tv Closing Bell With Maria Bartiromo CNBC January 29, 2013 4:00pm-5:00pm EST
close to the end. i don't want to say that. >> i don't know about that. >> is it different this time? >> i give the retail investor much more credit than that. >> i agree with you. >> doing their homework. >> in pastoralies we've seen that. at the top the retail investor is the last one in the game. i don't think that's the gays, but i do see them getting involved. >> next hour, hank greenberg, former ceo of aig. >> numbers from amazon as soon as they hit the tape as well. so what scares you out there? everybody says the market is overbought. yeah, so. sentiment is still good. what scares you? >> you know, the market may be overbought, but there's still more room on the upside. i think it's going to be a very, very narrow trading range. i don't think there's a high risk to put in your money now. i don't know if the return is -- you may have looked at a 20% return, you know in, september of last year. now we might be looking at a 5%, 10% return. risks are now muted. i don't real very any fears. i don't see anything on the horizon. >> how long can the market
continue to go up if apple doesn't participate at all? >> still the market is going to go up. apple is a big nasdaq number, but as far as the s&p, it's not in the dow. s&p 500 stock but that's well weighted for everybody, so i don't think it's that big a deal. >> all right. there's the bell, peter. thank you. amazon numbers out momentarily. maria and our expert team will break them all down for you in the next hour of the "closing bell". 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 dow industrials rock it again, rallying today within striking distance of 14,000 and inching ever closer to an all-time record high. take a look at how we're settling out today. the dow jones industrial average just shy of the highs of the afternoon. we were higher by about 86 points or so at the best levels. we're finishing up 73 points at
13,000. 21.27 billion is the number on revenue for amazon.com, coming across the tape right now. want to interrupt myself as we watch amazon.com trade very volatile as these numbers are just being released. we mentioned earlier the expectations. we got earnings of estimates of 28 cents a share and revenue of 22.6 billion. revenue at 21.27 billion on amazon. looks like it is a slight miss on revenue. let's get right -- >> 21 cents is the earnings per share. 21 cents versus an estimate of 28 cents. we look at this market settling out. gene, let me kick this off with you. numbers out 2, 1 cents a share versus an estimate of 28 cents a share and revenues of 21.2 billion versus an estimate of
21.8. what's your analysis? >> based on just what you went through, it doesn't look like either numbers came through. one important dynamic is third party versus first party, what bit the stock a year ago was the big third-party number. should have seen a better bottom line of third-party sales. guidance, typically guided 3% to 6% below the street, but number is a little bit on the disappointing side. we were hoping for more. >> i've got the guidance here. >> go ahead. give me the guidance, jon fortt. >> maria, guiding to between 15 and 16.6 billion in revenue. that compares to the street wanting about $16.86 billion in revenue and also guiding to an operating income rate of negative 285 million to plus 65 million. the street wanted i think around 250 million in operating income to come up with 34 cents per
share eps so that would be disappointing on the top and bottom lines of guidance. >> all right. disappointing guidance as well, aaron kesler. not exactly what the market wanted. what's your take on this quarter and the estimates going forward? >> yes. we would agree with gene. revenue growth was a little below expectations. we were around 22.7 billion, high end of the guidance range, an clearly this is a revenue growth story since amazon is trading around 80 times earnings and investors are looking for margin expansion. doesn't seem like we've got as much margin expansion. what's your take? what went wrong here, the holiday season? >> some mixed theater in q4 so some of the data points, sales started out very strong, 20% plus growth and sales weakened throughout quarter. the bottom line. data looked mixed and thought am zan could outperform but maybe not on this quarter. >> jean munster, what do you want to hear on the call? a revenue story. haven't cared about earnings. growing revenue consistently for
several quarters. what do you want to hear from management? >> well, we want to hear how much they are investing, how big aws is. at the end of the day, you know, investors are going to come back to this story if they really believe in an e-commerce greater theme. specifically in the u.s., about 7% of what's bought is bought online. eventually that number will be 30%, so to the extent that the management can talk and reassure investors that that secular theme is well within track and their market share is in track, i think that would be very advantageous for their stock for tomorrow is to keep long-term investors believing in the story. >> bottom line. >> i was going to say, one of the things interesting to me about this report, the scenario i hadn't expected. eps actually looks pretty strong which raises questions about what the kindle fire, kindle fire hd actually did. the independent research numbers that i had seen suggested that the kindle is actually the most popular of the android-based tablets. certainly did better than
