tv Closing Bell With Maria Bartiromo CNBC January 8, 2013 4:00pm-5:00pm EST
china, the company saying sales over there will be less than expected. huge market. stock down 4.25% and, of course, we have to talk about apple as we always watch what that stock is doing, and there are rumors in the market that may be an iphone mini is going to be coming down the pipeline for this company. the stock is getting a little bit of a boost. still sitting around $525, and finally how can you not talk about alcoa because it is going to kick off earnings season after the closing bell. in 30 second klaus kleinfeld will be on with maria before he speaks with wall street so you'll hear from the ceo what's happening there. let's speak with ben willis what. are you looking for? how important is alcoa with earnings? >> it's the princeton/rutgers football game. a great tradition but not pretty to watch. yum brands, far more important an indicator for me. i like the monsanto number, basic materials, building blocks, other good indicators. dichotomy between the two earnings, but those are the kind of things i'd be watching.
>> alcoa is up right now. >> and it is 4:00 on wall street. do you know where your money is. hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the market closing lower for a second day in a row today as we kick off the fourth quarter earnings reporting season. take a look at how we're settling out on the street today. the dow jones industrial average off the lows of the average with a decline on the session of 55.75%, about one-half of 1%. volume not great. 562 million shares at the big board. s&p 500 down five point, a third of a point at 1457 and the nasdaq composite gives up some ground to the tune of seven points. all the major averages ending off the worst levels of the afternoon. market closing lower for a second day as earnings kicks into high gear. alcoa reporting moments from now. we'll have the moments on alcoa and tell you what that may mean for the rest of the earnings season. mark newton is with me, a gray wolf execution partner and david sauerby with me and long with
scott wrenn of wells fargo advisers. scott, expecting better earnings this year. 5% higher than last year. what drives the earnings period, in your view? >> well, maria, i think, you know, the earnings in this period we're going to see for the fourth quarter isn't very good, but looking ahead, you know, we're at part of the cycle where growth slows down, but i think we're probably going see china bounce back a little bit better. europe may flatten out or at least be less bad and if the economy grows 2.5% or so, these companies have figured out how to make money in a slow growth environment so combined with that, 4%, 5% earnings growth, that's reasonable in the kind of environment that we're in right now. >> no great shakes in terms of earnings growth. >> no. >> but good enough is what you're saying. >> that's right. i think it's good enough. >> what's priced into the market though? i mean, we've got expectations that we'll see much higher prof materialize or what?
>> you know, really i think the market, you know, the p.e. ratio, if you look at valuations as far as that metric goes, i mean, the market is not willing to take the pes very high, may inch higher, 14, 14.5 or so, by the end of next year. the market knows we're in a slow growth environment. we're not going to get strong gdp, and it's not willing to assign much of a pe to these earnings. that's going to be a continuation, but next year i think investor confidence is going to improve a little. it's really lagged in this rally, so i think we're just going to be able to inch it up enough to where we have a decent year in the market and modest earnings growth. >> david, jump in here. your top stocks picks for 2012 outper formeded in the market by 6%. nice going there. >> thank you. >> looking ahead, what are your picks in 2013 and what's the maybe influence on this market, the, the dysfunction in washington, the global economy? what's the real catalyst for
stocks? >> sure, to the second question first, the catalyst for stocks will be valuation most important and lower interest rates and continued accommodative fed policy i think is ultimately proof positive for stocks, not just this year but over the next couple of years versus alternative investments. and in that type of backdrop a couple of themes. the continued play on housing indirectly. lowe's a stock that i gave you last year and continues this year. continued secular story in the auto industry recovery. ford motor. >> let me jump in here. >> sure. >> because we have the alcoa numbers. got to get this out. earnings came in at six cents a share, right in line with expectations. six cents a share. revenue looks like a beat. $5.09 billion in revenue versus the estimate of $5.06 billion. do see a pop in the stock in the extended hours as the numbers are just hitting the wires fresh off the release. earnings at alcoa out at this
point an the stock is on the move. we'll come back to the market guest in a movement right now i have the man in charge on the phone, klaus kleinfeld to talk to me about the quarter. thanks so much for calling in. thanks for your time tonight. >> hello, maria. >> characterize what went on in the last three minute. how was business? >> well, when you look at the business, strong cash iteration and solid, and revenues in the fourth quarter. the performance was paying off. free cash flow, nice cash on hand with 1.9 billion. working capital down to a record low. generated over the last year 1.2 billion purely out of improved working capital. 1.3 billion in n productivity, a nice solid liquidity through that, a best debt position than 2001 and our mainstream and downstream businesses are hitting new high levels, profitabilities, and another quart of that and record years and when you look at the upstream where it's basically
