tv Street Signs CNBC December 5, 2012 2:00pm-3:00pm EST
>> sue, thank you. jim iuorio, you have a bold prediction here. >> it is going to be crazy. >> go ahead. >> i think it is going to get cold again. >> it's going to get coal! >> we've been selling natural gas for a couple weeks just based on the weather patterns. and i get that. but it is going to get cold again. we use natural gas. to me seems like a nice place to pick it up. >> jim iuorio, it's going to get cold, he says. that's it for us, sue. "street signs" begins right now. ♪ come on baby ♪ don't fear the reaper ♪ baby take my hand >> don't fear the reaper. but how about the fiscal cliff? we're going to show you the real impact on americans' wallets and some stats to make you go -- hmm. apple slammed but the dow doesn't care. the indexes are higher as some break-away republicans are giving investors hope that a deal will get done. but will apple win the online music battle? why pandora is being boxed out today. ed unintended consequences of all these one-time dividends.
mandy's off today so let's welcome in courtney reagan. >> thank you very much, brian. blue chips are ruling the roost on wall street today. the dow bouncing back from morning loss to post triple digit gains. travelers, caterpillar and chevron accounting for a big chunk of that advance. apple having its worst day in four months. pushing the nasdaq into negative territory. bob, apple is lower than 4% -- we're going to toss it back to brian. >> courtney, hold your horses. but first we've got to get a big development on the fiscal cliff negotiations. at this point we are still just a quarter way to a deal. eamon javers, though, some republicans, call them defectors, call them break-aways, call them independent thinkers, whatever they want, what's the latest here? >> what we've seen just within the past couple of hours is a new letter from some republicans saying they'd like to see all
options on the table here. that's a sign that there is some willingness among republicans to have some negotiations. i'm talking to lawmakers here on the hill who say it probably strengthens speaker boehner's hand to go out and make a deal with the president. we've seen some rancor in the ranks on the right from the speaker dealing with sort of an insurrection yesterday. this might give him a bit of wiggle room for negotiations. i want to show you this video here. this is members of congress departing capitol hill today. they're heading off for the rest of the week. they are not in session anymore. no more votes, no more committee meetings. it is all negotiations behind scenes between the top leaders and the president. so the rank and file are being sent home. meanwhile, one of the key republican leaders said this morning that despite the fact that everybody's leaving here in the capitol, the next couple of days are going to be absolutely crucial. take a listen. >> you want the answer to solving the fiscal cliff? we put an offer on the table. the president now has to engage.
i think the next 72 hours are critical. if he sits back and continues to play politics, that will give you your answer where we're going. this is an opportunity for this country to lead. this is an opportunity for the president to lead. >> brian, also we saw the president talking to ceos at a business roundtable event earlier today. the president really reaching out to that group. he worked the room, shaking hands of almost everybody in that room. clearly the ceos and the business community are the linchpin to a deal here. both sides, democrats an republicans, reaching out for their support. take a listen to the president just a little while ago. >> i am passionately rooting for your success, because if the companies in this room are doing well, then small businesses and medium sized businesses up and down the chain are doing well. if companies in this room are doing well, then folks get jobs, consumers get confidence, and
we're going to be able to compete around the world. >> guys, the impact here is really focused on the rates, tax rates. that's where we're going to be seeing this negotiation over the next couple of days. that's where we've been for the past year-and-a-half. no indication yet that the logjam is breaking there exactly, but courtney, some movement here may be a little bit in tone in washington. so that's something. >> that's something. we'll take whatever we can get at this point i think, eamon. thank you very much. we'll check back in with you. now we found bob pisani. he's on the floor of the new york stock exchange. >> we've been talking about what's going on in the day and why this rally in the middle of the day. take a look. this is what everybody's talking about here. there have been vague rumors that the republicans may be breaking ranks a little bit and some may be willing to accept tax hikes. that would be a break-through if we can. of course the question is what to do on the spending side but one step at a time. it is still very vague as you heard from eamon. apple has been a big question.
