tv Power Lunch CNBC September 5, 2013 1:00pm-2:01pm EDT
probably walk away now. >> dr. j? >> super value. i find super value in yahoo and in super valu stores. >> be sure to check us out tonight at 5:00. until then, "power lunch" begins right now. >> "power lunch" and the second half of the trading day start right now. >> and we welcome you to "power lunch." i'm sue herera. the american economy, the fed and stocks. ahead of the crucial jobs report, it could be make or break for the fed and its plans to begin tapering. what will be the scale of easing, and can stocks and interest rates both rise, really, at the same time? you know, forget the smartphone, because right now it's the smartwatch war which has begun. samsung firing the first shot with the device. qualcomm unveiling one, too, and then, of course, there is apple. that's one of the big players in the space. we're going to find out who is going to win the war.
then a showdown between president obama and russia's vladimir putin as world leaders gather for the g-20 meeting. syria tensions dominating those talks. we are live at the summit in st. petersburg. simon hobbs is my pattern and he's at the new york stock exchange. hi, simon. >> for those of you tuning in, welcome. we have great data today with one small exception. obviously the economy is front and center as we gear up for tomorrow's employment report. we have three separate reads on the labor market, the adp report showing the private sector with 176,000 jobs in august. that figure is very close to the consensus estimate tomorrow of 175,000 job gains, too. separately we did get a report from challenger that says job cuts since august surged to the highest since february.
but the number of americans actually filing for new claims for unemployment benefits fell -- get this -- to a five-year low. and the four-week moving average is now at levels we have not seen since before the recession. as if that wasn't enough, the biggest part of the u.s. economy also a bright spot. the pace of growth in the services sector growing at its fastest rate now in almost eight years. oh, yeah! let's have a look at where we are in the markets. what's interesting, and this is where it gets really interesting, is that the stock market is now crouched very, very close to the flat line as we count down to the employment report tomorrow. meanwhile, bonds are selling off, so the yields on the ten-year is rising. 2.983%. we could hit 3% this afternoon. it's an important point in the markets. let's bring in kenny pulkari, director and cnbc contributor.
with me is jeff killberg and also a cnbc contributor. i think the most important question at the top of the show, kenny, is can stocks rise if interest rates are also rising? >> i think stocks can rise if interest rates rise as long as the economy can clearly power ahead. if interest rates are rising because they're cutting down on stimulus and people are nervous, because if the economy isn't ready and can't carry histories -- >> why are rates rising now? >> well, because i think the economy is improving. we expect the end of the year and into 2014 for the economy to really start to gear up. so i'm kind of bullish now on the fact that rates may be rising because we are seeing improving -- consistently improving economic data. that's going to be good and it's very consistent with the story we've been talking about of a rising market going into next year. >> you know, though, jeff, i guess one of the questions is, where is the lid on the upside
on interest rates? psychologically, 3% is important to the market, but do we go up through the 3% mark? isn't it not just about rates rising but how rates rise? what's the trajectory? how fast are they going to rise? >> right, sue. that's been the big story on the floor, this velocity of the move. just a couple months ago, it was at 160 and now we're not going to have 3%. we do see 3% trading in the next couple hours typically before the hft, they have that target. i disagree with kenny. higher rates initially are a knee jerk reaction to stocks, and put into chicago terms, sue, it's like a lot of folks here. they like to have late-night burritos, and going down, that sucker tastes great. but there is a delayed dijes shun period on that burrito.
so if there is a delay, even a couple days, we will see the stocks get hit. >> kenny is the one that usually does the food, and i think he's doing balsamic chicken. we have burritos and balsamic chicken. i don't know where to go on that. >> there is a lot of support there. if the market is going to attest we're stuck at the 2016 range right now, i think we'll bounce back. >> that's a wonderful point. the initial reaction is tough to digest. we're looking a little bit lower, 15.75. that's that multi-year high, so we're looking for that. >> if yields rise too rapidly, it will raise concerns that you're going to get a slowdown in the economy, and therefore people at the margin will fall back into treasuries. it's not just stocks in this equation, jeff. >> absolutely, sim moon.