will commodities coming down out the cost fufr. coming down 4 percentage points on the smelting business. that's what the quarter looks like. >> klaus, you're knave gotting a lot of things out there in an economy that seems to be slowing globally. tell me what the demand picture for aluminum looks like right now. i know 2012 was the strongest year for alcoa on earnings in about three years. what do you see in terms of demand this year based on what we're expecting to be a pretty anemic growth story for the u.s. and a slow growth story outside the u.s.? >> two things, one is we are protecting the amount for aluminum to double in this ken try and and where you look at where we stand day, i had offered. this would require a 6.5% growth per annum, and we eve seen that the average growth over the last three years has been 8 mis. we actually are taking on loom number demand projection by this year up by a percentage point,
up to 7%, so that's what we believe we'll see. in reality what we're seeing in the world market and our market, china is clearly coming back. i would not be surprised if you saw gdp growth above 8%. europe is muddling through better than most people would have exexpected it. look at bond race. always a nice way to look at it. italy bond rates, last year they were almost at 7. end of the year they were in the 4% range so the emphasis on the u.s. for the right reasons and everyone is looking at the u.s. saying how will the u.s. cope with the next thing which is the debt ceiling in the revolution, in my view, is on our hand but eeve got to get it volumed of. otherwise, we will continue to destroy confidence. >> what's your expectation for tween in the u.s., klaus?
>> given the washington dysfunction. the washington dysfunction will hopefully come to more common sense, and i hope churchill is right this, that we try out everything before we find the right thing. won't be good that we found it now, sooner rather than later, because the whole debate has been going on for too long. when you look at end market, some of the things we see in the u.s. are pretty encouraging. aerospace, a very important stli for us as well as for the u.s. i mean, it's going strong. continuinging to strong. airbus needing more than eight years continues. automatic. great last year and we see this year could be another good year and a lot of people are talking about build rates, car values going to 2007 level and after four years of total nothingness in this market. building in construction is clearly coming back. all the early indicators in
north america are showing positive signs, housing starts up 27%, none residential contracts awarded up 6% and architectural businessing index turned bosstive from august to now. so a lot of times potentially things to happen. the entrepreneurs in the trucking business, the small fleet owners, that are getting scared of all the discussions and are walking away, and that's where we see the biggest drop in our industry is in the truck industry, and that's not because they wouldn't need new trucks. the average age is the highest it was in the last 20 years. >> sort of the trucking business not out there. what would be the proper rate. >> hard to project. not giving guidance on the growth rate and people that know us for a longer time understand
that we're pretty much interesting opportunities of where we can use along the line where the general market grows and i wouldn't be surprised if we get it all sorted out here which is possible, to have the u.s. growing at a decent rite, probably the same level as last year. china, i wouldn't be surprise if it came up 8% and then no further reduction, let mow put it that way, which would be a big aggrievement. big aggrievement. >> kl a u.s., you've been a real cost-cutting campaign. last time we spoke you talked about moody's and they said they were reviewing the rating on alcoa on claar 8 billion debt. how do you chip away at debt and avoid the downgrade, or does it not matter, klaus? >> let mow put this this way. when you read the moody's things
carefully, they are not so much referring to the current balance she, and if you look at the current bam sheet it's very, very strong. in as strong a separate condition and i memgtss some mention prird. the nebt that we have since the lowest since 2006. if you look at all performance in the last year, which has been down years. every another we not did what we said but set at the cash generation that we've been able to do through capital an through active tut and about the are asset managements, the sign the is there on the lout look what's the -- >> i'm more optimistic that we're going into a year in 2013 with europe side possession. the big issue is going to happen on the debt ceiling side because
the whole debate around it is more damaging than resolving the whole thing, right? >> right. >> it's almost like any solution is better than continuing to have a debate and moving it out every two months. >> right. >> and then having 24 hours, seven days a week the news media filled with it. this will kill everybody's economics. >> pleasure having you shown the show. back with our guests now. gentlemen, what about that? we have now heard from alcoa. what kind of expectations do you have, mark newton, in terms of earnings for the fourth quarter, and does this tell us anything about what to expect from the s&p 5 hundred in terms of fourth-quarter numbers? >> well, i think they can be bit are a subdued and people have been taking down earnings estimates for quite some time and a lot of companies have begun to prepare for this, for obama care and this and that in the fourth quarter.
