tv Power Lunch CNBC November 19, 2013 1:00pm-2:01pm EST
josh brown won the debate on best buy. congratulations. >> thank you very much. i appreciate it. >> you don't have anybody to thank. that's too bad. steve weiss long. >> pete? >> buy citi and bank of america. >> i would take a shot of cpb. >> i like franks international oil service. "power" starts now. >> "halftime" is over. "power lunch" and the second half of the trading day starts right now. >> all right. scott, thank you very much. jpmorgan expected to settle any minute now really with the government to the tune of some $13 billion. has it put the worst behind it or not? is it time to buy jpmorgan stock or look to other financials? we're going to take a look at that whole sector and see where you might best make some money now. tesla is under fire, yes fire, as the government begins an investigation surprisingly, the stock is up today. selling off rather sharply in the last three or four weeks. we will tell you if the inquiry
will put a dent into tesla's sales. you may be surprised on that one. strong quarter for home depot, boosted by a resurgent home remolding sector. is the stock, a buy, sell or a hold. old-school debate coming up. first let's check in with sue at the new york stock exchange. hi, sue? >> hi, ty. good to see you and that big story is a developing one. jpmorgan expected to sign today a $13 billion agreement with the government to settle claims that it overstate the quality of mortgages to investors during the housing boom. let's take a look at where the stock has traded, up just over 1%. kate kelly at jpmorgan headquarters in new york city. kate, the street anyway, seems to be happy that at least this part of the whole saga may be behind jpmorgan? >> yes, we're getting close, sue and i think you're right. investors are cheering the idea of a formal resolution to this although the $13 billion pack has been anticipated for a number of weeks now and, in fact, some portions of it have already been agreed to and
announced. let's give you the breakdown of that. of the $13 billion, about $4 billion to the fhfa, already disclosed a couple weeks ago. another $4 billion goes to consumer relief measures. about $2 billion financial penalties expected in connection with mortgage securities packaging before the financial crisis. and the balance to go to credit unions and various other government officials involved with the probe. now in terms of consumer relief, this is an interesting piece of the puzzle. so jpmorgan has agreed to exit tend some things that it's already doing and also agreed to some new things. among them are of this $4 billion, they're going to engage in some interest rate reductions, principle forgiveness and mortgage modifications and agree to try to embrace some anti-blight steps in cities like detroit and an independent monitor established to see how things are going at the firm in this regard. this is something we're seeing a little more of in terms of settlements. there was a similar piece to the
sac settlement announced in terms of compliance over there. finally the question that investors may have and we'll see this addressed hopefully in an investor call toward the end of the day or as soon as we get the announcement and there's time to digest it with jpmorgan cfo mary ann lake and ceo jamie dimon. are they adequate kuwaitly reserved and what's next. jpmorgan added to them, to the tune of $9 billion during the last quarter. right now, they've disclosed they have $23 billion overall, sue and that means that they should have a healthy amount left over if and when the $13 billion deal is inked. analysts on the outside say they could have 8 to $16 billion more even more in mortgage liabilities in the near future. >> kate, thank you very much. it will be very interesting to see what those reserves are, indeed, and we await either a news release or as kate mentioned a call later this afternoon with jpmorgan.
california has played an active role in that investigation since the beginning and it is out of sacramento where the official word will be anounsds later today where we find jane wells to explain why. hi, jane? >> hi, sue. yeah, as soon as we get that official word later this morning, we're expecting a press conference inside the federal building here. why here? two reasons. first, the u.s. attorney for this area, ben wagner, has been at the epicenter of this investigation telling the "sacramento bee" he quote raised had his hand when the justice department was putting together a team to investigate jpmorgan. he and his deputies were on the cusp of announcing a case ceo when jamie dimon approached justice. second geography. wagner's district covers the worst hit areas from the oregon border through the central valley down to l.a. county. wagner says he has made mortgage fraud his office's top white collar priority indicting more than 350 people since 2008.
