tv Street Signs CNBC July 2, 2013 2:00pm-3:01pm EDT
and this is not your kid's bike. our summer series continues with a $32,000 bike and that's what you're listening to, today's theme song, bill conti's "going to fly now" aka the "rocky" theme song. it was the number one song on this day all the way back in 1977. let's get down to business and take a look what's happening with the markets. the three indices have lost steam and are all sitting mildly in the red now, but year-to-date gains, the dow, s&p and nasdaq are all within a percentage point of each other which almost never happens, folks, and really has not happened in a very long time. the nasdaq, meantime, is trying to gain for the sixth day in a row, a run we've not seen since september. of course, it's looking a little bit on shaky ground though as we speak. meantime, breaking news out of cairo, millions -- you can see there on your screen and taking to the screen hours before the ultimatum about mohamed morsi. there's a report that the
military has come up with the plan to overthrow the government. global markets are obviously watching this very carefully. one is on the ground and in the crowd there. we'll hear from him in minutes, but meantime, let's get straight down to the floor of the stock exchange, because josh lipton, how much is the situation in egypt which is clearly developing right now weighing on the session? >> yeah, mandy, listen. we had been in the green this morning. you got some economic data, factory orders and traders certainly telling me focused on those headlines overseas, egypt as well as greece and portugal so you look at the blue chips. you had been up 74 and now you are down 18. a couple individual movers, i would just highlight for you. one would be jpmorgan, raymond james and they are going to rate this one a strong buy, talking about a more favorable outlook for eps growth. near price target is 64 bucks on that one and apple continues to work, back-to-back gains. apple saying it filed a trademark application for an iwatch in japan. guys, back to you. >> thank you very much for that,
josh lipton, back out to sharon epperson at the nymex. what's the expectation we're seeing on crude right now? >> you can see it right now, mandy, as we're making that march towards $100 per barrel and looking at the contract at the highest levels of the session for the year right now and keep in mind a lot of oil traders are very concerned about what they are seeing from the pictures in tahrir square and the protests going on right now in egypt. there's a great deal of concern about what will the state of the government be in the coming days and what that will mean for a key economic choke point. the suez canal is responsible for as many as 4 million barrels a day of opec oil. the energy administration official says that in 2011 there was as much as 2.2 million barrels of total oil. another key point that people
are watching and there we're seeing about 1.7 million barrels of oil of crude oil flowing so the big question is whether or not we'll see a disruption of shipments due to what we're seeing there of the unrest in egypt. that's a concern of imtraders here as they are watching the price of oil. >> sharon epperson, thanks very much. we're sitting at 99.54, a stone's throw from cracking the $100 a barrel mark. rick santelli, saw lots of outflows from bonds in the month of june, but with the middle eastern situation getting a little bit hairy right now, to what degree could u.s. treasuries regain their safe haven status? >> you know, that's a great question, and it would seem to be such a logical conclusion that it will happen, but if you look at how treasures, ten specifically have traded since coming into our time zone at 8:00 eastern, real been in a super narrow range and we sit
now -- and we sit at 2.48 so it's hard to garner any possible movement from the middle east, but maybe the dollar index is where some of that safe harbor buying may be going. the dollar index is up more 3 oil of a cent approaching half a cent and it's very, very firm. >> we'll keep an eye on what's going on in egypt. we've got reports that the egyptian army plans to oust the islamist president morsi and plans to suspend the constitution. of course, we'll keep on following the market impact as well. let's get back to what's happening here in the united states. we have just one word to capture auto sales headlines, and that is, wow. phil lebeau, this is a fourth of july week and a banner day for the automakers, no? >> one that i think a lot of people in the auto industry are saying will we ever get back to 16 million? looks like they will get there. we'll get the official number in the next hour, but i want to
show you where the sales pace is expected to come in and a little bit of historical perspective about where we were. it's expected the sales pace for the month of june, again, the pace, not total sales, will be 15.9 million or 16 million of you've got to go back to 2007 to see the last time that the auto industry was at a rate of 16 million vehicles, so what was driving it? clearly the improving economy is a big factor but another factor is what's happening when it comes to pickup trucks. that's why when you look at all the june auto sales they are all above estimates between 3% and 5% depending on the automaker but key in on the big three because ford, gm and chrysler also huge gains of more than 20% when it comes to pickup trucks, and that's being driven by the rebound in the housing market, small contractors who have decided you know what, i've had this old truck for a while, it's not as fuel efficient as the new models, it's time to restock the fleet. that's why we're seeing pickup sales gain more than 20% for each of the big three in the month of june. what does this do for production