the bottom line is it technically the market still acts quite well. we've seen -- four of the ten sectors needed some highs so the last couple of days of condating has not done everything. a lot of people saying it was overput. my think is a lot of the market movement will be pred kated on this budget ceiling that will come to fruition later january. >> it's self-inflicted, and that's what we keep hearing, the debt ceiling debate. gentlemen, thank you very much. appreciate your time and we'll be watching this market. see you again. another big problem, dreamliner. we'll find out a bob 0 ut that.
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turns, washington lawmakers need to reach a deal to rates debt limits. early as mid-february, or else the federal government will simply run out of money. to pay for all the obligations facing the country. our chief washington correspondent john harwood with the latest developments on that score. over to you, john. >> reporter: maria, here's what we knowch the federal government is going to hit the debt ceiling, projected to, between february 15th and march the 1st. that's when the extraordinary measures that tim geithner is using right now to extend it are going to run out. republicans are saying absolutely, no rise in the debt ceiling without an equal number of spending cuts. democrats are saying we're not negotiating with you as all, because as whyte white house press secretary jay carney said look what happened when we tried that in 2011 it resulted in a credit rating downgrade. >> he will not negotiate with congress when it comes to the essential responsibility of congress to pay the bills that congress has incurred. it would be irresponsible to
flirt with default. we saw what happened in the summer of 2011 when congress did flirt with default. >> and i think we can conclude from the fiscal cliff debate, maria, is that congress and the white house won't reach an agreement before they absolutely have to, and don't rule out possibility that the white house could yet invoke constitutional authority to unilaterally raise that debt limit if congress is not willing to play ball with them. >> we'll be wag. thanks very much. how far can washington push this debt ceiling fight before damage is done to the economy? an economist with ftn financial joins us and steve liesman, our senior economics reporter. you worried, what are you thinking here? >> you know the problem is we're already starting to see the consequences and specifically we saw that in the quarters leading up to the fiscal cliff discussion, and really this is just another reminder, another round reminding the american people and the world just how much of an imbalance this u.s. u.s. economy has become with
out-of-control government spending and removing any incentive for businesses to invest in the u.s. economy. these are different conversations. when we talk about the government shutdown as a result of breaching the cliff, this is on obligations already made, dollars already spent. the conversation that we need to have or include here is reining in future spending which is what the republicans are trying to do at this point. >> what do you think, steve? have we already seen damage to the economy with all this uncertainty and questions surrounding the debt ceiling and the fiscal cliff, or is there a point that you believe the debt ceiling fight damages the economy? >> i think we're already there, and i think you only need to look back at what happened a year ago or in the summer of 2011 when we hit that ceiling, and, in fact, even paying for it, maria, had a little spike in interest rates that went along with that. had to issue some debt that's still outstanding according to the budget priority center, costing us 18 billion over the last ten years in just in debt costs alone but because it's hurting us right now, maria, doesn't mean it can't get worse and it will probably.
