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tv   Closing Bell  CNBC  May 1, 2014 3:00pm-5:01pm EDT

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>> with all due respect, you're right, it is important, but we've been between 2.5 and 3 for a long, long time. tomorrow is the big jobs report. that could make all the difference. >> it could. some say because bond yields are so low, no one wants to be caught short. we've got to leave it there, folks. stay tuned for "street signs." we do welcome you to "closing bell" for this thursday. i'm bill griffeth. >> i'm kayla tausche. the threat of an oil war. russian president vladimir putin making it clear he would make life very difficult for western oil companies who do business in his country if sanctions get too tough. we'll get the latest and find out what impact this could have on gas and energy prices. >> it could get ugly. >> it could. >> but at least they're talking
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oil, not military. >> right. >> which is a good thing, for sure. the debate over executive pay takes a new turn today. maybe you've heard this. coke reportedly backing away from that controversial plan after comments made by warren buffett on this program recently indicating that he was not a fan of that proposal, even though he abstained and didn't vote against it. but would buffett have ever spoken out if not for activist investor david winters? he was the first to sound the alarm bells about coke's lucrative pay plan for top executives. dare we call an activist investor a hero? >> warren buffett does a lot of homework but not on this company. >> it was david winters who brought it up. that's when buffett went and looked at the proxy -- >> and decided he didn't like what he saw. >> exactly. we'll talk about that a little bit later. also, he is widely recognized as the best boxer alive today. he is of course, floyd mayweather jr. he'll sit down ahead of his big fight saturday night.
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we'll get into that. bill might fight hill. >> yes. >> also some fascinating things he said this week about how embattled los angeles clippers owner donald sterling has treated mayweather in the past. some interesting comments there. mayweather has also taken some heat for those comments. he also is considering a bid for the clippers. there is going to be a lot news made out of that interview. >> when you think about it, they do have a friendship, he and donald sterling. that might give him the edge over others who don't know sterling from anything. >> it is hard to know if anyone's relationship with sterling will play a role at all in these negotiations. >> we'll ask the champ coming up. today the dow as we know only needs a positive close for an all-time high. first one of the year except yesterday. right now though they are down 38 points going into the final hour. the nasdaq is positive right now, trading up four-plus points, well off the highs of the session though. now at 4118. the s&p needs a gain of seven points to close at a new
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all-time high but we are nine-plus points away from that at the moment. but we still got an hour to go. let's talk about it on the "closing bell exchange" today. karen hughes, greg ipp, john manma manley, and rick santelli to explain what the 10-year note is trying to tell us right now. greg, the fed very quickly wants to say that the economy did not do well in the first quarter because of the weather. now there is a possibility we could go negative for the first quarter gdp. what's going on here? >> i think that the fact that all through the first quarter they continue to taper in spift fact we had lousy numbers on employment and retail sales. tells us how high the bar is to deviate from this path of tapering. shows a very high degree of confidence in the economy.
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i think that even though the economy will not do as well as they think this year, it suggests that they seem very fixated on getting policy at least from the point of view of quantitative easing back so something normal really soon. >> at least they are holding to a pattern, staying with the game. 10 billion a month. if you thought this was a volatile market, just wait until that taper is finish. comments day, as tapering ends most likely in october and the market will get a little bit more volatile, you better buckle your seatbelts for what's ahead. that was in an investor letter. what happens come october and how do you prepare for it now? >> i think market has to almost get more volatile. i don't think it will be a big deal. i think when tapering is over it ends because the economy no longer needs it. if the fed gets ahead or behind, they'll correct themselves pretty quickly. the most important thing for me is the fed really wants the economy to do better.
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the monetary environment will be good and that's good for stocks. >> meantime, heather, the flood of earnings continue. what do you make of what you've seen so far? >> we're definitely in the heart of earnings season, bill. you're right. investors may be feelings some anks today as the dow hit its first all-time high yesterday in 2014. i think investors are waiting. earnings and guidance will drive the markets higher but of course the jobs data, the jobs number tomorrow could be a catalyst for the markets to move in either direction. i think the retail investors sitting on their hands right now. jobs data is also highly correlated to the markets as earnings are. >> we'll take the poll for tomorrow. >> 2.15 is the consensus. our colleagues on "street signs" were looking at the 10-year treasury yield. we have been range bound for quite some time but the rally especially today in treasuries. what do you attribute that to? is that short covering ahead of a potentially bad jobs number tomorrow? >> i think when you consider how
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many talks of rates, large investors, institutional investors, hedge funds been on the wrong side. then the big issue of the jobs report tomorrow. but more importantly, a lot of holidays. whether mayday today, monday, london's closed. tuesday japan is closed. sometimes trading is actually easier than people want to make it. if you try to correlate what's going on with stocks, treasuries and foreign exchange, good luck. i would tell you this -- look at the price in a yield of a portuguese, a spanish and an italian 5 and 10. then look at price and yield in the u.s. the easy trade is that you have to sell those and buy ours because the differentials are either too wide when it comes to the bund or their yields are too low relative to the stature of our treasury market. all of those things are conspiring to keep rates low. >> jordan waxman, we are
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itemiziitemize ing all these possible problems for the market whether jobs, earnings or fed tapering or whatever. but yet the dow hit an all-time high yesterday. what's the message of the market, do you think? >> it is just like the 1990s all over again. you got a very long profit expansion. this could be one of the longest ones in history at very low interest rates and very tame inflation and that's usually the recipe for multiples to expand. now we're in the middle of earnings season. if you look at what happened today, 31 companies in the s&p reported up to this point. 20 of them have exceeded the expectations and only six missed. the ones that exceeded the expectations, 16 out of 20 are up 2% to 34% this year. earnings expectations were low and you are getting beats on the up side. >> are we having a lack of revenue growth though still? corporations are beating on the bottom line through cost cutting but again we're growing at a very slow pace. 2% gdp this morning. we're blaming it on the weather.
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maybe greg, can you answer this -- is that the new normal? 2% earnings and financial engineering in terms of companies beating earnings through shares of dividends and buybacks? tax aversion even. >> even though the real gdp numbers have been weak we've seen some intriguing signs that nominal figures like wages are picking up. in tomorrow's jobs report i am going to look closely at wage numbers. the fed has told us they consider those the best indicators of how much slack there is in the labor market. if we get an up side surprise on hourly wages, i would one, expect that to be positive for the economy, positive for earnings but also start to add a little bit more risk if the fed could move sooner than the bond market is right now anticipating. >> but would that be positive for stocks, john manley? i guess we could say yesterday's horrible print on gdp, the stock market took comfort in this case bad news being good news because that means that the fed will be on the case that much more. right? >> it is the yell and put.