rates? they have been steadily increasing over the last couple of years. we're likely to see that continue in the second half of this year, not huge gains, but gains nonetheless, and, remember, all of the big three for the most part, on almost all of their plants, they have eliminated the two-week summer shutdown or they have scaled it back considerably, and that's why when you take a look at the shares of the automakers, not seeing a huge pop because a lot of people have already factored in these greater production schedules, mandy, nonetheless, but a move to the upside for all the auto stocks, a day that a lot of people are wondering will we ever get back to 16 million. looks like the industry is finally there. >> certainly good news. let's ask the question, so goes the u.s. auto industry, so goes the u.s. economy. let's bring in our guests. luan, to phil's point, are all the positive factors driving auto sales in the first half going to remain in the second half? >> it's a little too early to tell right now but you look at
consumer confidence and construction starts and look at the dow and say things are going in the most positive way, and the dow really has a factor on the luxury buyers, whereas phil said the construction really shows the pickup sales. consumer confidence shows how many people really think they are going to keep their jobs and can either finance what w a subprime loan four to five years out and still feel good about it. >> it's a virtuous cycle, isn't it, steve, because if you've got a job, can feel secure about a job, more secure about buying a car and then more cars means more jobs because we're seeing the short shortened summer shutdowns. i've seen the jalopy you're riding. >> a bicycle, by the way. >> why is 16 million important? any time in this economy we can get back to the level we were in 2007, be it in housing, be it in lending or any aspect of the
economy, that's a huge victory. what is very interesting though about auto production here is while auto production is getting back to that level employment is not. employment has actually lagged. in fact, phil, i'm not even sure how they are building the cars unless they bought a whole bunch of new machines to build them, but when i look at the growth rate of auto production compared to the growth rate of auto employment, it's really lagging behind. >> and you won't see those jobs come back, steve. the bottom line is that those jobs that were there in the auto industry, you had too much capacity building too many vehicles that were not being sold. >> right. >> and that's why when you compare what we're seeing now with 2007, different worlds. back in 2007 you would go to a dealership, they were greasing the deal with several thousands in incentives because they had to move the metal. that's not the case anymore. production is matched with demand, and as a result the dealers are not having to goose the deals as much for people coming in. there's that natural demand, so those jobs in the auto industry, i know people don't want to hear
this, by far, most of them are not going to be coming back, a slight increase, but you're not going to see most of them come back. >> and here's the other double-edged southward, great news what's happening with the automakers and the double-edged sword is this. got a number of the plans cranking out cars and vehicles at 24-hour capacity. if there is more demand beyond what we're seeing right now, do they invest in new plants in the united states or do they ship those jobs and those vehicles out to places like mexico which is a much cheaper place to do business and i believe they have great quality in terms of car construction? >> odds are, mandy, you won't see them add a plant any time soon. got a little bit of wiggle room when it comes to capacity, not a lot but a little bit of wiggle room. if they get to the point where they do need to add even more production for greater sales in the united states, they might add an assembly line if there's a facility that has enough space where they can add one. they don't want to add a whole plant, if at all possible, and,
yes, you will see increased production in mexico because that's become the favored target for all automakers, not just the big three, but all automakers look at mexico as a prime place for manufacturing, and that growth is likely to continue. >> we're way on that subject, luan, what degree do you feel mexico and other areas will be a threat to u.s. production? >> one of the reasons is not because it's low wage but because nafta has an agreement with mexico which means that we get to import those without a tariff, but also brazil has bilateral agreement with mexico which means that they get to import cars without a tariff as well, and that's unheard of anywhere else because if you -- if you produce in brazil, you can sell in brazil. if you don't produce in brazil, there's a 90% import duty. there's not that duty if you get -- get the cars from mexico to brazil. >> that's an excellent point.
