Transcripts For CNBC Power Lunch 20091124

that cold. >> she's battled through bravely. >> yes, i am brave like everyone out there buying our treasury auction. rick was telling us earlier he doesn't think that's going to go on. that's going to do it for us. >> have a good afternoon. welcome to "power lunch." we finish higher or lower today? >> less low than we are now. >> nice. >> not quite the conviction of last week. stocks are lower right now, the dow being led lower by boeing and hewlett-packard. >> we're awaiting the breaking news when the treasury department will auction off $42 billion in five-year notes. >> amazon and walmart, now in total price war. holiday shopping season kicking into high gear. we'll take a hard look at software stuff. an analyst will give you his top picks. i am trying to channel bill griffeth. here's what else is on the menu. >> i'm steve liesman live at the trading floor at cantor fitzgerald in midtown manhattan. we'll take a look at the upcoming auction. before that, the third quarter gdp report and see what it says about the fourth quarter. >> home prices are improving, but less quickly than over the summer. is thahause for concern? and now, a new report on how many americans owe more on their homes than they're worth. i'm julia boorstin, los angeles. it's facebook's biggest ever holiday season. the social network is working with retailers on ad campaigns. i'll be talking to the ceo about the big push to grow the ad revenue. ahead of the 1:00 deadline today, scott wapner kicks it off at the new york stock exchange. >> really, the markets had a tough time getting anything going since then. the dow's down about 42 points, so offi its worst levels of the day. waiting on the fed minutes, it is a data-o-plenty kind of day. take a look at the relationship between the dollar and dow. it pretty much tells the story there as the dollar has moved higher there. telecom stocks leading the way yet again. yesterday, verizon and at&t had good days. they're having them again today. both up by, at&t's up a half percent. financials and energy stocks have been a drag on the major averages today. exxon mobil is getting a lift, but otherwise, you see the -- hormel earnings came in above estimates. the stock is down, heinz higher and medtronic getting a lift. let's head to the nasdaq and bertha coombs. >> brocade, its next sales are going to be softer than the expectation. analysts believing there may be problems ahead with hp taking over 3com. dell also down about 2.5%, suffering some collateral damage. hp is continuing to steal market share and earned a downgrade this morning. here's the good. qualcomm lost a lot of its momentum today. it was higher on the day as the eu had dropped an antitrust case. ram is continuing to power forward as well. >> we are looking at oil prices down over a dollar here as the dollar index has rebounded a bit. we're also watching what's happening in equities and watching what could happen this afternoon with inventories. we have a report out this afternoon. we're expecting to see another increase in oil supplies in the past week. the fact we've been seeing oil supplies rising, the tango with the contracts has widened and that is part of the fact that crude, really having a huge supply there. we saw the same thing happen last year and that is part of the reason why the kuwaitis and saudis are with the gulf coast region. again, they're probably watching this as well. bill, i'm going to send it back to you. you will be missed dearly. >> you'll be hearing a lot of that today. >> with the holidays upon us, we usually see a decline in volume and we have. because of that, we could see more volatility. is that something the bulls should be concerned about? let's gather our "power lunch" market insiders. joining us -- good to see you both. eric, i know you've been waiting for a pullback. you haven't gotten one. why do you think that is? >> i think we're at the point where investors, especially professional investors, don't want to be out of this market. there's a lot of momentum driving this market. the good news is the economy's fundamentals are improving. what we're a little worried about is that expectations are getting higher also. something in the range of 5 to 10% would not surprise us. >> carmine, your expectations are not a lot higher, are they? >> i do expect the market to move substantially higher over the next six to nine months, leading to a mass infusion of capital into the equity market. the market trades at 16.5 times third quarter earnings reports. catch is characteristic of what exists at the early stages of a bull market, so there are a number of positives and you need to remain invested. >> okay. eric, this pullback you keep waiting for, we were waiting for it in october and november, and now, december. when will it come and will the markets end up higher by year end than they are now? >> you're never wrong in this business, just early. what we're looking at is a lot of positives. the other guests just mentioned, i think we're not focused on the fact that these kind of recoveries never happen in a straight line and the pullback, when and if it happens, would again not be something that would greatly concern us. it would likely be having to do with the fact that data is getting better, but housing is a better example. may not be getting better as quickly as investors had hoped. >> higher or lower? from where it is now. we're down 10-4. >> s&p 1102. >> higher at year end. >> carmine? >> 1200 on the s&p and i continue to maintain it. what needs to be recognize is the nonfinancial corporate sector is generating cash flow. >> i was going ask you, carmine, about the hp buyback. very large percentage, or so they say. on the one hand, you could say that's good news. they're confident and are going to go higher. at the same time, how often do we see companies buy high and sell low? >> not in this environment. the stock market trades about 20% below value. there was a build-up between the second quarter of '07 to the second quarter of this year. there was a $790 billion build-up and that's a major drag. hp is taking $2.7 billion and returning to balance. >> eric, you also stha you need to hedge your bets a little bit with strong exposure overseas. where? >> we're big fans of the emerging markets, but we like the chinas and indias and a lot of the brick countries. there's a lot of opportunity, everybody knows that. volatility is going to be there as well. we're long-term investors and asset allocators and we look to see what's going to happen over the