tv Power Lunch CNBC October 31, 2013 1:00pm-2:01pm EDT
>> so give us a scary trade instead of a final trade. >> scary trade is to be long fixed income right now. i wouldn't do it. >> stephanie link. >> joy global. china and coal have stabilized. >> mr. fmurphy. >> national bank of greece, big upside. >> josh. >> small cap's too expensive, 20 times versus s&p, much cheaper. >> "power" starts now. thanks, josh. "halftime" is over. "power lunch" and the second half of the trading day start right now. >> bubble, or is it buble? the "b" word is becoming more and more part of the talk. today what you need to watch for when someone says bubble. the deficit now at a five-year low. is it possible that things aren't so terrible after all, that the fiscal state of the country isn't as bad as some people say it is? so what's it mean for the economy and for stocks, we're going to give you the answers in three minutes. and we have the first and
only video of the first bombing run of that new f-35 fighter jet. the planes are designed to replace the f-16s as the backbone of american air power. stew is out today. we're joined by kayla tausche. kayla? >> thanks, tyler. we start with a story that impacts anyone who flies. that phrase "please turn off your electronic devices" we hear every single time before takeoff, that may soon be a thing of the past. soon. not quite yet. shares of goinggo up big. they don't give you wi-fi below 10,000 feet which is what this rule changes, but the idea is maybe they will. phil lebeau is in chicago reporting on the faa's new policy. a long time coming, phil, but fun to see that it finally happened. >> you know, kayla, you fly a lot like i do. i think we're both tired of the stare that we get from the flight attendant when we don't turn off our kindle or whatever we might have on at the time. that's going to be changing. here are the new rules from the faa.
and essentially this does affect the takeoffs and the landing below 10,000 feet. what will be allowed? e-readers, ipods, game devices, basically anything that's not sending out a signal but is still electronic. what is still banned? anything with cell service. so you won't be able to text or tweet or send an e-mail. and you still cannot make phone calls in a plane. regardless of whether it's 10,000 feet or above. the faa says airlines should change their policies by the end of the year. we'll talk more about some who are doing it even sooner than that. if a flight attendant, however, still asks to you turn off your device, you must comply. here's the head of the faa explaining the new changes. >> most commercial airplanes can tolerate radio interference from portable electronic devices. it's safe to read downloaded materials like e-books and calendars and also to play games. >> now, we talked about the airlines who might be moving quickly to change their procedures. both delta and jetblue say that
they have filed plans with the faa to move as quickly as possible. in the case of delta, they possibly could do it as soon as tomorrow to change their policies in terms of what you can do or not do with your electronic devices on board. tyler, the bottom line is this. for years we've all done it, and we've all seen people do it, that you had your device on. the flight attendant says turn it off. you roll your eyes and you say yeah, okay. now the faa is saying in almost all cases, you can keep them on. >> i've never rolled my eyes. never, never, never. i promise you, phil. another big story this hour, the federal deficit hitting a five-year low. steve liesman is here to explain what it means for you and the economy more broadly. first to eamon javers in washington to explain how we got here. >> hi, tyler. the obama administration sees this one as a big win this week. remember that fiscal cliff deal that we had at the end of last year's crisis in washington? what they did was, they raised taxes, and they cut spending through the sequester.
and that's had a fairly predictable result. it's been good for the deficit. take a look at this chart, and you'll see the deficit as a percent of gdp has gone down dramatically since 2009 when it was 9.2%. 2013, just 4.1%. 79% of the decrease the government says it due to tax receipts. record tax receipts in 2013, up $325 billion from 2012. that's up 13%. so the tax man is getting his cut of this improving economy and also as a result of those tax increases. that has led to this lowering of the u.s. deficit. that's something the obama administration says is a good thing. they feel like, you know, it's not getting enough attention here in all of this hullabaloo here in washington. >> a quick follow-up question if i might that kayla tausche raised. and that is all of the money that the federal government has collected in settlements, fines and so forth with, for example, financial services company -- companies in the hundreds of billions of dollars over the past four or five -- does that count here?