last word to you, steve, because people have been freaking out about mortgage rates going up, what about auto loan rates? >> the auto loan rates have been very, very competitive. part of a derivatives market, bundled auto loans that have come back and come back strongly. they will be a little bit more expensive. people out there buying cars, i don't know how much the interest rate at the margin, what's more interesting to me is the extent to which production is equal to demand and companies have pricing power. >> right. >> they are not going to price themselves out of very competitive market. the pricing power out there, it's a big change, and i think, phil, i don't know, but the stocks look better when a company has pricing power than what they don't. >> absolutely. >> and look at the average transaction price right now, 31,663, the price being paid at a dealership, steve, and that's an increase of 1.2% compared to june of last year, just a smidge below the all-time high. i see that increasing because you have the match between sales
and cars right now. >> the united states has been crowned the. >> reporter:iest states in all the land and the unsellable $125 million arthur. take a guess at just how much that mortgage payment would be on a monthly basis. and, of course, we're keeping our eyes on the breaking news out of egypt. we're going to have a live report from the ground when we come back on board. you can clearly see what's going on live in cairo there in tahrir square, and we're also, in terms of the market, we've lost all the gains from the morning and we're currently sitting at session lows. don't go away. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions
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. the united states of snobs. "travel & leisure" has ranked the snobbiest cities. coming in at number three, boston. well, those surveys say all those harvard grads give the city an air of superiority. the runner up here is new york city. i mean, okay, i'm not even going to explain that up. i think we all know, but we were surprised by the top spot, san francisco. they say perhaps it's part to its super high end dining scene but the city did rank first in the survey for being the most gay friendly. what do you think about this list? tweet us at streetsigns @cnbc.
sales up 19% in the real estate market from a year ago but inventory was the lowest in the quarter on record. why? new yorkers are stuck in place. they are unable to sell. robert frank found three high uber end apartments but the price tag, absolutely insane, right? >> absolutely insane. new york may have a penthouse shortage or at least that's a fear among brokers after today's report. brown harris stevens saying there was a big decline in sales in the multi-million dollar category. sales of propertiesed 5 million or more fell 25% from a year ago and $10 million plus homes fell by nearly 50%. inventory a big problem. brokers saying they are running out of ultra luxe penthouses and properties. but a lot of that inventory is
overpriced. we went around and did some shopping, some aggressively priced, shall we say, priorities, the penthouse at the power hotel, 16 rooms, panoramic views of the city and central park, 23-foot city but it's 125 million smackers, not including the annual maintenance of half a million dollars. also this, the 18th floor of the sherry netterland, 7,000 square feet, 2,000 of outdoor space and the price tag is $95 million. that's a little rich, even for the super rich? that's it, the pool of potential buyers must be extraordinarily small, and i guess places like that also have all kinds of special things inside, one of a kind things, which maybe not everybody wants. >> that's true, and also today's wealthy virus especially, wealthy buyers, and could be a great place at $60 million but there's not a comparable apartment selling for $95 million than that other apartment. >> one of those apartments is priced at a whopping $125 million so we did some
calculating and got out our calculator and if you bought that apartment and put down a 20% down payment fact oregon in a 30-year fixed mortgage rate of 4.17%, your mortgage payment would be, drum roll, about $612,568 per month. so what else might you be able to buy with $125 million? you could have financed the movie "despicable me 2," costing under $80 million to make. and you could have bought restaurant guide company zagat which google snapped up for roughly that amount back in 2011 and could buy lance armstrong if you want him, reportedly worth about $125 million. let bring in cnbc contributor and real estate powerhouse, power broker dolly lind. what do you make of the manhattan real estate scene? >> to be expected. we have low inventory and high pricing. that's always going to be a disconnect, and as robert said, people are smart. they are value buyers. they are savvy buyers, and they