google's nexus 7 and nexus 10. if it didn't do well enough to depress eps or to warrant sort of a mention in this press release that gives, you know, "x" higher than a year ago, i think there's questions about how well that actually did over the holiday season. >> the stock is on a wild ride, now actually positive. bottom line here, gone and aaron, the stock is at $266. would you commit new dollars to amazon right here? >> i would. i still believe in the secular theme. amazon is a share gainer. if you think ten years from now e-commerce is going to be a bigger part of the world, you should be betting on amazon. >> aaron, what's your take in. >> we like the fundamentals, long-term outlook, 80 times earnings. be on sidelines right now. >> sidelines right here at 266. gentlemen, thanks very much. great conversation, appreciate your time. as we naff date the amazon numbers. joining me right now on set is greg mcbride and greg yip from "the economist" and ryan
dietri dietrich. gentlemen, good to see you. thanks for joining us and thanks for joining us tonight. greg, what gives with this market? what's with this market? >> run a long way in a short period of time really without stopping for a breath. saw it with amazon, and i think you'll continue to see it this year. top line revenue growth is an issue. eventually market revenue will run into it. >> by the way, we're running into it right now. amazon reported revenue below estimates. does revenue stock the story of the rally going toward in is amazon a problem tomorrow? >> whether or not that's a catalyst for this market to take a breather or have a correction remains to be seen. a lot of headwinds to face whether it's top line revenue growth or something out of washington. eventually we'll have to deal with spending cuts and the debt ceiling debate. whether or not that's it. for the meantime, the markets run a long time just because they are soaking up all the stimulus from the fed. >> a lot of stimulus from the other central banks cutting trase today. greg, you want to get in front of this train and fight the fed?
>> yeah, i think that the fed is going to continue pushing pretty hard this year but equity investors have to take a look at what's in the fed's tool backs and realize they have shot every arrow that they have got. they will keep gig qe this year, maybe another $1 trillion but even inside the fed there's doubts about how much more effective will be at this stage, what, with long-term interest rates as low as they are. tomorrow i don't expect any fireworks from them. i'll be interested to see how they characterize the economy, whether they are getting more comfortable with it now that we have the biggest piece of the fiscal cliff out of the way or whether they are still concerned that employment is sluggish an inflation is tracking kind of low. >> yeah. i mean, we have an economic that's improving but not necessarily gangbusters here to necessarily illustrate or justify this huge movement to stocks. ryan dietrich, what's your take on this in terms of technical strategy? what do the charts look like you to? >> we ton to see what's happened this year and see a lot of
similars with last year. we rallied virtually 45 degrees until april and seeing a lot of thins. early in the year, a lot of bulls come in, stocks in mutual funds. doesn't mean the market has to peak. a lot of people are saying that. seasonality-wisebrua usually strong when you have a strong january and march and april, the two strongest months the last five years, up 3.5% on afternoon. all in all coupled with the pact that short interest currently on s&p 500 components is actually higher right now and trimming lower than last year, in other words, a lot of room -- i know it's cliche to say sideline money but the shorts can cover and the market keeps going up. we would continue to think any and all pullbacks, 2% to 4% is it and we'll continue to buy into april. >> why april? what's the problem with april? >> no problem with a. historically the last three years had a market that tend to peak around then, sell or may go away but near term, all of the worries we saw a month ago, two months ago, we think all of those things, investors got a
little too squared. hedge funds institutions have drastically missed this rally. still underexposed equities, a lot of reason to play catchup and the next two, three months looks like pretty clear sailing. >> a lot of momentum into markets, okay. get your take on 14,000, another round number. feels like this market wants to reach it and go behind and hit another all-time high. you heard peter costa say it's going to happen this week. >> it may. not a hoppyist headwind. the debt ceiling debate has been delayed for three months no. reason why the market can't keep running at this point just because there's no obvious catalyst to run into, but at some point, whether it's the revenue growth or something out of washington, you know, i think we'll -- we're due for a pause if not outright correction. >> fundamentals matter. >> sooner or later they do. >> please, go ahead. >> just going to mention two cautionary notes here. even though i'm pretty constructive on the economy i'll give you a good reason to worry about april sis the sequestering