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>> do we say the same thing about tomorrow's jobs number? if it is well below forecast, does the stock market rally because it means the safety net -- >> or does it not mean that anymore? are we beyond that? >> i think if it's really bad the market gets a little bit of a bump but it is only a bump because the fed doesn't want the economy to come down. the fed will eventually get it right. if they've overtightened or tightened too soon, they'll fix it. watch what their intent is. that's important. the fact revenues have been lousy for the fact couple of years i think is the potential. i think at some point the economy grows better and the fed kicks in on a very lean corporate structure. >> these are companies that have free cash flow growth that are using that free cash flow to increase dividends, buy other companies, increase the buybacks. that's financial flexibility. that means balance sheets are in great shape. >> while we've seen revenue growth roughly around 3%, we are also nearing the top of an m and
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a cycle. rick santelli, when you see companies like pfizer looking to mount a $106 billion bid for a european drug company, when you see at&t thinking about going after directv or sprint looking to raise money for a t-mobile bid, do you see that as finally a sign of confidence that companies are willing to buy growth? or do you think that they should be hiring instead? >> i see it as a signal that when you can't make money the good old-fashioned way, you try to get your shares up, use a cheap debt market and a federal reserve that's much kinder to the big companies than the little guys and you try to get your stock price up. it would be like an industrial company selling all their machines but having great investments and huge amount of money somewhere stashed and having an ability to tap the shadow banking and credit markets. i'd rather see these companies expanding through product lines, but it reminds me of the period from '05 to '06, '07, when we saw the same thing and we all
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know how that turned out. >> the s&p 500 companies are paying 20%, averaging 20% less tax to the u.s. government than they were at the peak in 2006. so there clearly is a problem there with the structure of the corporate tax rate. pfizer and astrazeneca deal. maybe offshore. the uk tax rate at 17% instead of taking u.s. tax rate at a very high rate. >> ebay repatriating potentially. there is a little bit of money moving in each direction. >> why is that wrong? maybe they were paying too much in 2006? >> oh, okay. i like that argument also. so 20% less than they were then. but there is still -- we're clearly seeing a lot of the merger around acquisition takeover activity to avoid, i think, the high u.s. corporate tax rate that will need to be addressed at some point. >> i think the main take-away from all this m and a frankly is it shows that animal spirits in the corporate sector are coming back. rick is right, i'd rather have
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it in greenfield investment and new products. but as the market value pulls away from the book value, the next thing that happens, they'll start saying i'm not going to buy, i'm going to build. maybe that's the missing piece that this recovery needs. >> hey, i hope that works. we all want to see it. >> rick, you might be pointing to the publicly traded merger deals but plenty of private companies are being bought as well. that's creating incredible value for those public companies and shrinking the equity supply in the market. >> that last point is key as we look at all-time highs. yes, i'm going to have chuck on tomorrow from trim tabs. he is a firm believer that one of the biggest drivers of stock prices is the lack of supply of tradable stocks. >> that's what happens with all those buybacks, that's for sure. gang, good job. thank you for joining us with your thoughts on the markets. >> thanks, bill. 48 minutes left in the trading session here. the dow down 46 points.
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backing away from that all-time high that it did yesterday. >> actually losing some steam as we are just 45 minutes ahead of the close. but our question today is could what's happening half a world away in ukraine cause you pain at the pump here in the u.s.? russian president vladimir putin threatening to mount what some are characterizing as an oil war if further sanctions are imposed. we'll tell you how bad things could get for your wallet if that actually goes through. we just talked about merger and acquisition fever. it is still hot and happening right now, directv surging on that talk that at&t may be interested in a buyout. at&t not commenting so far, but we'll run through the day's mega morphs in a moment. plus, box is champ floyd mayweather will be here to talk about his fight against argentina's top fighter. that's this saturday night. you can only get it on show time pay-per-view. >> he's putting together a bid to buy the los angeles clippers from his friend, clippers owner donald sterling. that's right. we said "friend."
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welcome back. a mixed market. let's call it that today. red and green. the dow down 36 points, backing away from the all-time highs hit yesterday. the s&p just below the unchanged level here, while the nasdaq is higher. it occurs to me, yes, we are probably in mode to wait for tomorrow's jobs number before they move this market one way or the other. >> the only reason the nasdaq is even remotely positive is because it did get good momentum from netflix earlier today which was up fairly sharply, though we should mention nasdaq is off its highs. we want to talk about what's happening in russia and ukraine because russian president vladimir putin is threatening an oil war that could send energy prices up here in the u.s. and everywhere else. jackie deangelis has that story. >> reporter: that's exactly right. it is that fear and nervousness right now that's keeping crude oil supported at these levels. of course we had had a bearish inventory report yesterday showing that the u.s. market is well supplied but that really
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didn't have as much of an impact as trades were expecting. now what is it that putin actually said. he told reporters this -- he said we would very much wish not to resort to any measures in response, but i -- and i hope that we don't get to that point. but if something like that continues, we will of course have to think about who is working in the key sectors of the russian economy, including the energy sector, and how. now investors are a little concerned that his comments could be aimed at long-term projects in russia with international oil majors like bp, shell, france's totale and exxon-mobil. but how far put in is the x-factor. the assumption is that the europeans will not go along with sanctions against those two companies because they need the supply. so this is a very, very sticky situation here. right now it appears that putin has the advantage. back to you. >> he's got the supply, so yes, that does give him the advantage
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right now. thank you. what are the consequences if president putin goes after oil companies in his own country? >> joining us, two top oil executives. former president of shell oil, now founder and ceo of citizens for affordable energy. chris faulkner is president and ceo of brightling oil. gentlemen, thanks for being here. john, for being president of shell and working with oil companies in russia, walk us through the actual threat level here and what we here in the u.s. should be watching for. >> well, i think president putin's real power is in the threat, not in the carrying through of that threat. what i mean by that is, he has spent the last 12 years building trust, building relationships with ceos from major oil companies and their boards of directors to take on the risk of doing business in russia. i don't think he would want to undo all of that trust that has
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been built up and the commitment of billions of dollars of investment across russia. if he only relies on gasprom and rosnev, we take times back to the 1990s which was not a good time for russian gas. >> chris, what does this do to the price of oil and what is it, by implication -- we're all geocentric here in the united states. what's it mean to us for gasoline prices? >> i agree with john and i think it is just a threat. i think his cartel sword is based around oil, only thing he's got. keep in mind we had inventories reaching 400 million barrels of crude. the price of oil would have come down i think more substantially had it not been for this threat propping it up. i think the good news is our futures on gasoline have peaked, i think they'll stop trading down so i think the price at the pump is going to stabilize and begin to retreat as we go into
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memorial day. we just saw inventories rise this week. we thought they would decline and they actually increased. so those are good signs. but if i was a major oil company with big concessions in russia, i would have big concerns right now. bp has an ownership of 20% in rosnev and their ceo just got put on the sanctions list. i think it may help at the pump. folks may think sanctions should have been harder against russia so that might pull oil back a little bit. we're still dealing with a $90, $95 commodity. >> i'm glad you brought up the connection with bp and rosnev. bp does own a large stake in rosnev. exxon-mobil also has a joint venture with some russian oil companies and by extension, russian oil companies have some land in west texas they are actually drilling on.
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there is a lot of intertwining between what we do here and what they do over in russia. i'm just wondering, if you are exxon or you are bp, how much of a counterweight are you to putin right now and what should you be doing from an operational standpoint to make sure that you can deliver the gas that you have and the oil that you have in the near term? >> exxon has 18,000 square miles of concessions in russia, the biggest outside of the united states. they definitely have a big partnership with russia. when you think about these relationships -- think about russia. you can swing the sword, threaten to swing the sword all the want. but 40% of their budget comes from the sale of oil and oil products. their exports in russia over $300 billion this year will come from the export of oil and oil products. they're not going to cut off their nose to spite their face. but keep in mind, we're talking about vladimir putin here. he's not been logical. i think he's pumping the gas in the moscow propaganda machine. i hope he becomes reasonable at some point. thus far these sanctions haven't
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scared him. he's cultivated these relations over decades. he's not going to blow this whole thing up and walk away. he'd be a fool to and their economy isn't doing well. >> but the fact that he's threatening to pull back on supply would suggest that maybe these sanctions are starting to bite here, john. i just wonder, that's his first salvo. but if there is a rush to make um for the lost supply and his first salvo doesn't work, what does he do after that? what do you think? >> well, i think his leverage is more with europe than with the u.s. so the threats will rise, they will escalate with respect to gas to europe before i think he will start messing with his arrangements with the u.s. companies or bp, for that matter. and shell. so i think he has to -- he has more leverage than we actually realize in this country because europe can't do without russian gas. not now, not for many years to come. >> all right, gentlemen. thank you. this story is not over, by any
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means. it is just getting started, i have a feeling. but thank you for your thoughts on a very important issue that's affecting the markets. >> now that we are in may and the heavy driving season is about to get under way. >> one of our contributors today tweetd he just paid $4.88 in washington, d.c. today for gasoline. that's what he said. >> that really hurts the wallet. we are watching stocks, still. we wanted to get an all-time high on the dow. it looks like we're just about 29 points shy of that. but even so, with just a half-hour before the closing bell, the s&p is also slightly negative. nasdaq holding on to slight gains. we will see how we close out in just a few minutes. barclays is getting jittery about the u.s. economy. they are predicting negative growth. that famous oxymoron that could be around the corner. is a recession coming this year? doug holtz-eakin, president obama's former top economic advisor will tell us what he
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billionaires and millionaires from all walks of life teaming up to make potential bids for the los angeles clippers. someone on twitter said it is probably easier at this point to tell us who's out rather than in. >> the thing is, all bets are off. you never know. there are so many possibilities. there is a bunch of rumors right now about who is going to break
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out their checkbook to sign off on trying to buy the clippers if -- again, if -- they become available for sale. you're talking about oprah. you're talking about david geffen and larry ellison. that's a big team event trying to maybe ink a deal with the clippers if they come up for sale. next up, magic johnson. he's part of l.a. scene. he just tweeted out a couple of days ago he's not interested in buying the clippers. now that's not, though, stopping a lot of speculation that the team could be the next l.a. sports jewel for magic to add. he's already part of that dodgers story on the baseball side of things. then there is the golden boy. boxing star and l.a. native oscar de la hoya. may be some interest in buying the clippers, again if they come up for sale. sean p. diddy, i think he's back to puff daddy. sean puff daddy combs took to twitter saying, i will always be
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a knicks fan but i am a businessman. #diddyb #diddybuytheclippers. then this -- i'd be interested in investing l.a. clippers. make it wing stop are arena @wingstoplet's go! rich caruso may also get in on the action. don peoples planning to assemble a diverse team of minority and business team to also bid for the clippers. finally, let's get another boxer into the ring. floyd mayweather. his middle name is" money." so the question is will he or won't he or will others come up with the cash to offer to take sterling's clippers off his hands. >> don peebles will be with us next hour. we'll ask him about the possible bid for the clippers. it was at this moment that we were going to introduce floyd mayweather jr. on this program.