he likens the mortgage fraud in this area to a, quote, tsunami and meantime, of course, jpmorgan took over washington mutual in 2008 and many california mortgages that went south came from wamu. according to the state senate here from '08 to '11 more than a million california homes were foreclosed on, one out of every 13 houses and six of the nation's hardest hit zip codes are in wagner's district, stockton, vallejo and where i am right now in sacramento. so this is a case that hits very much close to home, literally and tyler, when this news conference happens we will get you the latest. back to you. >> jane, thank you very much. jane reporting from sacramento for us. with the settlement presumably soon to be behind them, is the worst over for jpmorgan or not? it still faces at least nine other government investigateions so is it worth investigating in? if not which of the financials are. joining us is michael scanlon
with management asset management. he runs a $3 billion fund for john hancock which holds over a mill be shares of jpmorgan and also with us on the phone is bank analyst gerard cassidy who has an outperform rating on the stock. michael, let me begin with you. if you're holding a million shares of the stock i assume you are very comfortable in saying this is one step to put these legal troubles behind it and that maybe jpmorgan's better days stock wise are ahead? >> yeah. it's very true. you know, if you look at the stock year to date it's up 28% which is a pretty good year. i think the precedent and track record for the financial group is reserve, settle and move forward. buy the stocks where they're going, not where they've been. this puts some of the environmental costs behind them but does not put all of them. >> how do you justify on behalf of your shareholders opening a stock that presumably is going to admit to some sort of misbehavior maybe even criminality, fraud? >> well, they're settlining it
with a financial settlement. sw jamie dimon has been transparent there are errors along the way, you know. he obviously aggressively is settling this and writing the check and making the concessions to other borrowers in order to put this behind them. it is a kidnapper, -- concern, reputational hit, where it was trading at a premium, so the stock has suffered the consequences but we like it a lot going forward. >> gerard, how about you. >> you have an out perform on this stock. i assume that means from this day forward and maybe from the days behind, you're comfortable buying this stock? right? >> yes, we are. in fact, when you take a look at the core earnings power of jpmorgan chase, it's about 20 to $25 billion per year. once they put all of the litigation issues behind them, this company, like our other too big to fail pankss, are probably not going to be permitted to buy other depositor tos or other
institutions meaning they will return that capital to shareholders in the future. >> what about the other investigations that jpmorgan presumably still faces not going to be settled as part of this $13 billion presumed settlement, what about them and could those be tripping points going forward? >> certainly there are other investigations of jpmorgan chase and other capital market players, particularly the foreign exchange investigation that's under way. and they could trip up the company over the near term. i think that's why when you look at the $23 billion that they've set aside, there's anticipation that there will be more settlements to come. >> let me ask you quickly, gerard, are there any other financials you like better than jpmorgan right now? >> i would say bank of america for folks looking for pure play on the recovery of the u.s. bank of america is the way to play them. >> how about you, michael, do you have a financial you like as much or better than jpmorgan? >> our top two financial positions jpmorgan and metlife has been another big winner year to date. we think that story has a long way to go. >> we appreciate it.
we appreciate that very much. sue, down to you. >> ty, to the overall market, we're up a little bit or we were a second ago on the dow jones industrial average but some of the stocks that have pushed the dow and the s&p 500 to record highs, have been take something hits recently and that brought us to the question of whether this is an oman to an overall market pullback. dominic chu is taking a look at that part of the story. hi, dom. >> hey sue. there is no crystal ball. if i knew where stocks were going i probably wouldn't be here withes you guys right now, but we did want to show some of the stocks traders have been saying show signs perhaps of weakness ahead and three stocks in particular we wanted to key in on this time around were three pretty well known names. regeneron the biotech pharmaceutical company and cree, the maker of led lights. it if you take a look at the last 12 months, last year, these have shown healthy gains. you see freescale up about 32%. regeneron up 60% and cree 63%.