>> it does. it goes to the treasury, but remember, a lot of those settlements are settlements to particular funds. so a lot of that is going to a mortgage fund, for example, which is going to help homeowners and other things. so some of it won't show up on the treasury's book. but you know, when you're dealing in trillions, a couple of billion is not necessarily enough to move the needle necessarily. >> all right. eamon javers, thanks very much. what does it mean for the economy and beyond? you look at those numbers and you see deficit as percent of gdp, 9% in 2009, the middle of the recession. 4.1% now. is this very helpful for the u.s. economy? >> it is potentially very helpful. we're moving in the right way. i want to do dueling charts with eamon. my charts are so much prettier than eamon's. he gave you the numbers. i'm giving you the bars. and what you see there graphically is there's the 10% of gdp, the negative deficit there in 2009. and now we're more than half lower than we were before, 4%. where we need to be, tyler, is 2%. at 2% of gdp, the deficit stops
growing as a percent of gdp. that's where we need to be. and that's a point that $17 trillion clock you see all the time, it will stop then and then the burden of debt. here's the problem. a lot of this has to do with revenue increases we had, a little bit more growth, higher taxes. spending cuts. what we're going to need to do is deal with longer-term entitlement problems. that's a problem three to five years out. now the news is good. you can see that the market is not overly concerned with the level of the deficit. however, when it gets two, three years down the road and we start to have this struggle the other way again, then the market gets concerned. >> and that's driven by entitlements by people like me of a certain elegant age getting to that retirement age. >> i would also like to point out i never left my cell phone on taxiing down the runway. >> never. i know you have not ever. steve liesman, thank you very much. kayla, down to you. >> thank you, tyler. well, it's been a volatile week for facebook. earlier this week forced to research saying the company, quote, creates less business
value than any other digital marketing opportunity. and i quote, don't dedicate a paid ad budget for facebook. facebook called that sentiment all illogical. facebook's ceo admitted teens are using facebook less. investors still like it, the stock up about 5% today though it gave back some of its gains from the after-market yesterday and up about 85% just in the last six months. nice run if you're a holder, tyler. cfo's facebook -- shall we start over? >> let's rewind. that was a gaffe, by the way. >> facebook's cfo is not alone in making a controversial conference call statement. mary thompson here now on conference call controversies. >> oh, these controversies, you know the conference calls typically are pretty mundane events, but once in a while an off-the-cuff can have an impact.
about teen users last night. >> our best announcement on youth engagement in the u.s. reveals that usage of facebook among u.s. teens overall was stable from q2 to q3, but we did see a decrease in daily users specifically among younger teens. >> whoa, the stock taking a hit on those comments in the after-hours session yesterday. though it has come back in today's trade. now, keep in mind, tone in critical on these calls. so investors took ebay cfo's bob swan at his word. >> at the same time, the u.s. economy softened critically and we have a cautious outlook for the holiday season. >> a misperception claimed ceo john donahoo. he blame it had on a cold. swan referenced concerns about the holiday season twice on the call, saying later. so all of that and the anxiety we see when we pick up the
newspaper every day makes us fairly cautious about how we look at the holiday season and its impact on our outlook for q4. lastly, what ceo would want to derail a rally in their stock? evidently netflix. >> when i read a story about it being the highest appreciating stock in the s&p, it worries me because that was the exact headline that we used to see in 2003. and, you know, you can definitely -- we have a sense of momentum investors driving the stock price more than we might normally. >> well, hastings' words taking some of the air out of the stock. maybe pleasing hastings but certainly not some of netflix's investors. >> that's hard to say. >> i don't think it is. i think you just say netflix. >> netflix apostrophe. >> sure. >> thank you. remember in august when aol's ceo tim armstrong fired patch creative director abel
lens on the spot for having his camera out? it was captured. >> i'm going to be very specific about this is patch from an experience -- abel, put that camera down right now. abel, you're fired. out. >> hmm. sounded like donald trump. a week later he apologized with an internal e-mail. kayla? tyler, hindsight is always 20/20. some executives find that out the hard way. time warner might be looking back at its fight with cbs. you see the stock, twc, up about 3%. that's trading at a 52-week high bolstered by merger speculation. the company is now getting a clearer picture of how many subscribers left during that torturous fight with cbs earlier this year. julia boorstin's in l.a. with that story. over for you, julia. >> well, kayla, time warner cable lost over 300,000 tv subscribers last quarter, almost double the losses wall street expected. it also cut its revenue forecast. now, largely to blame is its 32-day blackout of cbs channels
in major markets which not only drove subscriber losses but also higher marketing expenses and $15 million in subscriber credits. analyst craig moffett says the defeat by cbs is bad news for all cable companies' programming negotiations. writing, quote, every cable operator now goes to the table knowing that cbs not only won the war, but left time warner cable badly damaged even for having fought the fight. if you thought the scales were tipped in programmers' favor before, now you know that it is worse than you imagined. now, time warner cable's incoming ceo rob marcus said on the earnings call this morning that the fight was worth it to secure a better deal than where the negotiations started, but the impact of this negotiation with cbs will bleed into the fourth quarter. kayla? >> all right. thanks so much, julia. for now we'll send it over to dominic chu at headquarters for a "market flash." >> take a look at jos. a. bank.
