Transcripts For CNBC Closing Bell 20131205

Federal government should be very important. Well keep an eye on that for you coming up here. Also weve got a day of heavy hitters here. Silver lakes Glenn Hutchins. Hes launching his own center on fiscal policy and monetary policy. Hr to get into with the legendary private investor in the news today as well. Royal bank of canada ceo gordon nixon will join us. His form reported earnings. Other big news, a long time chief executive stepping down next year. Hes talking to us first to tell us why. A number of canadian bankers are stepping down. Ceos of some of the big banks. Well find out why. Also a story weve been covering here on closing bell all week. Fast food workers striking today nationwide over low wages. Yesterday you talked to the official from white castle who told us that raising the minimum wage to 15 would be catastrophic, leading to mass closings, workers who walked off their paying jobs today, their low paying jobs, are coming off the picket line to talk to us here on closing bell today. Hugely important issue. Lets get straight to whats happening in the markets. Right now take a look across major indexes. Dow is off by 72 points at this hour. Half of 1 . R red arrows for the nasdaq. S p 500 off about nine points right now. Perhaps more important is the series of losses, bill, were seeing. Not necessarily the size. Lets talk about that, shall we . In todays Closing Bell Exchange we have pauly liss. Sam stillwall. Cnbc contributor michael yoshikami. Jim lowell and Rick Santelli. Whats going on with this market right now . Youd think with the gdp revision was higher than expected, were at 3. 6 , you think that masks some weakness in this economy . It does. You can see the headline number was stronger than many of us had expected. Even as far as mcquarry goes as well. A lot of that was an inventory buildup. Thats really great for the Third Quarter. That puts in some head winds for the Fourth Quarter. Mcquarry believes you could have Fourth Quarter gdp as low as. 8 . Much lower than consensus. So, i mean, its good for Third Quarter. Not so good for Fourth Quarter. That doesnt bode well going into the end of the year. Sam stovall, weve now that three days, potentially four days of losses to start off the month. Extremely rare at least in recent history. I think this is the First Time Since june 2011 weve seen such a stretch. Is that the kind of information people should trade off, though, or is it just statistical noise . I think its noise right now. Really its only four days. The thought is theyre doing this in advance of tomorrows Employment Data with the worry being that the fed will likely start their tapering program this month rather than wait until march. Our expectation has been that they would do it in december. But, again, its because of improvement in the overall economy. Our belief is that because of some of these head winds, et cetera, that maybe we dont accelerate too rapidly and so tapering does not become tightening. Ill ask Rick Santelli about that in a moment. First to michael yoshikami. Youre looking at deleveraging in the economy that continues. You think that also is sort of a drag on our economy right now. I think its going to be a huge, huge drag on our economy. I think the gdp numbers holly just talked about in terms of whats going to happen first and Second Quarter of next year, i think thats completely accurate. Whats really interesting here, bill, look at whats happening in detroit. Now look whats happening in chicago. If this is going to be a model for municipalities and state governments around the country, what is that going to do to wages . What is that going to do to spending . Its going to reduce it. So consumption, u. S. As 70 consumption has got to go down. I dont see a scenario where we have strong gdp growth. As Rick Santelli says all the time, rational thinking eventually has to come into play. I think were starting to see that. There are, if you look at the corporate sector, were certainly seeing leverage pick up there. If you look at households, theyve largely improved their Balance Sheet already. Were seeing signs theyre taking on credit in areas like autos and understandably Student Loans as well. If that continues to happen into next year, that will provide some support for the economy. Itll provide support. Heres the whole issue. Im not saying youre going to see calamitous disastrous collapse in spending. But think about it. If you have wages going down, if you have wage growth going down, if you have the employment percentage in this economy at 20 or 30 year lows, and you have Interest Rates rising, even if people take on more credit, that really doesnt mean that people are spending real money. Theyre spending borrowed money. Thats the same exact situation we were in before. Jim lowell, i havent forgotten you. Rick santelli quickly. You need to step in here. All of our guests are pointing to a lot of the drags on the economy and reasons that the tapering should be delayed. Yet the bond yields continue to go higher. 2. 87 on the 10year today. Whats going on . Whats going on is, as you look at 5, 10 and 30 year yields, theyre by far the only three adults in the room. Anybody who doesnt believe that tapering is tightening, well, you dont quantitative easing is the way you ease when you have zero Interest Rate policy. In order to push that string you have to buy securities. When you dont buy securities, its tightening. Pure and simple. Theres no other way around it other than spin meistery. To really see this move in that context, i think, is something you really need to Pay Attention to. Rick, you know the supply of treasuries is going to fall next year. The fed will end up buying perhaps even a similar size because theyre not going to stop, theyre just going to taper. By the way, that 2s, 10s yield curve why not . Why is that such conventional wisdom. Why do we need to agree the people wearing straight jackets are the smartest guys in the room . Whos in the straight jackets . Seriously. Oh, they cant you know what . 85 billion a month. More like 100 billion for the exact dynamic youre talking about. Because the deficits are coming down. Because of the sequester they all want to get rid of. Yeah, it really we start to go so far down the rabbit hole i need a pole to get some air down here. You need some air. Get that guy a glass of water, quick. Jim lowell, what are you doing to put money to work right now . Let me give Rick Santelli a little bit of air. As a bow tie wearing yankee im used to being the skeptic in the room. Im not worried at all. The u. S. Consumer is in good shape. Consumers across the pond, in the eurozone yeah, consumption and gdp was just off the charts, wasnt it . It was okay, rick. Its been okay okay is much different than good. Grading on a curve. As long as that continues for real world investors and for my clients, weve been able to make significant gains. I certainly am not surprised by the pullback in the market. Look, after heapings of gains its only natural the market takes a little bit of a diet. The reality is Going Forward large cap, multinational blue chip, Balance Sheets look great. Why doesnt the fed stop . If it looks so darn great, why dont they stop . Right. This is the question. Go ahead, jim. Listen, from my perspective, they dont have to do anything differently than theyre doing. Were seeing gains across the board. You need to subsidize the economy youre bragging about is so great. Im not bragging about an economy, rick. What i would say is when i look back over the last five years and every single quarter was told that the u. S. Consumer was going broke, that the federal government was going broke, you could have buried your head in the sand aor did what we did. The consumer isnt going broke because money is so cheap. If you give free money, the consumer can buy all kinds of things. Give out free mastercards to everybody. Its not the question about free money and the consumer not going broke. The consumer is spending in a far more reasonable and rational pattern and borrowing likewise. Balance sheet coffers are full of cash. They can withstand a lot of blows. Would i expect to see a 10 to 15 Market Correction . Maybe so. Maybe so. But im a longterm investor. Ill welcome that correction. What happens when michael, whats your question . Whats when Mortgage Rates go up 2 . What happens when car loans are not zero percent anymore . What impact is that going to have on the consumer . It would obviously have a negative impact, especially for those who havent already locked into historically low fixable rate mortgages. Are Car Dealerships going to immediately react by not lowering prices to offset any significant rise in consumer financing rates . Absolutely not. Theyre going to do exactly what the Home Builders are doing now. Theyll dip prices as much as they can. We may have to face a real hurtle 18 months, three years down the road. Not in the next 18 minutes or 18 weeks. We dont have 18 minutes. We got to go at this point. I will remind all of our friends here including my feisty friend, Rick Santelli, today is the 80th anniversary of the repeal of prohibition. Respond accordingly. Maybe thats the problem theyre all drinking too much on the other side of the potomac rick is in a mood. We are continuing lower today. Dow down 64 points now. Coming up next, Marriott International stock down a bit today as well. Analysts are telling investors to check in on the hotel chain. Ceo of the well known brand joins us. Hes got some big news. Youll hear it, cnbc, first. Stay with us. If diamonds are a girls best friend, tiffanys may be an investors best buddy. The high end jeweler is seeing several upgrades. How long the luster can last for tiffany. After the bell, some unions are not taking yesterdays detroit bankruptcy ruling in stride. American federation of teachers president randie weingarten is going to court. Well ask her what the solution here could potentially be. How high and how much could this thing potentially escalate . I have low testosterone. There, i said it. See, i knew testosterone could affect sex drive, but not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. 