healthy gains for a year. now over the course of the past quarter to date, that's just the last six weeks or so, we've seen weakness come into these stocks. they're starting to roll over a little bit and that may be a sign, say some traders, for a pullback. take a look at freescale, up 32 % year to date but in the last quarter it's down about 13%. again, rolling over a little bit. regener regeneron, the same thing, down 12.5%. with cree it's down about 8%. so as we take a look at some of these names, traders are always looking for signs of a turning point in the market. one of the signs is whether these types of stocks that have had very healthy gains, start to show some signs of reversal and that's the reason why some traders, at least are a bit concerned. back over to you. >> all right. dom, thank you very much. let's talk about this with kenny polcari, director of floor operations with o'neill securities. and to dom's point, they have had a pullback, but to your point, they're still up 30 or 50%? >> 60 or 63%.
it makes perfect sense if asset managers are looking to raise some cash as the market is up 26 or 27% year to date and looking to raise cash and take the cash and funnel it into other things, the underperformers, it makes perfect sense you'll take money out of the names that have been the best performers. you're not going to take money out of the names underperforming if you still believe in that story. >> you're taking money off the table and redeploying it. how does the market feel to you overall? we bumped our head against the psychologically important levels and then backed off a little bit. it's holding up nicely today. why not see a continuation of the sell-off? >> 1800, 16,000, they're just round numbers. they're much more psychological. yesterday what you saw there wasn't an explosion in volume to the upside so it traded there, it hit there, felt like it had some resistance and then you had the commentary from carl icahn yesterday which caused them to go crazy. the asset managers aren't reacting to carl icahn. >> what about the margin debt?
that's one thing that does worry me as the video investor starts to get into this market, one of the things you watch for is how much people are borrowing to buy stock? >> we've talked about that. it's almost near record highs if not at record highs. that is concerning because what all that says is people are having us feeling once again stocks can never go down so bore roy everything and bet the house. probably not the smartest thing to do. it would tend to bring some caution, but yet overall, i think the market still feels healthy. next year is going to be a good year. talking about the global recovery, feels like it. >> on that note we're going to leave it on an up note. we're leaving it there. up to you. >> thanks, guys. tesla under fire literally and figuratively. the national highway traffic administration has launched an investigation into the luxury electric sports car maker after it reported three car fires over the past six weeks. the stock down about 33% since it hit its highs of $194 a share on september 30th. right now as you see, at $125.12
it's up strongly today. will the investigation put a dent into future sales? phil lebeau to answer that question for us at the auto show in los angeles. phil? >> hi, tyler. what's interesting is we're hearing a lot from elon musk on twitter today. we'll give you a taste of that in a little bit. let's focus on what this investigation regarding the model s is about. it's focusing on two battery fires here in the u.s. one last month just outside of seattle, washington, that's where this video is from, and another one earlier this month in tennessee. both of those fires are the focus of the investigation. by the way, nobody was hurt or killed in either of those fires, of which elon musk referenced on twitter today, he's been tweeting out about the fact that they are now the focus of an investigati investigation. he writes what makes this incredibly unjust is that the model s to date has the best safety record of any car on the road an then puts in parentheses, no injuries or
deaths ever. it is still unclear whether this investigation will actually lead to a recall. it's not uncommon that they will do an investigation and then at the end determine you know what, no need for a recall here. on the other hand, at lot of these dayss -- cases end up with a recall. any fixes required to the model s will be done free of charge. this is one of those stories, tyler, hearing a lot from elon musk on social media about the model s and his belief that it is a safe vehicle. >> very interesting. ironically you are at that l.a. auto show where audi is set to unveil its first venture into electric cars and a 3 sport pack. the marks for the electric vehicles has not been particularly sprightly. why does audi get in now? why do they think their model might win where others have barely scratched the surface? >> couple things to keep in mind. they've been working on this a number of years. you just can't hit the brakes right now. second of all audi believes that when the a 3-e goes on sale in
2015 it will be well received. here's the president of america for audi talking about the belief that the demand for electric vehicles will still be there. >> i think it's a big tempest in a tea pot. i think it's going to be a lot of noise but the consumers are buying hybrids, they are buying plug-in hybrids and believe in this technology. whether or not there's a short blip you can debate it. long-term sustainable it's going to be there. >> and he's talking about whether or not people will be concerned following the investigation of the model s. by the way, the a 3-e tron audi's first plug-in hybrid goes on sale in 2015. first 20 miles all electric. look at shares of volkswagen. keep in mind all of the automakers if they aren't already develop something type of an electric vehicle, whether a hybrid or pure electric, they are all working on it and those models are coming. audi's in 015. >> thank you very much.