they want to propose buying men's wearhouse. men's wearhouse said no. bank says it will consider raising if men's wearhouse lets it do due diligence. it's up to the board to engage in good-faith discussions. both stocks are down on the news. so maybe the deal isn't well suited for investors, tyler, over to you. >> thank you very much. ho ho ho, 55 days till christmas. after a lackluster third quarter for many retailers, the pressure is on now for a knockout holiday season. courtney reagan has target targo for an exclusive interview. >> thank you very much, tyler. let me bring in john mulligan, target's cfo from minneapolis. thanks for joining us. i understand you had your community meeting yesterday. a number of analysts saying that some of your earnings estimates and projections for target canada are feeling a little too
optimistic. what's your reaction to that? >> well, first, thanks for having me, courtney. you know, i think when you think about canada and what we're doing there, you have to step back and really understand where we're really at in the total process here. we spent two years spending $15 million remodeling stores, hiring 20,000 team members and training them, building a supply chain, building a technology, and now we're at a point where on average we've had stores open for about four months. and in any undertaking of that magnitude, there's going to be some hiccups. and we've had some of those in our supply chain. we've seen that. sales have started a little softer than our expectations. but as we invest, we invest for the long term, and we're building a long-term business. when we think about sales five years from now and getting to $6 billion and 80 cents, all of our modeling still indicates that we'll be able to attain that as we look at the trade areas and the demographics of those trade areas were very accurate in predicting sales in the fifth year. and in the first year sometimes we start softer. sometimes we start stronger.
but they have a -- these things have a way of working themselves out as we move forward and address some of the operational issues we've had had. >> i understand, of course, to hit any projection you need customers coming to the stores and buying. what ung do you think the mood the consumer is going into this very important holiday season? >> well, i think it's been a tough year for consumers overall. they started the year with the payroll tax increase. and lower and middle-income consumers bore the brunt of that. they were already stressed. you know, as the economy has improved slowly over time. but it's been a choppy recovery for sure. and we see fits and starts with consumers, particularly at the low end. so the payroll tax had an increase on that. our leaders in washington have done their best to create more uncertainty. uncertainty is never good for consumers. they like certainty and like to have a vision of where we're going. and so all of that together has made consumers a little says bit more -- they've pulled back a little bit. but we remain very optimistic about the fourth quarter. that's our time of year for
retailers. that's when we get excited about things. we have a great message to bring. we invest billions of dollars in ensuring our prices are right. we have a price match guarantee. we're going to be more overt in our messaging about getting ai great deal on great products in the fourth quarter, and we think it will be great. >> john, i want to come back to washington and its impact on your business after this quick question. gas prices -- i paid $3.01 for a gas today. are lower gas prices going to help you this season? >> well, first, that's a great price on gas. i wish we had that here. but more importantly, you know, lower fuel prices are always better for us. we've studied this a long time, and it's hard to find a direct correlation. but lower fuel prices ultimately mean more spending money for consumers. and so that can't help but be a benefit to us. >> you obviously watch the accounts very closely. i want to ask you about the affordable care act and what, if anything, you expect it to do to your company's health care plans that you offer to your full-time employees and what, if anything,
or how or in any way will it affect what you do, if anything, for your part-time employees, specifically would you consider reducing a part-timer's hours so that you're no longer required to cover them? >> well, you know, the good thing is, we have a little bit more time here. i think in the fourth quarter, we want our team members focused on providing outstanding guest service. so we've had a practice of reenrolling for benefits after the first quarter. so our team continues to evaluate the environment and what's going on, with the environment as it relates to health care and we'll make more decisions on that as we go forward. but as it relates to part-time teamer, this year we heard loudly from our team last year that they want more hours. we've been focused as we look at holiday staffing plans about providing more hours to our team if they want them. and we continue -- we're going to still hire 70,000 team members this holiday season to help us with the great sales we expect to do. but our first priority is providing all the hours that our team members want. >> john, you mentioned consumer
spending, which you mentioned consumer spending which has been fragile. it could take another hit this friday when the food stamp benefit expires. some analysts say that could take as much as $16 billion of spending out of the economy and hurt target, walmart, other retailers that fend on some dep. how are you prepared and what sort of impact do you think it will have? >> there's clearly an impact there. our role -- our -- the food offering for us plays a little bit different role than it does at some of the other pure-play groeshers and perhaps walmart. food for us is a frequency business, more of a fill-in business and less of your friday, saturday stock-up trip. so the food business, as a percent of our portfolio, just plays a smaller role. critically important to drive frequency but not as critical when it comes to our aggregate sales. >> john mulligan, cfo of target, thanks for being with us on "power lunch." courtney reagan, thanks for your reporting and bringing john along in that. power lunch" is just getting started. next up, we're talking about the
"b" word, bubble. where are they now and how can you clear out before they pop? and two big stories out of two big parts of the brick. michelle on brazil, seema mody on india. >> kayla, india loves gold, but there are signs demand could be slowing just before a key holiday, and that impact could be felt across the world. and from brazil, a batista goes but. if he couldn't make it, can you? what's in your ear? oooo! a quarter! check for more! well, i guess i can double check... my watch! [ male announcer ] it pays to double check, with state farm.