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you heard us teasing that. i tweeted about it. well, his people just called us and suddenly canceled the interview without giving us a reason. so we are left to speculate. we do know if he has taken heat for saying positive things this week about l.a. clippers owner donald sterling, something that he knew -- he had to know that we were going to ask him about it. if and when floyd mayweather reschedules, we will tell you about that. it is not just our program. he's canceled all of his interviews suddenly that he was going to be doing. >> of course, he does have a big fight on saturday night. so perhaps this was a distraction ahead of that. but it is peculiar to arrange a satellite tour of interviews, then subsequently cancel them right away. but alas, we will not be bringing that to you. >> he did have seemingly an inside track, unlike some of the other potential bidders. he has a relationship with donald sterling. >> what's interesting about this, you are talking about -- between l.a. and new york, these are two cities in the u.s. that
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have very closely-knit groups of the ultra wealthy. something robert frank speaks often about. with l.a., this is a scene. right? all of these guys know each other. could you almost say that it is not within the realm of possibility or impossibility that a boxer like a floyd "money" mayweather can get together with maybe a former boxing champion like the golden boy, oscar de la hoya. maybe they get some of their friends together. you want to build these groups of people, these syndicates, if you will, to all take little pieces. they all get to sit in the box or their sideline seats and play along. the ownership thing is interesting especially because there are so many big names involved and speculation runs rampant. >> l.a. is a city that's been through this before. many of those names are familiar from the option for the dodgerd. david geffen, guggenheim partners. magic was there as well. they've got money to burn.
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>> all right. thanks. sorry that the champ is not with us. we hope he can resul but we will talk to don peebles about this next hour. about 30 minutes left in the trading session. the dow backing away. down 44 points at the moment with the s&p down three. boy, the nasdaq trying to hang on to a gain. up two points. >> safety sectors like utilities have been taking the day as people are watching the 10-year treasury. but the urge to merge continues to sweep corporate america. bob pisani will wrap up today's big movers. the ceo of the generator manufacturers up next to talk about his plans to jump-start his company's stock which has been in the doghouse lately. back in a moment. [ man #1 ] we're now in the approach phase, everything looking good. ♪ velocity 1,200 feet per second. [ man #2 ] you're looking great to us, eagle. ♪ 2,000 feet. ♪
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welcome back. about 25 minutes left in the trading session here. dow is down 37 points. the nasdaq still up four. s&p down two. we may be on jobs report watch right now. that report, the latest report for march comes out first thing tomorrow morning. >> i know a lot of of investors have their eye on that report, especially as volume is really nothing to write home about this afternoon.
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we will certainly wait and see how the markets end. up closing. meanwhile, bob pisani is rounding out our big movers. we had a lot today. >> i'm a little worried about the russell 2000. we're off our lows, folks, but just barely. this could close -- this is intraday. we're not doing anything. we're sitting near the lows here. they should bounce a little bit along with the rest of the market but it is not. we're near the lowest he levels since february. watch that. social media having a pretty good day. yelp had great numbers yesterday. linkedin big volume all day. they'll have their earnings after the bell. facebook is up, twitter is up. social media doing pretty well. how about some m and a talk? that's helping the market. there are some reports out there that at&t might be interested in acquiring directtv. what do you get? you get 4 million subscribers and are suddenly a player in the tv distribution business. a lot of debate over the strategy. pfizer reportedly preparing to
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sweeten its bid for astrazeneca. talk is $106 billion. 52 pounds a share. old discussions were 50 pounds a share. 52 pounds a share is about $87.88. you've got room to go, astrazeneca at $81 and change. it was $63 just a couple weeks ago. see what this talk has done to that stock. generac. down. >> let's get more on the generac earnings. >> joining us, the ceo of gerenar holdings, aaron, thanks juror joining us today. i see sales are down 14% from a year ago. you can't really attribute this to the winter quarter because the same thing happened a year
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ago. how do you think weather particularly in this most recent quarter actually hurt you? >> i mean there's really two things in the first quarter here that impacted us. first of all our lead times were pretty extended last year coming into 2013 on the heels of sandy. that didn't repeat, of course, here in the first quarter. that was about $100 million worth of volume. secondarily, when we have normal seasonality, first quarter is generally our lowest quarter. we typically see that. third quarter is the highest. that's something that we saw that this year. this year with the harsh winter that we had, it was very difficult to install these machines. you have places where there was three feet of snow below zero temperatures, it is very difficult to get outside and put these machines on the ground. >> i would think this is a good time for you. we had had sandy. the year before that we had irene and the rush to -- for people in their homes to find generator power when they lose it because people lost it for months at a time and that was the case over the winter.