phil lebeau reporting from l.a. now to dominic chu for a market flash. hi. >> hey tyler. shares of jacobs engineering taking a hit near session lows after the technical professional construction and mining services company reported earnings that fell short of analyst estimates, but jacobs order backlog did grow by over 8% to 17 be there. the company also said it sees full year fiscal year earnings in 2014 between 3.35 and 3.90 in line with expectations. it does see weakness, sue, in the current quarter. back to you. >> thank you very much. so, we focus on microsoft. who will replace steve ballmer at the company? word has it the decision would come within days. we're live at the company's annual shareholders meeting where they're down to a short list of candidates including one that has leapfrogged to the top of the least. we name names right after a quick break. tdd# 1-800-345-2550 searching for trade ideas that spark your curiosity tdd# 1-800-345-2550 can take you in many directions. tdd# 1-800-345-2550 you read this. watch that. tdd# 1-800-345-2550 you look for what's next.
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shares of best buy under pressure, down 9% on the trading session. the electronics retailer posting better than expected third quarter earnings and revenue but the stock is being pressured by a warning of a fourth quarter margin hit that would be at the higher end of prior estimates. the stock, though, is still up 230% for the year. quite a comeback story,ty. >> it is. microsoft holding its shareholder meeting this morning. it's the last one that steve ballmer will run. back in august ballmer announced he's going to leave. within a year the stock is up
about 15% since the announcement. josh lipton is at the shareholders meeting in bellview, washington. how close is the board now to naming ballmer's successor? >> yeah, tyler, bill gates at the shareholder meeting. he gave us no guidance as it to when exactly they would select that new ceo. he simply said the process was going smoothly. he did, though, seem to choke up when talking about his friend, steve ballmer. >> we've got a commitment to make sure that the next ceo is the right person for the right time for the company we both love and our commitment that microsoft will succeed as a company that makes the world a better place. >> reporter: microsoft did grow under ballmer. revenue jumped from $23 billion to $78 billion, but critics say he also missed big tech trends like mobile and social. the stock is big this year, down
about 25% under his watch. word mentioned ford ceo alan mu laleh, steven elom, curn turner, and nadella the executive vp of cloud and enterprise. nadella knows the cloud business inside and out. at the shareholder meeting today, microsoft did emphasize, microsoft at a crossroads here. the company repositioning and redefining itself for this post--pc era when it continues cover the shareholder meeting and a report throughout the afternoon. sue. >> we're breaking down the busiest shopping days for you. up next mary thompson with the result of a survey that takes us sector by sector.
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breaking down the busiest shopping days sector by sector. interesting stuff. >> later for luxury. >> this would be guys panicking. >> something like that. later for luxury. that's how the shopping season shapes up for jewelers and our high-end retailers which tracks spending made with cash, checks and credit cards. the busiest kay for jewelry is super saturday, december 21st before christmas followed by the 23rd. they tend to wait to the last minute giving a prechristmas lift to main street. >> this benefits small business because 83% of jewelry sales happen in independent jewelers and not in the chains. a late thanksgiving means there is a week less to shop this holiday season so to pull in the shoppers, apparel retailers act first with the discounts. their busiest day black friday, super saturday and then december 14th as they look to move inventory quickly after a
lackluster year of sales. sales for electronics are expected to be down because of discounting but like jewelry electronics tend to be last minute purchases most happening on super saturday. this year could be different because of the new gadgets and games. >> this year we see because of the new launches of the number of products that i think black friday will actually overtake that from what historically it was last year. it is very driven by new games, new consoles and the like. >> and just a reminder busiest days in all, only 35 plus days left until christmas. 35 days, ten hours, i think. that's what our clock shows. >> i'll probably be there on the 23rd. thank you very much. >> sue down, to you. >> thank you, guys. let's get the trading action here. bob pisani joins me on the floor of the nyse. down about 2 points, now down 14, 15. >> trading in a narrow range about 60 points on the dow.
