tv Closing Bell CNBC July 12, 2013 3:00pm-4:01pm EDT
a solution to the problem. the state is mulling a plan that would allow students to attend state schools without taking out a loan. it's called pay it forward. students would pay back a percentage of their salary for about 25 years after graduation to pay for future students. let's see where it goes. >> have a great weekend. >> "closing bell" is next. happy, everybody. we enter the final stretch for the week. welcome to cleveland brown clk. i'm maria bartiromo. the market trying to squeeze out another big win. not sure we're going to make it. >> boeing is not helping. we've had a very good week so far. i'm bill griffeth. the stocks struggling to hold onto the early gains. still, we are set to close what has been the second best week this year so far. >> amazing.
>> and that compares to that very first week, the monster week we had to launch this whole year. so to be the second best week says a lot about this week's action. >> bill mentioned boeing. it's the down stock. the one in the news. accounting for almost all of the dow's closes today after a fire aboard an ethiopian airlines dreamliner yet. it had hit a shy earlier, and now the shares are falling. the trading volume on boeing more than 400% above the ten-day moving average. >> that's accounting for 50 dow points. so look at where we are right now. the dow jones industrials average would be positive if it were not for boeing's decline. down 33 points on the average at 15,427. that's probably what will weigh it down toward the close. nasdaq has gone the other direction. technology a leader today. up 10 points on the composite of 3,588. and the s&p 500 index sort of in
between. it's down just a fraction right now. any positive close there, of course, would be another all-time high, trading at 1,674. >> yeah, we'll see. the dow and s&p 500 less than an hour away from possibly hitting new record highs. we hit record highs yesterday. bob, what a week for the bulls. >> reporter: it has indeed. it's simple. we have the old leaderships back, bank, bio, housing. interest rates have sort of stabilized. i mean, of course, treasury rates. and they have stabilized this week. boom, housing stocks back in the leadership. this is just one week for some of the big names there. the same situation with bank stocks. remember, they have been big outperformers. great numbers from jpmorgan, from wells fargo. the housing numbers, mortgage numbers were not that bad. generally, the big banks are on the upside. some of the regional banks are down. again, a lot of relief. i'm surprised there hasn't been more selling into the news as we got the bank earnings. biotech is another one.
the big market leader. and we're going to have ipos next week. i'll be on top of that next monday. it's the ibb, you can buy into that. global industries for the week. it's been good by and large. the s&p 500 is right there in the middle. germany, china, brazil, japan all to the upside. i tell you what worries me a little bit, bill, maria, emerging markets today, you've seen real damage in philippine, thailand, brazil. they're all down today. what's happen something they're very worried about china's gdp figures. they'll be out on sunday night and there's some concern that number will be disappointed. the chinese government said 7.5% is the target. some people are talking about it could be in the 6s. that'll be out sunday night. back to you. >> thank you, bob. what about that, bill? >> we may have the oldest twinkie ever. i don't know. i was just hitting the desk with it. >> the rock. >> yes. >> but it's nice to look at -- >> think how old that is, considering what the shelf life
of a twinkie -- >> when was the last time -- you never -- >> well, i don't know. this is a rock. >> we're going to get her to eat one. >> that's coming later. about an hour away from a record-breaking week. l let's bring in our panel of experts to talk it over with us. i'm going to go with santelli first, just to kind of wrap up this strange week. bernanke's speech kind of ruffled everybody. >> the auctions. >> the auctions were in place, even at higher yields, the demand for the 10s weren't that strong. what do you make of the week, rick? >> don't forget, duelling fed speak this week. each going different way. so the surgeons can't agree whether they want to remove the qe from the patient or not. that nervousness is adding. so let's summarize. we're nine basis points lower in
5s and 10s, like three hours ago in yield. they've come nine basis points off the lows. having said that, we are still down 18 basis points on the weak on a five-year, and still down 14 basis points on the 10-year. the way i would look at it, as much as everybody wants to talk about the fed and taper, i think it's gotten to the point now where there is so much debate within the fed, that i think the emperor is naked to the participants. the strategy is uncertain. the outcome is uncertain. no matter what they do at this point, i think the market will be much more -- or much less forgiven. so i think rates aren't going to stay down as long as many believe. and i think the auctions also gave us a glimpse that even with the move in higher rates, investors are still a bit leery, even though the auctions weren't bad, they certainly weren't terrific. >> yeah, that's for sure, rick. thank you. quinn, let me turn your