would rather bait for the perfect thing to come on the market for a reasonable price deemed by them and they won't buy. >> you've talked about the manhattan class warfare, for example, on the very high end, those with a whole boat load of cash and others who are stuck. >> think co-op versus condo. co- co-condos are flourishing because the foreigners can buy it but the co-op market, stagnant because foreigners can't buy it and for that reason condos are winning big. >> still the best value? >> may not be the best value case by case basis, weather investment strategy. >> if you had $5 million and came to manhattan, which area would you pick and what kind of property? >> what would i pick personally in probably the upper east side because the upper east side is seeing very low pricing compared
to the rest of the market, so i think it bodes well for the future. greenwich village is the hottest market in the city, so you have to be really -- >> don't necessarily want to buy into the hottest market though, do you? >> unless you really want to be there. >> it's a special place and we talk about the for buyers being so key to that very top end. do you worry at all about what we're seeing in china and brazil and even russia and whether we're going to see some impact here in new york? >> we may see impact, especially in terms of china. you know, china concerns me because of the ability to pull the cash out. >> right. >> so that's the greatest concern, but so far so good. >> haven't seen it quite yet. >> maybe they will benefit. maybe they want a safe haven to put their money. >> they do want it but can't pull the money out. >> dolly lenz, great to have your expertise on the show. thanks, robert. still ahead, we'll head live to cairo to find out what's happening with the situation with reports reesantly that the army is planning to oust the
islamist president mohamed morsi and they do plan to suspend the constitution. we obviously need to know what kind of road map the army would have. we're at the session lows in terms of the u.s. market and part of that could be due to the escalating situation in egypt. stick around. we'll continue to follow story. creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better, but run different... to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work.
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let me show you what's happening with the markets out there. earlier today the dow was up by 74 point at the high. it's currently down by about 74 point as you can clearly see that last year. all three indseize have lost steam. seeing crude inch up towards the $100 mark per barrel and the u.s. is getting a safe haven bid. why? well, we can partly explain some of this market movement to what's happening in egypt. let's take a look at some live pictures of tahrir square in cairo. egypt is on the verge of turmoil. brace i bracing for a showdown. mohamed morsi has been given a wednesday deadline and military opponents are expected to suspend the constitution if no deal is reached. morsi said he'd continue to walk the path as outlined. statement, the egyptian market, interestingly enough, is actually strengthening as you can see there.
it's up by nearly 5%. the egyptian pound as well gaining on the black market around 4ment 98 right now to the dollar. sorry, that's the wrong index. nbc news correspondent is on the ground there. good evening. and please bring us up to date with what you've heard. >> reporter: everything is headed to the crucial deadline a few hours from now and that's really what's giving everyone in egypt a sense of anxiety. you have two rival protest. on the one hand those in tahrir square and protests of president morsi calling for his ouster and feeling it works to their advantage and they are extremely happy about the hours as they tick down because they feel in coming horse president morsi will be forced to step down. otherwise the military will intervene and issue their road map to transition egypt to a democracy. now, had a that looks like nobody knows. on the other side of this city,
there is another story unfoldingch supporters of president morsi, the islamists and muslim brotherhood and others have taken to the street demanding the president remain in power, that he's the elected leader and say that anything that removes him by the military would amount to a couple of these are the two camps and on the street it's extremely divided. there's already been skirmishes and conflicts and on the political front the gaps are just as wide. the military has not made it clear what they will do. some suggest they will dissolve the islamist parliament and will suspend the constitution and really that may reverse egypt back over where it has been over the past several years. some say the military may actually force president morsi out of power, and that is what is creating this sense of anxiety on the political level. all day long, president morsi has been holding emergency talks and has met with the minister of defense and the prime minister. no indication that he has been able to reach an agreement with the political opposition so far, even, in fact, late last night, the presidency said that they