right? i think markets have gotten very comfortable with the washington dysfunction going on because they keep going up at the deadline and then fix the problem without damage to the economy and my sense is sequester happening, $100 billion out of the economy, is actually on the high side and i don't think that's built into the market and the other thing, the last time the market was at these levels, the size of the economy was only a little bit smaller than it was now, profits a smaurter smaller. enormous market expansion which goes to the points others are say being. revenue story is very, very trouble. earnings have been strong but i don't know how much more room there is on the mar gyp expansion side. >> we'll leave it there. appreciate your time. see you soon. want to recap amazon because the stock is actually up 5%. company reported revenues and earnings that missed expectations coming out with 21 cents a share on the eps line versus an estimate of 28 cents a
share, revenue 21.7 billion versus an estimate of 22.6 billion on the revenue side. this is for the fourth quarter. guidance underwhelmed. having said that the stock dipped and is now trading higher on amazon. >> and up next, marc faber, wait until you hear who he says will be hurt when things turn aron and hank greenberg is suing the government over the bailout terms forced on aig. how does he respond to kritics who say he's being ungrateful? he's talking to us first. international paper reported mixed earnings. we'll talk to the company's ceo about where they are headed and how corporate corruption is impacting the way he does business. that and more on "closing bell." back in a moment. [ woman ] don't forget the yard work!
to deposit checks from anywhere. [ wind howling ] easier than actually going to the bank. mobile check deposit. easier banking. standard at citibank. welcome back. amazon shares spiking after reporting earnings. jon fortt with more on the quarter. >> more positives to pick out of this earnings report from amazon, one being amazon saying after five years e-books is a multi-billion dollar category for them. actually physical book sales slowing at quite a rate.
the lotest december growth rate in 17 years for physical books so amazon clearly in a leadership position in digital categories they have been pioneering, e-books being one and amazon web services expanding in asia. that being said, they missed the mid-point of their revenue guidance, but, on the other hand, operating income came in far higher than they guide, so positives and negatives. it seems like after hours the market is taking it both ways. maria? >> really is. back and forth and still looking at a gain right here on amazon in the extended hour. jon, thanks very much. we'll keep watching amazon shares in the extended market. a roaring stock market and recovering jobs and stock market, when will the fed ease up? we poll top economists on the question. steve liesman with the question. over to you, steve. >> very simple answer, maria, not any time soon. our cnbc fed survey for the month of january. we asked 52 economists, fund managers and wall street strategists how much
quantitative easing will the fed do 2013, and can you just tell by this chart what the answer is. this is the percentage of respondents at a given level and the big number here is $1 trillion. if you average it out for all the respondents, it's 858 billion of asset purchases by the federal reserve this year. now that averages out to about $72 billion a monday. under the current level, that's because they believe the fed will eventually taper off, and that could begin this year, but not end it. let's take a look at when on average our respondents think that the fed will finally end question. you can see the biggest percentage here say it is in the fourth quarter, but a lot of answers go well into the third quarter, 2014, 20% here and 22% there. not a lot of conviction when it comes here. what's more important is not the when. remember, the fed's now gone to economic targets, so we asked them at what unemployment rate will they end question? this is 6.8% is the average now. the inflation rate is 2.6%. importantly the unemployment rate has gone up for ending
question and the inflation rate has gone down. john carney on cnbc.com right now has an interesting article that suggests the data we've picked up showed the federal has really essentially tightened policy. let's take a look at data of when the fed will hike rate. here's the december distribution and there's january one. in general the average is the same as it was, a little more conviction about the hiking rates being in the first quarter of 2015. interestingly this number comes after the fed got rid of counter dates. question, will it lower unemployment? no. they have been consistent about that. will it lower mortgage rates? divided but they think it will. bond yields, evenly divided. the one thing our market participants are sure that question will do, raise stock prices. 69%, maria, saying question does help raise stock prices so when you think about the fed and the roaring stock market, our panelists think they are pretty well related, maria. >> no doubt about it, and what
we have seen is a market continuing higher ever since the fed started this. thanks very much, steve liesman. up next the author and publisher of the gloom, boom and doom report. marc faber on the go-go u.s. markets and why he thinks it's a giant head fake and hank greenberg giving his first interview. stick around for that interview. i'm only in my 60's... i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses,
