tv Street Signs CNBC January 22, 2014 2:00pm-3:01pm EST
pretty much everybody respects ibm as a company, but has big blue made a big mistake that is costing its investors a lot of money? we'll dig in. hi, everybody. that is your top story today. also on tap on "street signs," the goldman sachs strategist who coined the term bric nations will give you some of his best international ideas right now. after a terrible start to the year, what is wrong and maybe also right with retailers and who can still win? and we want to hear from you. who do you think is the most influential person in money and
finance over the past 25 years? cnbc kicking off a big new campaign today. >> hello, everybody. the dow could fall for the seventh time in ten sessions today. we can see here it is down by about 41 points. by the way, we are laying most of the blame on ibm today. that is also the dow's lone 2013 loser. you can see down here, it is off by 3.3%. as for the dow transports, they are still killing it, setting a record high again today regardless of all of that, january is now on track for the first losing month for u.s. stocks since august of last year. brian, back to you. >> thank you very much. i want you to imagine, folks, if the manager of the new york yankees or the dallas cowboys or the lakers simply resigned midseason, no notice, just boom, i'm done and moving on. that's pretty much what's happened in our little world of money. in an abrupt move, the ceo resigning as co-ceo of pimco. he says there are more acts
ahead but he will be doing something else. let's bring in matt phillips and tom lorisello. matt, first to you. kind of abrupt by mohammed, obviously a well known face and name to the world of finance and cnbc viewers. what do you think transpired? >> it's kind of important to take a step back. there are two main stories with the firm, an asset class story and an asset management story. asset class, pretty simple. stocks have done much better than bonds, people have pulled their money out of bonds and bond funds like pimco's. the asset management story is more difficult. it has to do with the fact that when firms get as large as pimco is, it gets very, very difficult to beat the market even if you're as tuned in and intelligent an investor as bill gross. >> absolutely. 2013 was pimco's worst year since 1994. do you think it's possible that mohammed was pushed to resign or at least made to feel uncomfortable and unwelcome enough that he made that decision? >> we really don't know the answer to that at this point.
i think the types of things matt's talking about are what we should be looking at. mainly, we have a shop in pimco still predominantly known as a bond shop. it's their history, their origin. we are at the end of this multi-decade long rally in bonds and you know, the question really is where does the firm go next. can they diversify into stocks, into other things, and at this point it's been pretty slow going in terms of them branching into other businesses. >> he just wasn't the right guy at the right time, do you think? >> well, they have replaced mohammed with somebody from the business side, somebody with client relationships, and if you're trying to sort of get people to think about your firm in a different light, you're trying to tell a different story, mohammed as we all know is exceptionally intelligent guy, knows a lot about the markets and the economy, but he's not a marketing guy, not a
sales guy. he's not a product guy. that would seem to be where the emphasis is shifting back towards. >> matt, let's back it up here. everybody's pouncing on pimco and i have done stuff with bill, he's a guest on our show and i like the guy so maybe i'm coming at it from a different perspective. every bond fund was terrible last year. the yield on the ten year went from 1.67 to 3% so by nature the capital returns will get slaughtered anyway. we asked bill gross on this program about two or three weeks ago, i asked him do you want to get more into stocks. he pretty much hinted around yes so pimco has acknowledged if you're accepting bad bond returns for the next few years, you will have to do something else. if you're a gold miner and gold is worth less and less, find something else to do. we can't pin this all just on el-erian or the markets. >> that's absolutely true. although not every bond fund manager is as well known as bill gross and not every fund manager
gets called bond king regularly. it's important to look at how that fund has managed the upturn in rates that we've seen over the last year or so and particularly the taper. it's true, pimco didn't see the taper coming. hardly anybody on the street, any of the desk analysts saw the taper coming, but it came. investors were paying pimco fees to manage their money and have to ask what are we getting for our money. the fund did a little bit better than the barclays aggregate index but hardly at all. >> but let me give you some data, then. tom, you can chime in as well. on morningstar's site, the average long treasury, in other words, long government bond mutual fund, was down 9.1% over the past 12 months, 9.1%. most pimco funds were down slightly less, some a little more. vanguard, wasatch, t. rowe price, they all got whacked. >> the one thing you want to look at in yesterday's news was who they elevated here.