there's a lot of complicated things going on. right now we're going to do 35 million shares in apple today. that's twice the normal volume. we aren't far from the lows of the day. let me give you a short laundry list about what's been going on, various things we've been hearing today. there is an at&t investor conference going on that at&t's been participating in. they're talking about smartphone sales about flat for the quarter compared to last year. is overall smartphones. not just iphone sales. but the implication is that might be a little bit better than last year but still some might be a little disappointed with that. some concerns about iphone sales maybe being a little bit weak. ipad's share of the tablet market, vague reports they might be slipping a little bit. some firms might be raising margin requirements out there. no special dividend coming from able. the bottom line still is people who got in earlier in the year on apple, court nif aney and br are still very much in the black
right now. >> bob, thank you. apple is having a pretty rotten day today sinking well into bear market territory. let's dig in a bit more with travis mcchord, todd hazelton. tavis, talk about the ipad. an idc report -- bob just referenced it a bit -- suggests while tablet sales as a whole are booming around the globe, apple will continue to lose market share to android devices. are you concerned? >> not especially. i think to a large degree these are servicing very different markets. apple is an upscale tablet in terms of price point and profit. there may be hundreds of millions of $99 tablets sold ultimately as far as i know. but none of this really impacts apple as long as they can convince their customers to pay up for the best products out there. so share of units may slip over the next few years but that's really not what apple has ever cared about.
its share of revenue and share of profits that they tend to dominate. >> that's just 1 of 2 reports out today that some people are attributing to apple's knockdown. digitimes reporting the possible slowdown in iphone sales based on some component numbers. we just got in touch with gene munster of piper jaffray. he sails the digitimes article was misinterpreted. do you agree with that? >> yeah, absolutely. the point of the article was that iphone orders are very strong this quarter and don't forget these orders typically fall off in march. i think they put a 20% number out there. that's completely normal. the fact that it hasn't happened yet is a very good sign for apple. i would note for most smartphone manufacturers appear to be very strong this season. >> todd, if i can ask you, what is the impact on the ipad mini? what's it having with the market
share as far as these other smaller devices, who's buying it, is it helping, hurting? >> i think there are two ways. one worry with the ipad mini, it might be cannibalizing sales of the fourth generation ipad from apple because it is more expensive. people are like i want an apple product, i'll just get the cheaper one. i think they're also in a little bit of a danger zone. people might be like it's $200 and not $330 or not $420 as you move up the line and if you look at it this way, you could spend $200 on a tablet, then have $130 left over to buy all the media on it, movies, books, everything like that. but if you get the ipad mini, now that budget's gone. >> it is not just about the device itself but the media that goes on afterwards. how important is that going to be in the week that follows christmas, follows hanukah? >> i think that's huge and i think we'll see big money across the board, all tablet makers. amazon doesn't necessarily make a profit off of the kindle fire but they do when people start buying the content.
everybody, you get your new tablet, the first thing you want to do is load it up. >> our giant wall is a thing of beauty. we have the death cross up there. despite the dire name, it is really a technical move in stock patterns. tavis, some traders are technically saying apple is a break dourn technically, this death cross taking a bite out of the stock, yadda, yadda, yadda, what do you make of that move. is the death cross a big deal? >> not for a fundamental analyst. we'll see how it plays out over the next year or two. but it looks like earnings growth will be very strong for the foreseeable future. >> don't fear the death cross or the reaper. tavis, thank you very much. todd, thank you very much. on deck -- are we facing irrational fear over the fiscal cliff? we are going to make some comps on what it will really cost you. and is a big oil company about to issue a big fat one-time dividend? we're going to ask the ceo coming up.
[ male announcer ] when it comes to the financial obstacles military families face, we understand. at usaa, we know military life is different. we've been there. that's why every bit of financial advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad! dad! [ applause ] ♪ [ male announcer ] life brings obstacles. usaa brings advice. call or visit us online. we're ready to help. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.