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Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. In a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Welcome back. Marriott international is ringing the closing bell at the Nasdaq Market size up in times square today. Why did they do it . Joining us now in a first on cnbc interview is Arnie Sorensen with simon hobbs also at the Nasdaq Market site. Simon, kick things off for us . Its a day for celebration down here. Were surrounded by chefs. Finally we did get marriott moving over, tented over to the rival nasdaq site. Arnie sorensen, ceo, is here. Why did you move . Theyre persuasive at nasdaq. Theyve got good smiles. They said come on over here. Here we came. Come on. Someone said its cost. Allies at the New York Stock Exchange would say youre not a value brand. This is marriott. Why would you chase a saving of that magnitude . What does it say about the business . We have to manage obviously our expenses including listing expens expenses. We also look at what difference does it make today . Nyse is obviously a wonderful exchange. Tremendous history. Theres nothing like ringing the bell at the New York Stock Exchange. But the world has changed. And the physical location of an Exchange Floor is much less important than it was before. And so we look at what nasdaq has done. They have done a really good job. Theyve built a good platform. Weve made the switch. Weve been about five weeks now on the nasdaq. The transition went flawlessly. So if you can save a few hundred thousand bucks and theres no cost associated with it, why not . Join the conversation here. Im going to move away from the listing issue. I just want to know how business is. You, of all the hotel chains, i mean, youre so international. Wheres the best growth right now . Is it still here in the United States . I know youre making big pushes into asia and so forth. Where do you see the greatest growth right now . I think the strongest same store performance is probably in the United States. At least in terms of big markets today. And within the United States, it wont surprise you its the west coast. You look at the Silicon Valley area, city of San Francisco which is benefiting from a lot of those young tech people wanting to be in the city, not in the valley. Those are very strong markets. We expect theyll continue to be strong markets. When you look at new build development and growth for new hotels, its not about the United States. Its about the rest of the world. Still about asia. Is it business or is it leisure youre seeing the greatest growth is what im getting at . We tend to think as consumers about the Hotel Business as if were all vacationers. The fact of the matter is, when you look around the globe, probably 75 of our business is Business Travel or is business meetings. Not vacations. Obviously that varies dramatically from market to market. What that means is the strength is being driven by the strength of businesses today. More than strength of leisure consumers. Thats good, too. I want to ask you a quick question about something in the news weve been covering a lot here on the program as well. Are you for or against raising the minimum wage in this country . What would it mean for you as a hotelier. Thats a tough one. Thats pure politics. We are in the political world, but were not politicians. Were simply doing the best we can to run business. I think the most important thing, though, is that to the extent the politicians, or the Political Landscape says we need to increase minimum wages, we ought to do it in a way which is thoughtful. We ought to do it in a way which is not too dramatic at one time. And weve got to be careful about not changing fundamentally the hotels or that will cost jobs. I realize it has become a politically oriented question. Really it is an economics question. I think that gets to the point of what kellys getting a t here, mr. Sorensen. What would it do to your business to have a much higher minimum wage . Well, it varies by market. We really are not primarily a minimum wage employer. You look at were sitting here in times square. Marriott marquees across the street opened about 30 years ago. I suspect we have zero or nearly zero minimum wage jobs in that hotel. I dont know off the top of my head. Were not in the fast food business. By and large this is not a big impact if we go from 7. 25 or whatever it is to 8 minimum wage. It becomes an issue for the economy at large. Obviously the entry level employees are under pressure. So you can understand why theres political voice out there that says this should be addressed. Arnie, this time next week hilton is going to price one of your probably your biggest rival coming to market to float over at the nyse on friday. A, what does that mean to you in terms of Stock Performance . Do you think people will sell marriott in order to make room to buy hilton . What do you think of them finally bringing that behemoth back to the market . They almost went under after blackstone took them private. Hilton is a good company. Were tlimed theyre coming to market. There are two really positive things about their coming to market. One is well have their data. And we relish the competition with them. So to have that regular dose of hilton data will be something that well digest every quarter. I kind of think you know their internals already. We know less today because theyre not public than we knew when they were public. Okay. Because being a Public Company does obligate you to say things that you wouldnt have to say otherwise. And to do it in a way which is consistent with s. E. C. Standards and the like. We look forward to that transparency. The next thing that i think is good is that the size of the Hotel Listings will be bigger. More relevant to the market as a whole. Also higher valuations. Maybe four seasons. Arnie, weve got to leave it there. Enjoy your celebration. Ceo of marriott. Back to you. Thanks, simon. Arnie, really appreciate him joining us and sharing his thought on that very important topic. Very important issue of industry. We have about 40 minutes to go before the closing bell with the dow sitting down about 67 points. S p 500 and nasdaq are about equally negative. At least in point terms right now. Royal bank of canada seeing some big changes today. Ceo gordon nixon announcing hes stepping down early next year. Well talk to him next exclusively about why he made that decision now. Also coming up, silver lake cofounder Glenn Hutchins, known for big Money Private equity deals. His latest transaction isnt so much about making money but about the future of money. Hes putting a lot of it into this new enterprise. Glenn hutchins will join us extrue exclusively next. Keep it right here on closing bell. Tdd 18003452550 searching for trade ideas that spark your curiosity tdd 18003452550 can take you in many directions. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. Tdd 18003452550 sharpen your instincts with Market Insight from schwab tdd 18003452550 experts like Liz Ann Sonders and randy frederick. Tdd 18003452550 get support and talk through your ideas with our tdd 18003452550 trading specialists. Tdd 18003452550 all with no trade minimum. And only 8. 95 a trade. Tdd 18003452550 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. So you can take charge of your trading. Do i call it the left leaning Brookings Institute . Brookings announcing the establishment of the Hutchins Center on fiscal and monetary policy. It is set to launch next month with 10 million from Glenn Hutchins himself to get this off the ground. In a cnbc exclusive, were joined by Glenn Hutchins. Silver lake parters founder at post nine. Welcome. Good to be here. You love coming to the floor here. Kid in a candy store. This is like being in old stuhr bridge village. Pretending to live in the old world. They dont know that stock trading happens online these days . It does . What . We have to say this is an important issue. In fact, you in your career have had some experience with this move to electronic trading. Quite a bit, in fact. Before we get to that, talk to us about this initiative. A lot of people here, fiscal and monetary policpolicy. They want to fall asleep or scream. Im an investor for a living. I like to find highly leveraged places to invest where other people havent invested and we can do something unique and build something important. Thats what i think were doing. First thing you do when you make a good investment is back a good manager. I think you picked a pretty good one if i may speak from personal experience. Having David Russell from the wall street journal whos a highly respected, as you know, thinker and writer run this thing is just a blessing. Secondly, the fiscal policy piece of this, what were going to try to do is create a place where legislation can be analyzed and whats called scored. Now the scoring only happens inside cbo. A little omb. Youre trying to figure out how much something is going to cost from an objective substantiate point. Objective, analytical, aauthoritative point. Something that amazingly does happen in washington. Im going to posit that it is not possible any assumption you make in trying to put the numbers into Something Like that implies projections that often have a political hue to them. You could be right. But you do sensitivities. One of the things you cant do today is say if this happens, this will be the outcome. Today when omb or cbo does something, theres a set of assumptions that constrains them. Thats all they can posit on. They cant do 20 years instead of 10. Dynamic versus status growing. Different outcomes and tax policies. It seems, though, weve hit a wall here when it comes to fiscal policy in this country. One side says were spending way too much. And they seem to have a point. The other side says, we need a better, more simplified tax policy. And they have a good point as well. What can you guys bring to the table that will help clarify things to end some of the gridlock that exists so badly in washington right now . This is a good question. The first thing you need to make a good decision is good analytics and good commentary. Information to make a good decision. We hope to be able to bring really good information thats nonpartisan, reliable and authoritative to the process. Thats point one. The other thing i would say is that from my perspective today, in terms of where we are with fiscal policy, both our longterm policy, which is undisciplined and has excessive spending going out forever, and our shortterm policy which is tightening, are both wrong. In fact, what you want to do is precisely opposite. Have a little stimulus for the economy to get it going but have longterm reform of the entitlemen entitlements, certainly for the Business Community they can invest and hire because our policy stance is in good shape. Having commentary like that can buy one good analysis, we hope will influence the debate. If all goes according to plan what does it look like in 2015 . That the Hutchins Center is part of the debate, giving information in terms of the numbers to a lot of these important issues . Or will you help to drive outcomes . A little of both. As i say, i dont think you can have good outcomes without good data and analysis. We want to be the goto place for authoritative thinking. Today theres a partisan point of view here and partisan point of view there. Then their analysis are influenced by that to get to an outcome. We want something nonpartisan, authoritative to help drive decisions. These things take a long time. Ive always said to people theres not going to be a big bang. You have to