysis between the price of copper and the price of stocks, there's really not a strong, statistically consistent message there. i think that what we saw was 2007 on until 2012, a massive run in copper prices. that was not justified. everybody thought china was going to be buying it hand over fist. now it can go down, and it doesn't really signal anything. >> yesterday we were up a hundred points, yesterday we were down a hundred points. which market is correct? >> i think they're both correct. i think it depends on how you're interpreting the data. i think with copper, the message there is that right now, china isn't necessarily going to be at 8% growth. slower growth means less demand. they have a lot of stockpiles and we have some of the production already coming on. the price should be coming down. with stocks, corporate prices are still high. we haven't got this economic kicker quite yet, and we can actually stay here with both
earnings and stock prices. >> they're not great. it's only 0.6% growth for the first quarter, by the way. based on what, for the first quarter, which we're going to begin next week. right now, in terms of everything you know, whether it's copper, earnings, how would you position yourself in terms of equities? >> the market's going to have a quick stumble. it will be able to get itself back up and investors will be thinking everything's fine by about the beginning of may and the real pain will begin from early may through october of this year. so this is just the stumble. this is not the big fall. >> the big pain, being -- what are you talking, the real pain? what's your percentage decline expectations? >> everybody's going to set their buy orders at 10% decline then say, oh, no and it's going to keep on going. >> it lacks like he's selling in may. >> don't look for a price low, look for an october low, whenever that is. >> thank you, guys. good to talk with you. appreciate it? >> we'll come back with the closing countdown on what has been a pretty volatile newsy day on wall street. >> and after the day, we'll tell you what else besides north
korea could end up sparking the correction so many have been predicting. >> and have you seen the outrageous video of rutgers basketball coach abusing his players? well, he's just been fired. but that video is from four months ago. we'll look at this incredible lack of leadership from the school, coming up. you're watching cnbc, first in business worldwide. keep my eye on her...ways o but, i didn't always watch out for myself. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack. we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare. for tapping into a wealth of experience. for access to one of the top wealth management firms in the country.
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i think it forgot to eat. >> that's me. north korea, earnings starting next week, and the jobs numbers. three things. i mean, that's rattling this market. i'm going to talk to our guest about the nah this three minutes. >> adp numbers came out, did not look good. services number is all going lower. here's where we heard more about north korea and then it really got serious and we come back, a 130-point decline came a 94-point decline. two other things we're watch vrg carefully, very quickly here. two things that have been leading us to the upside are starting to break down here a little bit. the transportation average, right at its 50-day moving average. we'll watch that very carefully. the other one, the russell 2,000, the small caps, guess what, same thing. that's broken through the 50-day moving average. wondering whether that could mean the end of a short-term swing up that we've seen here lately. >> i really feel that this is such an excuse. ken palcari, people are looking for an excuse. >> the market's looking for an
excuse to take money off the table. and we got a little bit of that taste. the chatter about north korea has sent people over the edge. >> are you going to take off? >> i'm going to take off, i'll talk to paul o'neill. >> i thought you were talking about the former right fielder for the yankees. >> that was paul o'neill's joke, not mine. is this the beginning of a correction? >> i don't think so. i think there's a little bit about north korea, gold would be up 20 points instead of down. i think it's more than with the labor market today, the ism numbers, i think that's weighing high. >> the dollar was not strong today. you think that would be also an indicator, right? >> you would. but i think, overall, the market has been tightened and we've had this conversation about the market just really looking for a reason to want to take some profit. the other thing i heard today, which was interesting, was from customers, is that there's some selling going on ahead of april 15th, which is taxes, people need money to pay their taxes. you may have a little bit of that, but overal
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