were blind-sided by the announcement of the military. so it gives you a sense of the kind of tension that has gripped egypt in the final hours before the ultimatum kicks in. >> a lot of tension, indeed. do keep safe on the ground. would like to bring in the new policy adviser and managing director. what do you think is the most likely scenario to occur now? >> well, it's a very difficult situation. its options are now narrowing and very limited choices. i would argue that he has no good choices at this point. close to 1 million people on the streets of cairo and tahrir square, and the military is making it clear that it could not afford the situation. the writing is on the wall. morsi would have to step down or
potentially face a new election. >> i've got to jump in here. would i love to keep him talking with you -- unfortunately, we do have a bad technical connection there, but thank you very much for your thoughts anyway. meantime, with ear going to go for a very quick break and track the trades for you. should you follow the insiders when it comes to your money, either buying or selling? and we're also serving up stocks, piping up, or even on the rocks. it's your boozy overcaffeinated edition of "street talk" just as we like it as "street signs" is back in two. ♪
at one point this morning we were up by 74 so you get the feeling that we're really losing steam here and the situation is such that the egyptian armed forces have basically put out an ultimatum, at crunch time and plan to suspend the constitution. plan to ouster president mohamed morsi if he indeed cannot reach some kind of deal with his opponents by wednesday. as we know, that is very, very soon. of course, it is evening there in tahrir square where millions of protesters are gathering. we'll continue to follow the situation on the ground and find out what is going on. i want to get to sharon epperson as well to see what the oil impact is. we're already above $99 a barrel this morning, and we're creeping ever towards 100 right now. tell us more, sharon? >> oil prices are settling right now, mandy, up about 1.50 on the session, right around 99.5 a barrel and prices have been rising steadily since sunday evening as the situation in egypt has escalated. we've seen prize rise almost $4
in that period of time. keep in mind, we're look at prices right now ever so close to $100 a barrel. neither heist price we've seen since september of last year, and there's a great deal of concern about what will happen to shipments along the suez canal, the choke point that traders are concerned about, not so much about the experts of coming from egypt of oil. there really are no net exports, but really we're looking at the transportation issues for the suez canal and the suez mediterranean pipeline and whether or not there's any disruption there. that could be a very serious situation for the oil industry. >> thank you very much, sharon. >> joining us on the cnbc news line, what do you think is the most likely scenario, and can it be peaceful at this stage as we get down to the wednesday deadline? >> it's difficult to tell at this point. it could go either way. one can't completely rule out the possibility of a compromise deal, albeit, you know, it's
looking very difficult, but i -- you know, it's -- it's a situation where both sides understand that, you know, they have their forces mobilized on the street, the muslim brotherhood and their allies came out with their troops so they are trying to pressure the muslim brotherhood and president morsi know they can't hold on to power so what they are doing is they are enhancing their bargaining power on the negotiating table, so let's see how long that takes. the 48-hour deadly was a bit too short for this kind of a compromise deal. >> right. >> but we just have to wait and see. >> what would be the road map if indeed we reach the scenario whereby the army ousters the president and suspend the constitution, like how long would it be before we see a new drafted constitution and maybe even a new democratic process of presidential elections. >> there's two routes to that. one route assumes that there's a deal, and the muslim brotherhood is not oppose the ouster, so in
that scenario we could, you know, go by a 90-day time period for fresh elections. they will have to do a lot of, you know, negotiating and sort out a lot of issues before that, but, you know, that's one route, one potential route. >> what do you think the market impact of that situation would be? >> i think that the markets would look at it and say, you know, things are calming down and we'll react accordingly, but let's say that's not the route that the situation takes. let's say that the -- that the deadline comes and there's a miscalculation, you know, and when you negotiate there's all sorts of potential for miscalculation and the brotherhood continues to drive a hard bargain and the army decides to -- to, you know, forcefully remove president morsi. then we're looking at protests and unrest to say the least, and there will definitely be some level of violence and then, of course, the markets will obviously react to that saying things are looking bad and therefore, you know, we'll see