think about this as a tenyear process of getting it right. Right. And having that someone in those debates for each little decision thats made. Lets talk about the where are you putting money to work right now . Where are the opportunities that you see in technology, for example . In technology. Are you investing in drones for delivery . I think look, i think thats a terrific idea. I cant wait to have the first one appear on my doorstep. The Biggest Technology opportunity of my lifetime is the mobile internet. You look today at the amount of devices that are out there. Were about roughly a billion pcs at use in the world today 25 years into the pc installation cycle. And we have 5 billion hand sets and 6 billion subscriptions. We only have 7 billion people in the whole world. Ive never seen a market that was larger in size than the total population of people in the world. The amount of innovation thats going on top of that, all of the addition of hand sets, whats going on in the networks. Networks having to go rapidly. How does dell, for example, fit into that . How do you take some of the investments, some of the biggest investments you guys at silver lake have made and, you know, is that really where the most opportunity is . Im not going to comment specifically on dell. If you want to comment on dell you should get michael on here and let him talk about it. What i would say is one of the main things thats happening in the this mobile revolution is a huge amount of computing happening in the data center. In other words, people say were doing much less computing now because we all have tablets and hand held devices. Turns out theres a lot more computing happening. Happening in the data center rather than your desktop. Thats huge opportunity for a whole bunch of people. What am i going to invest in as an individual investor . Weve all figured out mobile is the place to be right now. Youve got companies scrambling all over the place to try and take advantage or at least catch up to this trend toward mobility that individual consumers have already figured out. Right. But as an investor, where do i invest that theres still some growth possibilities . Let me give you another good example of this. I spent some time in a public forum recently interviewing the ceo of time warner. I dont know if you saw that. And in the im not recommending a stock here. Im just giving you i dont recommend stocks. I dont give individual investment advice. Do not buy stocks on my recommendation. God forbid. If you think about one of the places that, if you imagine a fixed amount of content together with a huge amount more of devices and means by which content is through those devices, theres a supply and demand thing here thats very important for the value of content. Supportive for the value of content. There are plenty of actors and actresses seeing that now. They say theyve never seen more work because the demand for content is so strong. Thats an example. There will be big losers. We can posit who they are. Were in a time period where this is by far the Biggest Technology youre really not against drones . Look, its im not against them. Im not for them. I dont have an opinion about them. Hes droning on on drones. Great to see you, glenn. Thank you for having me. Good luck with the institute at brookings. Tell david i said hi. Heading toward the close. 30 minutes left in the trading session here. Kind of Holding Steady now. Maybe the market just kind of waiting for the jobs report tomorrow. But it will be the what. Im losing count now. The fourth consecutive down day for the market this month. Were down 67 points on the dow. Thats right. Still to come on the closing bell, the latest on the minimum wage walkout hitting americas fast Food Industry today. Well talk to a worker from popeyes who says she wants and deserves 15 an hour. Shell tell us why. Early holiday sales coming in weaker than expected for many retailers. Luxury lines like tiffanys, though, are shining. Well talk apart tiffanys blue boxes when we come back. In todays markets, a lot can happen in a second. 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Welcome back. With about half an hour to go in the trading session the dow is down about 53 points at the moment. Slightly better than where we started the hour. Nasdaq, s p still weaker, though. Plenty of focus on whether we will continue the losing treek that has started off this month so far with four down days potentially in december. Five, perhaps, for the market. As the investing continues, well keep an eye ahead of tomorrows jobs report. Over to dominic chu now. Hes been keeping on eye on whats moving. Lets talk about whats happening with twitter, first of all. Moving higher on news it was launching a new type of targeted add that aims to be a game changer for how advertisers target consumers and convince them to spend their hard earned money. Also conns gaining ground. Raised earnings estimates for the full year. Electronic arts losing ground in the wake of battlefield 4 problems. Thats one of its biggest game franchises. Then theres francescas holdings. Also falling after the specialty retailer reported a decline in same store sales and guided their Fourth Quarter results below Analyst Consensus views. And we end with those little blue boxes. Tiffany moving to the upside. Luxury goods retailer added to the conviction buy list over at Goldman Sachs as the firm foresees expanded Profit Margins and free cash flow. All about those little blue boxes this christmas season, kelly. Appears to be. Thank you very much, dom. With the shares soaring can tiffanys keep shining or is the price tag too high . Time for a little blue box brawl. Try saying that ten times fast. Brian nagels, our bull. Brian, stock is trading at 89, almost 90. Youve got a price target of 92. Thats hardly pounding the table on this. Are you going to raise that price target. The stocks had a good run lately. We always review our price targets. I would just say that tiffany, i think, sets up really well here. Really one of my favorite names in retail. Youve seen an improving demand trend as well as benefit of lower input costs for the Company Really starting to help Gross Margins. The input cost is a nice one. John, we got that benefit flowing through to them. Here youre saying valuations are too high . Absolutely. If you look at michael kors or even tiffany earlier this year, they both gapped up when they hit big numbers. For example, tiffany did move from 55 to 65. And it then took two months to get back to it. So i personally feel when we went from 80 to 90 last week on this Earnings Report and all these upgrades were looking at two, three months of selling to get us back down and take out that gap and then move higher. What about that, brian . I disagree. Look, i think the valuation here is to some extent a moving target. Because earnings estimates in the company are coming up. As im talking to our clients and gauging expectations out there, i dont think that the street is really modeling correctly how big of a benefit these lower input costs will be. We saw an almost 3 percentage point improvement in Gross Margins in the Third Quarter. I expect that type of trend to continue at least through the first half of next year. John, you know, to look out over the longer term, unfortunately one of the themes thats emerging, whether its black friday or the retail environment this year, generally is that its the highend thats seeing the buying power and the low end that isnt. Why do you want to be short effectively a name like tiffany if thats the case . Its really just a case of pricing and valuation. I think, you know, when you have this big of move, a 15 move, all the good news is priced into this stock. Youve got a story of a long story of many months of rising prices for tiffanys shares. And so you have so many people who have interest in closing out and taking profits when a move comes this strong. I expect theres not going to be profit taking on all this news. And people have priced in everything that brians mentioned. What well see is 80 dollars before we see 100. I was just going to say, whats it worth, then, john . Give us a number where youd start buying it again. Id buy it somewhere towards 80 to 85. You want to wait at least a month before you get there. I wouldnt touch it before 85. Id probably wait till 80. Brian, just to you, where do you think the stock can go next year, in 2014 . Look, like you guys pointed out, i have a 92 dollar price target. We could work some math. I think its not too difficult to see maybe 5 in earnings power. You get a multiple on that in the low 20s would suggest a stock price above 100. Its not my price target. Just kind of thinking about directionally where it could go. Whats its historical multiple . Over the past several years its traded generally speaking between 20 and 25 times. Okay. That would be in line. Thats right. It wouldnt be out of the ordinary. In fact, if people were to pile in and like the story more broadly, that multiple could move up, brian. Its not out of the question. Thats absolutely right. John, if youre investing for five years, why not just buy this stock if you think the growth is still there . If your investing for five years, i think youre right. I point out its a very heavily covered stock. 17 analysts cover tiffany. 11 of the 17 have holds. Theyve had them three or four months without changing much. What it tells you by and large the Consumer Discretionary space, the story about jewelry, the story about asia, all of thats wrapped up in tiffany. Its been on the table for some time now. Its priced in. All right. Brian, john, good to see you both. Intelligent conversation on tiffanys. Take a break. 20 minutes left in the trading session. Dow coming back just a smidge. Down 50 points a at the moment. Accounts changing hand at rbc. Gordon nixon will tell us why. After the bell, this weeks bankruptcy ruling was designed to improve detroits blight and plight. The head of americans Teachers Union says shes going to fight the courts decision. Whats her plan to save the city and its employees . Well ask that and more. Well be right back. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year [ ding ] at the lexus december to remember sales event. This is the pursuit of perfection. At the lexus december to remember sales event. So when my moderate to severe chronic plaque psoriasis them. Was also on display, id had it. I finally had a serious talk with my dermatologist. This time, he prescribed humiraadalimumab. Humira helps to clear the surface of my skin by actually working inside my body. 