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do you think you'll see a bump-up in this current quarter as people who crawled out from the winter do install their generators or what do you expecting? or is that lost business? >> no. i mean we are seeing that improvement, bill, here in april. we're seeing installations pick up. seeing demand pick up. typically it follows the warm weather. as we get ready for the next storm season here, people will start preparing for that accordingly. that's when people get interested in the product. we've more than doubled the category in the last three years so i think it's moved a lot and obviously as i pointed out, off of irene, sandy, the aware is tremendous. it's only in 3% of households an every 1% of penetration is a $2 billion opportunity. we have 70% share of the market so a lot of up side, lot of runway yet for this category. >> aaron, i wonder how long the life cycle is for any one generators. you did have a series of a lot of very big storms that caused people to run out and get a generator where they might not
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have had one. you already have 72% share. what's the risk people don't need to replace these for quite some time? >> the replacement cycle is probably not going to kick in for quite a while yet. the category's only been around for ten years. it is like a furnace or air conditioner, 15 to 20 years. realistically we are seeing a lit of replacement. it is less than 5% of what we see. but we see more people getting interested in the category because of the issues with the grid. the grid is by far and away, for a country as rich as the u.s. and as advanced as the u.s., our grid is really very third world in nature and that's really what people are buying these systems, is to protection themselves from these outages. >> do you really think that growth can come from just making more consumers aware of the need for a generator rather than potentially buying, acquiring a different company to maybe diversify your portfolio or getting into a new business? it just seems like a tough sell when a lot of people live in areas where they're not hit by storms that often or perhaps
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they already have one. >> yeah. it's a great point. we've been diversifying our business over the last three years through acquisitions. we've done six acquisitions and we're getting into products. we love generators. it's our core. we've been around since 1959 building generators here in the states but at the end of the day we're really good at engine powered equipment. we've purchased some companies that give us exposure it oil and gas, purchased some companies that get us into some rental markets, construction markets where we can expand our wings a little bit an also diversify our business. >> aaron, thanks for joining us today. appreciate it. ironically, i can remember at the height or depth of the winter, people rushing to a lowe's or home depot or a walmart and there were no generators. they were out so the supply constraint was a big problem. >> there is a difference in the spectrum of generators, some hand-held smaller ones, lower voltage, versus ones you need to
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install adjacent to their home. 20 minutes left here. dow down 31 moin 1 points as it been essentially for the past hour or two. the nasdaq perking up a little bit, up seven points. flash boy fallout. major brokerages are refusing to use the alternative non-high-frequency platform made famous in michael lewis' book. but are they breaking the rules by doing so? it is a fascinating story and eamon javers is on it up next. also ahead -- >> that really struck me as quite excessive so i didn't actually read that though after winters wrote the letter but i would have felt the same way. >> billionaire warren buffett giving credit to activist investor david winters for calling buffett's attention to coke's compensation plan. you heard that confession right here on "closing bell." we'll discuss activist investors and whether or not they are so bad for shareholders, after all, now that reports are surfacing
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that coke is reconsidering that executive pay plan. stay with us. stay with us. whon a certified pre-ownedan unlimitedmercedes-benz?nty what does it mean to drive as far as you want... for up to three years and be covered? it means your odometer... is there to record the memories. during the mercedes-benz certified pre-owned sales event now through june 2nd, you'll get complimentary pre-paid maintenance and may qualify for a two-month payment credit.
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in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. welcome back. just minutes before the closing with you can see the dow is down by just about 37 points.
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s&p still down by about three. nasdaq holding on to very slight gains leading the dow into negative territory. ibm responsible for about half of the losses today. >> on the dow. >> on the dow. >> yeah. and there is that story out there that major brokerages are now refusing to use a new non-high-frequency trading platform developed by the whistle-blower in michael lewis' book "flash boys." but is it legal to do that? eamon javers has been working that story for us. what did you find? well, cnbc obtained some correspondence here between two brokerage firms, fidelity and scottrade, and their own clients. clients in these cases sent written requests to the brokerages to route all of their trades or portions much their trades o to iex, that trading venue made so famous by flash boys. both brokerages sent different responses back to their clients saying no, we won't be able to honor your request.
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here's what fidelity said. "fidelity is unable to accommodate your request to direct all of your orders to iex." scottrade a similar response. they said, "scott trait respectfully declines to honor your requests to route your orders to iex." we asked the regulatory agency that oversees this type of thing what the rules are here. they told us that if a brokerage receives a request to route trades to a particular exchange or venue, that broker needs to do that unless they're not connected to the exchange or venue at all. scottrade is not connected. fidelity is, in this case, so there is some questions about what it was that these firms did. both firms say that they did nothing wrong and they were simply following their own policies and procedures, guys. >> okay, eamon, thanks very much. the dow has stabilized here at the low end of the range for the day. my speculation is they are waiting for the jobs report for tomorrow morning. the dow down 37 points right now.
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some correlation between the treasury market some are saying as treasuries have rallied, stocks have come off. plus, with college tuition and student loans running rampant, a treasury official says she is alarmed but what account government do about it. it might be more than you think. stay tuned for that story coming up soon on the "closing bell." just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review.
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ten minutes left -- i think we're on it. the market's waiting for the jobs report tomorrow. don't you? >> i think so, too. it's been a busy week for data. at this point there is really nothing else to chew on for the market. we do have earnings after market. that will move individual stocks but right now there is not much to fuel it in any one direction. >> joining us, michael leer from athena capital advisors and michael block from rhino trading partners. what do you think the jobs number -- is it one of those where if it is a very poor number, the market takes comfort thinking well, the fed will be tapering the taper maybe. >> i think it will be rather muted but i do think a weak number, could be a bad is good type scenario where folks say, okay, the fed is not going to get more hawkish here. yesterday was a very little change, very dovish statement in that nothing really changed. they're tapering but not
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tightening. they're staying on course. that's really where we are right now. the question is will that being enough to get us through those april 4th highs after we get through the payroll report. if not, we could see a little bit of a tail-off here. >> april is a peculiar month because we had such bad data throughout the first quarter of the year. a lot of data has thawed throughout april but what happens if we get a really negative print tomorrow? pike. >> i think it will be a little bit troublesome. we've seen a pretty mute response after the fed presentation yesterday. we could see a significant sell-off if numbers are really dire. but we don't have that expectation honestly. we are hoping for a number that's close to survey. hopefully that plays out. >> would you be inclined to buy if we get that sell-off? >> yeah, definitely. we've seen the sector rotation kind of head our way. i think last year we were a little bit early. being underweight u.s., we moved that up to neutral.
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right now we would certainly add. couple of investments we -- we're really focused on adding some small cap. they've outperformed the russell 2000 by about 8%. looking at 5.5% performance. they run a very concentrated portfolio. less than 40 games. that's somewhere to be looking at. >> you're taking it stock by stock. >> i think the street right now is leaning -- i'll call it confused to neutral. i was listening to led zeppelin dazed and confused on the way down here. i thought, well, how appropriate. i think there is a lot of that out there. if we get a number that makes people feel good about april or makes people feel good the fed is not going to do anything crazy, we could see a move. >> where would you buy? >> i would buy on the dip. on a strong number, look at
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laggards and value names an reits that haven't acted as well. i think these growth stocks -- there still needs to be a little bit of cleaning house here. >> that's brave. there haven't been many fans of the banks and reits. those have been beaten down as growth has been hard to come by. >> that's where we go, where no one dares. zprp that zp >> stick around, guys. as we head toward the closing countdown for this thursday, we have a lot more coming up. after the bell, real estate titan don peebles gives us his take on the real estate market. is barclays hitting the nail on the hit by calling out commercial real estate. >> cnbc, first in business worldwide. stay tuned.un ♪
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that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. about three minutes left. all we needed was a positive close for the dow to hit another new all-time high because we had had one yesterday. had it for a little while couple times today but late this afternoon, minor, minor sell-off. nothing big. down 26 points as we head toward the close. as kayla pointed out, ibm was half that decline. big blue down 1.5%. down to $193 and change. $3 move. earnings after the bell tonight. an eclectic mix. lately we've had a theme but tonight we've got linkedin and they're up a 5%.
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one of the big gainers today. they expected a profit of 34 cents which would be down 25% from last year but that stock is higher today. expedia is up 4%. they expect a profit of 15 cents which would be down 40% from last year at this time. and then kraft foods is reporting, they're down a fraction right now. they expect a profit of 76 cents which is about what they did last year. michael and michael, of this group, anything you like here? you want to go defensive. you like food? you like kraft? >> kraft is an interesting one. i do think these defensive stocks could get in a bit of problems with commodity inflation. as for linkedin, you look at the performance today, obviously a lot of people are squaring their positions. maybe a lot of short interest is coming out. we'll see what that means coming into earnings. >> they've been one of the most successful social media companies in the market here. at some point they become too expensive. >> we think they're too
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expensive. we haven't played a lot in the growth among momentum stocks. we've had a tilt toward quality on and we are confident in maintaining that. essentially establishing that through a low volatility, dividend equity screen that we put on for a lot of our clients. we generally stay away from linkedin and a lot of the internet names an just where comfortable where we are at with quality. >> does expedia follow that category as well? is expedia an online company or is it a travel-based company? which master does it bow to in this case? >> i think we have that falling in the category of new economy which we do like as a theme but a little bit further out from here. >> i think it is a bit of a travel company and again, it all comes down to leisure. what are gas prices doing for this, how much of a run has the consumer had. is there more juice for the consumer? if so, good for expedia. if not, it is not someplace you want to be in the longer term. >> thank you both for joining us today. going out with minor declines for the major averages as we get
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ready for the big jobs number that will be out tomorrow morning. 8:30 a.m. eastern. stay tuned. earnings reports are coming out and we'll talk to a prominent real estate investor who is thinking about making a bid for the los angeles clippers. it is all coming up here right now in the second hour of the "closing bell." welcome to the "closing bell." i'm kayla tausche in for kelly evans. bill griffeth will rejoin me in just a minute. the dow finished down 23 points, that's off the lows of the session. nasdaq holding on to a 13-point gain. s&p down by less than one point. avon products, the worst mover on the s&p 500. we want to bring in today's panel, cnbc contributors carol roth and josh brown, our own sharon eper southern. also with us today is john tapper from bar rescue. for more on today's markets is "fast money" trader guy adami.