i don't know if you saw the small business confidence numbers this morning. they were up 0.5 from one of the lowest levels in 38 years. we have really taken small business optimism and put it in the gutter right now, and so it's a real problem for the economy right now, getting on a correct fiscal track would really have a lot of benefits. >> i mean do, they not understand that? it seems so obvious. >> it strikes me there's a rule they ought to be thinking about it. this is my rule, but there's a lot of other analogs which is what you ought to do is compromise, maria, at the point are getting the cost your way exceeds the benefit so if you're really concerned that reducing spending is going to hurt people. guess what. if you stop -- if you stop the government, if you stop -- if you shut down the government, have a debt ceiling debate, the people that are going to be hurt will be hurt even worse. >> the problem is this becomes a political game because it's much easier from a political standpoint to send inflation
than austerity so right now we have an administration that would rather print its way out of problem than actually address the long-term structural issues of the economy making a more sustainable composition of growth, reining in that government balance sheet so it really is a more political game than it becomes an economic analysis. >> nobody takes accountability. where's the responsibility? i mean, you just don't see anybody actually taking accountability. so what do you think, lindsay, if no deal is reached in time, what's at risk, a credit downgrade, a hit to gdp? >> right. >> what are the risks. the problem is when we talk about a credit downgrade, i'm not concerned about that, right, because a credit assessment really gauges an entity's ability and willingness to pay back those dollars but the u.s. government, as i mentioned, can print indefinitely so we'll pay back the $1 trillion. may not be worth enough to buy "love" of bread so the $1 trillion will be paid. the bigger hit is on gdp. government spending accounts for 25% or at least it has on average of growth so if we see
the static pullback, that could be enough in the short term to push us into recession. again, that short term pain versus long-term gain getting back that more sustainable accountability of growth. >> steve, you think the markets react to this? even though everybody was worried about the fiscal cliff. the market was going higher and higher and higher, no problem and barely escaped the fiscal cliff. came up with a deal new year's day, 2:00 a.m. >> i know, i know. >> will the market react? >> there's a better bet right now on the government working this out and the worst scenario not coming to pass. i will tim you, maria, reading a lot of interesting scenarios given the government cash flow, how you can keep the government oh. i think we don't default because we have the cash flow to pay interest on debt, but you can like close down the department of education and justice and make your social security payment and pay your vet rarngs not the military. >> unreal. >> different ways to work, $270 billion coming in and if you get
rid of the deficit spending, we can service the debt and keep parts of the government open. >> right. >> but none of it is going to be pretty. >> if it's so easy to close down agencies, why do they exist? i'll leave you with that. thanks to both of you. placing his bet on a new tablet. fittingly they are doing it in business. the head of hewlett-packard's computer business will be with me from the electronics show and why this will be different than past attempts which did not work out for hewlett-packard. up next, pays to watch the "closing bell." herb greenberg predicted price matching would be made a year-round event. herb will be around to tell us what happens next. you'll want to listen to this. stay with us. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies.
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welcome back. it's a dream come true if you're an aggressive shopper looking for deals. target is now offering price matching against select online competitor year round after using strategy during the holiday season. now, if you've been watching the "closing bell," you knew this was coming back in mid-october when our own herb greenberg predicted it, that it was going to happen. listen to this. herb, this is just for christmas, right, but you think it will be around year round. >> once that genie is out of the bottle, i think consumers are going to want it and will use that. if the retailer wants them to stay at the store. i think we've seen this before certainly in retailing and, yes, i think this is going to ultimately, not right now perhaps, if it's successful, it will have to spread beyond the
holiday season. >> and herb greenberg back with us for his victory lap. joining also the conversation is isi analyst on what this move may mean in the big picture. herb, why were you so sure? kudos to you. >> so obvious. the kind of thing when you give people an opportunity to get something for less money and you don't have to leave the store or you can give them that old, you know, guarantee a week later, i think that's what people come to expect, and that's exactly what target is doing. people have come to expect, that and i think going forward, you know, that's the nature of business, and by the way, they could be setting themselves up for something interesting because as taxes come in, as we have to pay taxes on our amazon purchases in some states, that really levels the playing ground in a lot of areas and make the other retailers more viable in that sense. >> that's a great point. greg. you think this is a necessary move. what does it mean for the retailers out there? does it turn out well for the
rell tailers? how does it impact the group? >> every group needs to keep its customers and traffic positive so you need to be competitive. good retailers will recognize that and you'll win by having a better service, better selection. target, it's a smart move for them because you've got to keep traffic going. if you don't, you end up like best buy. >> are we going to see others do this then? >>o absolutely. any good retailer recognizes that the big change over the last three years, three years ago, less than 5% of americans had the internet walking around in their pocket. >> right. >> now it's over 50, and in our survey work, we think 25% of consumers told us that they have shopped multiple times with their mobile device. that's -- that's just a game-changer, so if you're not prepared for that, just going to lose. you're going to die. if you, are you can keep growing your sales and generally a lot of cash flow and your stock will do well. >> maybe. isn't there a downside? i mean, herb, isn't the fact now that we see is happening, retailers are going to face the constant threat of undercutting by online retailers.