next three, five, seven years. it will help us get to the growth rates we won't have going forward. >> good to see you. thanks for joining us today. more trouble for general motors. as the deal for the company's saab unit is called off. phil has more. >> this was not going to bring in a lot of money for the company. they were trying to streamline the portfolio. it was time to off load it. that's changed. here's the latest on what's happening with saab. the deal is off. the group, which by the way, they're a supercar maker out of sweden. they have stopped the deal due to the slow process. they have said timing the crucial. the collapsed sale puts the brand's future in doubt. gm's ceo saying he's disappoi disappointed the deal fell through. he says -- again, the gm board will meet next tuesday. this clearly is going to be one of the topics that will come up for discussion. you have to wonder, this was not a brand where there was a lot of bidders. you have to wonder if it's going to go the same way as saturn. if we can't find somebody for saab, so be it. >> i don't mean to be snide, but how many were they selling a year? >> the sales were down 61%. they sold 7400. for gm, 1.7 million. >> the yuppie mobile of the '80s could go away. >> very high cost structure. they build those things in sweden. one reason why gm has also struggled to make money with saab. >> almost a collectible. >> almost. >> thanks, phil. the gdp number out. the economy is growing, but deficits and the bond market are a big buzz today. steve liesman will pull it together and tell us what it means for the market. coming up, we'll give you the top software picks. at 12:30, walmart and amazon battling it out. there's a major price war brewing between the two. does the internet retailer really pose a threat? and get ready for the fa"fa money halftime report". bull market or bear, traders are always hungry for ideas. they find them at td ameritrade. trading's all about strategy. and strategy... is all about information. so i start my trading day... with td ameritrade's morning perspective. that's interesting... or, look at this... i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this-- pattern matcher... pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it's like pattern radar. pattern x-ray vision. plus, this amazing gadget... called the telephone. i can call td ameritrade anytime and talk trades, strategies. anything. that's where the action is. td ameritrade. built by traders for traders. announcer: trade commission free for 30 days plus get $100 cash, when you open an account. of money. oh, wait. hold on a moment. i believe i had that now that i think about it, it is your country that owes us a large sum of money. now, it's coming back to me. i believe it's $800 billion. >> you're going to get your money. i assure you, you're going to get your money. you're going to get your money. >> that was "saturday night live" taking on the national debt. you know the national debt is a big story when it gets into the national "saturday night live." that was president hu jintao. it highlights the situation with the national debt and today, the government's going to try to borrow another $42 billion over a five-year period. we have steve liesman at cantor fitzgerald. he's going to be there live when it happens and we're going to have him do this morning's economic data. >> let's talk about the economic data first, then we'll get to that bond auction, a record $42 billion. the gdp number being downgraded, but signs that maybe some of what was weakness in the third quarter may help in the fourth quarter. 2.8%, spot on with the economist's forecast. and the core pce number there followed by the fed taking down to 1.3%. looking at the long-term, you can see the beginnings of a recovery. we went down to 07 in the prior quarter, then ticked up to 2.8%. where it goes from here is the broader question as to whether or not we repeat something in the 2 to 3% range. again, not a very robust recovery, but a recovery. how did we get there? consumer spending down to 2.9 from 3.4. business investment dropped more than we expected. stu structures up a little more. housing was up. looking at the net trade figu s figures, some economists think this is going to help us out more in the future. government doing its share in spades. it's one of the reasons we're here today. then inventories, that's another area where they think there's room for improvement. certainly the liquidation of inventories would stop in coming quarters. that's the gdp number today, but we're looking forward to this 1:00 bond issue. >> let's talk more about that with joe, one of the largest investment managers. how do you think this is going to go? are you encouraging people to buy this? >> i think it will go fine. we keep running into that trap, but the reality is the u.s. still remains the safe haven and these yields have been attracting foreign buyers and i don't see a reason why today will be any different. >> wouldn't we be really criticizing the u.s. government if they were auctioning off this debt at much higher rates? i mean, if you're going to borrow money, now is the time to do it when rates are as low as they are and the economy's just starting to grow. if the economy grows more down the road, it makes it easier to pay that debt back. >> absolutely. look across corporate america, we will break a record this year in new bond issue wans. they're taking out their liquidity concerns. >> if you could tell us, sir, why is the u.s. selling so many bonds on such a short range? why not go with 20 and 30-year far more so than two-years? >> i think it's a supply and demand thing. at the end of the day, we still rely, for good or bad, on our major trading partners who tend to like three years and five years. beyond that and inflation becomes a concern which means demand becomes a concern and costs will go up in a hurry. >> does it worry you or perhaps better said, what is the market telling you when we see so many trades going into the shortest end of the yield curve even at the same time wall street is doing well? it seems as though there's a fear trade out there. >> there's a reach for yield. when money funds yield zero point something, the other is to take credit risks. we think with an economy starting to grow a little bit, you may as well reduce your interest risk. >> so you don't see this as people fearing that second double dip. >> i think it's a different trade. it's fed funds at zero. >> steve, you and i shout about pop culture signals all timt about the markets. what do you