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guys, welcome to today. seems like it was a relatively quiet day of trading. not that much to write home about. josh brown, i know you can always find something colorful to say about this market. >> i think the biggest thing that's going on right now, we cannot figure out the bond market. bonds are still on fire. tlt just took out a high that hasn't seen since 2013. according to the cftc, short positions in the 10-year bond hit the highest level they've been in four years. everyone is leaning the wrong way. utilities are ripping. it is just a very bizarre market right now. bonds ripping with economic data somewhat improving. no one can figure it out. >> john tapper, this is one of the busiest wakes for data. only eight times in the last 14 years do we get a fed meeting, a gdp number, jobs data and as much manufacturing data as we do. yet the markets are roughly flat on the week. i just wonder if you think the market is just basically not into it, if they're just saying, look and there's nothing really to write home about here.
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>> i think there is a separation between the numbers on the page and the way the market feels. so me out there on the streets every day in the business community, there isn't the excitement that sometimes you see on that piece of paper. we're just not feeling it. >> i'm thrilled to be playing with the big kids. i get to stick around and be at the big kids' table. guy, i thought were you in hawaii. >> i was there for about 48 hours. quick in, quick out, bill. >> what is that about? >> crazy. >> i told guy that he made a bad trade. he's a trader. he was there and now he's here. what's up with that trade, guy? >> it is ridiculous. it is the craziest time zone change, too. i got on a plane at 8:00 in hawaii. i think it was tuesday night. i was back on the show on wednesday night. i'm a little backwards right now. >> it's all good. i'm here. >> crazy. we're glad you are. we got some results coming out right now. don, what did expedia tell us? >> expedia, right now a stock that's up about 2%. thin after-hours trade, about 79,000 shares traded so f
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afterhours. earnings per share of 16 cents beating analyst estimate of 15 cents per share. revenues coming in slightly better. 1.2 billion in revenues versus $1.1 billion. slight beat on revenue and earnings per share. what the company said in terms of the overall picture, room nights grew 24% over the same time last year. revenue increased 19% over the same time last year for the first quarter driven by growth in hotel, advertising in media, as well as air ticket revenues. brand expedia successfully repurchased 1.7 million shares to date from aggregate purchase price of $122 million. they've updated us on their stock repurchase practice. we have a penny per share beat on earnings. that stock again at last check up about 2% in after-hours trading on about 100,000 shares of volume.
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kayla, back over to you guys. >> it's drifted off that high. anybody want to weigh in on expedia? do you consider this a travel play or is this an internet play, josh brown? >> i guess you would have to say it is both. what's interesting about expedia is that it is in a really competitive market. there were no shortage of ways to book a trip online these days. yet they've continued to maintain the lead and i think brand is the answer. i don't think their technology is head and shoulders above orbitz or kayak. they just have a hold on a certain segment of the consumer that does this type of travel booking and it is working. no reason anyone should expect it to stop working. >> the big earnings people are watching for after market today are linkedin. but when you talk about a stock that's the poster child for this momentum movement of late, how are you looking at linkedin ahead of the earnings and what number do you really want to see in that press release? >> that's clearly been a poster
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child. priceline's in there. throw amazon in there as well. i think the stock has sold off significantly enough where you might catch more of a bounce off the bounce you saw today. valuation finally caught up to these guys and gals. it is 64 times, 65 times forward earnings. people looked past that when the momentum was in play. but now that the momentum has failed on a lot of these names, now valuation counts. i'm not certain that eps is going to be the real guide. think it is a revenue thing and we'll see very shortly if in fact they can beat on the revenue side of the equation. quickly, back to josh's point. i've been saying it for a while. i think rates are going lower. tlt is going higher. i think the deflation has been the fear, will continue to be the fear. i think the bond market is trying to tell the stock market something that the stock market just doesn't want to hear right now. >> that's something rick santelli's been telling us for a long time. you agree, carol? >> it is really hard to say, bill. we continue to have these discussions which way rates are
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going. i certainly think that the bond market guys are pretty savvy. we've had a lot of discussions around valuations and whether or not they're going to change. i just don't think that we have a good answer on this right now but i do want to say in terms of expedia and linkedin, really there's been a boost to that momentum, it seems like today, almost all of the names were back up today so it seems like the valuations have come down to the point where investors are looking to get back in and we saw that across names. yelp, netflix, amazon, facebook today, a lot of those, little bit more mo in the momentum today. >> some of those momentum -- >> one thing on volatility very quickly. we obsess over the momentum stocks because they are moving the most. but if you actual lie loly look april, it was very benign. range the s&p traded in was actually smaller than the median average for april over the last ten years. so it is not like the whole market was thrown into timult.
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>> they're actually doing exactly what the market is doing but we're focusing off and on these momentum players and that may skew what folks expect out there. >> let's get more earnings. kraft out now. >> that's right. we have again kraft foods coming out. remember, this is the kraft foods we all know in terms of the velveeta, planter's. kraft reports earnings per share of 85 cents handily beating the average analyst estimate of 76 cents per share. revenues falling slightly below expectations. the expectation was $4.5 billion. what we do see or what they're refer fog are some highlights of the quarter. overall kraft says they continue
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to make steady progress during the first quarter. they have more work to to, confident their focus on brand ren nation will drive marketing growth. there is no trade in terms of movement. kraft foods coming in with an earnings beat but a slight sales miss. we'll bring you more details as they become available but for right now the trade right now is unchanged for kraft shares as we start to get this news flowing out. back over to you guys. >> bill, jump in there. >> i think this speaks to the bifurcation in the consumer. this is playing toward the lower end of the mass consumer market. fact that they didn't make revenue is very concerning to me about the overall health of the consumer. when you look at the consumer numbers, that's an average number that takes the highs and lows. to me this is saying that main street really still isn't healthy. >> the estimate for revenue was already supposed to be down from a year ago but sharon, i'm wondering, we were just talking about this momentum sell-off and when the momentum names were selling off. all these financial advisors were saying stick with the big
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cap names, stick with pope, ibm, microsoft, kraft, all of these familiar names that are sturdier in the market than maybe a high-flyer like netflix. when you see earnings performance like that or ibm which dragged the dow down today, how do you figure out that you're getting the best financial advice and that you're doing what you should be doing in the market? >> i think you have to look at the overall portfolio. they're saying those types of stocks an often they look at some of those names that you mention and look at them together. there may be some outliers. as carol mentioned, there is a big concern about what this all means for consumer spending and what why see going forward. the bottom line is if you are just following momentum longer term you may not get whr you want to go longer term with your portfolio because we'll see ebb and flows in some of these names as we have already with twitter -- linkedin and others. that's the point a lot of advisors are making. some of their clients may not realize they may already eventually get into these names without realizing as they get
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into some of these indexes. >> we've got the earnings hat trick. linkedin now. morgan brennan out in los angeles has those numbers. morgan. >> hi, guys. yes, we do. linkedin, non-cap earnings, 38 cents per share. that was a beat versus the street's 234 cents. revenue increased $473 million. that was a 46% increase year over year. a little better than the $467 million that analysts had expected. want to dig in to those numbers a little bit more. we've got three distinct revenue streams for linkedin. people are looking for those numbers. talent solutions. 58% of revenues at $276 million. a 50% increase year over year. marketing, the second-largest revenue stream, $102 million. premium subscriptions, finally, $96 million for the quarter. also want to pull out that they are saying they have over 300 million members now. that's something we have actually known for the last
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couple weeks but they are reiterating it here. for their projected guidance, a little light. top line for the full year. top line beat, bottom line beat. guidance, a little light. back to you guys. >> thanks so much, morgan. >> not just next quarter. in this environment we're shooting first, asking questions later. doesn't look -- >> for a company that's trying to diversify and trying to get into content, too, there will be a lot of questions on the conference calls. that's oftentimes what moves the stock just as much as the actual numbe numbers. morgan, thank you. panel, thanks for joining me. stick around and catch guy coming up on "fast money" at 5:00 p.m. el abcovering all the after-hours earnings movers throughout the show. >> they're sticking around here, like i am. coca-cola reportedly may revise its controversial executive pay plan because of pressure from warren buffett. but should buffett really get the credit when it was actually activist investor david winters who was the first to rail against that plan. we'll look at that coming up.