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welcome back. breaking news on boeing. right to phil lebeau. >> reporter: the ntsb releasing an investigate on the battery investigation saying they have moved on from macroscopic investigation to a microscopic investigation. that includes chemical analysis of the areas that short circuited and checking flight data recorders. bottom line, still don't know a cause behind the incidents involving the two dreamliners. we should also point tomorrow morning on "squawk box" we'll be having the boeing fourth-quarter earnings, the first time we'll hear from the ceo since these incidents. sure to be questioned about what happens with the dreamliner tomorrow morning when boeing reports earnings. guys, back to you. >> thanks so much, phil lebeau. the dow jones industrial average 50 points away from 14,000. that 200 points away frommin a all-time high reached back in 2007. if you think that's made marc faber less bearish, you'd be very wrong. despite, that marc is the man behind the gloom, doom and boom
report and joins me now to talk markets. good to see you, marc. thanks for joining us. >> my pleasure. thank you for having me. >> so you say regardless of what the markets do near term, a correction is overdue. when do you expect a correction and how significant? >> well, i think it can start any day. we are very overbought but it's also possible that we have a mild correction in february and then a further increase in stock prices, something that would be similar to 87 where in the first half of the year until august the market went up by 41%. to lose 47% in two months in october and november, so it's a possibility that we have a lot of volatility in equity prices. i'm selling shares at the present time. i'm reducing positions because
there is euphoria building up. >> why should it go down? let's talk about the fundamentals and what's supporting this market. number one, the federal reserve, easy money. making for very few alternatives to observe u.s. stocks. number two, corporate balance sheets flush with cash to the tune of $3.6 trillion. number three, an economic landscape that has improved and is continuing to improve in the u.s. why are you uncomfortable owning stocks? >> i love your comments because in 2007 analysts would have said exactly the same. why would the market go down? the fed will step in and bail out system and this and that. markets move up and down, and we had a lot of volatility in all markets over the last couple of years and they simply move up and down and when there's
euphoria and everybody is investing markets move down. why did bond prices goes down? last august long-term bonds have declined by 10%? why does the dollar go down? >> so you think it's going to go down because markets go up and down. how about the pe ratio on a forward looking base is only 14. what do you have to say about that? >> moab the earnings estimates are optimistic because revenue growth is not there and there may be cost pressures coming in and you can't lay off any more people. trace are bottoming out there's a chance it could disappoint in 2013. i've spent a lot of time recently in the middle east between christmas and yesterday, and i can tell new my view it's a boiling pot. >> if not stocks, where then? what's the alternative to owning
u.s. stocks? i'm just trying to figure out, got all this money on the side lines, corporate with trillions dollars on balance sheets. if they are not go -- maybe the market goes up strongly and that would be a major embearment for central banks to have a real stmt bubble while unemployment doesn't go down and the global economy doesn't grow. that would be a real embarrassment and then finally a stock market crash of major proportion because they can't cut interest rates any further, or an embarrassment would be for bond prices to really sell off, in other words, for the market to push up interest rates. the central banks aren't going to boost up interest rates, but the market may boost it up. >> how significant a spike could we see in rates? a lot of people worry that we
could see a fast and furious moves and given the fact that they are at such high levels. what could you think? >> the ten-year note has -- i think bond prices remain quite vulnerable it's bite the fact that the economy isn't very strong. number two, the stock market is up 27% from the december 2012 loews, but the dollar has managed to weaker by 10% against the euro. this is a -- quite a currenty. >> you said moments ago marks go up and down. >> yes. >> dollar goes up and down and stocks go up and down. >> yes. >> and yet you say you will
never stop buying gold. what's that strategy? doesn't gold up and down, too? >> i want to tell you something about gold, maria. because i'm fearful that we will have a systemic crisis and supports and so on so i'm gig gold because i feel fearful. you don't own any gold and you are in danger because you don't own any gold >> you don't know that i don't own any gold. >> guilty as charged, let me get your take. >> you don't look like the gold owner. >> yes, and you have a golden
personality. >> i like that, marc. what about stocks here? where's the low-hanging fruit in terms of the stocks that will lead this decline? you don't like apple very much. where's the -- that leads the market lower. >> i think urkian stocks are very low. i think vietnam is inexpensive. i think chinese stocks are rell civil inexpensive. >> you think i should sell all my u.s. holdings and buy ukranian stocks? >> maybe? >> really. >> yes. >> what about storks in the u.s. that's a whole other conversation. what the rule of law and getting my money in an out easily, could have a whole conversation about ukraine and vietnam and china. you want to go there? >> i like the rule of law in the