i think that's one of the hidden strategies of the fed. albeit small, they want to taper. they have to find a way to get a bid back in the treasuries, and how do they do that? that's allowing the risk markets, the treasury, to come back down, so i think you're spot on, simon. >> if indeed they do decide to taper, and i know you don't think it will happen in september, certainly. however, what is the market factoring in? 20 billion? 50 billion? >> no, i think the market is factoring in a taper light. they're talking 5 to 7 billion, which i think is ridiculous, actually. they shouldn't do anything if they're not going to do 5 billion. 5 billion valley doing nothing, so i don't think it should make much of a reaction. >> i was ben bernanke. we have to end it there. back to you. let's focus on retail stocks
that have been moving lately on that fed taper talk. many of the big chain stores also out with their latest sales figures today. on the retail beat, we're going to start with sheila. she's breaking down the latest numbers. hi, she'll a. >> hi, sue. if you look at those overall retail sales figures, not so bad. coming in right around expectations just above 3%. not a lot of companies report monthly figures anymore, so when you take a look at those companies that did, really mixed bag. one of the losers today was limited, down, after reporting results. on the winning side, you do have costco up about 2% after reporting august sales including gas of 4%. walgreen's was another bright spot today. better than expected sales of nearly 5%. and don't forget, we still have some more on the way. gap and zummi is actually reporting bigger numbers. you can see some of the shine has been coming off.
we've got a lot of hints lately that back-to-school spending has been off to a slow start. and don't forget about those disappointing earnings from walmart and macy's with expectations not coming down. retail stocks still on a roll. in fact, the s&p 500 retail index up 23% this year alone. the question is if that momentum can keep going and what role the fed will have in that as well. >> thank you very much. absolutely great point. we spoke about rising rates just a second ago in that fed talk and the rising rates impacting retail stocks lately. dom is here with that part of the story. hi, dom. >> hi, sue. since that sizzle in interest rates started back in may, we've seen them go all the way from 165 to the 3% we see today, so the question is, has the rise in rates hit consumer stocks? and the answer is yeah. it depends, though. consumer discretionary stocks as a whole are one of the best
performing sectors in the s&p 500 during that time frame. but if you break it down, some retail names in particular have been hit hard. check out a big box store like target or more upscale companies like coach and ralph lauren. as interest rates rise, could there actually be an effect on the way consumers spend? could it be more costly? another discretionary side of things is homebuilders. rising rates take their toll on home affordability. so if homebuilders have taken a hit as well, so homebuilders, retailers, stocks to watch as interest rates rise, simon. back over to you. >> dominic, thank you. let's check out where we are with j.c. penney, just staying in retail. a gain of 3.5% today. it's reporting that the struggling chain is now dumping martha stewart and her home goods line. courtney reagan is on the streets with more. what are you hearing, courtney?
>> there was a report in the new york post that j.c. penney has decided to do away with the martha stewart products. but remember, we're still waiting for the judge's ruling in the trial. they're reportedly suing martha stewart for living on in the media and we still don't exactly know what's going to happen with that. when i spoke to j.c. penney, they said we cannot confirm the new york post story, but we can tell you we're waiting to hear what the judge has to say and we'll make a decision after that. as of now, those products are still available in the stores and on line. yes, they are on sale but so are a lot of other things in the store. that's part of the new strategy that mr. ulman has tried to bring back. simon? >> they're trying to grab nationwide headlines against walmart. tell us with what happened there, if you would. >> very interesting. about 40 protesters associated with the labor market group showed up outside the manhattan office of walmart board member
williams, asking walmart to commit to providing full-time work with a minimum salary of $25,000 a year, reinstate the 20 workers who were fired for striking and agree to stop all retaliation against workers calling for better jobs. only two of the protesters were current walmart employees, two former employees. lucas handy says he was fired for speaking out. barbara gerst currently works for the company in colorado. here's what they had to say. >> when i started at walmart, they hyped it up to be like the best company to work for, and over time, it fell to pieces. >> i feel strongly enough, and i feel very passionate about the way walmart treats their associates is wrong, that i will stay here or i will go to jail. >> in fact, both have been arrested for blocking the door to williams' building along with one other former walmart worker. they say they will continue to provide service to 40 million customers. activists don't represent the