unexpected and prolonged contractions as they have in japan over the past decade. >> that comment alone sends world markets into a tailspin. tokyo down 3% immediately. hong kong down 3%. frankfurt and london down 4%. and new york down 2%. >> no offense to other shows here at cnbc, but we are the best team by far. that was awesome, guys. that was 16 years ago today. now the fiscal cliff is very real and possibly very expensive overall. will going over it -- i mean just going over the thing -- really destroy consumer spending? let's use some numbers. all right. americans pay an average of $90 a month for their smartphone service. that ipad will set you back $400. yeah, one time but it is $400. get this -- the average car payment in america is now $452 a month. average price, $31,000. the tax hike on most americans
if we go over the fiscal cliff and taxes go up across the board, $167 a month. that's about the same as two people's smartphones at home. that's not even a bill they had ten years ago. let's talk more about it. joining us, jared bernstein, senior fellow at the center on budget and policy priorities. nicole wu, director of domestic policy at the center for economic and policy research. jared, i'm not suggesting we go over it but i think you get my point. we spend a lot of money on a lot things, some of which we need, some of which we don't. why would a 200-month tax raise destroy the economy but spending $200 a month on a smartphone somehow doesn't? >> because of the aggregation problem. if you just look at one person it doesn't look so bad. but when you sum it up across 300 million americans and you factor in that 70% of our gdp is consumer spending, in europe it is about 55% so we're more dependent on the consumer for
our growth -- then you understand why the congressional budget office -- i don't think they've ever done this before -- is actually predicting a recession if we go over an stay over the cliff. so for any one person, it might not be that big a deal -- although when you think about $2,000 over the course of a year for a family whose median income is about $5,000, that starts to sound like real money, too. but when you aggregate it up, you're really looking at a recession probably if we go over an stay off the cliff, unemployment reverses course, goes up to 9%, really ugly stuff. >> nifk cocole, does the averag american really understand what's going on? how much of this impact do they understand right now? do they think that's an extra $200 a month in taxes which means i can't spend that money elsewhere? how long is it going to take for them to catch up if we go over that cliff with the mindset? >> i think the first thing to point out is that it is really not a cliff. it is not like we're taking $2,000 out of people's pockets on january 1st. this would be spread out over a year, as jared said. the cbo's predictions after
recession and higher unemployment would be if nothing's done for many months, almost to the end of 2013. if congress waits a little while, cooler heads prevail, we stop panicking and they have come to a deal in january, the typical american family won't really feel it and even if it went into maybe february, congress could put that money back. they could retroactively say we want to preserve the middle class tax cuts. calling it a cliff is just causing a lot of panic. >> i guess what i'm trying to get at, jared -- again, not arguing for it. nobody wants to pay higher taxes. but here's the thing. in the last ten years incomes haven't gone up, a a point you've noted very elegantly. but at the same time homes have gotten bigger, cars have gotten more expensive, smartphones were created, everybody's got high-speed internet at home, spending thousands of dollars a month on stuff they never even had ten years ago. suddenly a couple hundred bucks is going to doom us, it is the debt cross of the economy. >> i think nicole makes some good points. i tried to emphasize in my first
set of comments the real doom scenario going over and staying over. a short trip over the cliff, while i think it wouldn't be good at all, actually could be pretty mild, especially if there is a deal in the making. by the way, the secretary of the treasury doesn't even have to change the withholding tables so you wouldn't necessarily notice this in your paycheck if people believe there is a credible deal coming. look, in terms of the consumption result, it is very important. might be the stuff after whole nother segment. a lot of that came for the middle class because of their income problems from credit, from borrowing. remember that irrational exuberance cliff you just played? that got us into some really hot water so we really can't support middle class consumption on cheap credit alone. there has to be income growth. >> is it all, nicole, psychological? i mean like you're saying, we're not taking $2,000 out of your wallet tomorrow. the more we talk about it, the more we fear it.
is that worse than the actual impact of going over that cliff? >> i do think the panic is making it worse because it might force some really bad deals in congress. i really hope that cooler heads will prevail as you might have mentioned on earlier segments. the house democrats are thinking about forcing a vote on extending the tax cuts for the bottom 98%. the vast majority of us. and congress could do it. the senate already passed it. president obama said that he is willing to sign it. so that would be one way to just sort of get some of this panic out of the way and let people deliberate and make some really good choices when we come back in january. >> i want to bottom line it very quickly with jared. i'm going to make you squirm, jared. >> god luck. >>maker the argument for going over it. you have to argue for it. go over the whole thing. what would it be? get our aaa back? >> that may be the only way we can get a responsible fiscal deal. and if that deal begins to take shape in late december, the only way to resolve the cliff may be to temporarily go over the cliff so that tax rates reset and we
can get on a bitter fiscal trajectory, and -- and -- they can quickly, as nicole mentioned, reverse some worse effects of that. and in that sense, we've gone over it, but briefly. i'm not for it but that is a resolution that would really use the leverage, the dynamics that are in play right now to finally get us on a more sustainable fiscal path. >> it's not juvenile hall, it is just detention. you eventually get out. jared and nicole, thank you very much. meantime, more than 100 major companies have now announced either special dividends or move their dividends up from next year to this year. it is all being done ahead of fear of potential higher taxes on capital gains. while shareholders may be happy, there are likely to be some very unintended consequences. robert frank is here. what are said unintended consequences? >> there are unintended consequences. basically i'm going to call it the great income shift.
