tv Street Signs CNBC March 7, 2013 2:00pm-3:00pm EST
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quick check of the markets. new high for do yw jones today. 1564 would be the all-time high. we are a ways away from that. and crude at 91.43. ty, before i turn it over to you, a very big happy birthday to our old friend, art cashen. it is his birthday today. i gave him a hug for you. >> he is a natural treasure down there on the floor of the new york stock exchange. i speak for all of our viewers
when i wish art a happy birthday and many happy returns. that does it for this edition of today's "power lunch." >> have a great afternoon. "street signs" begins right now. >> and welcome to "street signs," everybody. i'm mandy. >> melting up and every other obstacle that could be thrown at them. holler for a dollar. payroll good tomorrow, go long for the dollar. payroll bad tomorrow, still go low the dollar? alcohol, drugs, video games, but addicted to nutella? now that's an addiction i can get into. meantime, good things do come in small packages. a fresh all-time high today. and up nearly 10% so far this year, and u.s. dollar index is
at a six-month high. let's get straight down to the floor on the floor of the new york stock exchange. bob, markets rallying. stocks rallying and dollar rallying as well. >> yeah, that hasn't happened in a while. that may be an indication that a stronger u.s. economy may be coming as well. that's good news. but over all still that bernanke/draghi talking here. you see the risk on. financial material this is all week generally to the upside. defensive names and consumer staples, and utilities to the down side. and we have other news today and important secretary o 0ers. banks and energy stocks, results of stress tests and 19 big banks. get results. we are anticipating all 19 will pass. there is some hope they will let banks own there are stocks and some of the banks will raise dividends. let me talk about production stocks here. look at these numbers, up 8%.
concho, 3, 4, 5% moving to the jup side. natural gas is moving up. this is becoming a sector that people are more interested in. look down here. what were we, back in may, 1.90. we are 3.06 in natural gas. not breaking through to new highs but still doing pretty well. fei finally, note the banks stocks. there is some hope for them. a few might even be raising the dividend as well. >> oh, okay, we will talk more about banking stocks later on in the show. thanks for setting it up, bob. in the meantime, yields up. and that surprise job in jobless claims and tomorrow, that the big cahuna. >> i think rates are paying more attention to stocks. but adp yesterday definitely triggering a bit after move as well. i agree, tomorrow's nonfarm. always about jobs, jobs, jobs. briefly weigh in on the dollar. dollar index and seven-month high. only one person on the entire planet, how would you decide if
it was big or short or tall or fat or skinny. it could wo be hard because it is about rel tist. relatively speaking i don't know if this is a great dollar trade, just a negative euro trade, yen trade and negative british pound trade. back to you. >> talk more about currency as well in a minute. in the meantime, as stock market rally continues. where should you be investing now? to the buckeye state and president ever james advantage funds and pete, senior portfolio manager at hunting ton advisors. very simple question to begin with, barry. how do you feel about this, are you nervous? >> well, i'm always nervous when the markets are rising. we've come from a place where you add falling knife back in march of '09 and we have come 150% since then. as i look at market today, i try to look at how the economy looks and how the markets looks and do they coincide one with the other. you have tax hikes and regulatory changes and a lot of
people still unemployed. as we saw this morning that export market isn't going that well. it won't jump behind out and say, hey, buy the market. but when you look at the market, we are in a melt up and you never underestimate a rising market. when you come at it from the perspective of someone out of the market, what do you do at this juncture? you probably need to take a slice in. if you don't you will wined up jumping both feet in at the peek of the market. >> so we will have a slice instead of the whole market. pete, give us three picks. >> that's easy, mandy. we think we should anticipate the next upturn in the market. we are looking at cisco systems, prax air and basic lay follow-up there. marathon petroleum. basically a north american story now. >> marathon is up 39% on the day, though. you still get in on these levels, pete? >> would. it is a break out.