views of the vast majority of the 100 million associates who do work for walmart. we know those protests are continuing throughout the day in various cities throughout the u.s. back to you. >> a distraction for the labor unions. thank you, courtney. groupon is having another great day. almost 5% up. the stocks now more than doubled this year. sue? >> simon, president obama arriving at the g-20 summit in russia, coming face to face with russian president vladimir putin. military action against syria and the fed tapering are dominating the overall gathering. cnbc's steve sedgwick is live in st. petersburg with the very latest. steve, over to you. >> yeah, a very good speech today. very interesting. they have just finished a chat which was supposed to finish two hours ago on the global economy. now, did syria come up in that conversation? we're going to go to a briefing
in a few minutes with the russian finance minister and find out what went on. but there is no doubt about it, the cloud of syria and concerns about the relationship and the breakdown of that relationship between the united states, the largest economy on this planet, and the host of the g-20, the russian federation, and indeed, the individual presidents, obama and putin, is center stage here in st. petersburg. don't forget, the g-20 is not the u.n. this is supposed to be about global economics, not about global geopolitics. it's supposed to be about jobs, growth, boring issues like taxation, capitol rules, how to look at the banking industry and improve regulation of that. but this has all been overshadowed about concerns of what military action may or may not happen by the united states. as much as the delegates i've spoken to today say it's all about the economy. we're not having any formal talks about syria. there is no doubt about it, there is concern around the
periphery, but the official agenda is being hijacked by syria. i spoke to the russian president's delegate on the g-20, the so-called g-20 sherpa that i talked to throughout various stages, and she said, of course the russians are talking on a whole host of issues, but clearly, at a presidential level, things are pretty thorny between mr. putin and mr. obama. it's not just syria, though. there is grave concern amongst emerging markets here, the likes of the brazilians, the russians, the indians, the chinese and the south africans. actually the global powers that be are not doing enough to help them, and of course they've seen extreme volatility since ben bernanke talked about tapering in the second half of 2013 to pull qe completely off the table in 2014. that hasn't stopped concern in the western market, so to speak, but it has done a lot for the asian and recurring currencies.
it's old concerns about capital 5, which has been really to the fore for the emerging market nations as well. so yes, syria is an enormous issue. but concern about tapering is really there to the fore as well. both of these, of course, are policies which the u.s. has a lot of control over, and it will be very interesting to see whether over the next 24 hours, the russians get this meeting back on track. but that relationship or lack of one between putin and obama certainly sets the stage here today in st. petersburg. back to you. >> very comprehensive. thank you very much. steve cedric joining us live from st. petersburg. major news for students and parents. jp morgan is getting out of the loan business. and what's driving the luxury auto market? >> great deals. when i show you some of the lease offers out there for luxury models, you'll say what?
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it's been a great summer for the automotive makers with sales up across the board. but the hearty segment right now is luxury. phil lebeau joins us live from chicago with huge trends. over to you, phil. >> simon, i've gotten a lot of questions over the last 24 hours. people were saying, why is luxury so hot right now and why was it so strong last month? three reasons really stand out.
first of all, when you look at the luxury auto market, keep in mind these guys have increased their marketing. there is a lot more advertising out there, they're trying to win over buyers. especially when you enter the marketing level, there is a battle going on from the ats, the is, and they're offering aggressive leasing programs. bmw jumped 45% last month. they're offering leases between $455, $500. luxury leases up overall 31% in august, and that's at the entry level. look at the number of vehicles sold for these entry-level models. strong across the board. in most case they were up compared to last year. the ats is new to the market, but already 3300 sold last month, and it's that new competition. that's what's also driving more agressive lease offers out there.