basically it could leave state and federal governments with huge budget holes and another big defense dit problicit probl. here's how it works. companies have announced more than 23 million inn in dividends this year alone, including 2013 dividends being paid today. investors are also selling stocks in companies and real estate before that clip. we have billions of dollars in income being shifted from 2013 to today. that means federal and state governments will see a tax bonanza this year and a tax plunge next year. the risk here is that governments assume that this year's tax boom is the new normal and they spend accordingly. we'll then have big deficits in 2013. now we have been here before. this happened in california in 2 dhou 2001. capital gains boomed, then crashed.
people front loaded their income when they expect it to go up, just like they're doing today. cap gains doubled to $52 billion, then the next year they crashed to $33 billion. the government struggled to fill that hole. the lesson here is that tax changes create huge spikes and crashes in revenue. now if governments understood this, we could plan for it but so far, brian, there is no evidence that governments, either state or federal, have learned this lesson. >> why is this so hard for us to figure out? you just laid it out. we've been here before. >> we've been here before. we've been here every decade we get to this point where we have this sudden artificial explosion in revenues whether from the market or tax havens. when governments get money they like to spend it. they like to pretend it is the new normal and they can budget along those lines but the temptation is to spend that money and budget around it. then suddenly we have 2013. >> remember world war i? >> i do remember. that was a rough time. >> they said there will never be
another war like that? what happened, like 22 years later? we are doomed to repeat the same mistakes. >> we'll have this interview. we can go back next year and say we told you so. because it is going to happen. there's no question -- we're seeing $23 billion alone in this quarter being shifted from next year. so it's -- there's going to be billions in tax revenue that's unexpected this year and it is not going to happen next year. >> you want to run for congress? >> absolutely not. >> you want to fix this problem? >> though the vacation time is nice. >> i'm going to save this video on my palm pilot and revisit it in a year. up next, what the ceo of one big oil company says about coming tax hikes and spending cuts. plus, is the surface a bust? is microsoft ceo steve ballmer toast? so many questions. here's today's "return on retirement." one of the largest tax
expenditures are federal subsidies for 401(k)s, i.r.a.s and other accounts to encourage increased savings. how much will the u.s. spend in tax expenditures on subsidies for retirement savings accounts next year? the answer when we return. when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule.
well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office. so, the 5.3-liter v-8 silverado can tow up to 9,600 pounds? 315 horsepower. what's that in reindeer power? [ laughing ] [ stops laughing ] [ male announcer ] chevy's giving more. this holiday season, trade up to get the 2012 chevy silverado all-star edition for 0% apr financing for 60 months plus $2,000 cash allowance
or get a total value of $9,000. i have obligations. cute tobligations, but obligations.g. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
today's "return on retirement --" how much will the u.s. spend in tax expenditures on subsidies for retirement savings next year? the answer -- over $100 billion. according to a new harvard study using government data. the study estimates that for every $1 of tax expend tur bnd subsidies, total saving increases by 1 cent. have you seen shares of marathon petroleum this year? the stock is soaring, up 75%
since we rang in the new year. the company's making bold moves. in early october it announced a deal to buy bp's massive texas city refinery and it launched a master limited partnership to boost its pipeline business. let's bring in gary hemminger, marathon petroleum president and ceo. gary, thanks for joining us. congrats on what's been a big year. i want to ask you first before we get into the other stuff about oil prices. the spread between wti and brent has really kind of gone crazy the last couple of years. does that help you guys? >> well, brian, we think that's really the catalyst of our earnings. if you look at the wti/brent spread and really look at where this crude is coming from in the u.s., from the barnett, to the eagleford, to the permeon, and now to the utica in ohio where our home base is, you look at all the different production coming on in the u.s. as this production is trying to find a home, it's certainly widening
those spreads. >> so where do you see it going then? >> that's a great question. it is a great question as we look at the business going forward here. i think one of the key questions is going to be how much additional imports continue to fall -- flow into the u.s. as the balkan and canadian heavy as well as canadian light production continues to increase, as this crude tries to find a home as i said earlier, new pipelines are built into the u.s., i think what it is going to do is shift the demand side, it's going to shift down into the gulf coast. i think this will become really the melting pot for crude oil and therefore differentials which will be more so on the u.s. gulf coast on the western side, and then eventually into the central gulf. >> all right. so if we look then going forward, you've made the big -- texas city, gary, i've been to that refinery. that's big. that's a big deal for you guys. how big do you want to be? how many more deals do you have in your pipeline?