when they split that company out, have you assets that are undervalued. not really well analyzed. as north american story unfolds, as the natural or the nongas liquids, basically become a feed stock in north america. a huge crack spread opportunity here and when you get a domestic play like that, they could see a really long period of very outsized earnings gains as the economy begins to accelerate. >> barry, give us your slice. three slices, please, if you can. >> sure. you're nighted per pute iks, vascular research and and product development. they are doing well. all these are cheap and going up in price. those are qualifications. and financials with the fed doing what it's doing in terms of printing money, national financial makes a good play in that space. >> just before i let you go, cisco systems, pete, why is
cisco systems one of your picks? >> we are seeing that the acceleration of death and wire line and cisco is a supplier of internet hardware safety in terms of internet commerce. that's an area where we think there is more spending. cisco hasn't participated in this rally. great balance sheet. we think earnings estimates begin to accelerate going forward. it is great to get paid while waiting. >> barry and pete, thank you for joining us. in the meantime, a big jobs number tomorrow. it may not matter much to markets on this record shattering week. but that doesn't mean there isn't a winning trade. the dollar could be the ticket whether the payroll's number is good or bad. let's bring in cnbc contributor. >> i think this is one of those win/win situations very rare in the currency markets. payroll is expected by the consensus to come in at 160,000
tomorrow. so the dollar strength, either weak, you know, either weaker strong payroll scenario is most likely to happen if you get a strong upside surprise in the sense that you know, the market will price out quantitative easing. and the yields will go higher or very large down side result in which the dollar will continue to gain from its flight to safety bed. so either way, i think we are going to see it. have you to be very careful about which currency i think you played the dollar against in terms of strong dollar. i tend it like the sterling because i think the growth outlook for the u can k is quite bad. so tomorrow, i'm not making -- call on the jobs number but i'm calling the dollar will strengthen either way when the numbers come out. i would like to be long the dollar on the british pound. >> didn't the news surge after the boe decided ton continue its qe? are they getting less -- >> no. you're right. that they did not do anything for quantitative easing. however i do believe that with the switch in the committee
leaning towards governor king, who does want to quantitative ease and in the next couple meetings ahead, there is still a risk that bank of england will quantitative ease further. >> got it. okay, playing the dollar against the pound. >> that's right. >> thank you for joining us. be sure to catch money in motion this friday. ie tomorrow, with me, by the way, at 5:30 eastern here on cnbc. also happening right now, fireworks at center of banking committee hearing. eamon javers is in washington. what's going on, eamon? >> hi, mandy. the too big to jail companies, whether some banks are so large it inhibits prosecution, flared up again today in washington. this time senator elizabeth warren taking on obama administration treasury officials about whether or not the appropriate sanctions were laid down for hsbc, a bank accused of money-laundering on behalf of mexican drug car tells and rogue states. take a licen to what warrant had
to say. >> if you get caught with cocaine, chances are good you may go to jail. if you get caught with cocaine repeat lid repeatly, you may go to jail for life. but if you violate international sanctions, your company payes a fine and you go home and sleep in your own bed at night. i think that's fundamentally wrong. >> treasury officials told warren they got a call from the department of justice when the department of justice was considering sanctions against hsbc in which the doj was asking what the economic impact of those sanctions might be. people at treasury said they declined to offer an opinion to the folks at the department of justice on that, mandy. >> eamon, thank you very much no that are news. in the meantime, on deck, hear that? that is the collective grown of 1 billion facebook users. social network is getting another face-lift. the creepy yet cool new tip
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this is to make it easier for content that people share with friend and content that exists in the world around you. updates and news organizations. what facebook and mark zuckerberg call a personalized newspaper format. . this is designed to be visually richer. photos are huge and videos front and center. this is taking a page from instagram as well as tumbler. facebook is taking a bit of the mobile design that's cleaner and bringing it to the desktop so there is consistency in the news feed across all devices. facebook says what it is trying to do is get out of the way and put the content front and center. here is what zuckerberg said. >> our view is that if you contribute to the personalized newspaper you need to share any kind of content that you want. status updates, photos, videos, links, locations, pins from pinterest if you want. not back then, but now. you also need to share with any
audience you want. you should be able to share publicly with efrp in the world. share with all of your friend. >> sharing publicly does raise questions about whether facebook is trying to compete more with twitter. there wasn't a lot of discussion about ads but facebook said this will help all content including communication from brands and advertising be reacher. facebook said it'll roll it out slowly, starting today. first in the web format then mobile format. you can sign up to be on the wait list for the new news feed right now. >> buffalo john, ready for to you join us today, a couple of problems aleast according to reports. advertise are fatigue and user fatigue. will this redesign help? >> this is aimed squarely at addressing both of these issues. putting pictures front and center and videos easier to find is great for the end user and makes it easier to find