make of "saturday night live" having hu jintao and him saying over and over again, don't worry, we're going to pay you back. >> what i think is that this is like the movie, "groundhog day." every time a nation gets into a deep financial problem and it tries to stimulate its way out, you get the current from the other side, which is get out of it now and a real distaste for the kind of debt necessary by the government to get the economy out of this problem it's in. so here we are, dealing with the other side again, just like japan did, even with the great depression. to get the economy out of it, but one thing that's really interesting here on the bond floor, these guys are hiring. there's a new wall street kind of happening. you can see it right here where essentially, some of the second tier firms are taking over the business that really the bigger banks have walked away from. >> they're hiring bond traders? >> somebody said, we hate the fact the government is issuing this debt, but it's really good for business. >> great. >> one stray question. with the activity in treasury bonds so high, why are corporate bonds doing so well? >> for the simple reason that the basic fundamental is not a bad picture. corporations are generating free cash flow, but are paying down debt, refinancing next year's maturity. the corporate bond market, issuer, can live very well in a 2% gdp world, unlike the equity market. >> thanks very much. >> happy thanksgiving, joe. >> see you at the top of the hour, steve. >> tomorrow morning. when we come back, this year, far from over. it's a good time to go sorting through the software stocks. and here's a look at some key players in that area. oracle, mcfee. back in a moment. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling. i switched to a complete multivitamin with more. only one a day men's 50+ advantage... has gingko for memory and concentration. plus support for heart health. ( crowd roars ) that's a great call. one a day men's. they're running the men's room marathon. with lots of guys going over and over. and here's the dash to the men's room with lots of guys going urgently. and then there's the night game. waking up to go. these guys should be in a race to see their doctors. right. those could be urinary symptoms due to bph, an enlarged prostate. but for many guys, prescription flomax reduces their urinary symptoms due to bph in one week. only your doctor can tell if you have bph, not a more serious condition like prostate cancer. when taking flomax, avoid driving or hazardous tasks until you know how flomax will affect you, as a sudden drop in blood pressure may occur, rarely resulting in fainting. tell your doctor about all medications you take. if considering cataract surgery, tell your eye surgeon you've taken flomax. common side effects are runny nose, dizziness and decrease in semen. ask your doctor if flomax is right for you. call 877-4-flomax to see if you qualify for up to $40 off new or refill prescriptions. for many men, flomax can make a difference in one week. you want time to enjoy the holidays. lazard capital markets is bullish on enterprise software. joining me now for an exclusive interview, managing director of software at lazard. tell us a couple of your favorite picks. >> oracle. we think oracle's well-positioned to deliver on superior results going into 2010. >> you like the idea they want to buy sun? i don't understand why that is strategic. >> one, they want to get to their customers. the overlap is probably less than 10% of sun's customers and i think it makes for easy pickings for oracle to take some share. they also like their software. they've come out with a joint product called exit data. >> next? >> i like sa man tix. >> that's a highly fragmented businene there are a lot of players in that industry. >> that goes right into the trend. they're finally getting their act together. it's been a laggard, but we expect them to outperform in 2010. >> i keep waiting for larry ellison to come out and buy those guys. >> i have no comment on that, but they're showing momentum in their name. they've added 30% customer growth this past year in what was probably the worst economic environment we've seen. we think the company's going to continue to work. >> what would you stay away from, joel? what don't you like? there are others, a lot of people like a lot of things in tech. what don't you like? >> we don't like some of the application vendors on a perpetual model, where they sell and don't have a subscription-based model. companies are not spending expenditures on existing areas. >> names? >> we have hold ratings on epicore and some other names where we think they're more at risk. >> thanks very much. >> thank you very much. up next, bill. >> that's dennis channelling bill. >> we've got to tease him a little bit. this is the retail version of david and golliath. everything from books to toys to electronics. can amazon really put a dent in walmart's business? and the "fast money halftime report." >> the data wasn't kind to stocks. stocks are pushi ining lower. how can you put your profits in a lock box? you'll have to tune in. we have dennis gartman. he's going to talk about the things you need to know about commodities moving forward. tune in in 15 short minutes. alright, so this tylenol 8-hour lasts 8 hours... but aleve can last 12 hours. and aleve was proven to work better on pain than tylenol 8-hour. so why am i still thinking about this? - how are you? - good, how are you? aleve. proven better on pain. been putting our clients first. according to a leading independent research firm, in 2009 clients rated wells fargo advisors the #1 u.s investment firm for doing what's best for them. with advisors nearby and nationwide, we're with you when you need advice and planning expertise to meet today's challenges. wells fargo advisors. together we'll go far. dow jones industrial average lower by 34 points. 