down just a little bit as we have been sitting here. don't see anything on the wires. i'll check that. the key point, there's very little room for error on the upside. the risk to the downside. let me put up, for example, i want to show the cloud computing stocks. those reported, they did okay on numbers, but their guidance was a tad below expectations. so salesforce.com is down and the cloud computing companies to the downside, they're all to the downside. and we'll put up more of those later on. 3d printers, put these up, i don't see any news here. these were high beta stocks, had tremendous runs throughout the year, and this group did not get hit when the high beta stocks get hit a few weeks ago. i don't see any news that's obvious but i'm checking around. this is one of those high beta names. >> a drop -- >> that's a lot. >> they never really dropped and the other names were dropping. exchanges have had a good day.
intercontinental, first analyst meeting since the new york stock exchange. they updated a little bit. they're going to spin off, do an ipo probably in the summer but all the exchanges are up. housing related stocks doing well. home depot. best buy did okay, but they talk about a highly promotional time and those box stores, no matter what you say, best buy has had a good run over 30% this year. it's still a tough environment. imagine selling on amazon you can change the price instantaneously on amazon and those guys they don't have the luxury. >> they will match. thanks. >> they have done great this year. >> let's go uptown. sheila dharmarajan following the movers for us at the nasdaq. >> we spent the morning wavering between the gains and losses but we are at session lows, the nasdaq 100 and composite down by .3%. taking a look at the biggest loser, altera, a chip company,
after goldman sachs issuing a wait on the semiconductor segment as well. adp the winner today, after evercorp its price target on the stock. josh was talking about microsoft and as this investor day is under way we are seeing the stock at flat levels. jamie capital markets out with a note saying it expects the stock will be languishing at the current level. tesla, that stock up about 4.5%, finding borers after a formal investigation into the model s fires is under way. back to you. >> thank you so much. to gold. gold prices ares just getting ready to close. jackie deangelis is tracking the action for us at the nymex. hi, jackie. >> good afternoon, sue. gold prices slightly higher on the day. traders a little bit cautious today ahead of those fed minutes
released tomorrow in the october meeting. they're not really expecting that much to change. they're expecting the policy to stay the same. no taper talk. some of the traders are saying they would be buyers of gold tomorrow, around 13.10. those are the levels to watch. we're trading under 1275. and we've held that level for most of the day. meantime i also want to highlight copper today as well. making some moves that you've got a weaker dollar in terms of copper and also have some optimism in terms of china. you would expect both of those factors to really boost copper up and that has some traders wondering if this isn't going to be sort of a damppenning side for the stock market. keep an eye on copper. back to you. >> we sure will, thank you. rick santelli now at the cme and we're bumping up against 2.70% again in the ten-year. you pointed out that shouldn't be a price. >> no. as a matter of fact bumping up against 270 was an issue, i would say that all those black and blue marks, well don't worry
about them because the real key isn't 270. to many the real key is watching that five-year at a yield of about just shy of 140. now, if you look at intraday chart, up a couple basis points. last four sessions no more than three basis points away from 270. the chart to october 1st through the 10. look at the fives. there's your curve, steepening which isn't happening so much today. that's why the five-year is key. want to see a sell-off the five year back above 140. october 1st the dollar index looked like the ten yooert way it's supposed to look. back to you. >> thank you very much. strong quarter for home depot. up by a resurgence in home remodeling. so is the stock a buy, a sell or hold? we're going to get an old-fashioned yes, no, maybe debate when we come back. the american dream is of a better future,
grilled the centers for medicaid and medicare about security and redness issues with the site and current state of repairs during which he admitted one of the key parts of the process is actually still being built. listen to this exchange which representative cory gardener of colorado. >> how much do we have to build today? what do we need to build, 50%, 40%, 30%? >> i think it's an approximation, we're probably sitting between 60 and 70% because we still have to build -- >> 60 or 70% that needs to be built still? >> because we still have to build the payment systems to make payments to issuers in january. >> let me get this correct. 60 to 70% of healthcare.gov needs to be built? >> it's not healthcare.gov. it's the federally facilitated marketplace. >> the entire system that the american people are being required to rely upon. >> that part -- >> healthcare.gov the on-line application, verification --