attention to tech knoll here. it looks like tech is catching a bid after being the lagger of the year. >> maria, i think people need to be aware that it's the old stodgy names to us that are attractive. look at a group like microsoft, cisco, intel, they've had some good moves, sort of back in vogue, but when you back them out, they've gone nowhere for over a decade. they're yielding over 3%, all of them. they're great opportunities here. they have cash hoards, and what we're going to see in the coming quarters, they're going to be boosting those dividends. so i think like we saw a few weeks ago, the long-awaited pullback, and it was scary. you get out the shopping list and you go to town. you buy these names that have great cash balance sheets and are going to be here, finally, after a decade, to move higher. >> and, larry, you're getting out of the dividend play as
well. you want to get into the cyclical stocks, anticipating more growth in the economy, right? >> that's right, bill. over the last few week, we've seen summer markets can trade with light volume and overreact to the downside, as they did with the fed chairman's speech, and react to the upside like they did yesterday. what's significant here, we need to watch oil prices, bill. oil prices are key to the cyclicality of the economy. them drive inflation, and a whole host of factors. that's the single biggest risk. it's not the fad, the interest rates or the earnings. it's what does that tax mean on the consumer? oil is up. gas could hit $4 this summer. if it does, the consumer will fall back. it could still be good for cyclicals. it could still be good for energy producers. those are names you want to concentrate on for the portfolios. >> and aaa told us -- the average price of a gallon of gasoline rose 4 cents alone. >> and people are expecting 10 to 20 cents in the coming couple
of week, because we're still in the strong driving season. i agree with you, larry, in terms of the impact on the economy, if oil keeps going up. there is a good debate out there that we are approaching a tipping point, and prices will start coming down because of the amount of supply. on the market. >> yeah, yeah. >> obviously, you don't see it that way? >> well, certainly, maria, you make a good point. there's always this debate about supply and chicken egg. and what's surprising is in the weak data out of the emerging market, we saw china -- the china trade data was miserable. everyone is worried about the gdp for china. and the oil is staying strong. in the face of a resilient dollar, the oil has stayed strong. so that bodes well for the oil going forward. again, we hope it doesn't go up, because it's a headwind on the economy. >> peter, you like the energy stocks, don't you? >> we do in here. and i think really is the american public is going to have to get used to the fact that all their energy products will be
priced on a global scale. the infrastructure bottlenecks that were inhubting export of refined products from the u.s., the lack of pipeline, rail cars, those are being addressed. so the land-locked crews that not used to get to the global markets are getting there. that's sending the price up. that's creating opportunities domestically for build-out in infrastructure, for suppliers, for exploration and development. the resources have to be replenished constantly. there's opportunities in north american history story, despite the anti-energy pronouncements from the administration. >> peter, what did you think of the bank earnings, jpmorgan, wells fargo? they set the tone, but it was back and forth. what did you make of the numbers? >> it's interesting that they have heeled. there's still an awful lot of back chatter in terms of
dodd-frank. it's cause tds uncertainty. but the economy continues to improve. loan growth continues to kick in. we're focused on the basics of banking. return on assets and net interest margin. if a bank can grown the loan portfolio and do it profitly, that's the franchise you want to invest in. those giving it away on price, it's a charge-off waiting to happen. we're selective in the financial sector. the names with the great run, and they looked a little winded right now. >> all right, guy, thank you all for your thoughts. have a great weekend. >> thank you. >> thank you. >> we'll see you soon. in the final stretch of trading. about 50 minutes before the closing bell. the market was down about 38 points, but it has to do with shares of boeing. >> and we hear from art that the man is flat at the close. no bias either way, to sell or buy. jamie diamond admitted to jim cramer this morning that wells fargo is out mortgaging his
firm. >> he this do a better job in the mortgages -- >> you admit someone is doing better than you? >> absolutely. they've been doing better for a long time. >> quite a compliment from mr. diamond. up next, tim sloan tells us whether he's worried about higher interest rates hurting his bank's mortgage business. speaking of financial, find out if you should bank on this red hot sector. yahoo! shares up more than 70% since that lady, marisa m mayyer took over. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there.