welcome back to "power lunch." check out shares of harbin international. it reported profits and sales helped along by demand for higher-end audio from higher-end carmakers like ferrari and daimler, the makers of mercedes-benz. an interesting tidbit, german automakers make up about one-third of sales at harman. back to you. another fun fact if you've been living under a rock, today is halloween. that's the whole intro i have for you. roll the tape. >> the markets are starting resemble a bubble. >> we might be in a bubble. >> i think the markets are bubbling, and all asset prices are bubbling. >> don't let your family suffer the same fate. >> profit margins are bubbling. >> too violent, too deadly for you to imagine. >> let me throw out something
that will be her rhettetical. margin debt is at historic levels. >> i think it's going to force the federal reserve to push off the tapering at the very least to march but maybe as late as june. >> no! no! no! no! >> they're here. >> wow, spooky, spooky. kelly he have abevans, bubble, toil and trouble? >> just to add to those voices, robert schiller told us on "squawk on the street" that he's the latest to voice his concern about frothy levels here on markets. >> at this point in time, the stock market is somewhat bubbly. it has a high cape. but we can still find low-cape sectors in the market. and the market overall is not disastrously overpriced. if we ever get back to like we were in 2000, we might have to
rethink things. >> that's for sure. his comments echo blackrock's larry fink. they've also expressed concern the markets are diverging, and this is what's important. from weak economic fundamentals. there's larry fink saying we're seeing bubble-like markets again. he's talking about equities. but also corporate debt spreads which have narrowed dramatically. with regard to the macro picture, certainly the government shutdown didn't help, cut about half a percentage point roughly off gdp. it's basically, though, helped keep the economy from accelerating and keeping the fed in the picture. but there's a bigger story here as well. and here's bill gross in his latest investor letter. he's now saying to fellow financiers, "you did not, as president obama averred, build that. you did not create that wave. you rode it. and now it's time to kick out and share some of your good fortune by paying higher taxes to favor economic growth and labor." in other words, the higher this
market goes in a weak economy, the louder, kayla, you can expect those calls to grow. >> it's interesting, you bring up the weak fundamentals in the market. larry fink says the reason why the market is at all-time highs is because so many companies have been buying back stock. they don't know what else to do with their cash. it's no the that the market is high because the companies are actually performing that well. >> and this is financial alchemy which is a term we've seen people use. we all start to use even more. if growth doesn't materially pick up next year. >> we have kenny polcari here as well. we want your thoughts on the stock market. the vix is still low, too. where should we -- >> you all make a very good point. companies buying back their stock, so they're forcing prices higher. the fed kind of feeding the market and causing a complete disconnect between what the fundamentals are and where are investors supposed to go to earn returns. therefore there is that disconnect and that sense of a bubble brewing, right? although today look at the market. we're essentially flat maybe up marginally, right? but i think the average investor
needs to understand, at points like this, you need to take -- look at the outliers to really outperform and take the money from there and reallocate it into the assets that are not. >> you heard charles schwab saying client assets are up double digits. the retail investor are coming back. are they coming back at a time when the market's about to pop? >> we heard from robert this morning because they're putting more emphasis on the equity side of their business. so look, yes, the retail investor can be a little contrarian, but they're hardly getting involved here again. the question, i think, kind of kenny goes back to whether 2014 will be a year of normalization or speculation. >> i think by all accounts when you talk to the analysts and strategists is that 2014 is going to be a turnaround year. i think people expect it will be. it will give time for the economy to catch up to where the market is. and that's why i think up here you have to be cautious. listen, it was only last week where you heard calls of 1850 on the s&p. that's where it gets almost ridiculous.