>> that's why they have to become one. >> yeah. >> because people were showrooming in their own stores, so now you have to basically make sure when i'm showrooming inside your store, i do not leave and you match that price. >> yeah. >> margins, take a hit? >> yes, absolutely. >> yeah. gentlemen, thank you. thank you very much. appreciate it. keep watching this. certainly an important story at the end of the day for the entire sector. up next, hewlett-packard hopes what happens in vegas won't stay in vegas. the head of the pc business s joins me next. you won't see this interview anywhere else. keep it here. it's all about tablets and tech. later a story right out of a movie. a man wins the lottery and suddenly dies of poisoning. the terrible details on this million dollar crime. don't miss this incredible story. back in a movement ♪
fortt walks us through the dicy tablet history. >> not just hp but let's take a look at the overall history. it started here at ces three years ago. steve ballmer on stage waved around a hp slate which was a prototype talking about the future of computing. let's look at hp's tablet history. started before that. ten years ago in 2003 back in the windows xp days, hp had the compaq tc1000, a little bit of a niche following and never caught on. the slate 500 came after that in 2010, as i just mentioned. 2011 saw the touch pad which came over from palm. mispriced, a lot of people argue, at $500, the same price as the ipad. didn't take o.hp shut down the web-os division and then you have the envy x2 hybrid at 849 and the elite pad 900 which hp
has been taking pre-orders on that which expect to launch sometime this year, but really the touch pad itself, the old palm product, epitomizes the trouble that hp is in and kind of has to navigate product-wise. they havin willing to take chances in the past, but now as the company seeks to reorganize itself, do a turnaround, how much risk can they afford to take and yet take on apple at the same time? maria? >> all right, jon, thank you so much. joining us now to tell us more about this and why this time it will be different for hp and the tablet wars, todd bradley, the executive vice president of hp's personal systems group. todd, great to see you. thanks for joining us. >> hey, maria, great to see you. miss you in las vegas this week. >> i know. well, i wish i were there, but i've got to be here now, but i hear it's pretty active at the consumer electronics show. let me ask you about your tablets, todd. down this line before.