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student loans in the u.s. have topped $1.2 trillion as tuition just keeps soaring faster than inflation. now a top treasury department official is vowing to do something about it. don't miss that next on the "closing bell."
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a reversal for linkedin here in after-hours trading. it beat on the top and the bottom line. the stock fell nearly 3% in after-hours trading but it rallied about ten points off of those lows. right now up by just .25% as investors are working through those numbers. >> guy, did you buy something? what happened here? >> he is gone for now. >> he went to get ready for the next hour. josh brown, did you -- >> i did not buy any linkedin. >> i saw you furiously typing over there. what were you doing? >> it wasn't me. but it is off $11 from the lows which is pretty remarkable. now it is headed higher. it's already down 40% from its high going into the report. it is not like the expectations were so lofty. >> i have a theory about link linkedin. i think it has done as well as it has. let's face it, people who are on linkedin -- i'm not, i'm not looking for a job. people are looking for for a job
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and networking. as the job mark improves, linkedin's fortunes will decline. >> i use it for all kinds of company networking. i think it has more legs than that. that being said, that doesn't speak to valuation. >> i use it to find sources if i'm covering a story. >> room nights drive expedia just like job pressures drive linkedin and career pressures drive linkedin. >> i actually use it to compare myself to people i went to college with to -- >> to make you feel better. how's that working out? >> i use it to see what the thought leaders are saying and see if i can get blogs posted on there and what they are talking about. i think it is used though largely by people who are looking for jobs but i will say, a lot of job hunters aren't using it as effectively as they should. that's another concern that the company might have in how people are using that networking process. >> people link up with me on linkedin, i say now what do we do. nobody wants to look at my cat photos there.
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>> and you have coffee. >> everyone is going to rush and unfriend and unfollow bill on everything now after this. but we love you, bill. >> again. moving on to coca-cola. according to reports, coca-cola is reconsidering a controversial executive compensation plan after increasing pressure from billionaire warren buffett. coke responded saying there are no plans to change the pay-outs "at this time." but many believe there is at least some truth to the report because the ceo needs to keep buffett on his side. one of the major shareholders, if not the biggest shareholder. >> he is the biggest shareholder, 9% they own. but before buffett gets the credit here, what about david winters? he is the activist investor who first -- he was the first to call out the compensation plan as eye agr as's agr as's greejous. >> in 2002, coke had a plan that
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involved 240 million shares. that lasted six years. they had a plan in 2008, six years later, that was 280 million shares and that laftd six years. and then this plan when i read about it was for 500 million shares which they would equate to $340 million. still, 340 or 500. that really struck me as quite excessive. they said they were going to use it in four years. i didn't actually read that until after winters wrote the letter but i would have felt the same way sglp with us now, the founder and ceo of bamco, a critic of activist investors. plus our panel is joining the conversation as well. you have to give david winters credit on this one. he is a shareholder, he's got an ax to grind but he just didn't like this and he enlisted the most famous and influential shareholder coke's got and it seems to be working. you don't like that?
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>> i would say this. first of all, it is not winters that would get the credit, it is buffett because he is the real market mover. but buffett is not the traditional activist investor by any means. activist investors are coming in like sheep in wolf's clothing. there is an alarming trend happening more and more. it is something we've seen, they've come in and destroyed a lot of companies as a result. in this case maybe it is a good situation. overall if you look at the history of this type of investment it is really dangerous and really short-sided. that's not the way a business is run. >> is it fair to say the run of the mill shareholder just didn't do their homework for a company whose executive compensation plan just went up, up, up with every single year and diluted existing shareholders and sales in their core category were going down at the same time. >> including warren buffett who didn't know anything until after david winters said something. >> i wouldn't say it a bad
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thing. investing activists on occasion can have some really good outcomes. but looking at the overall trend, it is not positive. >> john tapper, are all activists created equal? >> no. when you dilute shareholders by 16% a winters claims, that's a big number and that has a huge impact. programs like that should be exposed. but there is a short-term/long-term issue here. compensation plans like this are more strategic in their thought and development. they are designed to enhance share value over a longer period of time and a short-term activist view can impact a long-term performance. so this has to be dealt with very carefully. >> i agree with john. i would say that activists are a net positive. i would disagree with the concept that overall activism is bad. if you look at the makeup of who owns all of the other stocks, the individual investor will never have the cloud so you have to rely on insurantitutioninsti. mutual funds barely ever vote in
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proxies. most asset management firms won't do that either. >> i don't think you can lump in these activists together. i think there are ones that have a more long-term view certainly addressing executive compensation as more long-term than something like a share buyback. i think you have to look at them on a case by case basis and say are they really an activist or are they just playing one on television. >> when they don't have the clout, they are also listening to voices that they may not be hearing. the institutions. >> the activist investors though, the problem is overall they're not looking at this thing from i want to be representing the shareholders' best interests. they are looking at they need to represent their capital's best interests and their capital's best interests is more short-sided and -- >> would you say that about nelson pelz? >> if you look at somebody like warren buffett as a passive type of activist, he was the one that had the muscle here. i actually have a theory that he
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had two guys named big veto and little veto who paid a visit to the ceo of coke and said i'll make you an offer you can't refuse and that's why we're getting the momentum. >> many i bet he just picked up the phone. >> he basically abstained from the vote so he's got something else going on behind the scenes. >> imagine a world where there's no one with the clout to ever question executive compensation. because in the absence of activists, who would be doing that? >> blackrock? >> maybe blackrock -- >> let the audience marinate on that one because we do have to go for now. one thing we cannot doubt is activists requests have gotten more diverse, not just buybacks, not just mergers. now they are questioning compensation plans as well. phil, thank you for your thoughts today. don't miss david winters' reaction to what's happening at coke and warren buffett also tomorrow morning on "squawk box" at 7:30 a.m. eastern. up next, real estate mogul
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don peebles tells us how he seize the health of the housing market. plus, you heard the report earli earlier, sterling has been banned for life from the nba following his racist remarks. not sure if the company or team is up for sale but a lot of people are crowding it if it is. don't look now but barclays now says the u.s. economy may have actually shrunk in the first quarter. does john tapper believe that? don't answer that yet. he's got a unique perspective since he's in different restaurants nearly every single day. we'll get his view on the economy later on the "closing bell."