10,406. nasdaq lower by nearly 12 points. and the s&p 500 holding on to the 1,100 level. what began as a price war between walmart and amazon has spread to a wide assortment of goods. but even walmart's size and scope, is amazon a legitimate threat and how might that affect other retailers? the new book -- jane wells, who is a bargain shopper if i've ever seen one, joins us from los angeles, too. lee, i'm going the start with you. it is amazing what's happening here, but who do you think is going to come out the winner in this? they are really ramping up the competition, but do you think they will be that successful? >> you almost get the sense that walmart is baiting amazon into this and i'm a little afraid they're falling for the bait. walmart has always been about one thing and that's price. amazon has been about service. they're extraordinary with it. the other day, the ceo of walmart.com criticized amazon's two-day shipping. if amazon starts fighting the price war, then i think it's in big trouble. here's a company that's 20 times bigger than it. it's a company that a lot of people don't like to do business with. there's a brand community that does like to do business with amazon and if amazon, it may turn out to be a case similar to starbucks. >> walmart hasn't nearly had the kind of success online that amazon has. so couldn't you turn it the other way and say that walmart aspires to be like amazon? >> no question it aspires. walmart has had a very checkered history of getting its online act together. the one thing i'm concerned about on amazon's behalf is that they may turn into just another big discounter. >> jane, when i think about investors, consumers love a price war. investors hate it. >> maybe in the short-term they do. i think one of the greatest iron anies, some analysts applauding walmart for taking on amazon. yes, walmart fighting for the common man. maybe amazon is known for its service, but when one of eight people is out of work in california, it is all about prices. walmart can afford to toy with amazon. the ceo says it's only a matter of time before walmart dominated e-commerc e-commerce. hally capital says the biggest loser in this is best buy. >> lee, you're more optimistic on the consumer than almost every expert out there. this fight, could it serve to bring more consumers into stores and online when they hear about the discounts? >> i'm more shoptimistic. the american consumer will continue to buy. i'm not saying they're necessarily going to shop wreck le wrecklessly. what i think the consumer is really looking for in addition to price is value and service and attention. >> so if you were jeff basos, what would you do? >> i would continue to have the world class, online, customer service site. you can have a pretty darn good, big, online site and profitable one without turning into a biggest behemoth on earth. >> i was saying, don't take the bait on apparel. walmart is doing everything it can to maintain its brand. certainly it has the distribution built up for online shopping, but it's only a matter of time. i guess the question is, is the universe big enough for both to succeed. >> i'm hoping it is. and amazon's got that extra sense of community. >> good luck with the book. thanks. >> i hate words like that. up next, critical housing data out today. home prices rising for the fifth month in a row. have we turned the corner? and we're just minutes away from another big treasury auction. this time, it's the five-year notes on the block. steve liesman will have the results coming up at the top of the hour. >> record auction. you've got to tune in. yet a lot of natural gas has impurities like co2 in it. controlled freeze zone is a new technology... being developed by exxonmobil... to remove the co2 from the natural gas... so we can safely store it... where it won't get into the atmosphere. exxonmobil is spending more than 100 million dollars... to build a plant that will demonstrate this process. i'm very optimistic about it... because this technology could be used... to reduce greenhouse gas emissions significantly. ♪ homebuilders on the negative side. one bucking the trend, it's up six cents. the case-shiller index showed home prices were up in the third quarter, but still down year over year. diana olick has the details. >> that's right. we're continuing to see home price stabilization, but september's numbers didn't come in quite so strong. they're still down 8.9% from a year ago. top 10 and 20 markets continue to improve month to month on average, however -- >> if you go across all 20 cities for this month versus last month's data, you'll find out that fewer cities showed positive month to month gains in september than august. if you look at the seasonally adjusted data, you're going to find the same thing. >> now, another home price report from fhfa, which looks at conforming loans. prices rose just .2% and are down 3.8% year over year. august to september prices were unchanged. an interesting report shows 23% of all borrowers owe more on their homes than they're worth. 40% of borrowers who took out a loan in 2006 are underwater. negative equity is concentrated in five states. i don't have to tell you which ones. >> dennis? >> i saw the case-shiller numbers, prices were down 9%, but this over survey was 3.8% on the cheaper homes. >> when you're looking only at conforming loans, you're seeing to the lower price homes, which have seen a lot of action over the last couple of months in sales, where as the higher priced homes have not see quite the action and they're prices are further down. still ahead, the big picture on making money around the world. plus, it's a facebook christmas. the ceo is going to be "power lunch." 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let's get the word on the street. that data wasn't very good. gdp, a disappointment. which ever way i look, it did not instill confidence, pete. >> right now, the confidence level didn't like that impressive. then on top of that that shanghai didn't close well either, that didn't fortell us that the day didn't look too strong. actually, i'm impressed with the market so far. i expected the pressure to be harder on the marks. we bounced off support in the s&p 500 that a lot of people were pointing to in the s&p pits and they were talking about the 1096, 97 area. then it seemed as if all the paper left and now, we're waiting on the bond auction. >> jeff, we have to be fair here. consumer confidence wasn't bad. but with what's going on, wouldn't you expect that? how do you incorporate that in the data and price structure? >> first of all, where did the green chutes go? >> it's moss. >> and where did the traders go? i think they're more worried about their turkey dinners right now. i've been trying to keep myself awake and today, with all the data coming out, i thought we were going to see some heavy volume. it didn't. everybody tries to cushion up the market. if i'm trying to tell a customer to buy equities, i'd been lying. >> katie, he brings up a good point, but i always find there's always ways to make money. >> there sure are. i'm looking at exxon mobil today. they gapped above an important resistance level at $75 and that breakout comes