>> brian, this acquisition that we're making here in texas city, in fact we're going to name the refinery the galveston bay refinery. this acquisition was not about getting bigger. we saw a great opportunity, a great kit, set of assets at this refinery but it really sets up what i was talking about earlier, the western gulf. today we have a small refinery in texas city. so we really did in the play in this what we believe market dynamic will be a competitive advantage against the central gulf. we have a very large refinery in the central gulf. this made sense and will really balance our refining capacity with approximately one-third in the midwest, one-third in the one gulf and now the other one-third being in gariville, louisiana. >> one beauty of master limited partnerships, the income they kick off. what happens if we go over the fiscal cliff. number two, are you going to issue a giant one-time special dividend or move up your dividend ahead of the new year? >> well, if you go back and look
at the mlp, yes, that's been a great catalyst again for our share price this year, both in mplx, as well as mpc. as we see mpc going forward, we expect to be able to balance both mplx, we have a large stable of assets that are eligible earnings that could be dropped in down the road. and then as we look at, to your question on a special dividend or something here at the year en, i believe that we're going to -- we just finished our board meeting this week and we're going to stay with the same timing and sequence that we have been in the past year to maintain our dividend, going into next year. we do not at this time see a special dividend at this year end. >> gary, thank you very much for joining us. congrats on what's been a big year. see you soon. coming up next, trashy, boozy addition of street talk. hope this isn't because i'm here
today. plus, why pandora is playing a sad tune on its tiny fiscal cliff violin. ars of our governmt employees insurance company, or geico...as most of you know members it.congress. ...i propose savings for everyone! i'm talking hundreds here... and furthermore.. newscaster:breaking news. the gecko is demanding free pudding. and political parties that are actual parties!? with cake! and presents! ah, that was good. too bad nobody could hear me. geico. fifteen minutes could save you fifteen percent or more on car insurance. americans are always ready to work hard for a better future.
since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪
of the day. brian, double down on a double deal? >> freeport mcmoran, big decliner today. the situation's kind of odd. it is the biggest drop in four years. the company's buying both pxp and mcmoran exploration, two separate deals. total $9 billion cash and stock. they're trying to get back into the oil and natural gas business. still two-thirds of their revenue come from mining. but they are getting back into oil and gas. investors don't like it. >> how about intel? >> that's down after raymond james' hans mosesman cuts the share to underperform warning the company faces a "potential gross margin nightmare." he sees a risk that intel's gross margin could drop into the 50s range because of increased competition, not from amb but
potentially from a.r.m. holdings. down 18% year to date. >> talking trash. waste management. >> double garbage call from goldman. i guess a good call on garbage. waste management and also republic services group. goldman upgrading wm to a buy from neutral saying the rebound in residential fixed investment will drive prices and volumes higher. ie, people are accumulating more stuff and more garbage. also adding republic services to a conviction buy list. >> let's go to the mattresses. >> mattress firms. too bad herb is not here because for some reason he loves talking about mattress companies. look at this. down 21%. they cut their full year guidance to $1.49 to $1.52. current street estimates at $1.69. mattress firm says traffic growth has slowed in recent weeks. i guess the fiscal cliff fear has people not shopping for a mattress. >> something like that. you're depressing me.
lift my spirits with brown foreman. >> we didn't booze up before the thing but we probably could have. the stock is not moving today. not only is it fun to talk about spirits, but second quarter net income rose 9.8%, raising full year guidance. margins were higher. it's an ig nonomonous number. your biggest corporate story of of the day involves citi group. bank saying it will slash 11,000 jobs in order to save more than $1 billion a year. let's talk more about it with glen shore. he has a buy rating on citi with a $41 price target. glen, stock already at $38 and change. will it take this move or more to get to your target of $41? >> we're moving quickly.