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so the banking index getting a huge boost today after better than expected earnings from jpmorgan chase and wells fargo. kayla breaks down the results for us. >> reporter: the banks are always bellwethers for the economy, and investors saw a quarter of progress. there were far fewer loans going bad and fewer reserves needed for those, but cautious borrowers have kept the loan value down. wells fargo, rising 19%. revenues beat though flat.
and the firm's lesser-known on investment banks, the surprise, the upside in mortgages. wells was expected to suffer as fewer people took out mortgages in the quarter. not so. origination rose slightly. that drop-off fear is still to come. diamond, as you said earlier, admitting that wells fargo out-mortgaged his bank, down 17% to $49 billion. total loans also fell. on top of that, the bank shifted more cash toward carrying higher capital levels. that drove margins to record lows of 2 baunt 2%. next week is busy for banks. we have citigroup out monday. goldman sachs tuesday. and bank of america, which analysts have begun favoring, out wednesday. morgan stanley reports on thursday. one message we could hear, don't worry about rising rates. it means the economy is only getting better. back to you. >> all right. thanks. >> that's what we keep hearing. thank you. go behind the headlines of the wells fargo results. >> joining us first is timothy
sloan, cfo at wells. thank you for joining us. >> welcome back. >> great to be here. >> take us through the quarter. 19% increase in profits. how would you characterize it? what dove the performance? >> maria, we were very clear with the quarter. the revenue was up, as kayla, net on a growth in income, up $250 on a sequential quarter basis, because of the growth in loans and the growth in investments. we had nice fee growth in many of our business, including credit card, retail deposit, retail brokerage, investment banking. expenses were down almost $150 million, so operating efficiency improved. in addition, we had good credit performance. our loan losses were down from 72 basis points to 58 from the first to the second quarter. when you put it all together, our roa was up and r.o.e. was up, other metric we follow. so very pleased with the quarter
and reinforces the strength of the customer-focused diversified model. >> rates have been going up. the rates on the 10-year, for whatever reason, listening to the fed, expecting the tapering, and we've heard refis have come down. that has to have an impact on your business. >> oh, bill, you're absolutely right t will have an impact. we started the quarter with $77 billion worth of pipeline in mortgage, and we ended the quarter -- meaning we started the third quarter with $64 billion pipeline. that's an incredibly strong pipeline, which is terrific. but you're absolutely right. as rates go up, those borrowers -- some of the borrowers who could have normally qualified and want to do a refinance aren't going to be able to do that. so we were very clear today in our just, and just to reiterate, the mortgage volume will come down. we've had seven quarters in a row of over $100 billion of mortgage origination.