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[ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year [ ding ] at the lexus december to remember sales event. This is the pursuit of perfection. Welcome back. On a day where markets are sitting at their lows, near their lows, i guess i should say, of the session, want to give you a sense of where were seeing the selling pressure. It looks as though largely rain sensitive sectors to some extent. Telecom down almost 1 . Financials, bill, also down today taking it off by almost 1 . Thats hardly you dont want to brag too much about that gain in Consumer Discretionary. The industrials which has become a darling for so many analysts right now. They feel the industrials are a safe haven, if anything, in this economy right now, to invest in. But youre not seeing that right now as we begin the month of december. Weakness pretty much across the board here with people taking profits from what has been a very good year for the u. S. Stock market. And right now were continuing that trend down for a fourth consecutive day here in the month of december, down 63 points. This is what the ten these are the 30 stocks in the dow today. Looks like about twothirds of them are lower right now. Some of the biggest dogs of the dow, microsoft weak today. Jpmorgan as well. You can see the financials there are lagging. Speaking of financials, on a day when can tas largest bank, rbc, reported quarterly profits rising 11 in the Fourth Quarter, it also announced a big change is coming. Yeah. Longtime ceo gordon nixon will be stepping down next summer after 13 years at the helm. Why make the move now . He joins us now exclusively. Rbcs ceo gordon nixon, welcome back. How have you been . Great to be back. Been just fine, thank you. Earlier this year, you said your retirement was not imminent. I guess you changed your mind. I guess we needed to figure out what the definition of imminent was at that point . Thats exactly right. You know, reporters have to break the code. I actually said id retire sometime between 55 and 60. Ill be 57 1 2 almost to the day. A lot of people are wondering why now. Youve been at the helm there for quite a long time. Youre a longest serving of the big so why make this decision now . You know, its been 13 years, which is quite a time. Particularly given what the industry has gone through. Its also been, you know, an important part of our Succession Process was, you know, from my perspective was to make sure that succession was well in place. That the Management Team was well in place Going Forward. And my successor turns 50. I want him to have a good tenyear run at it. And the rest of the Management Team is on board. You know, hopefully ill have Something Else to do. Ill be 57 1 2. Hopefully ill have another career in me. Were the same age, gordon. Yeah. Theres plenty of time left. I keep telling myself that. We hope so. Yes. What is the mandate for your successor, then . Theres some reining in of spending right now. Some of your counterparts are closing stores, as you call them, there in canada. Whats the mandate for rbc . First, we are a little different. Our businesses are a little more diversified than many of our competitors. The slowdown youre referring to really more is in the retail side of the business. And our Retail Business is not at the pace we were growing three or four years ago when we were getting double digit growth across the canadian Retail Business. Today were still getting good growth, but its at a slower pace. Our other businesses like capital markets, wealth management, treasury investor services, are actually growing quite nicely. And we reported our results, as you saw today. They were up 12 year over year. And most of our businesses ended the year with record performances, including our Retail Banking business. So theres no question that retail growth will slow a little. But its off a very good base, and its still growing. But i think banks are going to have to work harder to improve their efficiency ratios if were going to continue to kick out, you know, double digit compounded returns over the next period of time. Gordon, thinking through your tenure as well, if another financial institution, an american bank, were to come to you and say we want you to take on this enterprise, would you say no to that . Are you looking to continue your career in Financial Services . I cant imagine leaving the helm of royal bank and working for any other bank in the world. Its been the pinnacle. So the answer would be absolutely not. All right. Youre not the only canadian banker i think the expectation was i would probably stay until, you know, at the max 60, but probably slightly before 60. I think the circumstances are different in all of them. I think ed and rick, they should speak for themselves. I think they basically, you know, reached the normal age of retirement. Got it. Gordon, i hope we see you again before you retire. Thanks again, as always. I hope we do as well. Gordon nixon, ceo of rbc joining us today. Heading toward the close. About ten minutes left here. Heading lower. Down 75 points. Again, we keep an eye on this last half hour of trading. This has been the time of day when we start to see movement, one way or the other. Usually lately its been to the downside. Thats happening again. I keep thinking a lot of people would wish to retire at 57 1 2 these days. Were talking about fast food workers. Retirement age in the uk, being raised back here. Interesting times. We heard from the head of rbc. Coming up, well talk exclusively to the ceo of td bank, ed clark. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome back. About ten minutes left and were heading lower. This the day before the job report to come out. Expectations are getting higher by the minute for that report. But the dow down 78 points. This will be our fourth consecutive down day for the market as we head into the month of december. Here we are at 15,811. Even the mnasdaq has turned negative. Michael guyez and mark lehman. Good to see you both. How are you . Whats going on in this market, do you think . We had a good run for the first 11 months. I think people are a little cautious going into the end of the year. I dont think our trend has been broken whatsoever. Would you buy this dip . I would. I think youll continue to see jobs data thats better. Economy is better better. U. S. Market is still the best play to be. Michael . Were surviving the great crash of 2013. Market is down four days in a row. Such a hurdle. But are you making fun of me . Im saying this has been an incredible stock market in the u. S. Most Everything Else has not been. Commodities are down. If youre talking about buying the dip, which dip, i think emerging markets. That is a dip. Thats a hell of a dip. I think you could see that as a big move coming next year. Remember, seasonality is on the side of the bulls. The question is, is good news going to be good news or is good news going to be bad news as we enter this possible taper which i personally dont think is going to happen. That is still what the market is worried about. I know they keep saying tapering would be data driven. Really, the timing, you have to believe its going to happen after janet yellen takes the reins. Her first meeting is not until march. Could you see it happening before then . If we have some extraordinary news that points to more bullish expectations and bullish numbers, i just dont see that. I think politically thats unlikely. The thing that could derail this personally in my opinion is Congress Gets back in session and start doing what they do very poorly, get along. The talk is theyre working on a framework for a budget deal for this january. I think thats the one thing that can derail the market. You think that would derail it . You mean they dont come wup a budget . If they come up with something thats deja vu all over again and start to fight and look as silly as theyve looked, people are going to say, you know what . I guess i was right. They cant figure it out. If that happens we may get a little tired of this market and take more of a pause. I dont expect that. People are looking to 2014, midterm elections as an opportunity for both sides. Theyve got to figure it out. What are you going to buy . Quickly . Besides the emerging markets . Staying here in the u. S. . I think the biggest that doesnt happen i think were okay. Emerging markets will be the spot for next year. Gentlemen, thank you both. Good to see you. Thanks for joining us today. Well take a break. Come back with the closing countdown for this thursday. In danger of a fiveday losing streak overall. So far no up days for the month of december. After the bell, they want 15 an hour. Or no one gets a happy meal. Fast food workers making their case today for higher wages. One will be joining us, coming up this next hour on the closing bell. Stay tuned. I wanna spread a little love this year i wanna spread a little love and cheer [ male announcer ] this december, remember provocative design and exacting precision come together in one powerful package at the lexus december to remember sales event, with some of the best offers of the year on our most thrilling models. This is the pursuit of perfection. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. 90 seconds left. Here we go again. Higher in the morning generally, then lower in the afternoon. Down 71 points. For the last week, we keep pointing out, five consecutive down days for this market. Heres what it looks like. We started at 16,150. Now were at 15,817. Im sorry, matt. I got to go to dom chu right quick with breaking news. Lets check out whats happening, bill, with Time Warner Cable. Those twc shares have spiked in just about the last five or ten minutes or so. This on reports the company may be open to an offer to buy the company somewhere north of the 150 per share range. Remember, Time Warner Cable has been at the center of a deal kind of talk, if you will, among any number of suitors. Names that have been tossed around have been comcast, Parent Company of this company at cnbc. Also charter communications. Again, backed by billionaire john malone. Shares reached as high as just about 139. Have now drifted back lower, bill. Well keep an eye on those twc shares. There it is. Up about half a percent at the moment at 132. 76. Well keep an eye on that as we head to the next hour. Sorry, breaking news as we head toward the close. Dont forget, tomorrow well have coverage of the jobs report when it comes out at 8 30 a. M. Eastern time on squawk box. In the meantime, second hour of the closing bell with kelly evans and her all star panel. Ill see you tomorrow. And hello and welcome to the closing bell. Im kelly evens. Still no santa claus rally. Maybe itll come later this month. The down december continues. Now down all four days so far for the month. Five consecutive days in total here. Heres how were finishing the day. Looks like the dow shedding about 68 points. Just under half a percent on that index. Nasdaq off by a tenth. S p 500 giving up seven points. 