the markets going down. >> indeed. thank you very much for joining us today. we'll continue to follow the events on the ground in cairo. getting back to business. is following the inside money the best way to make some money in this market? catalyst inside fund ticker insaks is beating the s&p 500. herb doesn't agree with this strategy and david miller is here with us, portfolio manager. pushing back a little bit. you'll get your turn. you'll get your turn. >> it's a strategy that does work when people know what they are doing. >> we'll ask you in a second when it doesn't work, but first of all, when should we be following the inside money in the top two excessive in any given company, inside a buy or selling? >> what we found is when companies have several executives buying simultaneously with their own money above and beyond their stock option plan,
that's the best time to trail their activity because if they are all buying in a big way simultaneously with their own funds, usually only doing that for a better reason. >> what's a better indicate, inside buying or selling? >> both great indicator but the insider buying is more predictive than insider selling. >> three times more predictive. let's bring in herb. when is it not a good idea to follow the inside selling? >> when you're not following the smart buyers and sellers, they will always talk about the smart sellers and buyers, my question is when does it trip you up and not work? even if you follow all the rules and regs and they get it wrong. >> chesapeake energy, very heavy insider buying, and interestingly a number of other executives were all selling. after he left there was a huge wave of insider buying, and i think that's actually just to say one executive can be wrong, but usually when you see all of them acting in the same direction simultaneously, whether it's selling or buying, that's usually where it's most
predictive. >> a very good point. which companies in particular are you following right now that are showing like this kind of activity? >> so, we've seen a lot of buying lately in patchy energy, the energy sector as a whole has been particularly interesting and seen some buying in murphy oil. we've seen some recent buying by carnival cruise lines. that's particularly notable because it's the type of reversal situation. the executives had all been selling there and one of them stepped up and put in a seven-figure buy. >> which is a real vote of confidence for the future of the company. >> that's right. kinder morgan, richard kinder, came in and bought $17 million worth of stock. when have somebody that successful, pretty indicative when they are buying in a big way, and they almost know more than anybody external to the company. >> what about green mountain? >> an example where right now there's some particularly intense selling. however, if you look back, when the stock was trading up at 100,
they had several executive selling tens of millions of stock in green mountain and then back in august there was a big reversal where they bought several million worth of stock. come back up into the 70s and now they are selling again. >> green mountain was going part of our street talk but the developing events in cairo caught our attention. and a bullish call on dunkies. did it have anything to do with the doughnut/egg/bacon mons strossity sandwich that we tried here? you won't believe how fast this guy is running. but first, iron man himself, bill griffith. what's coming up on the "closing bell"? >> wow, that guy is moving. >> it's amazing, right? >> unbelievable. disney's "lone ranger" getting panned by critics so far. would another john carter-like bomb stall disney's stocks and
others who say stocks are being pointed to go higher by another 24% a year from now, next july. okay, and one of the world's wealthiest men is with us today and is back here with us exclusively and will tell us when he believes one of his biggest holdings, citigroup will raise its dividend and his ongoing battle with "forbes" about their reporting of his net worth. more hon that issue. maria and i look forward to seeing you coming up on the "closing bell." more "street signs" coming your way in just a minute though. with the spark cash card
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this is the most unreal video of the day, an nfl player running on a treadmill at 25 miles per hour. it's not sped up, folks, this is real. 29-year-old robert gill is a receiver for the arizona cardinals. by the way, a road runner clocks in at 15 miles per hour. so he at 25. doing pretty well. well, america runs on dunkin''s dunkin' brands. shares up 32% this year, up just under 1%. today though on initiation coverage with a buy rating and also a $51 price target. let's bring in the analyst matt