>> compare getting enrolled, generating a transaction that's 100% there. what i'm talking about -- >> the entire system is 60 to 70% away from being complete? >> there's the back office systems, accounting systems, the payment systems. >> in other words, the billing payment systems the back end we've been talking about all the problems on the front end and with insurers getting information about people who are enrolled but the billing system is still under construction. i've put in a call about this to the white house and to cmf. had they've yet to get back with more clarification. 2:30 this afternoon is the daily conference call. this will likely come up during that update. back to you, sue. >> i think it would. thanks. keep us posted. home depot beating wall street expectations for its third quarter and raising full year forecast. shares of the number one home improvement retailer up big in today's trading session up about $1.25% rising more than 30% this
year. boosting their numbers rebound in home remodeling. diana olick is in washington with that angle of the story for us. hi, diana. >> hi, sue. that's right. you know, the remodeling resurgence began in 2009 with investor doing cosmetic fixes to foreclosures they wanted to rent out. regular homeowners are back in the game and doing more expensive and expansive work. home remodeling jumped 14% in september from a year ago, that according to build facts. projects over $10,000 are surging while smaller projects are not quite as strong. that's returning home equity and returning confidence and plays right into a brand new website that goes ultra local letting you see inside your neighbor's renovations. >> you really know who your neighbors use. we can show you the products near you. you're not doing projects that happen all the way around the country or millions of dollars
that are completely out of your price range. busy building his own new house. put in your skip code, which contracts, architects and plumbers are working in your areas, see inside some of your neighbor's projects. they have to give their concept. don't give their names or exact addresses. like getting neighborhood word of mouth without having to talk to your neighbors. >> we really took, you know, a year, more than a year, to aggregate 1.5 million professionals and the 90 million projects they've done, inside into $2 trillion spent on homes across the country on 85 million homes across the country. >> now, porch.com is going up against sites like house and pinterest and diy network and, of course, the ceo is already talking about partnerships with potential retailers. there's lots more on-line. realty check.cnbc.com.
>> all right. go stand in the sup sun and get warm in washington. time to buy home depot or has the stock had hit a near term peak. a debate with chris, jpmorgan, says buy the stock while laura, says hold right now. chris, let me let you make the case first and foremost to buy the stock at this elevated price. >> absolutely. we're still very early on in that remodel cycle. the prices going up are driving a very strong balance of traffic growth and ticket growth. tickets above $900 up double digitses. if you look back in terms of share of wallet, home depot share of wallet, home improvement category is still down 15% from average levels and this xs out the peak in with 2005 and 2006. they're driving a lot of margin expansion and because they'll funnel that excess cash to the buyback, we think they continue to grow earnings about 20% next
year. >> laura, make the case as to why you're comfortable holding the stock but not adding to it? >> sure. there's nothing fundamentally wrong with home depot. 7% same-store sales number is great today. because we're trying to discount the future, not the past, we think they're going to have a tough time lapping strong results when we hit into next spring. the growth has been phenomenal. they're in their fourth year of comp growth. next year the fifth. we don't expect additional acceleration off of a very strong 2013. >> why don't you respond to that, chris. i didn't -- a little surprised that the share of wallet, i get, really another way of saying market share in this business, is lower than it's been? >> well, what happened was when prices were going down, you got sustained negative comps for three to four years. and that's the consumer was no longer investing in their household. now that prices are coming back up the consumers feeling more comfortable spending so -- and
as a result, they're putting more money into their homes and as prices rise that feeds on itself and theyour willingness spend more goes up. retailer momentum stocks and i think as long as we can see home depot putting up 4% comps for the next couple years, which would not even get them back to that normalized slayer of the consumer wallet, the stock will it continue to creep higher by the pace of earnings growth which as we've talked about, we think it's -- >> laura, is there another stock in this world of builders remodelers, retailers, that you like better? >> we still really like lumber liquidators. talk about bracing the momentum they're more tied to big ticket housing related spending. we think they're gaining share. we think their margins have lots of room to move higher. we think a small cap growth company that can double its store count is just a little more attractive than home depot at 2,000 plus stores. >> thank you very much for
making your cases. we appreciate it and hope that our viewers benefitted from your insights. check out what's on tap for the rest of the week as we continue our series of bull and bear on retail. tomorrow, jc penney, thursday abercrombie & fitch and friday the gap, all with earnings this week all three have very interesting stories. sue? >> indeed they do, ty. one week ago that christie's held the $691 million art aukship. remember this? it's the francis bacon triptych of lucy and freud which sold for $142 million. we'll tell you who the suspected buyer is next. "power lunch" returns in two minutes.