>> but we should note that in our finance.yahoo!.com poll, 40% said they don't think there's a bubble. >> and that's always a problem because it's complacent. when you get complacency, you get people who aren't really paying attention and that's when it could strike. >> two things to watch. the dollar and the ten-year interest rate because the higher interest rate and a stronger dollar tells you we may be on the cusp of a sustainable economic expansion. the opposite of that will lead to more and more talk about bubbles. >> we at least have a higher dollar today. but no doubt a debate we'll continue having. kenny, kelly, thanks for being here. ty, over to you. it's halloween. of course, that means time to dress up. dominic chu looking at the best corporate costumes out there. >> it's our halloween theme, right? let's keep it going. some companies look one way, but they do something completely different. you think you're getting one thing, but take a look at some of these stocks we've found. tyler, we've got those costumes companies coming up next.
we just talked about a possible stock bubble. if you were in the market this month, you did very, very well. ten dow stocks, multiyear highs in october. 3m, procter & gamble, american express, pfizer, visa, those are five of them. we'll tell you the other big five. that is a really readable chart right there. you can see that right there. we'll tell you the other five after this break. happy halloween, martha stewart. >> boo! >> the homemaking guru is on deck. still ahead. there she is. looking good. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts.
welcome back. i'm sharon epperson at the nymex. gold futures about to close right now. down about $25 from yesterday's close. about 130. of course, that was ahead of the fed statement we got yesterday afternoon. but we've seen gold prices continue to decline in this session. and we're looking at prices here that have seen a really lot of volatility in the past month, rallying 100 bucks, unable to stay above that 1350 level and coming right back down. back to you guys. >> thanks so much, sharon. of course, we'll be watching gold throughout the week. before the break we told you about ten dow stocks that hit multiyear highs this month. 3m, p&g, american express, pfizer and visa. tyler's favorite chart. the other five, dupont, disney, nike, also ge and boeing. boeing actually the biggest winner in the dow this year. up more than 70% to an all-time high.
that despite all its dreamliner problems. tyler, quite a run for that stock. >> you know, sometimes you buy a company's shares and you think you know how that company makes money. but sometimes you are wrong. dominic. >> let's inform you about three of them, right? >> interesting. they are in costume. >> they are in costume, in disguise. check out this one. first we're going to look at yahoo! because earlier this week, analysts over at bernstein research said this company should be worth $40 or more, $24 of that value could just be its stake in chinese internet commerce firm ali bauba. if you own yahoo! you own a good port of ali baba. those analysts think $24 could be that ali baba stake. another company we're going to look at right now is one that you associate with think copying, think faxing, think printing, it's xerox because you think about all those xerox machines. it's synonymous with copying. well, these days last year they got more than half its revenue from services. things like health care reimburse ments and toll
collections. and we'll finish off with one other one. dunkin' donuts. this particular brand, it's not so much about doughnuts anymore because this company is not just about doughnuts. they make more of their money from selling coffee these days, perhaps no surprise. so a little bit of a misnomer. three companies that appear in costume on this halloween, tyler. back over to you. >> thank you very much. two very big international stories we are watching today. michelle caruso-cabrera with the monumental fall from grace from one of the world's former richest men. first seema mody with why gold is a very big deal. >> it is, tyler. india buys about 20% of the world's gold. and demand typically fades around now as indian consumers load up on gold jewelry and coins ahead of the festival. in response, shares on average gain about 2% ahead of this festival. but this year we aren't seeing that big move in gold. analysts are predicting that gold demand in india will be
weaker this year as consumers battle a slowing economy, rising inflation and a depreciating rupee. add to that high import tax, which makes gold even more expensive in india. so if indians aren't buying gold, what are they buying? according to the local merchants i spoke to new delhi and mumbai, silver. it may not carry the same prestige, but it is cheaper and thus a good alternative. but silver won't be able to fully replace gold's important role in weddings and religious events. that's why some experts say that regardless of the current state of the economy, india will always have a strong affinity for the shiny yellow metal. demand might not be as strong this holiday season. >> thank you very much. now to that big billionaire bankruptcy in brazil. it's kind of like -- somebody like that going blooey. >> in a year. we're talking about ikey batis e batista. his company filed for bankruptcy last night in brazil. and now the brazilian court system faces a major test. how it performs could help or