on the heels of a triangle formation that coincided with a breakout in the price of crude oil. today, it's testing its 50-day moving average, it is short-term oversold and is projecting a breakout of $96.50 a barrel. >> interesting. patty, what do you think on more of the consumer side? are there some names out there? you know, it's a quiet market. there's always a way to make a few bucks. >> what you've got to look for is the best operators. we saw today that we got good numbers out of dollar tree. the consumer is still looking for value and you cannot discount the fact that consumers are still trading down in most cases. the other place to go in retail though is to look toward the best operators and the best right now is j. crew. mickey drexler coming in there, turning around fashion. >> next trade, housing data. to be fair, wasn't a bad number, just not as good as august. some of these names are off by as much as 2%. jeff? >> you look at the housing market and again, rick, you know this better than anybody. risk rewards trades. >> but we have to be fair here. i agree, but you left a lot of money on the table in a lot of different areas, but it is a dicey proposition. >> i don't want to be involved in it. i want to be involved in high probability trades. you don't vhave to trade all th time. >> i'd have to agree. but i think you're always looking for opportunities. they have not been in the homebuilders. i think they've had runs here and there and that's based on a variety of issues, one of which is the short issues, but you've got to go to copper. there was a guest earlier on that talked about that. there is some some demand. it's coming mostly overseas but you can look at copper. still see it over $3, and if you want to come down a little bit in a different direction, you still look to a name like lowe's, like home depot where the valuation still makes sense. they aren't overpriced. that's what makes those names attractive, but i do not like the home builders themselves. there are too many variables and we all know the supply data still looks pretty ugly when you're really looking at a lot of the home building sector. >> us weekend warriors like lowe's, home depot, i'm with you there. bonds are higher ahead of the results of $42 billion five-year auction. just as an aside, we did see a $32 billion one-month bill auction. the bid to cover was well over four times over subscribed to. we continue to see great demand in bills. i think the five-year auction is going to go well but we'll have to see. five year isn't really considered a short maturity. what do you think? i guess let's go to jeff on this one. >> well, i'm going to be waiting for the fed minutes. i don't trade bonds that much, but what do you think about the fed minutes? >> you will watch the minutes, won't you? >> exactly. >> it's always nice to see what they're hinting they're going to do, but i'm going to be a little cynical here. they're good for hints, not good for a lot of action. patty, do you have any thoughts? >> yeah, i think if you look at where bonds have been trading, it looks to me like people are still scared. at these rates there are a lot of places you can make a lot more money than the treasury bills. people must be piling in just for the safety factor. >> these are smart investors. if they're coming in and getting six basis point on the one-month bill, three basis points on a three-month bill, what's going on there? next trade, gold continues higher, absolutely amazing. i bet the dollar is down eight days, and with tof bring the commodity king, dennis gartman, himself, on the money fast line. we want to know what he thinks about this gold market. be our interpreter, dennis. >> i wish i could interpret it, but you're right, it is up -- gold is up in dollar terms for the eighth day in a row. here we are at $1,166. it's stalling here right now, but i think what you need to understand is we're making new highs not for gold, not just in dollar terms. we're making new highs for gold in terms of sterling. new highs for gold in terms of canadian dollars. new highs for gold in terms of the euro. that's what's impressive and i think what you're seeing is a movement of capital away from fiat currencies. i sound like a gold bug and i don't like the gold bug, but that is what's going on and that's likely to be continued. you have to be impressed by gold gapping higher yesterday, on monday coming in, and here is gold up strongly on the day even when crude oil is down $2, even when the grains are falling. very impressive. >> when commodities go parabollic, emotion can overrigoverride logic. do you think this could end badly? have 40 ralph kramdens getting through a spinning port hole? >> 40 ralph cramdens, what a metaphor that is. the public really isn't that enamored of it. you don't see advertisements on tv suggesting you have no choice but to buy gold. in fact, what i find interesting is we see advertisements on tv to -- >> to sell gold. exactly. let's change gears. i like watching the euro but i think i was more interested in the dollar/yen today. the nikkei moves down to fresh four-year lows. a lot of this is the opposite of our problem. the yen is a bit strong. >> i think all you're seeing here is people taking risk off the trade. yen is gaining on euro and gaining on dollar and gaining on sterling, and when we're seeing that, that's just the obverse of people are moving into the dollar carry and out of the yen carry. they're unwinding that trade so they're buying yen that they had sold previously. >> dennis, i'm glad you're the commodity king. there's one thing about commodities we love. the government can't print corn. don't go anywhere, the "fast money" halftime report continues right after this break. here is what we have coming up on the big show tonight. stocks down. has a second look at america's economy shows a consumer still in pain and imports skyrocketing. were investors too giddy over an american comeback? peter schiff is back to say, i told you so. and here is what to do next. and it's a "fast money" double feature, black friday and cyber monday covered back-to-back. two top analysts set up retail's two biggest days of the year. plus, what is the pit boss thankful for? a stock that's made a huge run and fat with profits for the taking on america's post-market show tonight. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here. i hired him to speak. a lot of fortune 500 companies use him. but-i'm your only employee. we're going to start using fedex to ship globally- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football. i just don't understand... i'm sorry dick butkus (announcer) we understand. your business could use a pep talk. visit fedex.com/peptalk welcome back to the halftime report. time to call the close. let's go around the horn. buy or sell, pete. >> well, i got to tell you, rick, right now the markets are telling me don't do either. i think everybody is putting their hands in in their pockets. >> you're kneeling. patty? >> i have to get up early on friday, so i am going to take my thanksgiving nap early and i'm going to the side, too. >> wow, jeff. >> the same thing, rick. i'm taking an early thanksgiving holiday today. i'm out of here at 4:00. >> are you going to make it unanimous? >> i would be a buyer of the market in here. the thanksgiving holiday actually has houf spositive sea influences. i'm a buyer. >> one out of four. we have somebody looking to stay a little bit long. that's it for the "halftime report." i definitely will see you tonight live at 5:00 for fa"fas money." >> we have that potential market moving event, the results of the $42 billion five-year treasury note auction. we will have them for you straight ahead. and still to come on "power lunch" -- it's a facebook christmas. launching a major ad campaign and letting retailers use member profile data to sell goods. we have a "power lunch" exclusive. and gold hits new highs. the dollar dives. where should you go looking for profits around the world? jpmorgan's top global market strategist will tell you. plus, the retail details. exclusive results of a new survey on holiday spending. will consumers buck the trend and start spending again? will luxury stores be the surprise bright spot? we'll have the answers the second hour of "power lunch" starts right now. and we'll have even more questions that we pose throughout the coming hour here. welcome to the second hour. i'm bill griffeth with the rest of the gang. we're moments away from the results of that five-year note auction. $42 billion on the block. have the numbers, the analysis, and the market reaction for you momentarily. >> and i'm sue herera. as we wait for the results, stocks have given back some of the gains from yesterday's rally but we're off the lows of the session. now it's making a fool out of me we were down about 40 points, but now down a little bit and we're off 53 points. but at&t, verizon, and general electric, pour parent company, are the biggest blue chip gainers. >> i'm michelle caruso-cabrera. here are some of the 52-week highs. a number of health related companies. striker, express scripts, and cardinal health across the board. and i'm dennis kneale. you, the taxpayer, own 80% or so of aig. are compensation curbs preventing aig from becoming strong enough to repay tens of millions of dollars in government aid in your money. and we are waiting for the results of this $42 million auction, five-year notes. the government trying to raise. if you're going to borrow $42 billion over a period of five years, how much will they have to raise in interest rates? we keep wondering if that's going to climb. >> the demand was there, a regard low yield for the two-year note. such low volume for the stock market. it could be a market mover depending what happens but so far the markets are holding steady. the dow down 53 points. >> i think they're waiting to see whether or not. it's a test for the market, it's a test for the government if on a holiday shortened week with low trading volume and a lot of key players not there if they can successfully get rid of and auction off this debt. i think that's a good sign. >> china doesn't have thanksgiving, right? >> no, they don't. the bid to cover ratio is 2.81%. steve, what do you have? >> we had a wow come out here for a strong auction. let's bring george, george what do you have for. >> we've got an auction that investors paid through the market to actually get allocated treasuries at 2.175. we were going it at 2.21. >> that's what you paid if you wanted to own that bond ahead of time or have a claim on that bond after it was issued. came out below, 2.71. what was the bid to cover? >> it was 2.8. >> that's higher than it's been. >> highest all year long. holiday shortened weeks really don't matter. i think the auction markets operate smoothly regardless. we have indirect bids taking down 61% leaving very little in dealers' hands. >> 61% indirect. those are foreign accounts, who else? >> those are mutual funds. those are hedge funds. >> so you, the dealer, you got cleaned out. >> steve, why was it so strong? >> got less than what we usually do. >> george, why was it so strong? >> there's a scarity of collateral going into the emd of the year and this yield grab that's happening, you saw it yesterday in the two-year note. people are willing to buy under 2.25 for five-year notes. it's this demand for yield as we head into the end of the year. people parking cash. >> raising the natural question, does it ease off at the end of the year? will the government have more problems beginning in 2010? >> i think 2010 will start to see some issues with yields creeping higher, but the real issues will be in 2011-2012 when they have all this debt we've issued during the financial crisis starting to roll over. that's when it matters. >> can you explain why is it that the end of the year would drive so many people to want to own treasuries into december 31st? >> there's a time period where basically the banks want to pretty up their balance sheets ahead of the end of the year when they have to show essentially regulators and they want to show they're very solid in terms of what's on their books. this is a process that's really accelerated and exes a per baited during the financial crisis, right? >> that's correct. also, keep in mind that, you know, this collar being zero risk, investors and bank want to have as pristine a balance sheet in 2010. a lot of accounting changes coming down. >> let me jump in. this is definitely a "b" plus. i don't like the fact we priced it through 220, but if you look at the entire week the wi traded as high of a yield as 225, as low as 215, 221.5 isn't bad when you consider that the bid to cover is the best since september of '07 and i think considering that, you have to give a little turbo charge, so i think "b" plus. >> are you considering the seasonal factor they were talking about? >> once again we grade on a curve, the yield curve. >> rick, i'm glad i wasn't in any of your classes, because i don't know what it takes to get an "a"? let's ask george. >> i would lean more towards an "a." bid to