information. but also advertisers find information easier. so people should get ready for larger louder ads. this is the digital version of putting jie an neon lights glowing and arrows pointed right at your news feed. >> in terms of ads on facebook, am i right in thinking, john, they need to be very parti participato participatory. they are used to being interactive. they need to have a interaction. >> absolutely. facebook is now responsible to their shareholders and they will be judged squarely on user engagement and user engagement has been going down and down despite a billion users on the social network. so despite the louj ads in front of you, engagement is higher. advertisements geared directly to the udser. >> is there any possibility this will turn people off? just more ads, more stuff? will it turn people off and exacerbate the problem already going on?
>> there is absolutely that problem. facebook, despite losing the user engagement, people still go to facebook. 68% active users, so no one is going way from facebook. the idea is to make the ad seem more organic to the news feed so you don't mind seeing them. and bringing information, facebook is bringing advertisements from local card purchases. if you have a card from the grocery store, you will see the ads show up in your facebook time line. >> julia. >> mappndy, the reason they hav photos and show the ads, people engage much more with photos in news feed than with text updates. people want to see photos and that's why -- that's influencing all of the changes. at the enof the day, what people engage with, friends or advertisers, if it is photo based, that is going to direct a lot of what they see on the site
moving forward. >> can i ask a question, kind of off the topic of facebook, but in the same sector, what happened to google plus? >> so funny you should mention that. new redesign looks like google plus. going el plus is growing, becoming a platform for sharing video a lot. can you do live video interactions and live streams via a google plus. but certainly haven't had the engagement google was hoping for years ago. but as far as social networks and google going with their big success to date. >> you think google plus will be here to stay and get bigger and better? >> yeah. google has the resources to make sure that google plus will be here. >> mandy, i think it is interesting that zuckerberg stressed that people on news feed should be able to share with friend within and public. that's what google plus has mastered. this adilt ability to share wit different circles of people. so just make sure it isn't just
a platform for friends to share with friends but a platform sharing with anyone existing. with what twitter does. >> and facebook is trying to keep up with ininstagram. >> pandora reporting earnings after the "closing bell." internet music teaming is a tough business. a lot of competition. there are reports that google will take another crack at this space in the summer and reports as well that apple may be delaying their attempts to get in. just minutes ago, apple did decline to comment about those reports. let's bring in rich from albert free, a lot to talk about here rich. let me get straight to pandora. they have more listeners, they just need more money. are they going to be able to do this? >> key to earnings growth at
pandora is both growing the user base, grow radio specifically, we expect them to be around 8 -- between 8 and 8.5% when we report tonight. and leveraging that growth into mobile ads and getting the major ad networks, the group and omni comes of the world, to include pandora into the media buying pro kbramprograms. we expect sometime this year for regulatory relief on the content side. and in the interim, they have reintroduced usage caps which was effective in the past and could very well be effective this time around. again, and that's the status on pandora. >> we just mentioned reports that apple is having delays in their streaming plans. is that potentially a boost for pandora, rich? >> at the end of the day, we weren't in the camp that was
pounding the table on wall street, that apple was going to come out with a music platform. first, mobile five. music platform. then emmy's. now st. patrick's day and whatever fascination that wall street makes up. we didn't think it was going to happen because apple radio will probably be in the cloud. apple tv probably in the cloud. probably integrated with new apple tv product and that takes a long time to develop because streaming radio for apple doesn't work. they are to change the model. >> julia, bottom line, it is clear it is already a crowded space and more players want in. what will they say about potentially the winners and losers here? >> it is just such a crowded space, mandy. it is too soon to say. i think there will be a lot of players in the space. we have to remember that pandora isn't just competition for spot
fie, but also i heart radio from clear channel and what we are waiting to see from apple and google. both apple and google are in talks with various music for screaming service. they have a lot of advantage for people. we will see how that plays out. mandy, i don't think there is just one winner but i think pandora will face a lot more competition than it does now. >> watching for earnings to repeat after the bill. thank you very much. could eye scrolling be the next hot smart phone feature? what is it? basically when you're looking at your phone, you just move your eyes it make it scroll up and down. hand free. the new york times and others reporting that the new samsung ga galaxy phone is supposed to have that feature. and it is coming out here in new york. fantastic. daylight savings time will cost you more than sleep.