dan iveson who they elevated runs pimco income. that's one of these go anywhere bond funds that is designed to sort of profit no matter what's happening. it can go into all sorts of esoteric stuff. that fund has shot out the lights the last few years. it's a different kind of mutual fund than what bill does. and that's a fund that's been taking in tons of money. so in a way they are acknowledging that the head winds in the bond market, even just through what you saw in the personnel moves. if you look at pimco income, it's a different kind of creature and it's the type of thing that bond investors are increasingly gravitating towards. >> really great commentary from both of you. thank you very much. check this out. as we noticed a moment ago, shares of ibm down nearly 4% today after disappointing earnings again. herb wrote about how investors are over ibm's managed earnings approach for the street today. let's bring him in. herb, always great to see you. they are really locking
themselves in with this kind of five year road map but my question is, it's not just ibm, surely it's difficult for any company to put out that kind of multi-year road map and be held to it. >> well, you know, they all don't put out five year guidance. some companies, a year, or two in advance. so when you look at that, you have to say if they had done this internally, if they do these five year, that's one thing. but when you go out there and put a five year road map out there, when you really can't see what's going to happen and you are telling us this much is going to come from acquisitions, this much from buy-backs, you are really on the hook. as things move out, the timeline, you start saying by hook or by crook, i got to make that number, how am i going to make it. the quality of the earnings go down and that's what we see with ibm. >> are you against guidance, herb? are you against five year guidance? >> i'm not a big fan of guidance in general. i like at least, you know, somebody wants to give annual
guidance but the more guidance you give, when you give guidance you start gaming the market and gaming the stock. it doesn't mean a company is better or worse. you set yourself up for disappointment or creating surprises or lowballing. you name it. >> let me give you the flipside. a company says we are no longer providing guidance, guys like you and guys like me go on shows like this and go they've got no visibility into their business, they clearly don't know what's happening. so there's a damned if you do and damned if you don't aspect. >> it doesn't mean they don't have visibility. some companies that have no visibility stop giving guidance, but if you set the bar, say google has, and you say hey, you have to do your own homework into our company, do some real analysis, maybe then you really level the playing field in what people expect and you get away from the game of it. i say that saying that -- knowing darned well that i love the game of it from the perspective of being able to come out here and make a big deal about it. but realistically, i think i'm not a fan of gamed markets. >> what would be --
>> and gamed stocks. >> what would be the implications if ibm came out and said because of this, this and this, we're going to back off what we put out we would achieve by 2015? >> excellent question. >> what is the implication? you think the market would take a shot, first of all? and at least they're being honest? >> of course the market would -- the stock would take a hit. but then you would perhaps get a higher quality gain. sometimes companies do have to reset the clock. we talk about that often. i think in this case, if they are going to have to try to stretch it to get to that $20 number, people are going to see through it. the only way they will really get there is if they start reinvigorating growth and you start seeing it on the top line, and that gives them a little bit of wiggle room. >> a quick question. ibm is $56 off its 52-week high. the new ceo, you got to wonder if the old ceo left at exactly the right time, if you catch my drift. she kind of inherited -- >> let me tell you something.