hinder future investor interest in this once very hot country. brazil's current bankruptcy regime became law just eight years ago, 2005. and although it's broadly modelled on u.s. bankruptcy law chapter 11, it's still relatively untested, hasn't been a lot of time for legal precedents to be set. so key questions for investors. how long is the ogx proceedings going to take? this is the largest corporate bankruptcy in latin american history. $5 billion. before brazil's new law, proceedings took an enormously long time. yes, the time has improved now because of the special new courts. but can they handle something this big? two, will creditors be treated fairly? when a company goes bankrupt, they owe a lot of money to a lot of people that they don't have. in the world of corporate restructuring, there's a frequent phrase used, equal burden sharing. when it comes down to who's going to lose money, the concept is that the burden of losses should be equally shared among equal creditors. will that happen here? and number three, what if ogx
management doesn't actually act in the best interest of ogx? what if instead they act in the interest of batista's other companies to whom ogx owes money? will the judge step in in that case? tyler, a lot of things to watch for here. >> a lot of moving parts here. michelle, thank you. kayla, down to you. >> thank you, tile per. it's million dollar homes edition here on cnbc today. we have two more homes for you on the halloween edition. plus, the top ten housing markets that are seeing a big rebound. we're counting them down. and then jane wells who always gets all the best assignments has incredible new video of lockheed's new f-35 jet making a first bombing run. jane? >> kayla, it is the most expensive program in pentagon history, and it reaches an important and lethal milestone. we will have the very first pictures after the break. before global opportunities were part of their investment strategy... before they funded scholarships to the schools that gave them scholarships...
before they planned for their parents' future needs and their son's future... they chose a partner to help manage their wealth, one whose insights, solutions and approach have been relied on for over 200 years. that's the value of trusted connections. that's u.s. trust. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome.
welcome back to "power lunch." i'm glad it's halloween because some spooky technicals have worked eerily good. look at this chart that goes from the 2nd of may to the 5th of september. that's ten-year note yields. it covers exactly 136 basis-point rise. the 38% retracement of that is 52 basis points.
subtracted from the high yield of 299. next chart comes out to 247. and on that two-day chart, you see the response? we're up at 2.55. yesterday could have been the bottom of yield, top of price. the last chart is the dollar index. it is definitely doing much better, but mostly expense to the euro because many think a rate cut might be coming one week from today. kayla, back to you. >> spooky stuff, indeed, rick. thanks so much. the pentagon confirming the drop of the first laser-guided bomb in a test mission earlier this week. jane wells has the first video of the drop and image of the impact. jane? >> hey, kayla. it's an important milestone for the f-35, the biggest program in pentagon history as the lockheed martin aircraft made history at an historic place, edwards air force base. here is the first video just released. >> five, four, three.
>> 100-pound laser-guided bomb. that's a 500-pound bomb from 25,000 feet. the first time it's fired such a weapon. 35 seconds later, the guided bomb hit a tank on the ground. reuters reports that while f-35s have fired missiles over water before, this is the first time a guided weapon has been fired at a target on the ground. successfully, indeed. the first time it's been done, and it hit its target. it's marking what the pilot says is the first time the f-35 truly became a weapons system. the successful test comes as the inspector general at the pentagon has been critical of lax oversight of lockheed's f-35 plant in texas. lockheed has worked to improve efficiencies, is bringing down the price per jet to $112 million from $133 million. and tyler, sales of the f-35 are up, thanks in large part to international customers. back to you. >> jane, thank you very much. jane wells reporting. now, the million-dollar homes series is back. and in the spirit of halloween, we're going to check out to see what a million dollars buys you
in america's spookiest neighborhoods. plus, which housing markets are seeing the biggest recovery right now? diana olick is on that case. diana? >> reporter: well, tyler, it's not all about baseball in boston. okay, maybe it is. but housing is also boston strong. there's one from the list. we'll give you it coming up next. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. [ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading.