we don't think that will happen in the third quarter. >> do you think that's why we're seeing fewer mortgages being taken out, because rates have crept up? i think at some point we'll look back and say, 4.5%, remember when we could have borrowed there. but 4.5% is still way up from 3%. >> maria, it is. it's one of the lowest rates in history. home affordability, when you combine not only rates but also home price, it's still attractive. what you saw in our mortgage originations in the second quarter is a continued shift in terms of the purchase money activity. the purchase money percentage of our mortgages went up from 31% in the first quarter to 44% in the second quarter. that really reflects the strength in the growth in the housing industry. >> let's talk about the regulatory environment. now, senator elizabeth warren and john mccain want to bring back glass steegle. let's see what senator warren told cnbc about that bill. >> the central premise behind
21st century glad steegal, if you want to get out there and take risks, go and do it. but what you can't do is you can't get access to fdic insured deposits when you do. >> should the fire wall between insured deposits and money put at risk by investment banking be put back up again? >> well, i'm a little bit confused by the whole -- the whole idea, because this is a fire wall that exists todayment we can't take insured deposits and move them over to our investment banking business. that's just not the way it works. it's a separate subsidiary of the holding company, which is separate from our bank. we think that the banks today are much safer, because they're diversified. we think wells fargo is safer today than it was four years ago and ten years ago, because we're a larger, more diversified company. one of the businesses that is bigger today than it was five years ago is investment banking. we think it's a good thing, not a bad thing. >> she makes the point that the
five largest banks in the country are 30% bigger than they were in 2008. i don't think she's talking specifically using insured deposits for the investment banking, but the fact that there is investment banking that is being put -- the company at risk by implication it puts those insured deposits at risk. >> yeah. well, again, as john -- john stump mentioned on our call this morning, it's a free country. everybody can have their own opinion. our pen is that wells fargo is a very diversified firm. we have more capital today, more liquidity than we did as when we went through the downturn. we were able to survive the downturn, acquire wachovia, integrate wachovia with less capital and less liquidity. we think we're fine and we don't need to be broken up and don't need businesses that are separated. >> of course, many people believe this bill has very little chance of success. at the end of the day, you have to have a plan b. you and your counterparts in the industry have broker dealers,
have a large supermarket type situation that these guys want to separate. so might we see assets on the block in the coming year? >> you won't from wells fargo. look, we don't need a plan "a," because we have the best plan a in the business, and that is, let's focus on the customer. >> you see no reason to have to sell assets as a result of this pressure? >> no, not at all. 90% of our investment banking business is done with our commercial and corporate customers who use us for other banking services. it's part of the relationship. they want to use us. if they didn't want to use it, we wouldn't be in that business. >> what about the capital story? in terms of u.s. banks having to hold more capital on a percentage basis versus global counterparts. is the u.s. system under pressure and at a disadvantage in the global story? >> i don't think we are today, because the u.s. financial system is much stronger.
the u.s. economy is much stronger than almost anywhere else in the world. but it is something that we need to be very watchful of. and i think the regulators need to be thoughtful about making sure there's not a competitive disadvantage. we don't feel like we have one today. but over time, if there's more regulation, that could particularly happen. as of today, it's not an issue for wells fargo. >> you must have an opinion on when the fed's going to taper. everybody does. and what that's going to do to interest rates, because it does have such a direct impact on your business. what's your version based on your view of the economy of when the fed starts to pull back on the easy money? >> well, my opinion is i don't know for sure. we've got to be able to operate wells fargo in any interest rate environment. we've been able to demonstrate we've can do that. interest rates have been all over the place. a year ago, the consensus was we'd be in this low-rate
environment for multiple years. that's obviously changed. the consensus today seems like the fed is going to begin tapering in september, though we think there's a reasonable chance of that occurring. >> is the sizable dividend increase in the cards this year or next? >> we're hopeful to continue to increase the dividend. we've been able to do that over -- just from the first to the second quarter, we increased our dividend by 20%. the best way that we can think to increase our dividend is continue to report record earnings. we look forward to the annual ccar, excuse me, and we're looking forward to that and we look forward to the dividend increase. >> that's the capital plans, the federal reserve will be okaying for your bank and all of the banks. so you must have been pleased with jamie diamond's comments about well, huh, tim? >> you know what? my mother taught me always take a compliment. we have a terrific mortgage business. and the fact that jamie dimon
thinks we're terrific, that's great. and we think they're a very great competitor, and we love competing with them every day. >> all right. thank you. heading toward the close. 35 minutes left in the trading session. down 41 points. all of that decline due to the decline in boeing today. if you haven't heard, one of their 787 dreamliners caught fire. nobody's hurt. no passengers on board. just sitting on the ground there at heathrow airport. did catch fire. unclear what caused it. the thinking is it's maybe the battery problem. and then, there's this. twinkies. >> should i take it out of the package? >> making a triumphant comeback across the country. but the snack cake may have an impact on a major dow stock in your portfolio. >> want a bite? >> how hard is that? >> go ahead.