>> go ahead. >> when i was a full-timer, i was on set when that was announced and the first thing we said was, was he getting out when the getting was good. it seemed to come out of nowhere. by the way, don't forget, the cfo who is also behind the road map is going, too. >> those were the halcyon days when you were here on set with us. >> yes. i will be there next week. >> send me back my pants. stick around because it is a big year on cnbc. celebration of our 25th anniversary. we are unveiling the nominees for the cnbc first 25 leaders, icons and rebels, a list of 200 people who have had the greatest influence, sparked the biggest changes and created the most disruption in business over the past quarter century. we got 200. we will narrow that list down to the top 25 over the next couple of months.
this is where it's important. pull over your car right now. kidding. once you arrive at your destination, you can weigh in by voting for your favorites at cnbc.com/25. we will get all our smart guests and contributors on the show as well to ask herb, you have already voted in our first day. who was your top pick? >> well, it's really close to a tie, honestly, because the easy pick -- >> a tie? it's not hockey. >> i would argue, i would argue that bill gates with windows created the transformation that changed all of this. in other words, i think windows was transformative. he was running the company at the time. i think -- by the way, as a philanthropist he's involved in a level of stealth philanthropy that is also causing a transformation in various parts of the world. if i had to pick one, even though i think -- i think it almost has to be a gates/jobs because it all emanates from
silicon valley. i like entrepreneurs who can transcend startups to become empires. >> you are hedging your bet. it's a gates/jobs tie. >> you have to. >> i understand that you've got not two, but three runners-up as well. >> well, you could argue that andy grove with the chip was important, though he wasn't the entrepreneur but he led intel. then i think you go to the obvious, to jeff bezos, whether you like the stock or don't like the stock as a customer, it's been a phenomenally, a very well executed company, amazon.com. howard schultz effectively is one of the great leaders out there. i think with starbucks, he really shook up lifestyle. i think there is something to be said for that. >> i've got a clear number one. it's not one of those three guys, not jobs, not gates. >> you have to hold your fire. >> i'm not saying anything for like four months. you know who it is. >> i do know who it is.
i certainly don't disagree. >> it's me. i picked myself. >> i disagree. >> i will guess, by the way, i will guess you are going to say john vogel but i don't know. >> i couldn't hear, i got the wrap, wrap in my ear. who did you say? >> john vogel. >> no. i know john. nice guy. great pick, actually. he changed investing forever. i should have thought of that. >> you have to tune in every single day to try and find out. >> up next, what the heck is happening in retail, to retail? big names selling off, bigger red flags. we're mott junot just talking a penney and sears. we are digging in, coming up. later on, our series on the mints continues with jim o'neill. why he thinks these four emerging economies need to be on your radar. later on, the ultimate rich people's problem. how to ship your yacht.
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clwelcome back to "street signs." a quick news alert on target. it appears that the company is laying off 475 folks from its minneapolis headquarters. this is a very small number. there are thousands of folks employed there actually at the headquarters but still, it is something that we should note because we have heard a lot out of target after the data breach. also, the company is ending its health care insurance for
part-time employees. something certainly to note. back to you. >> thank you very much for that. staying with retail, it is the end of an era for sears. the company is closing its flagship store in chicago. sears says the location in the heart of the loop has lost millions of dollars since opening back in 2001. the store has about 160 mostly hourly employees. they will be given severance and the chance to apply for open positions at other sears stores. as for what the stock is up to, year to date, sears is down about 21% but is positive today. brian? >> based on those two stories, it's pretty easy to conclude that this year is certainly not shaping up to be the year of the retailer. let's leave out sears and also leave out jc penney because they have their own very specific issues. take a look at the year-to-date performances of some of the other names out there. bonton, big regional company, that stock is down 30% this year. bed bath and beyond down. container store down 18%.
minneapolis based grocery store chain and warehouse company supe sup supervalu down 13%. staples down 13%. those are bigger returns but bigger if you consider this. those losses we just referenced, down 30, down 19, down 15, those are just in the first 14 trading days of 2014. >> indeed. so are retailers really sending off big red flags? let's bring in our cnbc corroborator, jan nippert. you have worked and lived in this space. can you tell us what is going on? >> things really are different this time. we always say things are never really different. 2013 was different. we saw a huge dropoff in traffic with an increase in sales, it means conversion was up, it means nobody walked past your door if you were in the mall. a lot changed with these retailers. this is going to go forward and it's going to be a big difference. >> why do you think this difference has come about? >> the internet.