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tdd#: 1-800-345-2550 call 1-888-648-6021 to learn more. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. welcome back. 9 earnings reports have been coming back in fast and furious. the market reaction strong as well. >> linkedin reversing already, even though it did beat on the top and bottom line. but there's much more happening after the bell. round up all the action for us. >> like you said, a lot to get to. let's fire through them here. linkedin is posting better than expected first quarter earnings and sales but full year guidance was below consensus estimates. still down around 4% in after hours. expedia is moving higher in the after hours after posting better than expected first quarter earnings and sales. this as it sold more hotel space an airline tickets. the stock there off its session
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highs but still up .75%. kraft topped analyst earnings expectations in the first quarter, though revenues came in slightly below estimates. the stock flat, just down marginally there. vertex pharmaceuticals climbing up 9% in the after-hours. akamai technologies currently up toward session highs, after-hours highs up 3%. >> josh, you were impressed with the market response on linkedin. lot of volatility there. >> yeah. it looks like once they had a chance to kind of catch their breath an figure out -- because we give a summary judgment to the headline number. they missed or the guidance is a little bit light. then there is a huge reaction. actual investors step in, relieve the traders from active duty, they say all right, this is what we are willing to pay for the stock.
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>> as bill said, he wasn't going to use it and that's what happened. >> or maybe they announce they will allot cat photos. is there longer term, i don't know how young their audience is but i teach a class at colombl . graduates students are required to be on. if it is tied in to all the recent graduates and they are forced to do it, then we'll continue to see growth in this company. >> linkedin has a very -- >> on the other hand, this is the largest graduating class from our universities in american history. so based upon that, there is going to be an awful lot of people looking for jobs the next few years to fuel this growth. >> there already are. >> peeking of the u.s. economy, john, it is off to a slow start this year, the weather being a big factor all around especially in the housing market. >> let's talk about that with real estate titan don peebles, chairman and ceo of peebles corporation. the real estate market lately, you're only as good as your last report. we get such mixed reports on
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pricing and building and sales and so forth. what's your assessment first on residential real estate right now? how do you see that right now? >> residential real estate right now is transitioning from the winter markets to the spring markets, then on to the summer markets. for example, bad weather stifled activity in the northeast and mid-atlantic regions. but in the south and the midwest and the west in terms of the southeast and southwest, the market did very well because the climates were conducive and a lot of activity. florida, for example, is on fire. so is new york city. manhattan is the best real estate market in the country right now. and continues to do well. >> on the commercial side, don, when you look at a lot of these companies, it is a good sign when they want to expand. they need a new building. they need a new office but a lot of banks aren't funding this because of either the credit profile or exactly what the plans are so some non-bank companies are stepping in to actually do these deals. i'm wondering what your vantage point on this sector is and how
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you think the commercial real estate market is doing, what it says about the overall economy. >> look, i think credit, that's a very important point. credit is very tight. it is tight in the residential market. florida has its new way of financing real estate right now in terms of high-rise condos with deposits using the buyer's deposits up to 50% of the purchase prices are in deposits. on the commercial real estate side, other financiers are coming into the marketplace because credit is very, very tight. also, the commercial real estate market, especially on the offense market side, we're more efficient right now. so there is not as much of a demand for new office space. then retail of course is is still dealing with technology and online purchasing. i think that's going to stifle retail development going forward as well. so i think it is a combination of credit, technology, jobs and weather. >> don, it's sharon epperson. i wonder how much the affordability issue is really
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hurting the housing market particularly if you talk about a 50% deposit on some of those condos in florida. how is the first-time home buyer doing that? >> the market is being driven right now by more affluent buyers. florida, for example, miami is driven by affluent buyers and international buyers. manhattan is being driven by affluent buyers and international buyers. and so affordability is very problematic in new york city and very much in miami and other major gateway cities. the challenge there is credit is tight, even though with interest rates low, and costs are so significant right the now. construction costs and land costs. it is very difficult for there to be new inventory coming online if the major cities which is where most of the activity is. in terms of affordability. that's a very big problem. in fact, the mayor of new york is dealing with that right now. i think he's going to lay out a housing plan today about how to deal with affordable housing. >> let's move on to the clippers now. are you among a whole list of moguls out there who have
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expressed interest in the clippers. i got to say, i grew up in los angeles. the clippers for 30 years have been a door mat out there. now suddenly everybody wants to buy the clippers here. do you want to buy it to make a statement or are you -- would you buy it as an investment and make it a real business? what's the intent here? >> a real business but a transformational business. i've tried to in the development business to use business as a tool of transformation as well. the clippers, at the right price, are a good business opportunity because -- >> what is the right price? >> oh, i think the right price is somewhere between $500 million and $750 million. >> currently they're worth $575 million. some bidders have said they'd pay up to $1 billion. how high are you willing to go here? spl let's negotiate now, don. >> look, i think everybody's got to start seeing the numbers in the fine print first. the fact is no one's seeing the numbers right now. we're not seeing what the new collective bargaining agreement is going to have in terms of an impact on the clippers, nor has
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a new tv contract been affected. the reality is i'm interested because i think it would be a great business opportunity, and also i think diversity in terms of ownership of professional sports teams. there's not one woman that owns a professional sports team and there's only one minority who is a majority owner of a professional sports team and i think that's important. >> it's carol roth. if the clippers thing doesn't work out, if you want to team up and buy an nfl team, i'm in on that with you. >> i'd love to! >> i'm curious to know which play is more important -- the income or the the diversification play. >> i love basketball. through my youth i was a high school basketball player. my son who's 20 played all through high school. i in fact coached him in aau, i have friends who are athletes who play in the nba. i have mentored some nba players financially. >> yeah, but it is one thing to be a fan. it is another thing to -- it is
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one thing to be a fan, it is another thing to be an owner. you'll have all thosefin nicky athletes asking for more money. >> i'm looking for a challenge. i think this had is a tremendous opportunity. the nba is a great franchise. a great brand and there is a tremendous opportunity. one of the things i would like to be able to do as an owner and i'd like to encourage other nba owners to do the same thing is to take more of an active concern in terms of helping the professional sports players have more generational wealth, more long-term lasting generational wealth. if you look at some statistics of what happens in the nfl to players who retire, few years after they retire, then what happens to nba players, five years after retirement, it tells you that there is something that needs to be done there as well sglp don peebles -- >> are you saying right here around now you're going to bring a winner to los angeles? >> well, actually, los angeles has had had a great basketball team for so long with the los angeles lakers and the clippers
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have been overlooked. i think with new ownership they're going to be an even more exciting team but they've got the greatest talent right now in the league. some of it. of course in miami, we have the best. >> we wish you the best of luck. >> we just learned carol roth wants to own the bears now. >> i can't say which nfl team. i just said "an "nfl team. i'm fairly team agnostic. i'm open to ownership amongst the league. >> what's great is you don't have to really start on time. >> have you pretty good weather, too. >> i'm from l.a. i can take this. we're used to this. consumer spending taking off in march. what's behind that surge and what does it say about the rest of the economy? let's face it, it remains pretty sluggish. college loans are much easier to get than home loans were ahead of the real estate bubble. is that actually making the cost of college more expensive? stick around.