at the end of the day, what you're seeing, whether it's with the ats or one of the other brands, the entry level luxury sales up 28.7% in august. you have a market where the auto dealers are saying, what, you want a car that's going to be 32$32, $33,000 a year? you can go with a camry, but you know what? we could put you in a bmw. it's this striving for luxury which puts people in them. >> phil, thank you very much. in st. petersburg, as steve sedgwick just told us, they were trying to wrap up a meeting which was supposed to be a brief meeting. it went two hours. there is vladimir putin. of course, russia is hosting the meeting in st. petersburg of the that's a beautiful part of st. petersburg, by the way. the delegates are going to be going in to have dinner, and obviously there is a lot on the agenda. syria is top of mind right now. but the economic agenda also
includes the fed, the global economic recovery, or in some parts of the world, the lack of recovery. so we're going to continue to follow the situation in st. petersburg. steve sedgwick is live on the ground for us, so bring us any developments as they warrant. meantime, it's that time of year again, going back to school. if you're looking for a student loan, do not look at jp morgan. the banking giant is getting out of the student loan business. not good news for a lot of students and parents because it's dwindling the alternatives. >> it really is, and the application for federal aid is usually due in june, so this would apply to buyers for next year, but jp morgan sent a memo to participating schools saying effective october 12, they would not be accepting new student applications. they would process any loan application received before that date, and if approved, they will disperse those loans, but they will stop all other loans by
march of next year. they come with stricter terms and higher interest rates and they're riskier, too. most students, of course, don't have a proven record of creditworthiness, and they don't have the student loans necessary that are guaranteed. it used to be big business for banks. 25 milli$25 million in loans we number in 2007 to 2008. the bank cut off non-customers for applying for these private student loans two years ago. today's memo applies to some 12,000 customers who are also student borrowers at jp morgan-chase. >> thank you very much. simon, back to you. >> sue, ahead on the show, a
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computer hackers, a chimpanzee, believe it or not, a con man and several scantily clad females. andrea day has more. >> reporter: we're about to take you inside the delusional mind of a convicted felon. on one hand he was running an international securities fraud ring, but at the same time investigators say he was making a series of films so bizarre even prosecutors couldn't explain it. that's christopher radd, that's a chimp, and those are some of his other co-stars. it's all part of a short film produced by radd. in it radd calls up an insurance fraud hotline, playing the role of public defender. >> so if the insurance company commits fraud on the claim-handling end of it, you all don't deal with it? >> ironic, because the feds say while radd was busy making films about exposing fraud, they exposed him in one of the
biggest pumping schemes ever. a scheme to raise charges. he was so into his role as public defender, when the jury found him guilty of fraud -- >> mr. radd said, oh, my god. audibly, twice. maybe he went so far that he persuaded himself. >> the ultimate scammer? >> scammed himself. >> the assistant attorney on the case said radd began pas a legitimate businessman but he wanted more. >> it didn't matter how he made money, he just wanted to make money. >> so he said the 42-year-old came up with a scheme. he also got hackers to take over brokerage accounts and buy stocks in what they were pumping. >> they controlled everything. they held the stocks they wanted to sell and they were able to pump up the stocks themselves without having to deal with a
whole booilerroom operation. >> he knew them solely by nicknames. he never had any idea what their real name was, never cared to know. all he wanted was his product delivered. >> reporter: and it came in by the truckload. prosecutors say christopher radd made nearly 3 million in under two years, enough to hire plenty of models and a chimp for all of his films. >> radd was an individual who was eloquent, charming at times, really able to put on a good show. >> reporter: a crime show that lieberman said was finally snuffed out when they uncovered a smoking gun. >> this was a spreadsheet of how much money he owed one of the biggest hackers in the world, who we only know today as ega. >> reporter: that was all the feds needed to raid his house in texas. inside investigators found a sophisticated network of computers and critical pieces of evidence. >> the actual software they used to control bot necessits, which
malicious sets of computers, and sent out millions of e-mails promoting the stock campaigns. >> reporter: and there's more. they found the actual records between radd and his hackers, including ega. the hacker admits he's committing a federal crime, writing, you have to understand if i show my servers, and the sec sees it. but radd fires back, if you ever tell me you use bot, i will block you. i will go to jail for that. you are blanking stupid. >> he thought he was smarter. he said, if you tell me lip service, and i don't hear about how you do it, then i'm innocent. >> we were able to find out who he was sending money to or receiving money from and who he was sending shares to. >> reporter: even with all the evidence, prosecutors say radd