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in the spirit of halloween, cnbc's franchise scares up some houses worth a million dollars in america's spookiest naked neighborhoods. all the featured towns have a haunted pastor ties to a famous horror flick. we sent seven reporters out to give you a tour of some--dollar homes in them. these homes will fight to the death to advance in our tournament, but only one will survive. to make it even more suspenseful, we've asked our ghouls and goblins not to say where the homes are located. you may be able to guess using
our clever clues. you may be shocked when we reveal where they actually are. in the last round, diana's ominous oasis of savannah beat out new jersey's eerie estate. now in round four, savannah's ominous oasis battles the witchy warmth, touring the homes are diana "oh, no" olick and jackie "the ripper" deangelis. >> reporter: this four-story italian revival home sits on one of the most beautiful streets in the country. in a town where a mysterious past. set on 10,000 square feet of manicured lawn, complete with a stunning granite archway and a lush tranquil garden. >> this four-story town house built in 1847 is one of the oldest in an area famous for its ghost tours. the garden which can be used for good or evil is the centerpiece of this one eighth of an acre lot on a street that has many stories to tell. >> inside you'll find 4,000 square feet of living space
including this upgraded kitchen with top of the line appliances and hardwood floors. the downstairs also includes an elegant living and dining room. this home even has a greenhouse and a garden room. >> inside you'll find 3300 fully renovated square feet. and you can certainly cook up some mischief in this gourmet kitchen featuring double ovens and a wet bar for your tastier brews. >> upstairs you'll find four spacious bedrooms are soaring ceilings and crown mouldings. the two bathrooms have been recently renovated, covered in marble giving them a luxurious feel. the owners have impeccable taste. they're both local interior designers. >> upstairs there are three bedrooms including this master suite that has two of the home's five fireplaces. the guest bath has a clawfoot tub and a roof terrace overlooking a cathedral. >> this home is located in a quaint historic town of 40,000, a town with haunted roots. but it's the perfect sanctuary away from the hustle and bustle of city life.
rooms like this library have been meticulously renovated and restored by the home's owners who have maintained its original character. all for just under $1 million. >> the home also has this garden-level suite with a full kitchen and bath. it's the perfect place to make your guests disappear. all for the asking price of $1.64 million. >> we already know from the previous round that the ominous oasis is in savannah, home of "midnight in the garden of good and evil." let's take a look at our clues. witchy warmth. the crucible. there's daniel day-lewis, winona ryder. joining us to talk about it more, real estate mogul to the super rich. dolly will tell us if we guessed correctly and which is the better home for your buck. i was guess on that house someplace like lenox, mass or
brookline, mass. somewhere in mass. am i close? >> wow. you are right on. it's salem, mass. >> salem, mass. witchy. >> "the crucible," witchy, burning at the stake, all that great, fun stuff. you're right there. next door. >> i'm in the neighborhood. >> you're in the neighborhood. >> i should have known that, salem. >> very exciting. and both houses are terrific houses. you know, they're both historic, 100-year-old houses. both in beautiful condition. so it's really -- this is a tough one because they're both well maintained. everything is perfect about each one of them. >> they look gorgeous. >> they are gorgeous. but the big, big differences between them is one is 30 minutes away from town. one is in town. one is -- has a $2,000 a month rental apartment included, which defrays all the costs of the house. >> that's the one in savannah, right? >> exactly. >> with a suite. >> imagine $2,000 a month, you can pay for all your bills. >> yeah. >> and the other one doesn't. and i like the idea of location, location, location. you can walk to the art
galleries, the restaurants, the pubs, everything. i love that. so for my money, it is -- >> savannah. >> yep. savannah, georgia, wins again. diana, go for it. >> thank you, dolly. the ominous oasis survives another round. that's two rounds in a row. let us know if you agree. tweet using the hash tag #milliondollarhome. catch dolly in the next hour on "street signs" to see if the ominous oasis continues. she will crown the top house in the spooky market later today during "the closing bell." kayla, down to you. >> thanks, tyler. now on to the housing markets seeing the biggest recovery right now. fresh off a win, real estate reporter diana olick is here with realty check. diana. >> reporter: kayla, got to send the love out to dolly. love you and sorry, kayla, for beating your house. no, i'm not. savannah did not make the list of the top ten, but as if boston didn't have enough to celebrate, it made the list of top ten turnaround housing markets. this is a survey from realtor.com that looks at median