the internet finally has come of age. it's still only 10% of sales or so, less than that, but 10% in the fourth quarter, it's just going to get bigger. it's caused people to be much more accurate in their shopping. mobile has come full circle, its ahe here now. it's really working. people are using it. you can stand in front of the store now and order the product, you can check prices. people are not walking in and shopping. they are walking in and buying. if that's the case and you are a guy that lives off of traffic, you will be in big trouble. you have to be an online player. you have to have your full inventory online. you have to make it seamless for the customer. if you're not doing all of that, your stock will look like these guys' look. >> not denying there's problems and amazon is probably stealing a lot of share. the other theory i heard, and i have spoken with two retail executives about this idea, one gave me the idea, the other sort of confirmed it, which is homes and cars are doing well and that's going to steal business from traditional retailers. if you buy a home, you probably buy a couch but you may not go
spend $1,000 at coach on nondiscretionary stuff. is there a negative side to retailers from the upside in cars and homes? >> that's always been true. in years where we've had these huge growth in cars, we have seen in our business, we have seen it not be in sweaters and not be in purses and not in cosmetics. >> let's talk to a guy who did this. herb greenberg lived here, sold his house, made millions, moved to san diego, bought a castle. you've been there. you just bought a house last year. did that take away from other discretionary spending? >> i would say a lot of money is still going into the house. >> so it's not going into your fashion or $4 soy lattes? >> literally have not stepped foot inside nordstrom or wherever to buy the clothes i typically would buy. you got to divvy up the money. one thing i want to point out.
this is very important. they identified that business picked up three days before christmas and the importance of that is that's where the window would close if you wanted to do online shopping and have something delivered before christmas. so it showed that people were coming in because that tells you how important online retailing has been and why you saw so many people out of the stores. i think that was perhaps the most visible explanation. >> it's not just the purchasing online. it's all the research online. it's using your mobile device to determine what the right price is. that's all changed. >> going to the mall and going and getting what you want and getting out of there. we have to ask about coach because we were doing the fierce competitor series, coach versus michael kors at the end of last year. you said you chose coach not for the holiday season which as we have seen was disappointing. you said it was for 2014. why do you think they will turn around and why do you think it
will be a good pick this year? >> what i said was i thought they were a better pick for 2014 than michael kors but i wouldn't be buying them before the earnings release. i think the new management's going to make better product. they will release more interesting stuff. they will do better marketing. i also think michael kors is slowing down. when you're making those paired picks, you are picking when you think it will start getting better and one you think may be fading. doesn't mean they won't still be necessarily gaining share against coach, but they won't be gaining it the right they did last year. >> as part of that series you were forced to choose one of two. it's like i have a guava and mango, i hate both, but if i had to choose, i would eat the mango. >> lesser of two evils. >> there's some of that. i also believe management is doing the right things at coach. they are doing well in asia, terribly in the states. if they can pick up a little business here, get a little bit away from being so addicted to the outlet malls, they can be another winner. >> all those outlet malls not helping. got to get rid of those. >> they can't destroy their
image by using all the business in the outlet malls. they have some things to do. it's not a short term fix. but we will start seeing some benefits by the back half of 2014 which is why i made that pick. >> we will get you back in the back half of 2014. >> just in case i'm wrong to beat me up. >> we'll see you before then. thank you so much. herb, as always, thank you. let's get to dominic chu for a market flash. >> check out what's happening with the gaming stocks. they are taking a hit as jpmorgan analysts say gambling may be cooling off. the three largest las vegas casino operators get a huge part of their revenues from a special administrative region in china. m mgm resorts, wynn and las vegas sands losing ground today. back to you. >> thank you very much. dominic chu. still ahead, america's love affair with chile's. have investors been beefing? bye-bye, brics. the mints are the new economies
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protests turning deadly in ukraine overnight. three protesters were killed in clashes in kiev. the u.s. embassy in ukraine is revoking visas of ukrainians involved in the violence. however, the u.s. has been a clear supporter of the demonstrators. protests began in late november after the government began aligning itself more with russia over the european union. we are on day two of our mints economy series. what could be the big breakout stars of 2014? we introduce the mint concept to you yesterday, you might remember. we started focusing on mexico. today, we are focusing on indonesia. first let's bring in the man who knows a thing or two about acronyms, jim o'neill, who coined the term bric for brazil,