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john tapper with his new show we were just talking about "hungry investors," talking tough what it makes for investors to make it in this economy. today the strength of this economy is certainly in question. construction activity coming in softer than expected. even firms like barclays now saying that maybe first quarter growth was actually negative. negative growth. you know what we mean. >> never a good thing. also in this discussion we have former congressional budget office director doug holtz-eakin. john, since are you in the restaurant business, you see what consumers are spending money on, what they're buying, how much they are willing to actually take out of their wallet. >> how high are they reaching on the slefl? >> they're not reaching as high
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on shelf. there are two equations in our business, guest counts and spend per guest. combination of those two elements drive our revenue. we are sees rising guest counts. we aren't really seeing substantial rise in spend yet. that's what's really holding back the chain restaurant segment. earnings are reasonable. we're seeing some growth but until we get spend released we're not going to see the growth that we need to. >> not you specifically but the industry's sort of training customers now to expect the two for $25. some of those deals that bring people in. >> that is the fallout of the recession. $2/20. we created an addiction to discount, an addiction to lower pricing and it takes time to wean the consumer out of that. it is also very expensive as the market shows. >> but it did create a cottage industry. all these coupon businesses were able to spring up. doug, i'm wondering from a more macro perspective, we have a negative print for gdp, at least from one shop on wall street
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when they're making their estimates. the fed has said that the economy will grow 2.9% this year. that's their forecast. when you include the first quarter, that means that the next three quarters, we're going to need 3.9% growth, on average it would be actually get there. how did the fed get this so wrong. >> the fed's been consistently overestimating u.s. growth. if you go back again and again, this is the pattern. look at the first quarter. first estimate is .1. inside that, good news on the consumer. personal consumption up three percentage point growth rate. when you look at the march data that really powered that, it is all coming out of savings. the thing i'm looking for tomorrow is some evidence that we're going to see hourly earnings grow, hours grow, the foundations of income growth because if that doesn't happen the consumer can't keep it up and i don't see anyone else picking up the ball. >> how much are energy prices a factor here? when you look at the fact gas prices have been going up every day since february we're at the highest prices we've seen since
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march of 2013. how much is that impacting what we are seeing in terms of spending and overall impact on the economy? >> it has less of an impact than it used to. one of the great things about the huge energy boom in the united states is we now own some of those higher prices and we benefit from it. it mutes the macro impact a little bit. i think my biggest concern is that when you're wandering along a two percentage point growth, that starts hitting people's confidence and it snowballs. i'd love to see after much stronger fundamental growth path. >> is that bifurcation in the market that's most concerning to me. because i think sometimes when we see these average numbers we are really brought up by the premium consumer and it gives this hope that things are better than it is. we just have too many people that are unemployed, too many people that are underemployed. i don't care what number we see tomorrow, it is not going to be
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in the realm it needs to be. >> we'll get $210,0210,000, 225. how much is part-time help. are we see hourly earnings grow, hours of work grow. we have record-high in long-term unemployment, record-high teenage unemployment. the fraction of the population working still below what it was before the recession. labor market has not recovered and the consumer can't power this economy without that. >> doug, wish i had had more time. thank you for stopping by. we'll see those numbers tomorrow morning. when we come back, the hot list has some secrets and they're coming up next. and our school days feature is back with yet more disconcerting news about the cost of higher education. too high right now, right? announcer: where can an investor
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everyone wants to get in on a good secret, right, bill? >> yes. like where the best steakhouse is. the people visiting today are no different. what are the secrets lighting up the hot list today? we got cnbc managing edit allen wastler. >> five stocks that uncle sam doesn't want you to know about.
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this is a cute little stock story. essentially they did a screen for stocks that beat the market. but don't pay a dividend and therefore don't get taxed. at least until you sell the stock. cute little thing, activists probably selling a couple of the stocks. you want the rest? go read the story. next is our secret billionaire success story. okay? we've had the cnbc 25 list this week. we've asked each one of the ones on the list that we've interviewed what's the secret to your success? we strung it into one handy dandy story which our readers are finding handy dandy. finally the other big draw on the website right now, dan lobe's third point hedge fund had a letter to investors describe bubblelicious markets and with a word like bushlliciobush bubblelicious in the headline, you know you got to click on it. >> i love it when you call a story a "cute little thing." deadly for weapon traffic though. >> spoken like a real managing editor. next, the sky-high cost of
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college is driving millions of americans mad. >> that includes a top official in the treasury department. we'll hear from her next. plus, the panel tells us how they would make college more affordable. can't wait for that one. honestly, i'm pouring everything i have into this place. that's why i got a new windows 2 in 1. it has exactly what i need for half of what i thought i'd pay. and i don't need to be online for it to work. it runs office, so i can do schedules and budgets and even menu changes. but it's fun, too -- with touch, and tons of great apps for stuff like music, 'cause a good playlist is good for business. i need the boss's signature for this. i'm the boss. ♪ honestly ♪ i wanna see you be brave
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welcome the treasury department is taking a closer look at the student loan situation and how it relates to the cost of college. >> for that we turn to sharon, our resident expert. you spoke to an official at the treasury department. what did they say? >> we're looking at two serious issues. the first is the rising cost of college the other is the enrollment in the federal loan programs and the enrollment is surging. government officials are concerned about what the impact of these rising costs of these loan programs are as well as the fact with the federal aid will we see colleges continue to have these costs rise. we talked to the deputy treasury secretary about this exclusively, her first interview in her new role. >> the student loan debt issues have a lot of connections to the
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economy. any that's of interest to the economy is of interest to the treasury department. we want to take a careful look at the amount of student debt accumulating and try to understand with some specificity what it's due to and whether or not it's dangerous. the cost of college has gone way up. we're seeing dramatic increases across the board. it's becoming very difficult for many families to be able to afford it. this isn't really a single point of contact that is going to be important for solving this problem because the cost of tuition is something that's very high as well. we have to think through what administration can continue to do to make that education more affordab affordable. >> so she's calling on federal loan servicers as well as colleges and universities to work together to try to figure out the tools needed to help bow
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r -- borrowers not default. >> sharon, it's important to note the government student loan portfolio, $1.2 trillion. the delinquency rate is 10%. somehow at the federal government level it's easy to forget the delinquencies are that high. >> sky high. and when you look at the amount of the student loans and how much of those are originated by the federal government, that's 90%. we're talking about a problem needing to be addressed. >> it starts with the federal government. they have been the cheerleader for the american dream in a way. we saw this in the housing and college market. they are with the cheap capital increasing demand. what do you think is going to happen. >> i think the colleges are also at fault. a lot of unrealistic expectations in terms of the way
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they're creating the programs and completely bloated. they are some of the most bureauic organizations in the country. it's also where the money is going and a lot of cases is going down a black hole. >> debt without income is paralyzing. it's paralyzes the youth and it puts them if a mode where they're being defensive to pay debt rather than assertive to create their lives. >> i keep saying the cost of college will come down when demand starts to come down. but demand is not going to go down as long as they've got these loans going in. they don't realize until after they graduate i have to pay this back and how long it's going to take. >> a lot of people don't look at what they are going to have to owe down the road and what they will be able to make in terms of the degrees they're getting. when you look at the amount of mas out there and we're not
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looking at some of the graduate programs where that's where the real growth is coming from. they're in these liberal arts type master's degrees not necessarily in business or law. >> you also have a law degree bubble and not enough jobs to go around. >> we can on and on and on. >> let's go on. c'mon. >> we're going to leave it there for now. sharon, i thank you. a lot of families are starting to look at this issue. when we come back, we'll look back at today and look ahead at tomorrow. a lot of things to look at. >> by the way, on tomorrow's closing bell, yes, it's derby time. we'll talk to the chief investment offers of asset management who has three entries in saturday's kentucky derby. we'll see where he's putting his clients money and if the derby faithful are putting their money on his horses tomorrow on
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had a lot of fun today. final thoughts. josh, what are you watching here? >> i'm thinking about throwing my hat into the ring for the clippers. john and carol have my back.
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why don't i try. >> carol? >> obviously looking at the employment numbers tomorrow to see if there's any momentum in terms of wages in terms of hours worked, what kind of jobs being created. focused on that tomorrow. >> sharon? >> where that growth is coming from. what sectors and the long term unemployed looking to see what's happen with those numbers. >> john tafer, we have been talking steakhouses, your outlet for that industry? >> the restaurant industry is about hours. i want to see the hours go up. i want to see individual income go up and work hours be granted at a greater level. that's the trick to getting us going. >> wait a minute. pork prices are going up. steak prices are going up. >> and obamacare. >> we have a regulatory crisis. no question. shrimp is up 30%. beef is through the roof.
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produce is through the roof. the consumer has pressure to keep pricing down. >> you've got to open a vegetarian restaurant. >> i was going to say. >> salad for dinner. >> that won't help. >> thanks for joining us today. it was fun. >> "fast money" coming up in a few seconds here. >> thanks a lot. start with breaking news here. linkedin's conference call right now. we're following that and a number of other big earnings movers. plus the stock closing down more than 1%. found out what departures would make our traders change out their portfolios. our traders are dan, jonathan, and guy. and karen. a little bit of a reversal. dan, what did you make of this? >> the expectations were not high. some of the research i read suggested that they were going to give conservative


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