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boeing down about 5%, 6% as a result of the fire on the 787 dreamliner in heathrow. no passengers were on board. nobody's been injured. the questions remain as to what caused it. could it have something to do with the battery? we don't know at this point. a lot of questions in the air. right now, the dow is down 35 points towards the close. by the way, any positive close for either the dow or the s&p will be another new all-time high. maria? >> bill, walmart saying that they will scrap up plans to open three new stores in the nation's capital this week, in response to a proposed minimum wage increase in washington, d.c., city council. but the giant retailer will have twinkies fans flocking to the stores. the nation's largest retailer is stocking the shelves with the tasty delight, as we speak, after seven months, it could be a good weekend for walmart and certainly twinkie addicts. with shares up 13.5%, is now the time to buy the stock? let's look at walmart and talk the numbers. technical side of the story, as well as the fundamentals. the technical, abigail doolittle
back with us from the seaport group, and john stevenson is with first asset management. good to see you both. john, let me kick it off was you. twinkies aside, what's your outlook for walmart, in light of the rising gasoline prices? >> yeah, i think a great sale on the short side. it's great news the twinkie drought is over. but the stock is looking tired. it's very hard for it to move the needle. the company is absolutely enormous. the company itself is only guiding to earnings growth of 0% to 2% and will revise it downward. i think it's going to struggle, and i think the other reason you don't want to be in the stock right now is because, quite frankly, the market's moving to cyclicals and away from defensive. i think the timing is right. i think the valuation's okay, but it will trade lower. again, i think this is something you'd be more inclined to short rather than go long. >> abigail, what does it look
like from your standpoint? >> twinkies may be back, maria, but when we think of the sweet treats, they're likely to be a snack for the walmart bears. walmart has stalled into a sideways range of urn certainty. when we consider the fact that walmart's upfriend is starting to weaken as shown by the breaches on recent pullbacks, it really tells us that walmart is likely to pull back down into that range, down towards 66, and that the range itself may resolve to the downside for a measured move below 60. i agree with john here. i'd steer clear of walmart. >> interest be. so both on the fundamental side and the technical, are you both want to sell walmart here? >> absolutely. >> sell walmart. buy the twinkies, though. >> buy the twinkies, right. is there anything that would change your mind in terms of making the stock a buy? what would be the catalyst you
would look for? >> from a technical standpoint, maria, if shares were able to break above the range, above 80, i think maybe you could become more constructive. that would certainly have to come on a more positive quarter. we look at the last quarter, put up a messy quarter, missed on same-store sale, missed on traffic. i think that it's unlikely, though. i think that eps, they talked about the slowing global economy, and that will show in walmart's -- >> go ahead, john. >> i think the back door is negative. if you saw quantitative easing extending into infinity, that would be the time to look at a defensive like walmart. but it faces so many headwinds. the payroll tax increases. you have slow refunds, weather-related issues. the list goes on and on. you look at the cost, just to move the noodle, so hard on it. 1% increase in comps in walmart is equivalent to 26% at bed, bath & beyond. there's so many other places to be in the defensive space if you want to be there. >> all right.