his, but in terms -- in the u.s. -- bauerish on apple. >> no, no, no. i tell you in the husband which is relatively dheep, mining companies, betors companies. i think that is a second- or that i wok like. >> you think in terms of some stocks that will lead the selloff, what are they? what are the sectors leading this rally that you're expecting? >> well, i think -- a year ago i went to atlanta and phoenix and i looked at property prices in georgia and in arizona, and i felt they were very low so i wrote about this, and i thought one way to play is to obviously buy homes there, and also to own home building stocks. they have a huge move, and i
think they are ahead of the fundament fundamentals. >> i have. >> i would essentially will be a builder. i think that technology is still available. leave it there. great to have you on the program. thanks so much. >> thank you very much. >> and i'm going to be checking the ow corinne, vietnam and china. marc faber, bublisher of the glom, and doom report. an exclusive company about one company's better than expected knelt. first, up next. >> it's not acceptable socially for aig to have taken this money and think that we can come back and sue the government. >> aig's current ceo deciding not to form former ceo hank greenberg in the bailout lawsuit
against the government. he is here to talk about that and his new book out this week. back in a moment. surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission. [ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees. ♪ it's not rocket science. it's just common sense. from td ameritrade. stop! stop! stop! come back here! humans -- we are beautifully imperfect creatures living in an imperfect world. that's why liberty mutual insurance has your back with great ideas like our optional better car replacement. if your car is totaled, we give you the money to buy one a model year newer. call... and ask one of our insurance experts about it today.
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on the road to recovery, the stock hitting a 52-week high. out of debt to taxpayers and standing on its own two feet but not the same company that former ceo hank greenberg ran for decades. he chronicles the rise and fall in his new book. mr. greenberg is currently suing aig over the terms of the bailout in 2008, a fight that he is taking on without aig support and joins me now in a cnbc exclusive, that and a lot more. >> good to be with you. >> thanks so much for joining us. you have been telling this story on "closing bell" for the last several years so i think our viewers are familiar with -- with this fight and how you feel about it, so let me start with the new book. critics say it is, you know, basically you not being grateful to the government and to the bailout people who basically helped aig come out of what was a very, very terrible moment for the country and for aig. >> what is your response to
them? >> well, there are several responses. first of all, much of what happened was a liquidity issue, not a solvency issue. aig had $1 trillion of assets. they need liquidity, and that's what the central bank is for. aig was denied access to the fed window. the fed could have guaranteed some of aig's issues that would have retained their aaa rating. no money changing hands and it would have been very easy to do, and so, of course, what they did is lent aig on 14.5% and took 79% of the equity. the government has a right to nationalize a company, any company, but they have to pay for it. you can't just take something in our country and not pay. we were nationalized in iran in
aig. i went to the world court and we got compensated. you can't simply take somebody's assets. >> but why do you think this was? you've been fighting this fight for many years at this point talking about, you know, why, you know, making it very clear to viewers and to readers that the government did nationalize this company. took 14.5% interest because of the bailout. now what would you have rather them do? we were at a moment in time when even ge was saying we might not be able to make payroll. what did they do for ge, lent money and got access to the fed window? why was aig denied access to the fed window? >> why do you think it was? >> because there was a bailout going on. could have had a brokered deal to give them access to the window. they tried to get that and it was denied and when you deny that there was no option. they had to take that loan at 14.5% interest, but independent
of that why do they take 75% of the equity? acquired 80% of the company. in other words, they length aig that money. they go and pay counterparties. >> aig didn't do anything. the government owned the company and 65 billion of the 85 went right out the back door to foreign banks, domestic banks, goldman sachs, other investment banks. had no control over that. the government owned the company. >> where are you willing to take this? think probably after building this firm over four decade you had to document what happened so you write this book, the aig story which is really an incredible read but now you pursue a lawsuit against the government. where are you going with this? ? hold on. all the facts were not own. it took us here's to get all the facts, okay. they were in the book and that's a difference as to that's been publicly acknowledged and what's in the book.