cover highest of the year, indirects the highest and we went through. >> but rick grades on spelling. that's the thing you have to understand. >> rick, yesterday we had record low -- we had a record low yield on the two-year yesterday and still you didn't give it an "a." how much more demand could you have? >> i still think if demand was really strong this thing should have came in 220 or less. i have to grade off just a bit on the 221 handle. >> rick, it came in 217. it came in 217. >> let me ask liesman about this. because already the stocks are about to go back up a little bit and the dow is back up to 10-4. >> i am revising my grade to an "a." i'm sorry, i misunderstood the yield. it is an "a." it is an "a," an "a," an "a." >> steve, so the stock market will like that auction and yet doesn't the fact that it's a strong auction or strong demand mean there's a lot of fear out there and i want to be in low interest treasuries instead of in the stock market and shouldn't stocks fall on a strong auction? liesman? >> that's a reasonable thought, but i would say that's true at the two-year and closer in the bills market. i don't think anybody is going into five-years as kind of a flight to safety play. you don't do five-years on that. you do two-years on that, six months on that. i think there's still a lot of risk aversion out there -- >> dennis, when they don't show up for the auctions, that's when you want to sell stocks, trust me. >> but to dennis' point, this is a lot of money that could have gone into stocks but it's not. it's going into treasuries. >> or private businesses, but the trouble with that argument is as far as i can tell banks are not out there lending and even businesses are not out there even asking. the demand is not there. if the government were crowding out, i think what you would find is you would find higher and higher interest rates. the idea that the interest rates are lower and lower is there's a sign there's not crowding out going on at the moment. >> given that there's a high participation of foreign governments, doesn't it mean that the chinese are just empty jaw boning when they're worrying about the dollar? aren't they still in about buying? >> i can remember mr. greenspan, credit markets aren't too tight. you know what, it is what it is. put any adjectives on it. we need to pay attention to how much longer their appetite will be limitless. >> but they're faking it so far. they're bluffing for now. >> thank you, steve, and your guest. rick, we'll see you later on "fast money." the minutes from the fed's last meeting on interest rates, that will be released in less than an hour coming up at the top of the hour, 2:00 eastern time. get at the tails first on "street signs" right here on cnbc. so where should you look for global profits right now? let's bring in stuart schweitzer from jpmorgan private bank. stuart, nice to see you again. welcome back. >> great to be back. thanks. >> we have had a number of people on our show over the last few months saying you have to have global exposure, and many of them are favoring the bric countries and asia in particular right now. do you agree with that? >> yes, i do, although i don't think that we should be ignoring the u.s. because we have a much better growth dynamic developing here than is commonly expected, and the reservoir of negative sentiment is just so, so broad and deep in this market that i think we do have the potential to surprise positively here as well. >> what are the positives that are jund punderpinning your opi right now? >> number one, the consumer has started to come back. admittedly it's not really broadly based yet, and we'll need to have job growth to support that, but i think that's coming by early 2010. and then what i think many people are overlooking is that the biggest drag on this economy in the downturn was actually business capital spending. businesses pulled back to sharply across the board not only with respect to hiring, but also capital spending and we are now poised for a capital spending come back. >> where is this job growth going to come from in 2010? i thought the new spending programs and tax policies would make it harder for businesses to grow? >> i think that's right and there will be many businesses that will be reluctant to hire until they know the tax landscape and the health care cost landscape and all of that, but we've had such sharp contraction in jobs. we've lost over 7 million workers in this downturn, and the number of people employed today is basically little different than it was at the start of this decade, and meanwhile the economy is up a lot. i know productivity needs to grow and has been growing, but it feels to me as though companies have been making do with far less labor than they're going to be able to make out with. revenue is, you know, is starting. last quarter there were way more positive profit surprises than revenue surprises, but revenue is beginning to come back, and it's a slow process for sure. >> we bill this as a global investing segment. yet at the beginning you said don't overlook the united states. what does that mean? when you're allocating assets all over the world, where should you be putting most of your money? >> i think if you're a u.s.-based investor you probably are looking first and foremost here, but i'll tell you that we like nonjapan asia. i do say nonjapan was japan just can't seem to get out of its own way. it can't seem to make the changes that are needed for its economy to adapt to today's world. i have to say i have grown much more -- i have grown to find europe much more appealing in the last couple of months than earlier. >> why? >> now that they're outgrowing us. >> well, they're outgrowing us, but, you know, they're coping with this incredibly strong euro and still their exports are beginning to come back and i think the strong euro makes them stronger because it forces their businesses to compete more effectively. i think that's a positive for europe that europeans won't agree with because they say that strong euro is killing business here, but i think it makes them strong her in the end. >> forgive me for this phrasing, but you're a little bit older than young, young investors, right? >> gee, i don't know why you say that. >> would you honestly stay in stocks even though two years out we could have a real hard time with inflation, a real hard time with some of this adjustment. you would actually stay in even though you're a little bit older? >> well, i'm definitely in personally and i believe that it makes sense for investors to