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pretty heat offy price tag when you think about it for one less hour of sleep in the meantime where's wre at job growth taking care of grandma not your grandma someone else's grandma. jane wells says the granny nanny business is attracting all kind of entrepreneurs and all flocking to granny, right, jane? >> that's right, mandy. americans are growing older and more can afford to grow old at home. that is fertile ground for aspiring business creators like sydney cap lin. >> i love being with the seniors. learning from them, being around them. i love their energy. even when they are cantankerous.
p. >> she calls her saeherself a granny nanny. doing shopping, running errand for the more wealthy on the west side. she is licensed, bonded and charged $60 an hour. okay, jane, you still there? no, i'm afraid not. there's live tv for you. unfortunately we lost jane due to a technical difficulty. we will try to get her back. next, dog food supermarket and bacon addition of street talk and banks are leading the rally but still well and truly off their all-time highs. is there still time for to you get in? we will dig in, next. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market.
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analysts tell me the deal is kroger decided to make prices reasonable the past few years. that is a penalty to gross margins and meant their product offering proving more resilient. that stock up 26%. >> i believe they are luring customers away from other competitors. >> nice pop. >> also hot topic, real hot today. >> here is your headline. hot topic will be bought by sycamore partners. the teen apparent, sycamore is a fan. >> not doing much but some analysts expect that to change and basically some saying slapping a thousand dollar price target on this one. that stock now up 20% in the past 12 months. >> i believe overtaking apple is top u.s. mutual fund holding as well.
>> including citigroup. >> and also that 1,000 price tag and not the only ones. dell is a very interesting story. latest twist in the buyout story. >> icahn saying dell should pay out 50.7 billion as a special dividend. other investors are opposing plans for the pc product. >> sufrrging, surging 10%, did someone say bacon? >> that's just a tremendous run today. also, strong conditions in international operations specifically eastern europe. >> okay. also our last stop of the day, pet smart, really, excuse the pun, smarting today. >> that fourth quarter profit did pop. the disappointing outlook for 2013, i thought it was
interesting, a risk here is the sales of super premium pet food. the point was consumer facing higher payroll taxes, might start seeing those slip. folks might love their dog, just not willing to pay that for the food. >> quite a lot of competition. >> a lot of competition. >> and sites like wag.com. okay, thank you so much for joininging us today, josh lipton. let's dig in on financial stocks. since the markets low in mid november, financials have been leading this rally up more than 20%. but here is the but, they are still well off their highs, some 50% since a peak in 2007. great to have you with us today. >> hi. >> despite the fact they are down so much, still since 2007 highs, there is only one stock, one bank have you a buy on. >> that's right. right. actually the rally we have seen recently is impressive. we were buyers of the rally
early on. we got off the train a little bit early and we missed some of the end of this rally here. but at some stage, given where investors want to give credit effectively for expense reductions coming down, i must prefer to own a bank where execution is terrific. and that's j.p. morgan. and unequivocally the best banking bar none. >> the rally since november, are there any particular banking stocks that you will be selling at these levels that maybe you have overshot a bit? >> i think actually the whole group is pretty fairly valued. so you can argue you can trim a bunch of places when you compare j.p. morgan it bank of america, you have j.p. morgan trading at nine times earnings right now. b of a trading at 11 time and the group is trading at 10.5. b of a is above the group and j.p. morgan is below.