second, look. there were thousands of people who lost their net worth at aig, pension funds. i owe it to them and i'll pursue that all the way to get justice, if that takes another five or ten years. >> and employees were cut as a result of what went on in. >> oh, okay. >> other you are a warrior trying to get something back from what was incredibly important to you, tied to your heart and soul and everything, built this firm and yet aig is not going along with you. benmoschy was on a couple weeks ago. i want you to hear what he has to say because i asked him are you going to go along with hank greeningberg's lawsuit? >> it's not acceptable socially for aig to have taken this money and to think that we can go back and sue the government because you made too much money on the deal. it may be a bad deal, but a deal is a deal, and we can't go back. i wasn't there at the time. most of the board members
weren't there at the time. we have to -- we have to move forward. can't go back and make the past any better than what it was. >> so he admits it's a bad deal. >> he's entitled to his own opinion. he did can do what he wants. skull him why he's suing the treasury department now. >> aig is suing the treasury department. >> why is he suing? >> you have to ask him, but i think aig believes that they are entitled to the money that the fed is now taking. about $7 billion involved. >> you talk in the book about the financial products part of the business a bit. >> yeah. >> and that really was the trouble. the insurance business at aig during the real dark days was very strong. >> that's right. >> did you speak to regulators at that time to say split this up, you know, this is the wrong move? what were the answers were you going? >> i was not there. i left in 2005.
>> but you were vocal and out there. i tried. listen, i tried. i talked to i tried to get paulson and couldn't get him. he called back my office at 5:30 in the morning. i tried to help every way i can. you had a lot of people who were making decisions and that was one of the pount parties. talk about that. why did aig get in trouble on these cdss? they were insuring the cdos. the cdos that they were insuring were alleged to be, by those who were selling them to aig, super senior tranches. in other words, aaa or better even. okay. they turned out to be far less
than that, far less than that and ai go could have done many things. could have refused to recognize anically the ral payment and said we're not going to recognize that at all and if they had done that three to four years later they recovered so there many things he could have done. the fete fed could have done more. we have a to imline of what went on, aig taking that $85 billion loan and government getting the 85% stake in september '08. just about nour years, aig paid back its loans and the government's profits from the deal. what's your take in terms of where this story goes next. what would it be that you like to see that says, okay, i'm victorious here with this lawsuit. what are you expecting to happen? >> i expect us to win. >> you're expecting to rin.
>> i have a past time of doing nothing. i'm busy building a very. very missy and doing quite well. >> were you surprised that the company sold back. >> yes. they sold some. kih, the only life insurance company in china. cold a major operating condition located world wie and some of the great real estate in the world. of the 79.had% that they got in the market, and as the markets improve over time stock of aig went up, so obviously they made a profit on that. they made their 23 on the boilout of aig. not exactly a bad return.
>> are you building another asnig. >> building the star companies but not hil. >> got to get your take on this market. >> have you been par tasing in this mark as well? >> the book, aig's story. earnings season at full speed. that company, of course, dealing with the dreamliner nightmare this quarter. wall street etop money pros, what they are expecting in a few minutes and rolling out profits. the head of international paper will be with me exclusively to talk about his company's bottom line. the global economy and the challenges of doing businesses abroad. laws, not always clear cut. stay with us. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.
tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-866-294-5411. welcome back. international paper reporting fourth quarter earnings this morning beating expectations on both the earnings side and the revenue side actually. the stock up better than 5% in 2013. the ceo of international joins me now for an exclusive interview to talk more about business. good to have you on the program. >> nice to be here, maria. >> first let's talk about the quarter. in the middle of a repositioning at i.paper. tell me what drove business in the last three month. >> more or less what's been driving business all year long, we've had a slow but sluggish
recovery here in the in the united states which is turning. more tail winds next year as housing gets better. seen that throughout the year, and other businesses around the world, some doing quite well. an all-time record year in russia that was an important business for us. the fourth quarter is seasonably slow in north america because after thanksgiving all the orders were placed because we're a short cycle business. >> i'm glad you mentioned russia. a lot are worried about russia saying there's no rule of law and if i get my money in there, won't get it back. are you worried about dealing with the russians? >> it's a complicated play. been there since 1989. made our first v.back then. quite successful, made it at a time when there was a lot of uncertainty and volatility in russia and a very large investment in the largest forest products company in the country. it's different. have to have the right people, for sure. >> and you have the $1 billion pipeline business.