russia, india and china and now champions the mint economies. great to have you with us. it's important to point out, isn't it, that this is more an economic concept as opposed to a block of investment countries, right? >> well, very much so given all the focus on my life as mr. bric. when i first created that term, it was to try and demonstrate to people about their rising economic importance. it was not to suggest people should invest in bric funds or any other kind of fund. however, i don't want to go too far the other way. i think the best investments of the past decade and the next decade and beyond probably relate to things going on in all these countries because they are the ones that are increasingly shaping and driving the world. not necessarily directly in these countries, but other international countries that can
do it better than any of those or might not necessarily just be the equity market, but i think because they are becoming economically more and more important, they are the heart of the best international investments even though there's a subtle difference between that and the investing in some specific fund or such. >> let's move on, then, from brics to mint. we look at the four nations, if you had to put your or your clients' money in one of those four countries, where would it be? >> i don't have any clients anymore which is quite a nice feeling, actually. >> goldman does. >> well, i left goldman sachs in april. they are pretty good at dealing with stuff without me, i'm sure, and i've got my own life to lead. as you know, i kind of did this as part of a big radio documentary series for the bbc so i traveled to them all a lot in the fourth quarter. the two that i left feeling the
most warm about for slightly different reasons have been mexico and nigeria, actually. mexico because the quality of the policy making and what i call the new china allows mexico to be so much more competitive, and why i didn't pay any attention to it when i dreamt up the bric phase. today mexico is probably the most competitive producing nation in terms of low value added stuff like autos and other things. they have fantastic policy makers. mexico, which i gather you discussed yesterday. the other spectrum, nigeria, i absolutely loved my time there. while they have enormous challenges and problems, the opportunities in my opinion are immense in what is a very complex but exciting country. >> talk to us about what the opportunities are specifically for indonesia, because this is a country i remember long ago that it was actually possibly going to become part of the brics, but
it sort of never quite made it. there were all kinds of weird things going on in indonesia even now, like the very controversial and possibly not terribly clever idea of the president to have an export ban or at least export tax on some of the companies like freeport. is this something you see as jeopardizing the future of the country and its investment possibilities? >> well, let me just say they are certainly linking to what you said. i got e-mail advice for years telling me it should be briic instead of bric and i didn't agree with it and i still don't today. of the four countries i did, i left indonesia a bit colder than the others and i can link to aspects of what you touched on and i will get more specific in a second, i kept asking myself as i was going around interviewing people and meeting companies and individuals and all the policy makers where's
your sun song, what is it other than 260 million people that indonesia really has an edge on in the world. i'm not sure of the answer on that. so it doesn't stand out for me that you can easily answer that in the other mint countries and you can in the bric countries, too. that said, they have got 260 million very young people who are urbanizing fast, so i think there are huge opportunities related to the emergence of their middle class consumer, taking it back to what i said at the start. this is the story of this decade and the last decade all over these countries and it will remain so. i stood at the top of a tower crane on an ikea building site, the big furniture store that comes out of sweden, i guess it's a private company so people can't invest in it, but they are building a massive store there, the first one on the edge of jakarta. i think unilever is heavily
involved and many u.s. brands like unilever, too, i would think would be major winners. in terms of directly investing, i should declare here i'm personally invested in it myself. there is a real estate group in california called the emergence fund and i think it's the first overseas real estate fund investing in indonesia. i'm actually in it. i hope it does very well. >> it probably will. i got to apologize. i thought you were still advising goldman sachs. shame on me. i knew you didn't work there but i thought you were a paid consultant. i completely botched that one. >> obviously i've got lots of very dear friends there. but no. >> thanks for bailing me out. i completely screwed that one up. my apologies. very quickly before you go, we are doing our cnbc 25. who would you describe as the most influential person over the last 25 years in business, finance or macro economic policy? you can't say jon corzine.