i think you had an initial pop on it today but long story short, people have understood they had differentiated growth outside the u.s. they have capital building. they have less mortgage related exposure than some of the other banks. this was the other piece of the story that people really wanted to see little bit more commitment to a more efficient company, better profitability, therefore better earnings, better capital, better capital return. this is an important step for the company and i think it can give you better earnings and a better multiple. it could happen pretty quickly. >> glen, what do we think about bonuses for citi? it is the end of the year. >> i wouldn't read that it is too correlated to what bonuses would be outside of what it would have been anyway. this is a tough bonus season on wall street in general. obviously you have to go firm by firm and business by business but the revenue environment is not great. reasonably well telegraphed. as you saw, only about 25% of these cost saves are coming at
the investment bank. and even when you dig down deeper, at least half of those are more on the opposite of i.t. when you go through many layers of details, it is not like the billion cost saves are coming right ow of the bonus pool. i'd just say city is in a similar enough spot as most of the firms on street related to bonuses. >> you put out a note today where you wrote, "citi is already pretty efficient with an efficiency ratio better than most peers." i kind of did a double take on that because i thought they were a giant, bloated, highly inefficient, oversized big bank? >> well, i didn't say all the big banks were efficient,dy? no. look, that is -- i put out actually a precursor to the note last week that said the same thing and it was a bit of an eye opener for people. people have been frustrated with citi saying basically $48 billion to $50 billion of expenses on an annual basis for the last couple of years all while other companies have been naming these cute cost saving
programs on a gross cost save basis and citi did not have a named cost saving program. when you dig a little underneath the covers, you see their efficiency ratio is better than a lot of their peers. they just didn't have a cute name for their cost save program. actually in the last seven quarters they've taken out over $4 billion of efficiency saves which is about 8% of overall cost. the thing that gets missed there is citi brings you revenue growth where some others don't. that is the power of the non-u.s. franchise. so you have to kind of look at the revenue end at the same time. >> maybe we'll look back and say pandit did kind after decent job. glen, thank you for joining us. amazing video to show us. allan simson of simpson-bowles fame dancing gang hall style. 81-year-old putting psy to shame. he was at a breakfast this morni
...could end with adding a close friend. ♪ the lexus december to remember sales event is on, offering some of our best values of the year. this is the pursuit of perfection. but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 95% of people who tried it agreed that it relieved their headache fast. visit fastreliefchallenge.com today for a special trial offer. a passionate belief, and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.
i'm bill griffeth. even if you don't like facebook as a stock, you may soon own it in your portfolio. we'll tell you why that's going to happen and whether it is a good thing. plus, the top fund managers of 2012 are out with their top stock picks for next year. we're going to round up the names that you cannot afford to miss out on coming up. and does the white house think that falling off the fiscal cliff is a better option than compromising on tax rate increases? we will hear exclusively from treasury secretary tim geithner right here on "closing bell." maria and i look forward to seeing you at the top of the hour from right here at the new york stock exchange. meantime, back to you guys. >> bill, thank you, sir. time now for today's edition of "where in the world is john mcafee." last time we spoke to him he said he was in belize. now we know he is in guatemala.