hp a lead payout coming out late they are month. why is it different this time? >> well, look, the history that jon went through showed a focus on both the ability and willingness to take risks and innovate, and as we look at elite pad coming out next week, our focus with that product has really been to create a product that's focused on the enterprise, that's focused on security, on manageability, on the things that cios find so critical to run their organizations. >> so how does that -- this tablet address that? >> oh, i'm sorry. well, the tablet's totally built for that, built on the platform, on a microsoft platform that unlike the rest of the market has that enterprise capability, that enterprise degree of security, of manageability, has the backwards compatibility with all the enterprise applications that are -- that are so proliferate, and so our ability to sell this through our channelled to that very, very
large enterprise base, and really start at the enterprise and let it come down to the consumer versus what happened in the past couple of years where you've seen consumers bring tablets into the enterprise, we've seen an opportunity to sell to the enterprise as the industries traditionally done. >> i see. you really have to have some kind of a standout product today because the market is crowded. you've got a lot of competition out there. a lot of folks trying to sell to the same group of people. >> yeah. well, the market, clearly the global market is -- is changing. i think our ability to, you know, compete in over 170 countries is one differentiator. last quarter we introduced 18 new products, combinations of products that included touch, products that included -- products like the x2 that are convertibles where the tablet actually detaches from the keyboard so you get the best of
both worlds, so i think our ability to innovate, to innovate in a hardware, in hardware, innovate in software, innovate in design is what will help us stand out, help us sell to those consumers, both consumers and enterprises that are so critical. >> are you seeing sort of breakout products there at the consumer electronics show this week, todd? give us a sense of what the activity feels like on the ground. >> so, actually i'm -- i'm just getting here as well. the activity on the ground is pretty robust. it's very broad this year. it's not just the hall behind us but several halls around -- around the city. a lot of focus on touch. a lot of focus on windows 8. obviously a lot of focus on tablets as jon referred to. >> right. >> we're looking both -- we're looking both at -- at our tablet strategy obviously and our tablet products. we're also working very hard here with our printing business
to look at products like flow which embed the capability to take a printer and manage your office documents. you'll see us introduce new high-speed ink products later this year. a lot of work from an application perspective on what we call e-print. you know, that's the ability to print from a mobile device anthe world. >> oh, wow. >> safely to the printer that you choose. >> that makes a lot of sense. >> and we think that is just -- >> look, it's a phenomenal -- it's a phenomenal innovation, one that will really reinvigorate the relevance of printing. >> right. todd, let me ask you this. it seems like you've got lots -- you've got to navigate through so many different things right now and here we are looking at an economy that is sort of growing in quite -- at quite an anemic pace what. are you seeing out there in terms of the customers? are they buying? >> so i think -- you know, as we looked at -- first off, i will say, you know, we're moving into a quiet period so i'm going to
be very, very broad. i think christmas was good. we see customers with lots of interest. the transition from online and in-store shopping is taking place, taking place everywhere in the world. so we see interest that's slowly converting. >> all right. we'll leave it there. todd, good to have you on the program. thanks so much. >> thanks, maria. we'll see you soon >> enjoy the rest of ces in vegas. breaking news right now on hugo chavez. let's get to our international correspondent michelle caruso-cabrera. >> it's official. hugo chavez will not be sworn in as the leader of venezuela on january 10th as it was supposed to occur. he's still in havana being treated for cancer. the story goes as follows. the vice president says -- of venezuela says he's either spoken or received a letter from chavez saying the doctors won't permit him to go to the inauguration and doctors asked
that they delay the inauguration and this could very well set off a constitutional crisis in venezuela. the opposition is going to say this is not allowed. why do we care? second largest reserves in the world when it comes to oil. the biggest in the western hemisphere. they have got refineries actually right here in the united states. they supply 8% of our supply in any given year. just because he's sick or just because he's not inaugurated doesn't mean we get that oil but any instability certainly raises question about supply. maria, back to you. >> michelle, thanks so much. we'll keep on it. michelle caruso-cabrera. meanwhile, boeing hit with a double whammy today. a fuel leak grounding another 787 dreamliner. as officials investigate what sparked yesterday's fire on a different dreamliner. we'll talk about boeing's future next, and then a mysterious case of a man dying from cyanide poisoning. get this. he died right after winning the lottery. details of this bizarre story. stay with us. [ male announcer ] count the number of buttons in your car.