left them speechless, requesting two meetings with the top investigators just to chat about his case. >> and each time the air of invincibility was there. he didn't think there was any chance we would be able to prove our case, and he told us that. >> but reality finally caught up with christopher radd. he is now behind bars, his film career on hold, at least for now. radd is serving 71 months behind bars. he declined our request for an interview, and so far his attorney has not returned our calls. back to you. >> thank you very much, andrea day reporting. let me tell you around the markets as we position, gold is giving back some ground. jackie deangelis is live at the imex. jackie? >> that's exactly right. it looks like we'll close at about $17 down. couple reasons here, you've got the stronger dollar, but this wait and see approach before that jobs number tomorrow. all eyes on that. also traders tell me the move
lower today based on the technicals as well. we broke under 1400 yesterday. the key levels today, 13.72, 13.73. traders now telling me the next stop could be 13.25. that's a 50-day moving average. simon? >> jackie, thank you. mary, how are we looking here? >> 50-point range in the dow and the gains we've seen told definitely tapped by this bond yield hedge with the ten-year approaching that 3% level. so that's keeping the markets basically in check. it's also keeping pressure on some sectors. telecom and s&p utilities keeping the bond down today. we're seeing better rates from some of these higher rates, but the drillers are leading the charge today. they're the strongest performing sectors. just a couple quick story stocks. this is a wholesaler of industrial bolts, et cetera. strong august sales. they were up 2.5%. same store sales up 17.2%.
making an acquisition. i canadian lumber company called ainsworth to pay $1.1 billion are going to open the markets to asia in particular, and investors like the news. you can see the stock gaining there. >> let's jump 5 miles north to sema at the nasdaq. >> we have big news on the social media space. facebook higher. it reached its target to $48 a share. pandora on the move as it released its latest metrix. an increase of 28% listeners year over year. qualcomm higher after surprising the street with its smartwatch. and a mixed trading session with some of the tech digital players as we watch that yield on the 10-year treasury note. simon, back to you. >> rick santelli at the cme for
the very latest on the bonds and the rest of the trades there. hi, rick. >> hi, simon. indeed, look at that 24-hour chart. we're not knocking at 23%, but we always do the big dance whether it's 14,000 or 15,000 in the dow, 3.5 or 4 in the tens. but we'll get a five-year chart going back to may of 2011 because 2's and 5's are comping back towards mid-may. if we look at the dollar index in particular, it's very important today. it's at a 6.5-week high, and boy, how much sense does it make? its interest rates are at 2-plus s t dollar rally. today everything seems to be falling into place. unless, of course, you're looking for lower interest rates. back to you. >> exactly, rick. thank you. well, the smartwatch war is heating up with samsung and qualcomm both releasing one. but what does apple have up its
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glaxo smith klein falling after the company said they failed to meet an important trial milestone. shares of the drug maker astex pharmaceuticals up two points after suka said they would pay 9 $9 million for the company. the nation tea largest auto retailer reporting they jumped 2% in august. >> the smartwatch war begins with samsung and qualcomm unveiling their big products, but now the big question is what does apple have up its sleeve? john is in that komps conferenc san diego. hi, john. >> yeah, the focus in the market heading to the end of the year is on things like qualcomm's
watch here that are at lower cost here, build on the momentum that the smartphone built. we expect to see apple with an announcement just next tuesday. new i phones may be something more. i was here just interviewing mark andriesen, now a venture capitalist at horowitz. we talked about the smartwatches. he has hope. hear what he had to say. >> it's a real exciting idea. we're all hoping they become really big and they become a platform our companies can build on top of. there's sort of the watches themselves. thep there's this broad idea of where we're computing. i think in time we'll have a variety of computing devices that are kind of worn, that we keep with us all the time. >> and it's interesting, we also talked about microsoft and nokia. he said he's rooting for microsoft because competition is
good in the mobile market. now, soak in for a moment the irony of mike andreeson who had netscape stomped by microsoft, rooting for microsoft because he wants more competition. welcome to 2013. back to you. meanwhile, sue bradbury wants to speed up the sale of its units and find a new owner by november. what's behind the move? i guess you could call it a fire sale. seema joins us now from the nasdaq. >> the struggling phone maker is still on the hunt to find a buyer, but new reports indicate it has narrowed down possible bitters, which includes lo novemblonovo. however, there is no guarantee this will materialize into actual bids. since it announced its plan to explore strategic alternatives, shares have gained nearly 19%.