thank you. we'll see you soon. >> thank you. >> just looking, 37 ingredients in a twinkie. >> what are they? >> well, there's 37. you got time? everything i've gone over so far is stuff i've heard of, so we're okay. >> okay. >> nothing too foreign. heading to the close, 38 points. doesn't look like an all-time high for the dow. the s&p, that's a question. we are positive there. that would be another all-time high. >> the investors have loved yahoo!'s performance ever since marissa mayer took over. but up next, nicholas carlson will tell us why she shouldn't get an "a" grade. and whether you should be making any moves in your portfolio. if you're serious about taking your trading to a higher level, tdd#: 1-800-345-2550
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>> look at that. >> sweet. a surge of over 70%. >> however, her journey has not been without some twists and turns, so we want to talk about yahoo! the past year and where we go from here. joining us, take us through it all, nicholas carlson, business insider, and our own jon fortt. jon, there's been such fascination during the tenure of marissa mayer, one of the most fellowed ceos in america. why is that? >> well, it certainly helps if your stock chart looks like that. they were able to unlock stock from the asian asset, but a few other things she's been able to do, she's worked on this year. working on the culture. free food on the one hand has been a good thing. but there was a method to the madness there. she also eliminated working from home. get people having free food in the office, they want to stick around, you get better ideas that way. and then, maternity leave. she got some criticism for coming in, not taking maternity leave, but she ended up doubling
maternity leave for employees to about 16 years. another cultural change. finally, i'll point to a workforce overhaul. yahoo! employees have gotten pretty darn happy. i overheard tenure, the rankinings on glass door have risen to the highest level in five years. er rating as ceo is 85%, pretty high. higher than ellison at oracle, but not as high as ellison at google. >> so b-plus, 70% higher in the stock? what's wrong? >> well, that's right. i gave her a b-plus, because it's too early really to tell how much of an impact she's had on the company. now, look, the stock is up 70%. but it has nothing to do really with what marissa mayer has -- >> oh, can you say that? she's been in charge for the past year. couldn't it be people have confidence in her leadership? >> it could be that. or it could be ali baba was
given money and they started to buy stock with it. and they also know yahoo! is in line for another $7 billion, maybe sometime in the next 6 to 12 months, and will probably use that money to buy more yahoo! stock. this isn't to take anything away from her. she's done herself a good job by putting herself in a nice situation where she's not under the microscope, because of all of the money. he can go out and buy tumblr for a billion dollars. >> yeah. part of the knock on the predecessors is they were falling behind technologically, losing market share where it mattered. is she try starting to right this ship? >> no, and that's why i have to disagree with nicholas. yes, it's true, she was able to unlock value from the asian assets. everybody knew that was coming. the problem was, investors didn't have confidence in yahoo!. i think she, through change she's made to the board, the top executives that report to her at
the company, and to the attitude toward yahoo! in silicon valley, a few more start-ups looking to be acquired by yahoo! no way tumblr would have gone to yahoo! before marissa. it's looking up. >> and let me be clear about the job she's doing. it's a good job, but just too soon. i talked to one executive who said the friday before marissa joined, the parking lot wasn't full until after 10:00 a.m., and empty again after 4:00 p.m. she come, bam, people are there at 7:00 a.m., working hard. no doubt, she's done that for yahoo!. and she's doing a good job. a b-plus is a good grade. of course, marissa mayer wants an a-plus in everything. she's doing a lot of things to get that. look, mail is flat. the home page is down. the big thing she did was this weather app, and it has no ads in it. so it's just -- it's way too early to tell if she's doing a good job yet. >> okay.
so what would be your marker for you to believe that she's doing a good job, then, if not a 70% rally in the stock? >> can i jump in here? >> yes, jon. >> because i agree with nicholas overall whether it's too soon to tell if she's a long-term success. i think for a first-year ceo, she's done at least a-minus work. you can't get the brand-new products out the door in just a year. she needs to get revenue moving longer term for this to be a great tenure she's had. >> i agree with jon. that's the thing to look at. does yahoo!'s core birks does the revenue grow there? if it starts to move in an explosive way, then, yeah, marissa mayer is doing a great job. and that'll happen when yahoo! develops the next tum bertha, the snapchat, something users can't get enough of, and it's out of yahoo! and they can stick ads in it and erb revenues explode. when you see that happen, you know she's doing a great job. that's what she came there for. not to sort of follow through on
this ally baba deal. >> all right. shay, how about we reconvene in a year? >> i'm there. >> thanks, guys. >> thank you so much. a lot of skepticism about her. a lot of people felt this was a job that would not actually be fixed. and then, when you see the performance in the last year, you have to give her some credit. >> exactly. >> we're in the final stretch of the trading. we have a market down 28 points. if you take boeing out of the story, this market is actually up. boeing is representing about 50 dow points on the downside. so that is why we're seeing the dow to the downside. >> twinkie aging by the minute. when we come back, we'll look at whether portfolio allocations need to be changed amid the historic rally in stocks and the sell-off in bonds we've seen. later, is baseball ready for more replay to overrule its umpires? mlb executive joe torre has been working on a plan.