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delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial. welcome back. boeing stock having the highest trading day since june '90, and it was a lot of ceiling. phil lebeau with the details on why boeing is getting ahead. >> we thought most of the focus would be on the dreamliner fire from yesterday, but there was other news starting with the fire. boeing today saying that the 787 fire was traced to a battery in the plane's auxiliary power unit. the ntsb says the battery suffered severe fire damage. by the way, they sent two more
investigators there. we have checked with airlines that fly the dreamliner. many say they have checked the battery and the wiring. boeing also issuing a statement today saying with regards to the fire investigation, nothing that we've seen in this case indicates a relationship to any previous 787 power system events, all of those relating to electrical concerns on the dreamliner. meanwhile, like deja vu in boston, a jal dreamliner suffered a fuel leak on the boston runway losing 40 gallons of jet fuel before it returned to the gate. they fix that had fuel leak t.eventually took off n.december the faa ordered dreamliner fuel lines be properly install. one of those stories where there's a lot of headline risk. shares of bothering over the last two days this. stock has been absolutely pummeled. the market cap fall, $2.7 billion, by the way, dropping two bucks today, another 2.5%, so there is a lot of headline risk out there right now when you look at the dreamliner and with boeing. maria?
>> thank you so much. phil. stick around. what does boeing need to do to shake this string of mishaps? joining us is jason engineersky, senior aerospace and analyst with citigroup. has a buy rating on boeing. thanks for being here. >> thanks for having me. >> any of these stories change your feeling on boeing? >> i see a string of potential manufacturing issue, and i think that it's very important for us to look at these issues as two different camps, manufacturing and design. if this is manufacturing hopefully we'll have a quick fix here. this is a plane ramping in production rates. boeing is learning how to produce this plane. if it's a design issue, that's a bigger issue because we'll have to redesign and do longer-term fixes, but boeing is learning how to produce this plane. if they are manufacturing issues, i think we're going to be okay. it's the design part that we would want to be worried about. doesn't change my long-term view of the company which is that it's a company that will generate a lot of cash here over
the next several years and 40% of its market cap over the next three years and that money seems like it will be heading back to shareholders through dividends and share repurchases so i'm remaining constructive on a wait and see approach whether this is a design issue. >> phil, what about the incidents damaging the issue? any issue there for the company? >> i think there's two images that boeing worries about, the public image. they don't like to see the pictures and headlines that are out there and the image that it has with the customers, the airlines, and as strange as this may sound, at end of the day, maria, i'm not sure how much all of these incidents actually will hurt boeing when it comes to landing orders in the future with the dreamliner because the airlines are talking to each other, and what they are hearing back from those who have the dreamliner already is that for the most part it has been meeting expectations in terms of performance. have there been problems? you bet. is it perfect, no way, but at the end of the day if you're an airline and you're waiting for this plane maybe two or three years down the road. if you're confident that everything will be worked out by then.
you're not changing your plans on keeping that order. >> jason, what's ahead for these stocks if these incidents continue, and i want to ask you about the layoffs part of the story. we talked a lot about the defense industry at the end of last year ahead of the fiscal cliff, but now we've got a delay on the sequestration. are you still expecting layoffs from the defense industry? >> yes. first, what's ahead for the stock here? clearly this -- these headlines are going to gate any kind of multiple expansion we would see on the stock. i think the earnings stream will be growing here over the next several years so there's potential growth here in the stock itself, but the multiple valuation on this stock is going to be gated until we get some more results on what exactly has been the cause of these recent issues, and, again, we're hoping that it's a manufacturing versus a design issue. on the defense side, you know, clearly we are in for probably a lower growth trajectory in the defense budget overall here in the united states. we've seen most defense contractors already begin to
begin cleaning up some of their manufacturing facilities and getting ready for slower -- for slower revenue streams over time so i do think we'll seeoffs, but the growth outlook here is not catastrophic for the defense industry. we are seeing a lot on the export side in particular. boeing is a perfect winner of that with export sales with things like the f-18, so while we're seeing the u.s. slow down. we're seeing growth and international markets, it all kind of adds up to a flattish environment. yeah, we'll see layoffs, but i don't think we're going back to the early 1990s where we had base closures and massive layoffs in this industry. >> we'll leave it there. thank you very much. we'll keep following this important story. out next, could be a story right out of "law & order." a man dies after winning $1 million in the lottery. the medical examiner's office now says he may have ingested a lethal dose of cyanide and that's not all. stay with us on this bizarre story.