>> as mr. bric, i have to say somebody that's been at the core of that story, in particular the rise of china. 25 years ago, china was $350 billion, it's just gone over $9 trillion. on your list, maybe jack welsh but given my biggest passion, it has to be alex ferguson, the manager of manchester united. look at it without alex. >> we have to leave it there. great to have you on "street signs." jim o'neill. >> alex ferguson. formerly of manchester united. on deck, could facebook actually lose 80% of its users? a princeton study says it's possible. does that mean it's time to get out of the stock? later on, small cars getting crushed in recent crash tests. is your make safe? stick around to find out. [ tires screech ]
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straight talk time. stock recommendations and also news you do need to know about. fortunately, we have done the hard work for you. walgreens and cvs both getting an upgrade today. >> refreshing honesty. when you make a mistake, like i made with jim o'neill, you have to say -- i owned it. they were wrong about projected difficulties with cvs. the stock upgraded to a strong buy. they see the recent pullback, down about 3% and as a result, up 2%. kudos to them. >> norfolk southern boosted by much better than expected earnings. >> nice boost. $92.81. profits soared 24%, strong shipment volumes. coal, the only commodity that saw a dip in demand but what's new there. general merchandise rose 12% so we talked about the retail records. norfolk southern is shipping
more stuff. my guess is it's postly cars on flatbed rail cars. >> a 7% increase in profit and also growth in same store sales. this is where chile's comes in. >> and maggiano's italian grill. better known for chile's. they had a same store sales boost but not because of actual sales. it was because of the checks. the purchase ticket item number was up. people -- the people that went there were spending more money. first time in a year we saw a gain there. the ticker up to $48.70. is facebook about to lose 80% of its users? according to a study by princeton, lack of interest in the social network could cause a rapid decline in users between 2015 and 2017. facebook shares did hit an all-time high earlier today before dropping about 2% as they are now. is this something that longer term investors need to be worried about? let us talk numbers. on the technicals, ryan detrick.
on the fundamentals, steve cortez. steve, we always say when mom or grandma joins a social platform you're on, you have to get off. it seems princeton thinks this could happen to facebook although eight of ten, maybe a little extreme. your thoughts? >> i think 80% is extreme. first of all, god bless these brilliant nerds at princeton, the engineers there. they were able to figure out you can, with some accuracy, predict the popularity of social media using as a gauge the history of the spread of diseases which i think is fascinating. i do think they have a point here which is that activity begets activity. that's the one side of the cycle. if your friends are on, you are more likely to be on. but that process can also work in the reverse. that's what they say happens to many social media sites. it happened to myspace, for example. they are saying it can happen to facebook. because it has lost its cool and
these numbers that say 80% of the people will go away. just last week said teens are no longer using facebook at all like they were. to me, that negativity with the fact the shares made an all time high today, i know they're dropping but still, negativity is bullish and maybe could push it higher once we get into earnings season soon. >> okay. could go a little higher. >> or could go away, according to princeton. that's a big market spread. >> that's a big market spread. >> guys, thank you very much. be sure to check out the online edition of talking numbers. the show also has a facebook page. up next, the flicks and fries super value edition of earning squad. plus the scary results from a new crash test study on the safety of the little mini cars. why the super rich need a yacht for their yacht. first, what is next on "the closing bell"? we've got a play coming up, the final most important hour of the trading day.