home price, supply of homes for sale, and days on the market it takes to sell. now, we're going to look at numbers six through ten. dallas is actually a newcomer to this list. it didn't rise much during the housing boom, so of course it didn't fall very much during the crash either. it's rebounding faster than others because of a strong local job market. unemployment is below the national average. inventories are down 16% from a year ago. prices are up over 10%. now, boston, we've said it is strong. one of the nation's wealthier housing markets. unemployment below the national average, again. it did suffer pretty badly in the foreclosure crisis, but inventories are now low, and prices up 9.5%. rounding out the top ten is las vegas, epicenter for the housing crash. half of its homeowners are still under water, and unemployment is well above the national average. but prices are up 31% from a year ago. inventory is down sharply, which is giving the market more momentum now. investors, of course, playing a
huge role in that market. so which of the nation's top five turnaround towns? tune into "street signs." you'll be watching because the million-dollar home will be going up for a third try, kayla. >> shameless promotion, diana, but we will be watching. thanks so much. ahead, we have martha stewart, big money, washington and where the money is this halloween. first let's see what's coming up on "street signs." >> kayla, bubble, bubble, toil and potentially trouble. some prominent names warning of asset bubbles forming out there in the markets. how many others are seeing the same way? and also, halloween is the biggest day of the year for candy makers, right? so what's the trade there? hershey's is already at an all-time high. and we are joined by the president and ceo of "the new york times," mark thompson. lots of talk there, folks. you've got to tune in to find out. we'll see you all at the top of the hour for "street signs." "power lunch" will be right back. happy halloween. ♪
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caught up with lifestyle maven martha stewart at a big halloween party in santa monica. she shared her opinions on everything from wall street to washington to main street. here is what is on martha's mind. three questions for martha stewart. >> i think a lot of companies are doing very nicely and helping very much extend what the government is supposed to be doing. i think there's so many admirable companies. and innovative, unusual companies. manufacturing good products, unusual different things. but, again, it's a major problem for the entire world about all the economic -- economic challenges we face. i think we have to sort of get ourselves a little bit more organized in congress and in the senate and really pay attention to the individuals who really make this country run.
i'm not an economist. i am not, but i can feel the tremors and the challenges in our own businesses. i must tell you, the pets business is doing very well. the home depot business is a strong vibrant business. people are spending more money fixing up their homes. you can see that in the wonderful earnings reports from the home depot. macy's, too, although expendable income might be a little bit less, i think macy's is still doing very, very well as a major retailer. i am marsha ttha the fairy gran martha. i wanted to do good. i wanted to do good this year. it's about 50 yards of inexpensive pink tulle. you can buy a whole bolt with not very much money and a little good ingenuity which good costumes make and a few snaps
and binding and some glitter and some little ornaments. we created this costume. very inexpensive. >> martha and her tulle. i think there's just not much more we can say about that. martha stewart, by the way, down 13% over the past year. shares of one of the world's biggest cosmetic makers plum plummeting right now. it is a big stock to watch when we return. tdd#: 1-800-345-2550 trading inspires your life.
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welcome back to "power lunch." avon is getting whacked on a glut of bad news today. first it reported weaker than expected third quarter profits and sales. this on a steep drop in sales in the u.s. and in china. then the beauty company said federal regulators were seeking much larger than expected penalties to resolve a long-running bribery probe. today's 20% drop left the company with a market cap of around $7.5 billion, kayla. back over to you. >> thanks so much, dom. on this halloween in the midday markets, we have the dow which is almost exactly flat. it is down by just 1 point. the nasdaq is up by about 7 points. and the s&p is up by about 1. tyler, really not too much that's interesting going on in the markets. >> no. but it has been, as we just ran on that crawl, a terrific month for equities, a month usually
marked by maybe not such great performance. >> well, it seems to be a good month. next month, of course, starts tomorrow. we'll see how november fares going into the rest of the year, tyler. >> folk, that will do it for this edition, halloween edition, of "power lunch." >> "street signs" begins right now. ♪ the music says it all. a scary but merry happy halloween to you. but is the most frightening thing right now the valuation of the stock market, or is the exuberance rational this time? a big debate ahead. we're going to ask the ceo of "the new york times" if you'll have an actual newspaper to read in five years. why facebook may have a teen problem but nobody seems to care. plus, mandy, the top five turnaround towns in america. first, tell us what these markets are doing. >> i will indeed. hello, everybody. stocks are swinging between gains and losses today in the aftermath of the fed. with the dow a t