1785 is the level there after we punched through 1800 just a couple of trading sessions ago. Lets bring in todays closing bell. Cardiff garcia. Heather hughes. John pisani. Also joining us to talk markets, fast money contributor dan nathan. You are last, but im going to put you first right here. What do you think explains the losing streak that were seeing right now . I think dan is still getting ready. Bob pisani, over to you, sir, in the meantime. Bob pisani, four down days for the dow. Were seeing some of the rate sensitive sectors today, for example, take it on the chin. What are we to make of all this . The market wants some unequivocal sign that the fed is or is not going to taper in december or in january. And thats why this jobs number is so important tomorrow. Generally most people feel, got to be a little over 200,000. 220, thatll give the three month average at 200,000. Thats the sign theyre going to do it sooner. Without that, if we get some wimpy number of like 150,000 tomorrow, the market is going to sit and say now we dont know what to do. Thats part of this indecisiveness weve been seeing. I wonder, cardiff, is it possible, lets say 500,000 jobs tomorrow morning. You really think the fed a couple weeks after that is going to turn around and taper . I dont know. Heres what makes it really complicated. Weve got this imminent changing of the guard coming up. If it were just bernanke being chairman in perpetuity, id say, yeah, probably. His last speech definitely emphasized he thinks the marginal cost and marginal benefits of further qe represent an unclear tradeoff now. Janet yellen is coming on. She might want to control this process from the beginning. It would be very awkward if they do go ahead and taper and she didnt support it or she thought it shouldnt start for a few months. Heather, how much does it really matter . I know that sounds a little bit crazy because weve been talking about fed driven markets for the last couple of years. But what if this is kind of about people and investors moving past the impact that there might be from this decision one way or the other. You think in terms of the stock market, does it really matter anymore . Weve been discussing the potential fed tapering for, what, six months now . You saw the move in rates already. 100 basis points from may to where we are now. So you think, well, have a dramatic impact on the equity markets . Perhaps no. Maybe thats not what were hearing today. Were getting into a situation of good news, maybe, bad for the markets, again. However that line just grates me. But its been it has been true. I will say. Why not trade on the fundamentals, finally. Weve gone from an environment where we see stocks selling off and bond yields sinking in tandem to a different one today. That does indicate theres been some evolution. Dan nathan, i think hes finally hooked up here. I am hooked up. Dan, im curious what your take is. Especially some of the sectors where weve seen weakness over the last couple trading days. What you think is going off to start off the month. Like you guys have just said, we have seen the 10year yield almost double or we did off the bottom at one point. For all intents and purposes the fed speak did do a taper. Theyre still buying what theyve been buying for the last couple years here. Im a bit more skeptical here. I actually think one of your guests just mentioned the stock market, you know, really trading off of a better economy. And, to me, i think the data has been very mixed. Theres no doubt about that. So, to me, you know, were trading better with yields higher. And thats a positive. We need to see an incremental pickup in the economic data. Were not really seeing it in earnings. Im a bit more skeptical about returns in the q1. Thats a good point. We should make the dan greenhouse point as well. Weve had the 10year increase by 1 percentage point. S p 500 at 12 during that time. It hasnt been a give and take in that same regard. Bob pisani, speaking of some of the mixed cig names that weve gotten, you know this better than anyone. Some of the retail numbers. Whats going on . Was there a single upside surprise in those figures . Four of them today. Aeropo aeropostale. Wet seal. Francescas. What were seeing is a real contradiction from what were seeing on the consumer level right now. Thats a real problem. Weve seen nice traffic, but weve seen sales cut rather dramatically. 50 . Were not seeing any margin improvement at all. These companies are not making any money right now. Cardiff, is it we have too many of these retail chains . The consumers shifting . Back to that gdp report, 1. 4 . That was all the growth we saw on an annualized pace in personal consumption. It wasnt actually that strong. Still seeing a weak consumer. Bob told me on the break to boost the economy hes going to take me shopping afterwards. Can i be a little more sanguine here for a minute . This was actually not that bad of a week for macro data. The Housing Market is Getting Better the last couple of weeks. Weve shown that. The ism numbers were fantastic. A lot of people are looking at this gdp report. Theyre saying, this was all inventory driven. That does suggest an expectation of whats going to happen soon are going to get a little better. Ism report said the same thing. I mean, i think next year when theres a little bit less fiscal drag there, i think some of this optimism is jufl justifiable. It hasnt happened yet. We have to hope policymakers dont screw it up again. Im not willing to make that assumption. This is a very good point. John, you know better than anyone as well, today and for the last couple trading sessions were moving on budget headlines. That deadline is approaching. How important is it we get a deal out of washington right now . I think that the rumors that were hearing out of washington are obviously that a budget deal will get through. Whether its going to happen before christmas or after is the question. In asia we saw the market down 3 . Saw europe down 5 . The fact were basically down really just about 1 the last few trading days, and actually the nasdaq is basically unchanged, the u. S. Has held in far better than the rest of the world. Thats obviously positive. We saw draghis comments this morning. He was a little bearish in terms of what the market was expecting. They were hoping to hear more about unconventional monetary policy. More ltros. That didnt happen. We saw rumors out of europe about italian and spanish sovereign downgrades. That didnt help. Those markets closed down about 1. 3 . John, im curious all said, whats going on around the world, were actually doing very well. Heading into a big number tomorrow. Right. Are we overlooking this is probably always true. Were too u. S. Focused here. Are we overanalyzing the trends in this country . Is there something beyond our shores thats really driving the market right now, john . I think that right now, i think what were overemp fa sizing is whats happening on the east coast and the west coast. Obviously west coast, we have palo alto. We have facebook. We have hightechnology. In the middle of the country, thats where things are happening. Were seeing that oil and gas is just just basically on the wayside. Nobodys really talking about it. Thats whats going to drive gdp over 4 if we get there in the next few years. Wow. Export of natural gas, oil and gas, is whats going to drive this economy. All right. The fact of the matter is, as exports go up, that feeds directly into gdp. Stay right there for one second. Want to bring into this discussion michael pento, president of Pento Portfolio Strategies coming off the market close. Whats your take on all this . I would say be very aware of wall street consensus. Right now the consensus is there will be a taper sometime maybe in march. Interest rates will only go up slowly and incrementally. The economy is going to be just fine. I will tell you right now, Interest Rates will go rapidly up to 4 . And then as high as 6 if the tapering is actually consummated. And thats why i believe there will be no consummation of the taper. I believe the best way you can make money right now is start allocating your portfolio to antidollar investments. You know, the last time we had no qe i feel like ive heard this from you before, pento. Im sorry . I said i feel like ive heard this from you before. Heard what from me before . The antidollar trade. Yeah . There are times ive been very much exposed to antidollar investments. There have been times when i havent been. Ive been managing money for the last two years now. Right now you dont like the dollar here. Right now id be allocating myself to a failed taper. And that would bring the dollar much lower. You know, this taper, whenever it happens, has to be done in concert with all the other Central Banks in the world. Can you imagine what happens to the dollar if we actually taper . When everybody else is still printing like mad . Bob pisani that would bring about inflation. This is a big claim here. Any taper will bring the 10year to 6 . Okay. So the last time we had no qe, no recession, and no european debt crisis was in the spring of 2010. The 10year note was 4 . Since then, the feds Balance Sheet is up 70 . Weve had four more years of zero percent Interest Rates. And the debt of the nation is up 45 . So you have to allow for the i think where i think go ahead, john. I think where people by the way, 6 i think what people fail to realize is the fact that weve had disinflation for all this time. I think that bonds bond yields are tied to inflation. So unless we see inflation move higher, were not going to see bond yields move higher. I dont care about taper. 30 year traders, which i used to trade, 30 career bonds and euro dollars, all that stuff, that yield curve is tied to inflation and growth. Until we get those two things michael pento, guys, hold up. Last word to you, sir. Were not seeing inflation unless you look at money supply, housing prices up 13 and the the velocity of money is basically the velocity of money has to do with the quantity of goods sold. You have to look at the value of the dollar. Okay. Yeah. What would your bob pisani, what would your line on this be . There is no inflation. The ecb just eased rates because theyre afraid of disinflation. Right now. Right now. Ecb is basically the have inflation rates i think janet yellen is going to spend the First Six Months of her tenure there convincing everyone that tapering is not tightening. I know the bond market controls long te loan term rates. Not the federal reserve. I still wouldnt underestimate the potential tools they have to try to keep the key Interest Rate levels down where they want them to be. Seeing that shorter part of the yield curve steepening right now. They could be doing a stealth taper right now and we wouldnt know about it through reverse repos. Ben bernanke has spent the last five years convincing you qe is all about pushing long term yields lower. Its actually a joke now. Hes saying, guess what . Tapering is not going to bring yields up. Heather . You see the two. The 10 year is already creeping up at 2. 