>> that's a capital project in siberia, the biggest capital project outside of oil and gas and mining in siberia in more than 40 years. >> i'm glad you mentioned the sluggish situation in the u.s. we keep talking about this sluggish situation and yet the market is on fire. what kind of a 2013 are you expecting in. >> expecting to make a lot of head room on our own, more of the same in terms of the economy. no assumption that the economy improves. we can meaningful improve our cash flow and earnings even in an economy that looks like this one. >> you're not expecting any great shakes from the u.s. economy. >> got to create our own bottom line. >> how do you do that? >> made a number of moves over the last five years, most recently making an acquisition in packaging here in north america of one of our competitors and there are huge merger benefits associated with that. realizing the merger ben 2012 twoe 2013 and going on into '14.
one of the big drivers and some of the things we're doing around the world in russia, india, south america. >> emerging markets still an important place. >> the cash comes out of america and the growth is in these emerging markets if you have cost position. >> the costs in the u.s. and growth outside. that's what we're continuing to hear. >> sure. >> from a demand story, where is the demand coming from? can you talk about sectors in the u.s. that you see the big ebigest demand and where the weak spots are? >> packaging and brown boxes, 20% of corrugated packaging goes into durable and many durable sectors are affected by housing and see it even in small segments like moving boxes. we see moving boxes, you know, with more strength than they have had in four or five years and it's mostly homeowners moving. not corporate moves but individuals who are feeling more confident about being able to sell their house and moving into another house. >> housing is important. an important underpinning of the economy. >> what sectors are still a real
weak spot for you and broadly speaking? >> 80% of food packaging goes no non-durables and that's been pretty sluggish. as people still don't have the confidence. they pull back on some of the discretionary spending and all that have shows up in the purchases. 70% of our economy is consumer spending right, so if consumers aren't spending they have we ar in the u.s. from an investment standpoint and you have investors watching. they want to know a reason to own international paper stock. are you going to raise the dividend? what's in the cards? >> international paper is a cash flow story. it's all about cash. we told investors last year when we were making $3.7 billion we had a career way to get to five. we're going to make a meaningful step towards that this year even in a more of the same economy and committed a return cash assurance that said we were going to pay 35% to 40% of our free cash flow back in the
formal of dividends and we have a lot of run way to go. >> so, you are going to do that this year? >> we'll look at the dividend later on this year. i'm confident if we're on the trajectory we're on right now we'll be able to return more cash that way. >> john, good to have you on the program. we'll be watching this story. >> thanks. up next, we have the latest details on what a secretive hedge fund manager is investing in. back in a moment. stay with us on "closing bell." combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent. i'm colin beck of fidelity investments. our integrated technical analysis is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
welcome back. we have breaking news right now. >> maria, we have obtained exclusively here at cnbc elliott management's q-4 investment letter run by paul singer. in it, he reveals an investment in les miserables. he spends a lot of time lam basting argentina, who has he been in a battle for a very long time. he's long gold, bearish international coal and grains and there's a lot more there. over to you, maria. >> perfect. go to cnbc.com for the rest. michelle, thank you. how real is this rally? my observation after this. stay with us. [ male announcer ] you are a business pro.
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want to go down, even after a 6% rally in the s&p 500 since january 1st on top of a big rally at year end. traders say they continue to see big pocketed investors at the ready to buy u.s. companies. an economic recovery in the u.s. was all the talk in davos. many investors believing the u.s. landscape is the best, most investable story in the world today. but the real story, of course, driving equities is the federal reserve and its easy money policy, creating few alternatives, if any, if you are seeking a return and some kind of yield on your money. this is a landscape that the rest of the world is now mimicking. well know that the european central bank has pledged to save the euro by doing whatever it takes. but now we see parts of asia, latin america taking the low rate directive. today, it was india to cut interest rates. one of the first asian economies to do so, aside, of course, from japan, which has been on a stimulus mode lately. so, based on that, the landscape looks good for stocks, an economic recovery, low rate