when you look at history of execution, the execution is outstanding. so if you bet on earnings coming through, and having dependable earnings i would much rather bet on jp rather than b of a. >> every investor loves dividends, right? are there any financial stocks looking to hike dividends? >> great question. we get a preview of that tonight. the fed's stress test results come out this evening. we don't get the news about dividends and buy backs until next week but it gives people an idea of how severe it is from the fed's perspective and get a sense of where dividends can go. with the big banks a lot of them basically told us where they would be on the buy back perspective. so there's not nearly as much a surprise as you might get with regional names. >> are all banks passing with flying colors are are there any stress points showing up?
>> yeah. i would expect this year we're not having problems the way we did last year among big banks. i don't know if we have problems with other ones but from my perspective and the ones i know, there is no issue with capital plans. big example is city. they stub their toe last year. and some people believe it cost him his job. former ceo. new management team there being very, very conservative. they are not taking any chances. they just want it show that fed views them in a good light. they got the okay to do a moderate buy pack and they can move on from there and make it a 2014 event. >> i only say this only half tongue in cheek. but when you consider so many of the big banks have had a lot of risk stripped away from them and regulations tightened on them and they are too lame it fail now. >> that the goal, right? this is what regulators wanted
to do. they turn them into boring businesses, lower risk taking, the idea of taking risk o out of a pink like to me is -- it doesn't even make sense, a risk taking enity. that's the purpose. you make loans, take risk. so you don't want to make them completely riskless but they are certainly trying to turn them into utility like creatures. that's for sure. >> just keep your head down and keep working. >> thank you for joining us. up next, brains gone wild and first it was trans fat, then sugary drinks, and now this. mayor bloomberg's new war has us all saying, say what? but first, bill griffith, what is coming up on the "closing bell"? >> let me turn down my ipod. the dow may be set to close at another new high today but not everybody is bullish. gloom, boom and doom, mark fasher will defend his prediction after massive sell-off on the horizon. and big hitters joining us, jack
well, tells us whether stocks will keep rallying as long as the fed keeps money easing policies in place. and larry fink weighs in on the latest bank stress tests that are coming out after the close tonight. look forward to seeing an all important last hour. marie will join us at the stock exchange. in the meantime, "street signs" is back after this quick break.
today's say what goes to new york mayor michael bloomberg. a new campaign on ear bugs. he want to curb hearing loss from listening to loud music. he fought against big sugary drinks, baby formula, trans fats and of course we are all waiting to see what he will say next. in the meantime, let's get back it jane wells with the granny nanny business which is attracting all kind ever people. >> yeah, a senior home care growing 40%. we are talking about sydney kaplan, a grandee nanny. she charges $60 an hour to high-end clients on l.a.'s west side. but bigger facilities expect to
gross $15 million this year. here is jake and kaplan talking about the outlook. >> it is definitely becoming a very enticing industry for some of the larger corporations. those that have been centralized more on the medicare side. they are looking at the private side. they don't get rate cuts. >> can you get rich? >> i think can you with the right skills set and marketing to the right people. i think so. i mean, i'm making a living. >> mandy, there are 40 million americans age 65 and older. that is supposed to grow to 67 million. we have the whole story, including for these two entrepreneurs the challenges they face in growing this business. >> in terms of the challenges to growing this business, to what extent do they say is difficult for people to work in the business? for people that have the skills?