>> watch out, because phil lebeau will be joining us with real life rise of the machines. the robots that are taking over our lives and perhaps taking over our jobs right now. >> i heard that before. companies are flush with cash. get this, now about $7 trillion by some estimates. what are they doing with it? why are they hoarding it? what happens when they spend it? so many questions. we will try to get to the bottom of that, coming up. >> and the earnings of two internet titans after the bell, netflix and ebay. instant analysis as well. lots to look forward to. tdd# 1-888-628-2419 searching for trade ideas that spark your curiosity tdd# 1-888-628-2419 can take you in many directions. tdd# 1-888-628-2419 you read this. watch that. tdd# 1-888-628-2419 you look for what's next. tdd# 1-888-628-2419 at schwab, we can help turn inspiration into action tdd# 1-888-628-2419 boost your trading iq with the help of tdd# 1-888-628-2419 our live online workshops tdd# 1-888-628-2419 like identifying market trends. tdd# 1-888-628-2419 now, earn 300 commission-free online trades.
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welcome to the earnings squad, where we dissect the earnings stories everyone is talking about. i'm melissa lee. joining me, dominic chu and the doctor, john najarian. first off to the score card, 16% of the s&p 500 has reported insofar. 61% beat their eps targets, 13% have met, 26% of reports have come in below forecast. let's start off with johnson
controls, the company surging more than 65% year on year. so doc, what are you watching for? this is out tomorrow morning. >> a whole bunch of things. comments, for instance, on warren buffett's involvement with the chinese car company because that could be a driver, believe it or not, as they try to turn that into a global car company. johnson controls could benefit from it. also, the lithium ion batteries, everybody has their eye on that. it's always rumored that -- >> eye on ion. >> elon musk is having trouble procuring them. i'm not saying he is. that's the rumor. these guys are one of the biggest players in the space and unlike many, they are not a chinese battery producer. so that's viewed as a positive, i think. i think a lot of folks that want these, want them from the likes of johnson controls instead of some of the upstarts from asia. >> actually, jci i believe is after the bell today. as is netflix. that's another one that a lot of people will be watching for. of course, you think of netflix, you think of momentum.
the stock is up 227% for the past 12 months but over the past two and a half months, it's been a rough go because the stock is sitting at pretty much two and a half month lows going into the quarter tonight. the key metric of course, subscribers. 33 million is the magic number that netflix will have to hit. also, a lot of people will be listening for any sort of commentary on net neutrality. that ruling came down, will netflix have to pay more in order to ensure that its customers can actually stream at robust speeds, will they have to pass it on to consumers, and there have been some analyst notes out already, noted bear michael packer has said you know what, a sizeable percentage of profits would be wiped out if they charge one cent per gigabyte. of course, he's a bear but that's something to keep in mind. >> i have been watching over this past weekend some tv shows i haven't seen in awhile. i was a data hog. i can only imagine what my counterparts are like all around the country if net neutrality will be that big of an issue, you have to watch what's going to happen. >> netflix users account for 32% of peak internet traffic in
north america. this could in fact be a very big impact. the conference call starts at 5:00 tonight. be listening for the q & a, the tone of the q & a as the price target on netflix, $344, about $10 or $11 from where we are right now not very far from here. also watching mcdonald's. dom, i don't know if you are a binge eating mcdonald's -- >> my girlish figure cannot take any more of the mcdonald's but it is tomorrow morning before the bell. $1.39 in earnings is what you will be looking for. the average analyst estimate. $7.1 billion in sales. but last quarter, we saw some real concerns coming in about growth globally across all markets, comparable store sales, sales in stores open at least a year all across the board only up .9% in that past quarter. that could be an issue. look for that this time around and of course, execution. their drive-in, their diner, all that stuff is slowing down because of all the new menu items. >> actually, my first instinct was right. johnson controls is tomorrow morning. i shouldn't have second-guessed
myself. by the way, the wide shot here, the doctor is wearing these fine boots. that's the weather we're seeing here. >> i didn't get them from amazon, either. i walked into a store to buy them. >> exactly. that does it for us. if you want to from us. tweet us #earningssquad. tonight on "fast" we're talking to the ceo of gogo. a boom in airlines, is that a boom for gogo. >> thank you very much. up next, drill, baby, drill. a huge step made toward ramping up american oil production. plus a new crash study proving size really does matter when it comes to the safety of your car. the can't miss results next. mine was earned in korea in 1953.
a new crash test study shows when it comes to car safety, the bigger the better. phil lebeau joins with an alarming result in the subcompact arena. 10 out of 11 did really badly, phil. that is bad. >> the video is shocking, mandy, when you take a look at it. we're look talking about a new crash test. the crash tests were small front overlap crash tests done on mini cars.