di frisco. what makes dunkin' a buy for you? >> among mid-cap investors there's very little growth opportunities out there, and their top line growth in the expansion, same-store sales very strong and it's got a very reliable free cash flow model as it's 100% franchised. >> a lot of growth ahead, according to your reports. you see what, more than double the french just here in the united states domestically alone? over what time frame? >> that's exactly it. a 5% clip they will be able to double so you've got seven to eight years of good visibility around growth domestically. the white space is right now is the center of the country. 2015 they will enter california, and the most important part is the returns they are seeing off the new stores are greater than 20% the last four years, so a lot of good growth and a lot of demand by franchisees to grow this concept into new markets outside of the new england core market. >> talking of new markets, what about offshore and what about other countries? of course, not just talking
about dunkin' donuts, also have in their stable baskin robbins which is very popular in asia? >> correct. that's an interesting segue right there. baskin robbins gives them experience in asia. right now the stock does not have much baked into it, no pun intended there, with relations to growth in the international markets, but if you did get dunkin' going into asia, korea is one market that baskin has a big foothold in so dunkin' could piggyback in there and that's instrumental to the growth story not there now and domestically other channels like the green mountain k-cups, just came out with a new product, ice coffee and green mountain machines so it's even growth outside of their stores. >> got t.matt, thanks very much for joining us. >> thank you. >> what is it with priceline? that stock seems unstoppable, edging ever so close to the $1,000 mark. what's behind the run? and walmart reaching $1 billion in annual sales faster than any other company at that time.
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intraday due to the escalating political situation on the ground in cairo which we're continuing to follow. on this day in history, the first walmart opened in rogers, arkansas. fast forward 51 years. walmart has more than more than customers and over 10,000 stores in over 27 countries. walmart reached $1 billion in annual sales in 1993, faster than any other company at that time. and, by the way, if walmart were a country, it would be the 25th largest economy in the world. it really does make you think. why don't we look at the shares of walmart while we're up for it? they're up for the year but way underperforming the dow. what's holding it back? joining us is bud, an analyst at raymond james, and upgraded it to outperform two weeks ago. what was the reason for the upgrade? >> the reason was pretty much it had underperformed in the valuation, come back into an area where we thought for
portfolio managers who have walmart in their benchmark, it was a time to overweight the shares. >> do you think it's a bit of a run-and-hide trade while we're looking more volatile in the markets today, it might be a defensive play? >> yeah. for most of 2013, the market's been seeking kind of a risk-on trade, and that's changing now with some of the situations we're seeing around the world. so walmart represents a pretty good place to park your money for a while. it's got a 2.5% yield, the valuation looks a bit more attractive, and we think that's a trade that makes sense. we did call it a run-and-hide trade. >> do you think it's the achilles heel, the international segment? i know the area needs improvement. when do you think we'll visibly see the improvement on that front? >> probably not in the second quarter. that's one of the things we think has held the stock back this year, is that the international margins have not been good. it will deleverage probably again in the second quarter. but the company is committed to improving the performance of their international segment, and so, by the end of the year,
we're probably going to see improvement on that. they've had a couple of areas international -- brazil and china -- where they're trying to get the everyday low price and everyday low-cost discipline really cemented into their own culture. >> if we put walmart up against its peers in the sector, is it best in show for you? >> best in show? >> yeah, best in the sector? >> well, certainly in terms of a company. it's really a fascinating company to follow, with so many different things going on. there are things they do that are best in show. obviously, they've always been focused on saving people money, so they can live better. that is their advertising prescription, and that is -- that's a way of life at walmart. so from that standpoint, they are best in show for helping people live betterment but there are things they could always do better, and obviously, the foreign corruption -- the foreign corruption practices act has been an issue they're working on. and they're analyzing that pretty carefully. and to see what they did wrong