i i ma i imagine this business will get bigger. >> it is a challenge finding the right people. kaplan charges $60, but average pays $10 an hour. and this is hard work. you have to have people that like seniors. who won't abuse them or take advantage. it takes a special person. if you are the right person, you will be in high demand. but the pay, than great, unless you are sidney kaplan. >> absolutely. and very physical work as well. >> thank you so much. very interesting story. time for energy close. highest level of the week today. closing up around 1%. let's get straight to cme for a check on how other commodities are moving. commodities we don't always look at like grains. president of the mccarthy commodities, come on, let's make grain sexy. soy, wheat. how do we make gains on grain? >> there is pressure on wheat and corn. however looks like it was
oversold and we are having a bit after bounce today. thank goodness bringing wheat back and corn. soy beans, still strong. based on the chinese buying and so that's giving the mark eat little bit after boost. and it is holding its ground even though the south american crop is big. they are having problems getting soy beans out of there. chinese keeps buying. we have a big report tomorrow. that's going to tell the tale on which way we are going. and they said it was going to be something bearish, though the market has come down a lot in the last couple of days. when these ideas were coming o out. so i'm not sure. if it is a bearish report, maybe it is in the market and we do see the market get a lift. >> eight-month lows. virginia, thank you very much for the snapshot. >> payroll taxes, higher gas prices and bad weather. how do american retailer survive this bad news? trifecta. plus we will introduce you
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as you can see, the dow is up marginally by 25 point. off the highs of the day. nonetheless, pushing for a third straight day now into record territory. hopium at the mall. same store sales mostly upbeat today. let's bring in courtney reagan. what is working and what isn't? >> it is an interesting retail report when we look at february. february same store sales up 3.the%. that is compared to the 3.3 increase, at least for the remaining nondrugstore retailers still reporting monthly. patterns seem to show sales did improve as the month wore on suggesting consumers adjusted to the higher payroll taxes, gas prices and receiving delayed tax refunds. though adverse weather in northeast and midwest blamed for negatively impacting sales. february is the smallest month of the quarter and 11 nop drugstore retailers reporting, the picture isn't as full as it one was. seven fewer retailers reporting,
including target, macy's, kohl's and nord trom no longer reporting on a monthly basis. gap turned in a stronger report earlier than expected. a vender erroneously posted information prematurely on a website. the plan was for gab to report after the bell. once they saw the mistake, sales were halted and moved up better that not 3%. limited tjx, costco, you can see, shares are trading lower. february is a weird month. >> pretty weird month. stick around, courtney. let's ask the question, who is getting it right these days, catering to women specifically really pay off? joining us is consumer retail analyst, rick snyder. retail specialist mary aetna. mary, who is getting it right? >> macy's continues to get it right and vertically integrated retailers in the middle of the mall getting it right. and pretty much ch hicos. depends on the age rage but
there are a lot of them doing very well. >> rick were for you, any surprises or disappointments? >> i thought the gap was a little business after surprise. i thought ross stores was a bit of a disappointment. it is unusual for them to miss. >> let's get to the issue of hello winners. with jc penney, with hello bread winners. and women entrepreneurs around the world. and is the professional woman, you think it will pay off? >> i think it will pay off for the macro level. for jc penney, i would be more worried about bringing the customers back that i lost in the last year, and not worry about the ad for yesterday and today. it is a beautiful ad but i'm not sure it'll accomplish what they hope to. >> what do you think, rick? luring in the ladies. haven't they always, retailers generally been trying to lure the ladies? what's new now? >> i think it is a great way to go. i know in my case, i don't have
much to say about where dollars get spent and i'm happy to have it that happy to have it that way. i think the jc penney ad as well is one of those ads, wow, that's a great ad, but you look and think five minute later and say what was that ad for, so i think that it missed the mark a little bit. >> you don't think it will move the needle in terms of the stocks for these companies, rick? >> no. i don't think so. i think advertising works best when you have great product and a great message, and i don't necessarily think jc penney has either right now. >> i agree with rick, yes. that's the thing. as soon as a lady sees that ad and then goes into the store she's not going to get the essence of jc penney as one sees it in that ad, so i think she will be disappointed. maybe in a year it will be a different story, but right now i agree with rick. >> in terms of the macro environment, quite a lot of headwinds in terms of the payroll tax increase and gasoline prices up 10% over the period. there are a number of things here, and to what degree will
these show up in a more negative way moving forward for a number of retailers, or do you think maybe we've passed the worst of it? >> i think there's continued negative news for some retailer. i don't see jc penney turning around quickly but it will be positive for the gap, they have the fashion right and capitalizing on two big trends, colored bottoms or novelty bottoms but the athletic wear that lulu lemon has that women wear every day. >> not too far off spring break will help some of the retailers push some of their newer products, so i, again, think consumers are focused on event-driven sales and event-driven promotions. that's what they are looking for. i like the new jc penney ad but i don't think it spurs demand right now i have to get to the store and see that stuff. i think it won't come until you have the event-driven sales and that merchandise better be there when the consumer goes in.