85 while were still printing at a rate of 85 billion a month. Theres a strong point that Interest Rates, okay, i dont know about the 6 case. Thats pretty extreme. If you look at historically where rates have been, its gdp plus inflation. Gross domestic product. If were expecting growth to pick up to lets call it 2. 5 next quarter, being somewhat modest, plus inflation which not much there right now, but lets call it 1, 1. 5, youre still looking at a 4 rate on the 10 year right now. Which does indicate we could have a little more room to go. This is the debate well be having. This is why markets are moving around. Thank you all very much. Catch dan nathan coming up on fast money at 5 00 p. M. All eyes on tomorrows employment report. Good or bad, however it turns out, are the numbers legitimate . Can they be trusted . Eamon javers investigating if the data is falsified. Remember, this report came around a couple months back. How long has any of this been going on . Coming up with that blockbuster report. Also ahead, fast food workers on strike. Well check out the action and get the lowdown from one worker on the front lines. Youre watching cnbc, first in business worldwide. Er future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Welcome back. As we wait for the important jobs number coming out tomorrow morning, questions about whether it is as trustworthy as it appears to be. Media reports of some false data working its way into a key preelection report last year were certainly making waves earlier. Government investigation is in full swing. A eamon javers has been doing some digging. That report making a lot of people nervous. You know how much we and everybody else Pay Attention to that jobs number. And what weve found out is just exactly the process, according to sources, that census conducts this survey that goes into the Unemployment Rate. The results there, im told by sources, build in an expectation that there will be some inevitable fraud or falsification based on the fact that youve got lots and lots of people involved in collecting this data. Look real quick at a screen that weve got here which shows just how many people are involved in gathering this. 2,700 field reps interviewing at 70,000 addresses per month. You can see there, theyre actually knocking on doors, handling 20 to 40 per month. Take a look at this screen which shows you the process that theyve got in place for trying to detect any fraud by people who are supposed to be doing the surveys but are actually just mailing in fake results. Supervisors are randomly rechecking and reinterviewing a lot of those households. About 150 times a month, kelly, they say theyre suspicious enough that theres fraud in there that they actually go back and reinterview that persons entire allotment for the month. They think there might be something fishy with the data. Somewhere in there as the fraud rate. We dont know. Officials wont tell us exactly how much fraud they discover on a monthly basis. Eamon, indicating, in other words, they might not be surprise firstdegree an employee had been falsifying some of the interviews he was supposed to be conducting. Thats right. In fact, that there would be checks in place for that or no . Yeah. Those are the checks that are in place. Supervisors going back and rechecking randomly to make sure the interviewers actually showed up at the address they were supposed to show up at. In some smaller number of cases, actually going through and reinterviewing all those people to make sure the data squares. They are rechecking it. But they are expecting theres going to be a certain amount of what they call curb sitting. The people go out and sit on the curb and fill out the data and send it back in. Its a lot less work doing it that way but you dont get real data doing it that way. A hugely important issue. Again, ahead of tomorrows report. Eamon javers, thank you, sir. For more insight, diana roth. A senior fellow at the manhattan institute. A former chief economist at the u. S. Department of labor. Diana, thanks very much for being here. Great to be with you. What can you tell us about your personal experience at the department of labor with regard to the trustworthiness or the potential that people were curb sitting, as eamon describes it, when it comes to the jobs report . So the data done by the census and theyre sent over to the bureau of labor statistics. I would say the data, its very difficult for one person to influence the outcome. And the report was there was someone in the philadelphia area who was falsifying those reports. And if that were true, and if that had an effect, you would see the Unemployment Rate for pennsylvania and new york substantially lower. But, in fact, you didnt see that. You saw an overall drop in the Unemployment Rate over that august to september period. So i would be very doubtful that there was systemic falsification. Okay, maybe there were one or two people. But they couldnt affect the overall Unemployment Rate. Eamon, as i should have said, is still with us. Eamon, your response here . You know, id be curious to hear from diana if you know what the falsification rate is inside that data . Is there a margin for error built into the data . Does anybody have an estimate done by economists of how much bad data drifts into the system . Whether its deliberate or just people cutting corners and cheating on the data gathering process . Thats an excellent question. Most economists regard the Household Survey, a survey of 60,000 households and affects the Unemployment Rate. Thats not nearly as good caliber as the establishment survey, which produces the job creation figures and is a survey of 400,000 companies. The accomplishment survey with the 400,000 firms is checked the next month and rechecked the month after. Then its benchmarked to the whole aggregate number of employees on whom Unemployment Insurance is paid. Wow. That is really an excellent survey. Now, the Household Survey, in contrast, is just 60,000 people. And theres, you know, all kinds of potential for people to give the wrong answer. You know, are you looking for work . They might say yes, but theyre not really looking. You know what i mean . The survey is not as high quality as the establishment survey. Diana, what immaterial proouch improvements would you make if any to the Household Survey . If i were to make any improvements i would make it much larger. I would survey more households. Also i would do some more rechecking. But thats very expensive so its not likely that its going to be done. But if we wanted to make it more scientific, we would broaden it above 60,000. We would recheck it if that were possible. Kelly i almost see a future. Go ahead, eamon. I was going to say a future where people are given the move of big data and all of that able to actually check the u. S. Population. Go ahead. Thats right. One quick point on this is that im told the total number is 70,000 addresses theyre hitting every month. If you compare that to political polling, for example, thats a much bigger sample size than a pollster would do. Youre getting a pretty robust data set there. The question is, with any data survey, is there a margin for error . The answer inevitably with human beings is yes. Always. Definitely a margin for error. Also a possibility of people not answering the questions accurately. Irrespective of whether the surveyors are falsifying it. Good point, diana. Thank you very much for perspective on that. Eamon, thank you as well. Well see where the number is tomorrow morning. Dominique chu at headquarters with a market flash. Ulta salon and cosmetics getting smeared in the aftermarket if youll forgive the pun after reporting a weaker than expected Fourth Quarter earnings and sales figure. The company also said its First Quarter earnings the next quarter would come in below street expectations on weaker retail sales as well. On the flip side, check out whats happening with gap km is moving higher as november Comparable Store sales came in better than expected 2 . Now its currently trading up about 2. 5 in the aftermarket. Ulta to the downside. Gap to the upside, kelly. Back over to you. Finally a bright spot from that batch of retailers. It confirms what bill and i heard of them all on friday. Coming up, winning the minimum wage fight may have unintended consequences. A white castle executive had this to say about it to us yesterday. We have 406 restaurants. What we know is that would result in closing more than 200 of those restaurants. And the ones remaining would be glowing embers. Theyd be dying stars. We will hear the other side of the story. A fast food worker taking part in one of those nationwide strikes youre looking at today. Thats when closing bell continues. Markets, a lot can happen in a second. 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[ male announcer ] heres a question for you where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Welcome back. Are you willing to bust picket lines to satisfy a burger craving today . Fast food workers around the country are on strike demanding a hike in the minimum wage to 5 15 an hour. Katy tur covering the rally in brooklyn. Outside of a wendys, they completely swamped the entrance trying to slow the lunchtime rush. Their goal to get workers inside these Companies Like wendys, inside these fast food joints to come out during their shifts. Im not sure if thats happened. Its been kind of hard to see whether or not anyones been able to come out. Thats really the goal across the country, really to disrupt the service. Theyve been chanting things like we cant survive on 7. 25. Thats the heart of the issue. Theyre saying the minimum wage of 7. 25 an hour isnt enough for them to live. Its not enough for them to feed themselves or their families. Not enough for them to clothe their families. Theyre saying a living wage, a fair living wage, would be 15 an hour. Of course, these are the second protests in just a few months. There was a major protest over the summer. They were somewhat effective in some cases, shutting down some fast food joints, not shutting down other ones. Well see how these go today. Certainly pretty effective here at this wendys in brooklyn. Quite the turnout there, katy tur for us in brooklyn. Now joining me is mary coleman. Shes a pop eyes worker. She currently makes 7. 25 an hour. Thats the federal minimum wage. Mary, thank you so much for being here. Were you on strike today . Tell us what the experience was like. Yes, i was on strike today. And the experience was awesome. It was so awesome that, you know, i couldnt help but to, you know, to feel good about it. Mary you know, i was go ahead. I was just going to say, how long have you been working at this popeye or in fast food generally . How long have you been making 7. 25 an hour. Well, ive been working with popeyes for a year now. I have been making 7. 