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pamplona. this was the week they were running. seema breaks it down for us. >> hey, bill. one of the biggest winners was web md. its turnaround strategy seems to be working. earnings and outlook topping wall street consensus. shares hitting 17-month high. technology has been on a tear. amazon and netflix hitting new eyes. other big winners are in the housing sector following bernanke's comments on keeping interest rates low and dr horton and lennar up 5% for the week. intuitive down on disappointing earnings due to sluggish demand for its products. and boeing shares falling after news of a 8 7 87 fire. it's one of the worst performing stocks not just for today, but for the week. back to you. >> all right. thank you very much, seema. the dow and s&p 500 trying to close at a new high for the second straight day. the dow down about 19 points but it has everything to do with boeing. is it time to start thinking about readjusting your
retirement portfolio and exposing yourself to more stocks? bob pisani with us. >> reporter: i want to give people simple principals. keep calm. have a plan. don't time it on fed rumors. the plan should be to figure out how you want to divide up your retirement dollars. here might be a typical allocation for a 50-year-old cup, mix of foreign stocks, bonds, yield, and you think it should be 10% instead of 25%, fine. don't next month say oh, my heavens, the fed's talking, it should be 5%, and next month, oh, my heavens, they're not talking, it's 50%. you'll drive yourself crazy and you'll lose money. don't do that. secondly, look the at the portfolio every six months and rebalance. that's the second basic principle. if the target is 70%, and you have 65%, because the market's advanced pare the exposure down. be aware of the relative
outperformance. so remember, buy low, sell high. look at small-cap stocks, the s&p versus the russell. russell up 22%. s&p up 17%. partly onto idea that the u.s. economy will -- not a crazy idea to put a little more money into very large cap stocks. another idea. more nerve? you should notice the developed countries like the u.s. and europe have traumatically outperformed developing country. it's down for developed countries. again, if you believe in your allocation model, it's not a crazy idea to consider taking some money out of developed countries and putting it into developing countries. you want to learn more about how to build the retirement portfolio using low-cost etfs, check out our website, retirement.cnbc.com. check it out and learn how to build a diversified global
portfolio. i've seen this so many times, people don't stick to their plans. >> you're a long-term investor until you're not. >> exactly. >> volatility comes up -- >> the headlines drive people crazy and think they're suddenly in a need to go -- >> but you're saying put money in developing economies because this is a long-term growth story. the emerging markets have seen outflows, i agree with you, now we're seeing money go into the emerging market, but the growth rates are going to come back. >> that's a very good point. if you believe that 10% of your money should be in, for example, emerging markets, not an unusual unreasonable allocation, and seen a drop of 15% in some of the markets, developed countries are up, you buy low and you sell high. you take some money out of the money -- the stuff up big and put it stuff that's down big. >> we got the menu for the cafeteria here. serving sanguine with alfredo sauce. >> he is referring to
something -- >> he is -- it's a long story. >> i think the word i'll use is optimistic. >> sanguine. >> it's a good red wine, too. >> all right. bob. 20 minutes left in the trading session. we're down maybe just 8 points. the s&p 500 and nasdaq are at session highs. >> the market wants to go higher. stocks have the second best week of the year. stephanie link says investors should have extra cash on hand to buy dips in the market. she makes the bull case next. the craft beer business is booming, but it's not all about the brew. it's also a huge job creation story. we'll toast to that coming up. ♪
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that has everything to do with boeing. so we're seeing money move into this market as we approach the close. a bias to the buy side. >> we do. stephanie link from the street's with us and what a week. crazy week. again. >> bill, maria, you have housing moving your way. the fed has been moving your way with the comments of bernanke, and this coming week, he'll give congressional testimony. the senate on thursday, this coming week, the house on wednesday. you have the consumer doing well, okay, with the consumer credit, retail sales, the job, and the industrial part doing well. 3m, a new high. the bill giants are hitting 52-week highs. in spite of the strong dollar. you want to watch the earnings season to see where we're going from here. >> stephanie, i know we want to watch the earnings season. i know we probably will see an upside surprise at some point, even though the expectations are 3.5% profit growth. what about revenue? we're not seeing revenue growth.