sue, back over to you. >> seema, thank you very much. roiters reporting now that the president is going to cancel his trip to california which was scheduled for next week. he is going to stay in washington, according to roiters, and work on the syria resolution that will then be before congress. and we're going to keep track of that resolution very closely as things continue to develop at that g-20 summit. the meeting ongoing, and of course, syria is top of mind there. we're also going to talk about home prices which have been sorryiaring in san diego. the average home sales price is up 22% year over year, and we'll check out the hottest home properties coming up next in "powerhouse." >> and frank blake on the "closing bell." that's today at 4:00 p.m. eastern time. of fans on social media can be a challenge. that's why we partnered with
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top of the hour, economic news this morning and a relatively positive reaction in the market as well. just how good are things out there? something unprecedented is happening in the mortgage market. we're going to tell you what it is and what it means for you. and, you know what? there is almost nothing money can't buy these days. all those things and of course lots more coming up. back to you on "power lunch." this is something our real estate correspondent diana olik has been reporting over the past couple weeks saying it will happen, and finally, it has. jumbo mortgage rates have now dropped below regular conforming mortgage rates for the first time ever. the average fixed year conforming mortgage is at 4.73%.
the average jumbo mortgage rate is bow that, at 4.71%. we're witnessing government policy, less willingness from fannie mae or freddie mac. not willingness, but greater charges to ensure, and the fact that their flush with cash. >> you may need a jumbo mortgage for the area we're going to in the powerhouse today because it is powerhouse time. ma marie mccormick is here with us. marie, nice to have you here. >> thank you, sue, it's nice to be here. >> i grew up in california. i have family that live in the del mar area and i am always jealous of them. 22% tax up every year. it puts is at about 4 to $5
million. the average days on the market, 42, and that is down 47%. so ann marie, it does sound like you have a pretty hot market, and i would assume, a tight market. is that correct? >> yes. we still have very low inventory and the market is still moving, but we don't have a lot of inventory out here. >> let's take a look at our first listing and that is at 3535 keats street, unit 3. it originally sold at $380,000. $4,360 in taxes, two bedrooms, two bath and just over 1,000 square feet. what area of san diego is this in? this is in petlama. very nice balconies. beginner price range. it sold in a single open house
with multiple offers and a cash buyer. >> do you see a lot of cash buyers? >> yeah. >> all right. >> a lot of cash buyers out here. >> let's go to the second listing which is 4604 monongahela street. last sold, just under $700,000. three bedrooms, two baths and 1252 square feet. tell me more about it. >> this was in west clermont. it wasn't a flip, but it was a gorgeous remodel with modern finishes. the home was built in 1958 and had incredible views from la jolla down to mission bay. it was a nice piece of property. had multiple offers once the price was readjusted to just under 700,000. received close to asking price. >> those views are phenomenal. >> really special property. >> let's go to the power house
of the week. it's 14046 mercado drive. just under $2 million. taxes are $23,000. four bedrooms, three bath, almost 4,000 square feet. i believe this is in the del mar area? >> it was listed with jeff haddock of color reality. this was a really unique floor plan. had a lush pool area, outdoor entertaining area. and it had a lot of modern conveniences also, like an electrical vehicle car charging station and solar energy. >> that's novel. we don't get much of that back here. ann marie, quick question for you. i know obviously the market is tight and you're low on inventory. why is it that sellers are hesitant to list their house right now? >> well, i think some sellers are still under water, but i think that they're also hoping
that prices are going to continue to rise. some sellers have been putting their homes on the market at prices that are maybe a little unrealistic because we're starting to see some price reductions, but i think we're going to see more properties coming on the market as the year progresses. >> all right. best of luck to you, ann marie. nice to talk to you. you live in a beautiful part of the world. >> thank you. we're very lucky. thanks. keep in mind that home depot is a big winner in the house recovery, obviously, and the home depot ceo will be on "closing bell" today at 4:00 p.m. eastern time. that's frank blake. >> you have no idea how sold i am on those houses. rupert murdoch saying goodbye to his prized possession. the media mogul saying goodbye to his yacht one month after filing for divorce. find out how much he's asking for it. pl yahoo plans to change the rules on tipping in restaurants.