25 for quite some time. In various different jobs. And i have also been involved in other restaurants like mcdonalds, burger king, george webbs. You know, now popeyes. So i do know pretty much about, you know, the problems with the 7. 25. Mary, have you tried to take jobs that pay better . What in your personal experience has been the challenge in trying to get more from an employer or to find a job thats better paying . Well, a job thats better paying calls for a higher education. And, you know, if you dont have that, then its hard to get a better paying job. And, you know, a lot of people cannot get a better education because of them having to work and take care of a home. And, mary, i understand youre also taking care of a daughter with a heart condition, two grandchildren. How old are you, if you dont mind me asking . Im 59 years old. And, mary, i imagine then trying to move up in this position, as you say, without the access to education that could enable you to get another job is a huge problem potentially. When you began working all of those years ago, did you have a different outcome in mind . Yes, i did. I never thought it would get worse. Ive always felt that it would get better instead of worse. But it has made a turnaround. I want to also, mary, just give you let you listen to an interview we had yesterday with jamie richardson. Hes a white castle vice president. We said to him, jamie, what would happen if the minimum wage were raised to 15 an hour for food Companies Like yours . Heres what he told us. There are groups out there that are asking and pleading to raise the minimum wage to 15 per hour. And to more than double the federally mandated started wage wouldnt be bad for white castle, it would be absolutely catastrophic. We have 406 restaurants. What we know is that would result in closing more than 200 of those restaurants. And the ones remaining would be glowing embers. Theyd be dying stars. Mary, your reaction . My reaction to that is that if 200 of those restaurants closed, it would only be because they choose for it to be closed. Because there are people thats willing to work and do a good job to help that restaurant grow. But instead, they prefer to close restaurant down, take jobs away from us, lower pay, make one person do five peoples jobs. Mary coleman, joining us today. Having left that strike from earlier in the day. Mary, thank you so much for sharing your story. I want to get reaction here from our panelists. Guys, cardiff, what do you make of this . Theres something about this debate that always drives me a little bit crazy. All right . People reach for their econ 101 textbooks. It says theres going to be a disemployment effect. The actual impeer cal research thats been done on the actual effects of minimum wage hikes where theyve been tried shows that actually its quite mixed. Economists arent exactly sure whats going to happen. And the sad thing about this is that there are actually better arguments against minimum wage. Which is that its a second or maybe a third best solution. So something that what would a first best solution . Something that allows labor markets to work the right way, then make sure the outcomes of the marketplace are shared more broadly. So a more expansive and maybe a more wage subsidies. If you want to get really bold, a basic minimum income. None of those things is on the table. In the absence of a politically feasible alternative fst a really tough question. All i know its a much more nuanced issue than its often portrayed as in conversations. You can see it right here. The vast majority of economists i have ever spoken with think that a minimum wage is a bad idea. That principally it disrupts the idea of supply and demand out there. When you look at a woman like mary, we think of minimum wage kids, college kids working. Now we have middle age people and older women like mary in the workforce. I think the real question here right now is, does lets call them the Business Class ever abuse the working class . That was the very tone that mary was asserting right there. Thats one of the reasons we have unions in this country. Because of what happened in the 1920s and 1930s. I agree tits a troubling issue. I think that woman had some real emotion in her voice there. Heather . I also can see the other side of this. Of course, mary hinted at the fact she wants a higher education. I empathize with her for that social mobility. They have a job. You look at the chance to gain skims and learn. I started my first job at 4. 25 an hour at golds gym. Shes requiring 15, it sounds like, for higher education. However, the other side is, that cost will be transferred down to the consumer, though. So the parent, the single mom who has two kids also, like mary, i believe shes a single parent, can only afford fast food maybe or mcdonalds or popeyes. So your 3. 25 big mac is now 6. Its not going to be 6. I dont know if it would be wouldnt be the worst thing. John . I think one of the things that everybody obviously could emphasize with mary. Going to high school, i actually i helped clean up a burger king and set it up for the next morning and did menial tasks like that in the night shift. I know what its like to work like that. But i think one of the dichotomies we see right now is that we have people collecting 99 weeks of unemployment. Some of them in florida, lets say, where the unemployment the unemployment benefit is only 13 an hour equivalent. So you have people on unemployment not working for 99 weeks getting paid 13 in florida. Yet we have a lady who wants to work. She wants to work more. But she just wants to get paid a little bit more. Why cant we just, like he said, you know, maybe give a subsidy. Maybe give some type of living wage, right . Where youre transferring money, youre cutting it down from 99 weeks back down to 54 weeks. Yet youre giving a subsidy to raise the minimum wage. Got to go. Same thing with people on disability and food stamps. The Small Business owners, the franchisees, 89 of all mcdonalds store, for example wk are owned by individuals. 11 are company owned. Theyre getting hit, the Small Business owner. It doesnt matter whether youre big or small. Moving income around. Great point, john. Thank you for the debate as well. We should mention we had interviewed as well a 21yearold fast food worker earlier in the week. Were just broadening the sper spectives here. Coming up, is the economic recovery gaining full steam or stuck in neutral . Td bank group ceo will give us his take. Wait till you hear whats on the top of his worry list for the new year. Well be right back. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. Losing thrusters. I need more power. Give me more power [ mainframe ] located. Ge deepsea fuel technology. A 50,000pound, ingeniously wired machine that optimizes raw data to help safely discover and maximize resources in extreme conditions. Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. Welcome back. Lets get straight out to dominic chu to start things off with a quick market flash. Two more retailers in the mix losing ground in the afterhours. Big lots posting weaker and expected Third Quarter earnings and sales. It plans to exit its canadian operation. See those shares heading lower. Also five below beat street forecasts for the Third Quarter by a penny. But the specialty value retailer guided lower on earnings and sales for its Fourth Quarter. Again, those shares down. Put big lots and five below, kelly, in the disappointing earnings and forecast result column. One step forward, two step back for retailers tonight. Thanks, dom. Speaking of con anada, td b saw fiscal Fourth Quarter profits rise. Not enough to beat expectations. Long time ceo ed clark has been warning growth for the Banking Sector is going to be pretty challenging. He joins us now in a cnbc exclusive. Ed clark, ceo and president of td bank group. Thanks for being with us. Good afternoon. Great to be with you, kelly. Dominic chu just told us big lots is pulling out of canada. We know target has been struggling in canada. Is the landscape in canada becoming much more challenging . What can you tell us about conditions there . No. I think well, i think the economy is slowing. Ive been saying that for some time. But i would say whats really going on here is that the Retail Sector has become very competitive in canada. Weve obviously had a number of u. S. Companies come in. And the Canadian Companies have responded to that. And youve got a real fistfight going on. But i think thats terrific. Its great for the consumer. Were going to get, you know, better prices, and this is good. This is good for the economy. Thats exactly why i asked. Does this indicate its just the chains being more competitive, or does it indicate that canadian households having been in great shape in the past are under more pressure today, similar to u. S. Counterparts to some extent . Theres no question household data has gone up in canada. We havent really seen a noticeable slowdown in the consumer spending. Somewhat maybe a little bit slower than in the past. I think its more than the Market Conditions have changed, that the competition has increased, and its getting harder to be a winner in that space. What parallels would you draw between that and whats happening with banks today . Well, the banks, its kind of funny. Because as you pointed out, we missed, you know, analyst expectation. Our year was kind of an odd year this year. Our core Retail Businesses that account for 90 of earnings had spectacular years. But we had a couple of areas that were soft. We had insurance that was soft this year and wholesale was soft. Despite the fact that we missed analyst expectations, all the canadian banks reported about the same time. So five of the six have reported. And weve been the best performing stock. So the market has sort of looked through our results and said, whos positioned well for 2014 . And declared us the winner. Thats why i want to are you guys laying down the golf clubs here, walking out on top . Whats going on . Your colleague we just had gordon nixon on the program. Hes retiring. That surprise you . It probably did. I thought gordon would probably stick around for another year. Hes done a fantastic job as ceo of the royal bank. Hes been doing quite well. So i probably thought he would stick around. But hes young, man. Im sure hes got lots of things else hes going to do because hes a very accomplished person. I want to ask you briefly as well, the federal reserve, if it has to do more to stimulate the u. S. Economy, has been batting around the idea of negative Interest Rates. In that case, would you be one of the banks that would have to charge consumers to put their money in one of your accounts . I dont know what we would do. I hope they dont do that. Theres no question that would put a lot of pressure on our margins. And our margins have already, you know, had a lot of pressure on them. If its accompanied by