and then you give us a minute, a minute and a half. we'll give you what you need to know for tomorrow to make money. we'll get our wednesday morning market strategies. stay with us. he wing and a frac. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com. ♪ ♪ ♪ [ male announcer ] some day, your life will flash before your eyes. ♪
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it could be a million dollar murder mystery. a chicago man dies after hitting the lottery. wealth editor robert frank has this troubling story which sadly may not be entirely unique. robert? >> that's right. well, the man was working at a dry cleaner in chicago when he scratched off his lottery ticket and won $1 million. just one day after getting the check, he was found dead. now an autopsy has found he was poisoned with cyanide. police are still investigate, but the case is just the latest in a string of unhappy endings for big lottery winners. jack whitacre was until recently the biggest lottery winner in history. $314 million in 2002. the west virginia contractor had a successful small business before he won. but after that big check he got divorced, was robbed at a strip club and had multiple run-ins with the law. his beloved granddaughter died of an overdose. he now only gives interviews for money. then, evelyn bayshore won $5 million in the '80s. she was besieged by thiefer and
hangers on. she said the lottery was a curse, not a blessing. she's not alone. studies show that lottery win r winners are twice as likely to go broke. they have a tougher time with family fights and lawsuits. some turn out okay. one study showed lottery winners can have improved psychological health over time but history suggests that that dollar and a dream can often become a nightmare. in the case of khan, perhaps even something much worse. we'll be following this story for you along the way. maria? >> wow. what a story. robert, thank you. certainly want to hear an update there. 30 seconds on the clock now. our next guests will tell you what to be prepared for tomorrow. joining me is cliff davis, robert luna. good to have you on the program, gentlemen. thank you for joining us. cliff, you have 30 seconds on the clock. what are you watching tomorrow? >> markets are complacent. people are not worried about anything. vix is trading at the bottom of five-year lows. s&p, top of the five-year highs
and every investor is just focused on one thing. march 1st, that's the debt deadline. i think investors are asleep. china is slowing down. potential escalations in syria. and in the euro zone, a potential spanish downgrade. what i'm focused on is looking at vix call options, expiring in february. as a result, february comes around, more jitters in the market, you'll make money. >> all right, so, you're expecting a down market, then, is what you're saying, except being selective. robert, you're up. 30 seconds on the clock. go for it. >> yeah, tomorrow i'm going to be watching the price action in alcoa after reporting earnings this afternoon. the stock's been a dismal performer since 2011. we think a close tomorrow above $9.25 is positive for alcoa. gives us good momentum heading into earnings season. also at 1:00 p.m., i'm going to watch the ten-year treasury auction. want to see how that responds. we believe technically that rates are going to be heading higher and we think this is bullish for equities.
we anticipate the $1.75 trillion that's flowed into bond mutual funds to make it way back. >> 30 seconds on the clock. what do you want to look at? >> sure, maria. with little economic news coming out tomorrow, we're going to be focusing on commodities. a global coal index has been -- it's very close to breaking above a 50-day high. the price of oil has been moving up. now consolidating just below its 200-day moving average. and the steel index broke its 50-day high last week. we're looking to copper if it is give us a positive view of what the economy might do in 2013. >> all right, gentlemen, thank you. and we'll be watching all those storie stories. thank you. up next, my observation on the new world that the banking sector finds itself in. why the go go times in that business are gone. stick around. ♪
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into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. and finally tonight, my observation on a changing landscape for the banking sector. for years, the banks have been a group that were riding high on on a lot of positives.
decades of deregulation, but the next decade will be very different. the recent rally in the bank stocks, the world is looking a lot less friendly for this group. business models are changing and they will continue to change. deregulation is turning into overregulation. globalization turning to many economies turning inward. population growth turning out to be a lot less of an opportunity in places like china. regulations are becoming stricter, despite the recent changes in proposed rules from basil and europe. the fact is, capital and liquidity environments will continue to tighten. here in america, dodd-frank has not even been fully implemented but promises to add even more stringent rule-making for then baings. all of these factors have already and will continue to force some banks across the globe to shed assets. in some cases, the fire sale prices. this actually could benefit some u.s. banks that scoop up those assets, but longer term, they,