and how they can do things better. there are lots of areas at walmart where there are best in show. sustainability is another effort for walmart. >> mm-hmm. >> where they're working very hard to improve their performance. >> okay. you have an $84 price target, about 10 bucks from where it is right now. bud, thank you for joining us. >> thank you. feast your eyes on this. a new study named the worst restaurant meal in america. it is the long john silver's big-catch meal at more than 1,300 calories. it contains two weeks' worth of trans fat, 33 grams, 16 times the daily recommended value. heart attack right there. not to mention the additional 19 grams of saturated fat and 3,700 milligrams of sodium, all calculated by the science in the public interest, though i am absolutely sure it is totally delicious. coming up next, two wheels for the rich. we're talking bikes for 30 grand, next. ♪
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as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, 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. the dow is currently down by 64 points. it was down by about 100 earlier on in the session. reacting to the situation on the ground in cairo, where we are reaching a deadline for the president to reach some kind of power-sharing agreement with his opponents. it doesn't look like at this stage that that is occurring, and, of course, the army is
issuing ultimatums at the same time. it's a very tense situation on the ground in cairo. the nasdaq, by the way, if it was up today, it would be reaching for its sixth-straight day in the green. it doesn't look like at this stage that's going to happen. gold, interestingly, despite what is happening in cairo, is not catching the safe haven bid. it is currently down by about $14. i guess the u.s. dollar is also strongest, and that could be putting pressure on gold right now. it is no secret that america's roads are in really, really rough shape, but which state has the worst roads? the reason foundation is out with its 20th annual highway report which ranks the performance and cost effe effectiveness of america's highways and alaska came in dead last. but the 49th state argues the report does not take into account how much it costs to build on those unique roads. by the way, hawaii came in at 48th. interesting to note it has the smallest state highway system in the nation, and it spends nearly the most among all of the states to maintain its roads. of course, you've heard our very
own sully moaning all about this for a very long time, so it's no surprise that the tristate area of new york and new jersey came in at 45th and 46th. by the way, the state with the best highways to travel? north dakota. that holds the title. 7,400 miles of highways are in good shape, thanks in part, to the very low traffic volume. well, how about you ditch the highways altogether and hop on a bike? but not just any bike. high-end bikes are booming. mary thompson is at a bike shop in manhattan. what do i hear about a $32,000 bike? >> reporter: that's right, mandy. lamborghini is making a limited edition bike it helped design, again, as you said, selling for $32,000. this follows on the heels of something specialized bike did last year. they designed a bike along with mclaren of formula one racing that sold for about $18,000. you can't sell or buy either of those bikes here. but what you can buy is this $12,000 bike by specialized. it's called an s-works tarmac
and a women's racer bike. very light. it has one of the carbon frames that's all the rage right now. who are the people buying these bikes? dave fullback, the manager of bike -- bicycle habitats in new york city, says it's racers and road warriors. >> enthusiasts with, you know, with money to spend and with a hobby that they love. they want the best of the best. >> reporter: now, while bike sales were down this spring due to bad weather, last year they climbed 7% to $6 billion, fuelled by double-digit gains in sales of mountain bikes as well as transit or fitness bikes. so what drives dollars into this industry? well, experts say it's primarily new technology, which increases performance, increases the dollar amount that you'd pay for a bike and increases the number of enthusiasts willing to spend those extra dollars. on those bikes. in the bike world, keep in mind, mandy, a high-end bike is considered one that costs anywhere from $2,000 to $2,500 or above.
and most of them are sold at independent bike stores like this one. there are 4,100 of them across the united states. they only account for about 15% of unit sale, but they do account for 52% of the total dollar sales in the bike industry. so if you want a high-end bike, this is where you have to come. back to you. >> well noted. thank you very much, mary thompson. thank you to you for watching "street signs." "closing bell" is starting now. hi, everybody. good afternoon, welcome to the "closing bell." i'm maria bartiromo with the new york stock exchange. >> i'm bill griffeth. we've had another day here, the second time this week, where we've had -- we've lost early gains heading into this final hour of trade. we're keeping an eye on that as we go into this last hour of trading. the dow was up 80 points, or thereabouts at the peak today. but since that time, we have been heading lower. we were down 90 points. we're coming off that. among the stories we're following, the deadline from
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