robert frank, yet another strange twist to what's turning out to be the strangest story of the year. >> yeah, it really is. he picked a good country to go to. guatemala does not like belize. they've had a long-time territorial dispute about territory in southern belize. and he went to the border. he's hired an attorney. he says that he's seeking political asylum. i'm not quite sure whether he'll be granted political asylum. not sure what the ground will be. he's seening help from the u.s. state department on that issue. but he has turn what initially started as a murder investigation, he's just a person of interest, he's not even a suspect, into a grand theater and media charade against the government of belize. he wants to highlight the corruption in belize. meantime, the murder investigation's gone cold. the please police just told me he's not even a wanted man so why he would need to flee. but mcafee has said he will answer questions by telephone to the belize authorities, which is the first time he's offered that at least to answer those
questions. we'll see whether he makes good on that. if he could have done that in the first place, why not? >> is he going to stay in guatemala if belize is not looking at him anymore as a person of interest? >> co-have gone to guatemala without political asylum. that's the number one question. but he does plan to stay there whether this murder version investigation or what he sees and persecution involved. again he is a free man, he is not a wanted man. co-have even come to the united states if he wanted to. again he's not under arrest. he's not charged, he's not a wanted man. >> and he has darker hair than the last time we saw him, courtesy of the disguises. i'm going as john mcafee for halloween. your oops of the day. an 18th century castle in france was destroyed by mistake! a polish renovation company had been hired to restore it but they accidentally demolisheded
it. an exact copy of the castle will be rebuilt because the guy who owns it is a russian trilli trillionaire. how do you make that kind of mistake? >> it is like the woman that tried to repaint that painting? oops. remember that? >> that's our favorite story on "street signs." we love that. next up, is pandora's mega plunge a big buying opportunity or is the business model gone too far? plus, apple having its worst day in months losing market share to android. how is microsoft still the biggest loser in the bunch? tdd#: 1-800-345-2550 let's talk about low-cost investing. tdd#: 1-800-345-2550 at schwab, we're committed to offering you tdd#: 1-800-345-2550 low-cost investment options--
tdd#: 1-800-345-2550 like our exchange traded funds, or etfs tdd#: 1-800-345-2550 which now have the lowest tdd#: 1-800-345-2550 operating expenses tdd#: 1-800-345-2550 in their respective tdd#: 1-800-345-2550 lipper categories. tdd#: 1-800-345-2550 lower than spdr tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and even lower than vanguard. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that means with schwab, tdd#: 1-800-345-2550 your portfolio has tdd#: 1-800-345-2550 a better chance to grow. tdd#: 1-800-345-2550 and you can trade all our etfs online, tdd#: 1-800-345-2550 commission-free, from your schwab account. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 so let's talk about saving money, tdd#: 1-800-345-2550 with schwab etfs. tdd#: 1-800-345-2550 schwab etfs now have the lowest operating expenses tdd#: 1-800-345-2550 in their respective lipper categories. tdd#: 1-800-345-2550 call 1-800-4schwab tdd#: 1-800-345-2550 or visit schwab.com tdd#: 1-800-345-2550 to open an account today. tdd#: 1-800-345-2550 funding is easy tdd#: 1-800-345-2550 with schwab mobile deposit. tdd#: 1-800-345-2550 investors should consider tdd#: 1-800-345-2550 carefully information tdd#: 1-800-345-2550 contained in the prospectus, tdd#: 1-800-345-2550 including investment objectives, tdd#: 1-800-345-2550 risks, charges, and expenses. you can obtain tdd#: 1-800-345-2550 a prospectus by visiting tdd#: 1-800-345-2550 www.schwab.com/schwabetfs. tdd#: 1-800-345-2550 please read the prospectus tdd#: 1-800-345-2550 carefully before investing. tdd#: 1-800-345-2550 can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh...
pandora taking a big-time beating after slashing guidance. julia boorstin, i can understand if a stock falls 3% or 4%. pandora's down 19%. what happened? >> well, earnings actually beat expectations, brian. but the stock, as you saw, is falling off the cliff. it's because the company blamed the fiscal cliff for its dramatically lower fiscal fourth quarter guidance which has sent the stock plummeting. it was down as much as 20%
earlier today. the ceo joe kennedy says advertisers are being particularly cautious about spending in january which is included in pandora's fiscal fourth quarter. >> we did reduce guidance. i think it is very prudent because of this unique situation we have in which we're sensitive to the mix of ad spend in january as opposed to february and march. >> now, the last time pandora's stock dropped this much in one day was back in october on reports of apple preparing to launch a streaming music service. wall street analysts are keeping an eye on those very tough competitive issues as well as the fact that pandora spends over half its revenue on music licensing fees. the c.o.o. says he thinks the company is on good track and points to its mobile growth. though, investors do seem skeptical. brian. >> julia, thank you very much for that. we're going to leave it there. running a little short on time. is pandora's plunge a big buying opportunity? let's bring in the director of
research at albert freid and company. what do you think? >> i think a lot of things. i think mr. kennedy's guidance for the fourth quarter was conservative. i think he's probably trying to set the bar low so they can beat it. in our channel checks, we're seeing a lot of weakness in the scatter market. because pandora is a new platform, they're seeing the same pushback that every other media company including cnbc is going to be facing this quarter in the ad sector as businesses are, you know, conservative with their ad spend because they don't know what next year's going to look like in terms of taxes, in terms of gdp growth. also, you got to keep in mind they have this hr-6480 coming before the congress in the first part of this year. last week they were called to task on them producing good results in the second quarter and therefore we think, well, maybe, you know, they decide to take a more conservative
approach because they have this legislation before congress and they don't want to be, you know, sounding too buoyant if their competitors, these special interests lining up against this bipartisan bill, are, you know, calling them to task on their results. >> but it's got to be a little bit more than just this advertising, fiscal cliff. what about the business model? look at the competition. these other places that folks can go to listen to music. i mean, what about all of that impacting? we're down 20%. that is huge. >> you know what? that is a big move. stocks don't normally lose 20% in a day. generally speaking, when i see a stock go down 20% in a day, because we like to buy low and sell high, we tend to buy those kind of situations, especially when companies have a clean balance sheet, no debt. no now, in regards to competition, this is a company that expanded its market share.