tapering, which i think what the talk is, that maybe you do the two things at the same time, so the long run rates long rates go up and the short rates go down, we would probably adjust our Balance Sheet and, you know, its not clear whether that will be negative or positive. And weve already we announced today that were already seeing a turn in our core margins. Where our core margins are growing. Because we are very deposit strong and we manage the Balance Sheet fairly astutely to manage these Interest Rate changes. Ed clark with a summary of whats been happening both above the border and here as well. We really appreciate your time this afternoon, sir. Have a good one. Great to see you again. Thanks. Coming up next, what happens in detroit will reverberate to every troubled municipality in the country. President of the American Federation of teachers will join us to explain why her organization is battling a bankruptcy judges decision to give the motor city a green light on its chapter 9 filing. Important issue. Stay with us. Its estimated that 30 of the traffic in a city is caused by people looking for parking. Thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small startup to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18883303136 now. Optionsxpress by charles schwab. Where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Welcome back. Just 48 hours ago a judge declared detroit eligible for bankruptcy. A dwindling tax base coupled with too many generous pensions have exhausted the coffers. The court rules the pensions can be cut as restructuring. That is not sitting well a lot of unions. Joining us is randi weingarten, president of the American Federation of teachers. Whose union will join in the appeal of the decision to support detroits teachers. Good afternoon. Thank you. First, kelly, thank you for having me. Well, to start off, the ruling by the judge, does it not suggest that in this case and potentially Going Forward, unless its appealed, that municipalities are going to be allowed, certainly not going to be prohibited, from cutting back on pensions in order to meet their obligations . Well, let me just say that theres for many municipalities, there is none of this issue about bankruptcy issues. Because many of them would never even contemplate doing creating, you know, declaring bankruptcy. My city that i love, you know, faced the same issues in the 1970s and decided for lots of moral and social and economic reasons not to declare bankruptcy, and look whats happened in terms of the vitality of new york city right now. But having said that, the decision will be appealed. It does actually affect cops and firefighters and nurses and bus drivers. And what its doing is its basically saying that that this deferred wage that retirees are getting in detroit, an average of about 19,000, that those folks who are still living in detroit and every dollar they spend from their retirement creates 2. 40 of Economic Activity in detroit, that those folks are going to be thrown to the side wall. And that is what were appealing. Randi, i wouldnt break in except that i unfortunately have to in this case. We hope youll rejoin us on this important issue. We do have some breaking news on Nelson Mandela. I want to bring to you right now if we can. Kelly, thank you very much. This a special breaking news. One of the great men of the 20th century, Nelson Mandela, one of the most inspiring people in the world, has died. After a long illness, it is just now being announced on South African television, that Nelson Mandela, a man who served decades in prison for his crusade for human rights and dignity in his home country, has died. He was 93 years old, if im doing my math correctly there. Hes 95 years old. Excuse me. 95 years old. He had 17 grandchildren and 14 greatgrandchildren. A man that really led the way for human justice and rights in his nation. Well bring you more details on the passing of Nelson Mandela very, very shortly. And well have news, im sure, from washington, from the president and the white house in mourning over the death of Nelson Mandela. Kelly, back to you. Tyler math senn, thank you very much. I believe john harwood is standing by in washington. John harwood with more detames. Potentially, any reaction at this early hour, john . Reporter no reaction yet, kelly. But this is a huge moment for the entire world. Because Nelson Mandela is somebody who set an example for the entire world. I spent a lot of time in south africa during the 1980s covering the unrest against apartheid while Nelson Mandela was in that prison stint that lasted more than 25 years. You never thought it was possible that you would live to see the day that he was not only freed from prison, but leading that country and leading that country in a way that encouraged the reconciliation of the races rather than the kind of bitter conflict that was predicted while the protests were going on against apartheid. As it happened, i just went to a screening last week hosted by john mccain and Hillary Clinton at the Kennedy Center for the new film about mandelas life. I could tell you, kelly, it is it is a staggering lifetime that he led. The distance that he traveled from a poor kid in south africa where opportunities were foreclosed to turning briefly to violence after the frustrations of that movement and the massacre that occurred in sharkville in south africa in 1960. He was jailed after a trial. And then emerged triumphant and somebody that the entire world could look up to. This is you can bet that president obamas going to be heard on this before too long. And weve lost somebody that deserves emulation everywhere. I dont know, i just want to bring people a little bit of Background Information here about mandelas condition over the last couple of months. He had been three months in the hospital with the recurrent lun september, originally. But those lung problems attributed to the tuberculosis he contracted during 27 years in prison before he led his country to democracy, subject of many biopics lately. What is your view on his history in south africa and overseas . I think he has more stature than Anyone Around the world with the possible exception of the pope. A lot of continue versy around the current president as well as becky who proceeded him in that job who was Nelson Mandelas successor. I think this is somebody whose reputation was titanic and the entire world will be mourning. We are following the news here for us. Walk us through the sequence of events since word came out . Word was starting to trickle out that Nelson Mandela was failing and took a turn for the worse sometime around 3 00. We were getting notions that maybe the situation was deteriorating and just in the past couple of minutes do we get that confirmation that he has succumbed to that lung infection. He lived a full life, one that had many deprivations in it as he spent some 18 years at robin island where he was most famously incarcerated for his drive to bring human rights to his native land. But that was really only the part of his incarceration. He spent more than two decades in all in jail, all the while crusading such as he was able to crusade on behalf of democracy and Voting Rights for his people in his native country. He was marry ied three times, perhaps most famously to winnie mandela. Really one of the titanic people and we now await as john rightly points out around the white house and around the world about how his pass willing be marked. It would be surprising to me if the president doesnt travel to south africa for this. Let me just mention here the reaction, early remarks indicating that mandela will have a state funeral saying to be mindful of his wishes and the wishes of his family as we gather wherever we are in the country and in the world. John . Tyler just mentioned the controversial winnie mandela. The story of their lives and how they responded to his period of incarceration is sort of a story of how mandela triumphed. Winnie mandela turned to violence and embraced that. Nelson mandela never went there and he didnt go there after he ascended to the presidency. He shared the nobel peace job with president clark, the white south africa president who made the decision to free him. At the time when black South Africans were so aggrieved for so long and denied so much, the president had a decision to make about how much redistribution of land and income he was going to engage in and he took a very moderate tone to that. Emphasized reconciliation. When he became the president , some of the people who had been his jailers later in prison. This is somebody who exemplified the idea of rising above bitter conflict and showing the world how to bring people together and youre an indication of that is going to be the way in which you see White South Africans grieve for Nelson Mandela. They realize the special properties he brought to Political Leadership once he got out of the prison. Thats absolutely the case. And again we can tell you that president zuma saying the nation has lost their dearest son. Tyler mathson, if we can bring you back into this, are you seeing any reaction to this on the news wires at the moment . I havent been able to check my wires lately so i havent seen any reaction. It will be interevery interesti. I believe the president is scheduled to do a town hall event tonight on our sister station, msnbc with chris matthews. Lit be interesting to see what he says on that occasion and how he handles that and how this will happen. I think that has already taken place. He taped it this afternoon. That will be very interesting. I thought that was live. Obviously it will be a very interesting evening as we hear from around the world. Right now i guess we are trying to watch some of the South African news feeds. The president there has spoke on the the nation and obviously there will be great mourning in that country. And to go back for those a reminder of the sequence of events, mandela formally left public life telling countrymen dont call me, ill call you. He certainly, john, has had no shortage of people trying to have access. Has he increased his political involvement at all during that period of time behind the scenes . Not that im aware of. I think he really did go into e retirement once he left officer. Remember, South Africans south africas economy is the engine of Southern Africa and much of the african continent. And protecting that those assets and not taking actions that would cause the economy to grind to a halt were important to business across the continent, elsewhere as well. And again, an example to how you can how you can see a transition of power. John harwood, thank you very much for your comments this evening. Tyler matheson. Nelson mandela dying at age 95 in south africa. We can show you live images as we head to break. Thank you for stayi ining with n the closing bell. 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