10 of 11 did not even get an acceptable rating. the one exception, the chevy spark. it's the only mini car to get an acceptable rating. mini cars as a group are the worst cars we've ever seen when it comes to front overlap crash tests. this group as a whole, about 440,000 sold in the u.s. last year, two models stand out as being among the poorest, the honda fit and the fiat 500. they got poor rating from the insurance institute. fiat says the 500 meets or exceeds all government mandated safety requirements. as for honda, it says that it will have an all-new completely redesigned 2015 honda fit that will come to the market in a couple months. they anticipate they will earn top safety scores from the iihs. guys, the bottom line is this, at the end of the day it's a matter of physics but even when you involve physics, iihs says you can design these cars better. that's the bottom line from these crash tests which are
eye-opening results. guys, back to you. >> phil lebeau, thank you very much. elsewhere, the keystone pipeline is open, sort of. oil began flowing in the southern leg of the pipeline today. the whole thing is still not open. jackie deangelis is in port arthur, texas. >> it's a tail of two pipelines, if you will. the southern leg opening today, operated by transcanada will transport oil from cushing, oklahoma, here to port arthur, texas, where there are four major refineries, toe tal, valero. they will have access to the barrels of oil that this 485-mile pipeline can bring to this area, but this is really significant because we're talking about the transport of light sweet crude, and we're giving access now to 25% of the nation's refining capacity. when you include the refineries that are in nearby lake charles and also in new orleans.
and moving this light sweet crude is really important. it benefits the refiners. it brings their costs down and saves them roughly $15 a barrel. this also raises the question what about the northern leg of the keystone pipeline? of course, still waiting washington's approval on this. it could bring another 830,000 barrels from alberta, canada, down here to the gulf coast. that's the heavier crude that we're talking about. the cost savings there, $20 to $25 a barrel. now, the canadians getting a little impatient with the united states saying that president obama has punted on this issue. secretary of state john kerry saying that he's not going to be pushed into making a decision here. but this is a really important step for the industry and also, remember, these pipelines create tens of thousands of jobs. so potentially the southern leg opening here now in texas will move the ball forward in terms of this conversation. guys, back to you. >> thank you so much for that. interesting stuff. what to do when your yacht needs a yacht. >> party. fifteen percent or more on car insurance.
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of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. ...and the little room above the strip mall off roble avenue. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪ so, mr. robert frank, rich whisperer, what do you have for us tonight? >> tonight on secret lives of the super rich, we're going to take you on a boat for yachts. that's right. every year hundreds of yachts migrate from the mediterranean to the caribbean and some of them rather than make the crossing themselves, they take this boat. it's actually a boat for yachts. this one had $250 million worth of yachts. we're going to show you how that boat submerges and re-emerges to
get all those yachts back and forth. a one way ticket, $250,000 per trip. guys, back to you. >> one way. we're going to look forward for it 9:00 p.m. tonight on cnbc. >> thank you for watching "street signs." we'll be here tomorrow we hope. >> we'll hope and pray. see you then. and welcome to "the closing bell." i'm kelly evans. as we hit 3:00 eastern on the east coast, eastern on the east coast. that's an oxymoron. >> redundant is what it is. >> thank you. we're trying to see if the stock market can get it's footing but we have to be clear what stokt we're talking about. >> i'm bill griffeth. earnings are the culprit dragging the dow later but the other two major averages are trading higher so it does depend which market you're talking about.