doesn't that still indicate end market demand? >> i would argue as the economy gradually improves from here into the second half of the year, and it will be held by continued stimulus by the fed, you'll see better corporate profits. they'll improve as the economy improves. both wells fargo and jpmorgan told us. by the way, i was hoping i could buy a dip on the banks today. we didn't get it. you didn't have this great revenue number. but you had very good execution. and within both companies, there were pockets of strength, right? so jpmorgan had good capital numbering and good credit card numb numbers. that means the consumer is spending. so i'm looking for opportunities. >> -- end positive with the numbers. >> some of this may be in the market by now. but net end balances 1.8 billion to the buy side. a lot coming in at the close. >> a tremendous amount of
bullishness. 49% bulls and 18% bears. the long-term average is 39-30, bull-bear. >> sunday night, we get gdp numbers from china. we're seeing a market come back here and trying to set all-time highs ahead of the important numbers. >> gdp, retail sale, it's all from china. so it will be a very busy sunday night. notice the data coming out this week, really crummy, and yet the markets rallied pretty strongly. i think the market is very interesting here. i think a lot of bad news is expected. >> all of the emerging markets. >> it could be china, but it could be the earnings story next week. >> and bernanke speaks twice, as you pointed out. >> that's right. and there are bigger names. it's a lot of the big banks and ebay, citigroup, bank of america. >> so not putting any money to work ahead -- >> we have some cash on the sidelines because we want to take advantage of when you have the upss of the day, you want to be able to take advantage and buy them. >> did you buy boeing today? >> i didn't buy boeing, but i was looking to buy honeywell,
but it never came down. we have our pockets of names. >> we would take money off the table, bill and maria, right here, and let the markets sell off and then put that to work. that's where we're expecting the market to be softer and then put the money to work. >> that's what makes a marketer. thank you very much. >> we'll come back with the closing countdown for the friday. >> then, after the bell, we'll bring you the latest on the boeing dreamliner fire in london, and whether it could ground the stock long term. you are watching the "closing bell" on cnbc, as we wrap up the week on wall street. we're first in business worldwide. stay with us. ♪
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welcome back. we're heading toward the close. the s&p is in record territory. the dow is struggling. we just might be able to work this out. this is this week. kind of meandering along until the bernanke speech, headed higher on thursday. we've come down here. this is boeing right here. the decline because of the 787 dreamliner fire at heathrow. we are coming back. we're down 7 points now. we got all of the numbers from china coming sunday night. which are you inclined to go here? >> as a trader, once again, i want to go home short, especially -- >> you don't want to be long in this market? >> long term, i want to be long. i think i can buy it cheaper later on. going home, as market maker, i want to be short against the chinese numbers, and the fed head, bernanke, he may take away some of what he said. >> he goes back and forth. >> that's his job. >> we do have that.
earnings, china numbers and bernanke speaking. >> and -- >> all right. thank you very much. the dow is finishing positive. so record close perhaps with the dow and the s&p, 13-year high for the nasdaq. join me tonight, another market wrap-up at 7:00 eastern time. courtney reagan joining me at that time. here's maria with the second hour. have a good weekend. 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 marie was bartiromo. we have two new record high closes. at the end of the day, money coming into this market. the s&p 500 finishing at another record high. the dow jones industrials average settling out, looks like we're flat on the session for the dow, down just about two points. it's close, though, and watch. the dow average, we actually could have two new all-time highs with the dow and the s&p 500. photo finish for the dow be which has been dragged down by boeing all day today.