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♪ ♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement. visit a branch or call now for your personal retirement review. welcome back to "power lunch." i'm kate kelly standing outside jpmorgan in midtown manhattan with developing news on their expected settlement with the justice department. we've gotten word from the new york attorney general eric
snyderman's office that he will be had holding a press conference at 2:15 to discuss his involvement in the jpmorgan settlement. expected any time now. now we're still awaiting word from washington, d.c., and an official set of language on what the settlement will entail but we expect it to be $13 million. resolving civil claims with jpmorgan's handling of mortgage backed securities before the financial crisis and more both from eric schneiderman and u.s. attorney ben wagner in the sacramento area. eyes on both and bring you updates as soon as we get them along with the press release out of washington. >> thank you very much. i'll pick it up. rising student loan debt is taking its toll on mill len yal savings. graduate debt on average will be $35,000 and after paid off most will have under $25,02 $2500 in retirement savings according to
a website called nerd wallet.com. if they want to retire by 67 they need to contribute at least 10% to the 401(k), 10% of income. most are saving well below that according to fidelity. it appears these millennials are not likely to retire until 107. no until 73. the silver lining, folks, a bright work survey found millennials employer plans will provide almost 15%, double of those reaching retirement today. >> let's hope they're correct. let's week at christie's the triptych of lucian and fraud made auction hospital when it sold on behalf of an unidentified client. who is that buyer? shrouded in secracy until now. the "new york post" reports a
member of qatar's royal family, the e-mir's sister was the buyer. art review named her the most powerful figure in the art world. perhaps no surprise given the family spends a billion dollars plus each year on art. we spoke to christie's and aqua vel la va. kristi christie's told us it was all speculation. and aqua vel la would like to decline comment for now. detroit isn't the only u.s. city in trouble. a handful of cities in critical condition and scott cohen is in chicago today. they have a list of problems there, scott. >> and tops on that list is pensions. you can't do a report on the critical condition of american cities without looking at a pension crisis that could be in the trillions of dollars and you can't do that story without being right here in chicago.
an epic battle between the mayor and unions. the story coming up after a quick break on "power lunch." . coming up on "street signs" at the top of this hour, boring is the new sexy. some of the high flyers are hitting as of late, we have dominic chu on the case. also the retailers to beat this holiday season and some of the biggest names in real estate investment will join us on our show.
what are they seeing we need to know. >> america's cities account for 85% of the gdp with many places in critical conditions. all this week we're looking at the reasons why highlighting one city and one problem. today a proud city on the great lakes is pushed to the breaking point by pensions. senior correspondent scott cohen is live in the windy city of chicago. over to you. >> my hometown, about 300 miles from detroit and this is picture postcard chicago, the magnificent mile behind me, the chicago river in front of me. that doesn't tell the full story. chicago likes to think of itself as a world-class city. but it also has a world of problems. ♪ >> the big story the mass shootings in chicago. >> reporter: chicago is the murder capital of america.