if she was previously disappointed and gives it another shot, big trouble. >> who do you think is link up to do event-driven sales best? >> i think macy's is doing a good job and saks and it's event driven more and more and in the first quarter it was weather driven. spring goods were selling much better last year than this year, and i think if we don't get weather, the events could fizzle. >> yes, and we have an earlier easter this year versus last year, so if we have an earlier easter and we don't have warm weather that could impact sales negatively. >> so bottom line, what do you think is losing out in the current season? >> the same -- the same old suspects. i think it's jc penney. i think it's some of the people who are just competing on price, and i think that the brands that are working well are the ones who have captured the fashion, and it is about product, product, product, and it's the ones who also have proprietary brands so that if you go to a jc penney you shouldn't be able to
find brands that you see there everywhere else, and i think that not too keep trumping macy's, but they have done a really good job in gaining proprietary share with their brands and their customers. >> okay. mary, courtney, stick with us. in the meantime, rick, thank you very much. >> thank you. >> and last week we introduced you to cake style, a personal stylist in your mailbox. today we bring you another retail subscription service. this one for kids and joining us now is the ceo and co-founder sean percival. i know you're a dad and how you came up with this idea, but let me ask you. your subscription service is 33.99 a month and you send $100 worth of goods to your door. how on earth do you make money? >> you know, it's interesting. really when you think about clothes, kids clothes cost about $2 to manufacture. the gap who were just talking about, want to sell you the item for $20 so what we're doing eliminating the middle man and going to direct consumer. don't have stores and don't have
the overhead of the other retail sales. >> and what w.h.o. would you say is the main competition, bricks and mortar or other companies out there doing similar things to you? >> yeah. a company that takes the kids experience of the kids clothing boutique online and we compete with gap and baby gap and carters and gymboree. >> where do you actually get the merchandise that you're offering in the packages that you send? who are you working with to provide the clothing itself? >> yeah. we do our own manufacturing so i would return from a trip to india where we have our own line and also work on liquidation and excess. a lot of companies like tea collection like to liquidate with us so that it doesn't go to tjx. a very clean way to liquidate their items. >> i'm intrigued by it or the issue that i've heard is i've heard of a lot of these websites and while you can get kids product for much less, it's how do you make money in the end,
and that's what there are a couple of prands out there, website retailers for kids called totsies that i know of, a they have issues trying to break even and having been a former kids merchants it's a tough business out there, and, plus, you've got all of the retailers in the mall who always undercut any price that a customer can get online or at another store. >> you know, with mine itoms it about trust. zoo littly is doing $500 million in revenue, business four to five years old. itunes, when you have the credit card on file you will keep spending and over the lifetime that there will be value. >> if you want to send the goodies back you have to pay for the shipping yourself. does that perhaps stop people from doing that? >> no, because we have a swap group. moms are used to doing swapping in real life and get together in a big group so we've created anine line way to do that. if it's not your style you swap
with someone else and you'll find who wants that item in another location. >> how many people are signed up to your subscription service, and how fast is it growing? >> it's growing very fast. i'd not disclose actual membership. 100,000 moms have created accounts and doing a few million in sales right now. we're about one year old. >> thanks so much for coming and describing what wittlebee is. >> colombia university is going through $5,000 worth of this and 100 pounds of it every single week. what is it, next?