at the end of the day, this is a business model that does have competition. spotify is the record store, if you will, of the internet as well as itunes. apple is the radio, the z-100 of the internet. you don't really see z-100 competing with record stores. therefore, pandora and spotify and itunes are the business model. >> but does pandora have a jingle ball like z-100, rich? i think not. but they do have lots of choices in music. >> joe is a pretty conservative guy. i don't think he's jingling his balls. >> merry christmas, rich. thanks very much. appreciate that. hello, fcc. all right. let's turn to tablets. idc reporting today that apple will lose market share to google's android tablet by the end of the year, so where does that leave microsoft? let's bring in craig burger to rescue the show. keep it clean, craig. you think the ipad is doomed?
that was a joke. >> good afternoon, brian. i don't think the ipad is doomed. it's still the best device out there. they still have 60% unit share, a larger share on the revenues. you are seeing a new crop of devices like the amazon kindle fire or the google nexus that are coming in at attractive price points and certainly capturing a good chunk at the low end. >> yeah, because i guess to your point, which is when you are the first person into a market, you actually have though where to go but down in market share. when you go in, you have 100%. so is there a demarcation line for you where you do start to worry? >> you know, i mean, it seems like demand is still good. i mean, i'm not the apple analyst, but apple sales on the ipad and ipad mini are still expected to be up 50% year over year in the fourth quarter. it's a big number. they're going to sell a ton of
these things. i'm not that worried. obviously, the stock is having technical challenges and tax related selling and special dividend but it still seems like there's good demand for that product. >> speaking of all these products, what about the microsoft surface? what happened to that? they're selling it, right? i haven't haereard a lot about . >> theoretically, they're selling it. >> i think they're selling it. there's been news stories going around they've cut production in half from their original target of, i think, 4 million units in the fourth quarter down to production of 2 million units. these are at very high price points. you know, so you're just not going to see the kind of volume on it that if it were priced at $199. these are ç$600, $700 devices. >> it's a nice looking device. i've had a chance to play around with the windows phone.
it's a very cool phone, great screen, movie ins around easy. but they're late. look at vista, zune, look at the phones. craig, when does steve balmer have to go? >> i'm going to stay away from that question, brian, but, you know, microsoft does have the added challenge of it doesn't want to compete too aggressively with the hardware vendors that it's competing against in own customers in the tablet market to some degree. so it can't get real cheap, or it's going to make guys like lenovo very upset. >> craig, thank you very much for joining us. thank you for playing along in the beginning. thanks for keeping it clean. >> you got it. >> next up, we're going to give you the story behind the video of the day.
that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. or that printing in color had to cost a fortune. nobody said an all-in-one had to be bulky. or that you had to print from your desk. at least, nobody said it to us. introducing the business smart inkjet all-in-one series from brother. easy to use. it's the ultimate combination of speed, small size, and low-cost printing. ♪ ♪ ♪
[ male announcer ] 'tis the season to discover the kid in all of us. the memories that last, start with the gifts that last. ♪ enjoy free shipping and great values on your holiday shopping from l.l.bean. here it is again. the 81-year-old alan simpson kicking it gangnam style. he's kicking off the can kicks back campaign to get the younger generations of americans who use