500 last year, and this year isn't turning out much better. sn>> who was you to take her fr me? >> reporter: gun violence is epidemic. >> it has happened again an innocent child is shot, this time at a park while celebrating the fourth of july. >> reporter: it doesn't help there are 1700 fewer police officers on the street than there were five years ago. >> we all know the problem. >> reporter: mayor rahm emanuel, form former white house chief of staff unveiling his latest budget with a $338 million shortfall. that's an improvement from a year ago, but for every step forward, one thing keeps tugging chicago's sleeve. pensions. >> we cannot allow the future to become a stark choice between the pension payment or police officer. a pension payment or a parks program. a pension payment or a school principal. >> reporter: the city and state have been scrimping on their payments to chicago's pension funds for years. now the funds are nearly $27
billion in the red. that's nearly 8 times as bad as detroit. the teachers union says the city owes its fund $400 million by june. and members are in no mood for more concessions. >> we're not interesting in having a conversation first about us making a bunch of sacrifices and by us i mean people who have worked their entire life and promised a particular pension and now we're going to have it cut by a third. >> reporter: millions are quick to point out that even though they are frequent whipping boy in all of this they don't pay into social security so this is their retirement safety net and that's one of the reasons that this battle seems so difficult to solve. chicago's pension problems are a big deal for sure, but not unique. at cnbc.com/cities you can look at the pension situation the public pensions where you live, read more about our special report and it's not just pensions, it's not just cities where the problems seem to be obvious. we're going from here, catching the next flight to miami.
there, officials are looking at disclosures in the municipal bond market. you may think that market is safe when you invest there but there are concerns whether cities are giving the full picture. tyler, back to you. >> thank you very much. fascinating stuff. walmart is upping the ante on black friday saying it will kick off its deals a week early. smart idea? we'll explore that when we come back after this short break. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts.
issues that they need to solve not on the mortgage front. i want to pull up a chart for other banks, nipe other banks being investigated in a handful of other states. bank of america could be the next, that's up, they're facing very similar claims from the department of justice and new york attorney general office. we'll see. it could be costly for the industry still to come. >> another big company, walmart, moving up plaque friday black f week. >> thanksgiving is late this year, they want to get ahead of that bad pr when the employees always boy cost on black friday and haven't got an lot of good press. >> it's hanukkah this time around on thanksgiving. >> exactly. >> big shopping season, black friday basically doesn't exist. >> all right. nfl and mlb, major league baseball, saying it could lead to the end of free sports on television.
the two leagues could move football and baseball broadcasts solely to pay tv outlets. a shot across the bough of areo. >> content is king, so they're considering taking fox off the airwaves and moving that to pay tv. because look they can't compete if they don't have a service like this. >> they get guaranteed retransmission fees. that's what this is about. media companies want to get paid an not going to get paid if people take it off air. what's thigh they're taking this route. >> you did it fast. that was great. sue, down to you. >> we're going to take a break and be right back with the big winner. ♪
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welcome back to "power lunch." check out what's happening with united airlines, flying high up about 4% right now. the airline said it was aiming about $2 billion in annual cost cuts and employees might be happy because the company says it does not plan any furloughs as part of this plan. they're going to reorganize other parts of the business, use less fuel, change their flight routes. again united airlines flying up 4%. back to you. >> thank you very much, dom. let's check the markets right now because we have the dow
jones industrial average now down 28 points on the trading session. part of that is linked to the fact we've moved back up through the 2.7% mark on the ten-year note, we're alt 2.72% last time i checked, and ar cat cashin te me is taking the market down. >> that will do it for today's edition of "power lunch." >> it sure does. have a great afternoon. "street signs" begins now. ♪ life in the fast lane makes you lose your mind ♪ if you like life in the fast lane this is the place to be. we're hitting tesla and portia stories this hour. brutally handsome and terminally pretty. not us, the show. welcome to "street signs." your other hot topics two real estate millionaires an how they're making money, why