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rupert murdoch making some waves today. he's decided to bail on his $30 million yacht, but he's also accused of trying to capsize an australian billionaire's run for office. this is quite intriguing. tell me about it. >> first to the yacht. it's a $29 million yacht called rose hardy. it's a sailboat. one of the most beautiful sailboats ever made in italy. he's selling it because people tell me he never uses it, he just works too darn hard. he's only been on it once or twice in the past year. wendy murdoch was really the person using it, and now that
they're divorcing it, he doesn't need it anymore. he bought some property in del mar, california, a winery, so maybe he'll move the yacht to the winery. clive palmer is a billionaire in australia, and they basically attacked palmer and said he's kind of a fraud, and this is the worst insult for the rich. they say that palmer is not actually a billionaire, which is the ultimate insult. so palmer is threatening to sue as billionaires do. >> he's not a billionaire, he's just really, really, really rich. >> i don't know what to say. as far as the yacht is concerned, i guess it's like anybody going through a divorce. you have memories where he is sbe ta entertained and where wendy is entertained and he probably doesn't need it around anymore. i have no doubt he will find other ways of using his leisure
time. here's what you thought in light of the idea, especially in light of an irs gratuity exchange. viewers think our restaurants should raise wages instead of moving on the different aspects of tipping. what do you think? >> well, it's my impression, actually, that the irs already withholds tax on the assumption that people are sipping 18% on the services they're involved with. it's not just about rewarding good service, and we don't reward good service in the same way in europe, and the service is much worse. if you can afford to go out to dinner, you have to give a bit back, and i think that's also the tipping process. i don't think the restaurant should be in the milddle of tha. >> if you automatically do include the tip in the bill, it
is counted as wages and taxed as such. i was a waiter, and i know you rely on that tax for earnings. i think it's easier for restaurants to say let's do away with tipping, but for waiters, it's really their livelihood and i don't think it should go away. >> i agree. yahoo unveiling their new logo. what do you think of the changes so far, simon? >> i think it's extraordinary how marissa meyer is able to generate such good pr continu s continuously when the likes of steve bowmar have nothing to do with it. the ceo of yahoo might be sacked by marissa because they're not selling as much display ads in a booming time for that section of the market. >> she has, robert, been able to generate an awful lot of positive buzz. >> simon hit the nail on the head when he talked about the pr.
initially i was very skeptical because this really is all exterior window dressing, it's all optics, and i thought, has she really fixed the business? i was skeptical. but this logo got me thinking that their business really is an image business, it's about coolness and freshness and i like the new logo and i think maybe the optics will translate into better business over time. >> you know what? it got us talking, right? >> it sure did. i'll see you in a second. we're going to talk about stocks. the 10-year yield is this close to hitting the 3% mark, and we'll have the biggest winners in the stock market coming up in a second.
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here we have the calm before potentially tomorrow's report storm. we are 14 points higher on the dow, just 0.17 points up on the s&p. more importantly, the yield on the 10-year sits just below 3%. >> our cast set out a news note a minute ago saying no one wants to be aggressive if that becomes a trip wire for sell in
inequities. we'll see. i don't know if that's the case. >> so the debate goes on. can you have stock rising when yields are risrising? >> they want to see how the g-20 summit plays out, so there are a lot of issues. >> that's it for us today at "power lunch." "street signs" begins now. that seems like an appropriate song today, "shiny, happy people," because we're going to run down the reasons to feel better about the economy, and maybe one or two to leave you concerned. everything else is getting more expensive in life. one very important part of your life is actually getting cheaper. what that is ahead. plus the bizarre thing happening
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