be in, but naturally a portfolio needs to be viewed as a whole, and when i say i'm in, you know, i'm sort of at a normal wa weighting. i recommend that to our private clients, that they be close to a normal weighting in equities, not above normal, and they be thinking about taking opportunities to take profits if things run far and fast. >> stu -- >> we do face longer-term issues. >> if you had to choose between india and china given the reception the president got in china and some of the rhetoric out of china last week versus what seems to be developing today as a warmer relationship between the president and india, which one would you choose? >> well, i think they're both important, but i'll tell you what, china has been growing based on massive increases in capital spending which have accounted for 80%, 90% of its gdp growth recently, and those increases in capital spending are creating new capacity in china that they flat out aren't going to need unless their export markets come back more strongly. i think the growth in india is a little more better balanced, and so for that reason i guess i lean a little bit more that way. but i prefer to look at the brics as a whole and i really like brazil. i continue to like brazil. it's been my favorite market. i call it an economic suburb of asia because it's benefiting so much from the growth in asia and i think nonjapan asia overall has to be viewed as a very attractive area for investment in the years to come. >> very good. thanks, stu. always good to see you. happy holidays. >> you, too. bye-bye. >> there's a new billion dollar vaccine plant in north carolina. it's faster, better, cheaper than the old kind, and it's a partnership between novartis and the feds. mike huckman has a live report for us coming up. and here is what else is on the menu. i'm scott cohn in new york city's diamond district where there are lots and lots of people who would love to buy your gold. at these record prices, should you sell? we'll have an outlook for the price of what has become a very precious metal when "power lunch" continues. controlled freeze zone is a new technology... being developed by exxonmobil... to remove the co2 from the natural gas... so we can safely store it... where it won't get into the atmosphere. exxonmobil is spending more than 100 million dollars... to build a plant that will demonstrate this process. i'm very optimistic about it... because this technology could be used... to reduce greenhouse gas emissions significantly. ♪ been putting our clients first. according to a leading independent research firm, in 2009 clients rated wells fargo advisors the #1 u.s investment firm for doing what's best for them. with advisors nearby and nationwide, we're with you when you need advice and planning expertise to meet today's challenges. wells fargo advisors. together we'll go far. novartis is opening the first ever cell-based flu vaccine plant on u.s. soil. it opens today and it will allow drug companies to make vaccines faster than ever before. mike huckman is live in holly springs, north carolina, with the story. mike? >> reporter: hi, bill, and in the next hour the ceo of novartis as well as the governor of north carolina and the secretary of health and human services will all be participating in the ribbon cutting ceremony here at this state of the art first of its kind facility in the united states, which is located in holly strings just outside of raleigh. so when this place is fully up and running, six of these 1,320 tanks will be the egg substitute. instead of injecting hundreds of thousands of eggs every day with the flu virus in order to make a vaccine, here they will mix a soup of cells and flu virus in these giant vats, ferment it for about three days, and then purify the liquid and finally package it in individual syringing at a rate of 600 per minute. this nearly $1 billion facility is the result of a pretty unique public/private partnership. the feds kicked in $487 million and assuming the fda signs off on this new technology, novartis says it can eventually make 50 million seasonal flu vaccine doses and up to 150 million for a pandemic within about a six-month period. so in a nutshell, cell based vaccine making a faster, better, cheaper than the antiquated egg method. >> i think it's a major step forward. we have been producing flu vaccines with a 50-year-old technolo technology. 50 years goes back to the end of the second world war if you think about it. so it's about time to make a change. >> reporter: and a pickup in the company's flu vaccine business is actually one reason that barron's just this week named novartis as one of its top ten dividend-paying stocks approximately while novartis is as we mentioned the first to have a u.s. located cell-based vaccine plant, several other companies, including sanofi, glaxo, baxter, and jnj are involved in this technology just to name a handful of the big guys. there are several other small companies as well. coming up on "street signs" an interview with secretary kathleen sebelius and that will be followed with the ceo of novartis. >> we will be watching both interviews. >> and chickens everywhere are celebrating. >> i am tired of the egg video. i am so glad about this. >> now we can -- >> i'm glad that my son can finally get the flu vaccine that's not egg-based. the department of transportation has levied its first fine ever for stranding passengers on a plane. continental partner express jet fined $100,000 for keeping passengers on board for nearly six hours after landing this past august. d.o.t. says the carrier violated a law that prohibits unfair and deceptive practices. new york's court of appeal says the state can use eminent domain to force homeowners and businesses to sell for a new development for the new jersey nets. tenants and owners had argued that the developer's project in brooklyn mainly enriched private interests. coffee battle royale breaking out on wall street. the bid for diedrich coffee has been upped. the real price. diedrich's burgeoning "k" cup business. one of four companies licensed. >> they're terrific. love them. >> very good. >> can i just point out that the continental fine at $100,000, six hours, $55 per hour. not enough. up next, a facebook christmas. the social network teaming up with retail giants and letting them use profile information that facebook puts up to proudly to target ads right there. and even though we have a downside market today, there are some stocks that were hitting 52-week highs. a number of them is just turned negative but medtronic is still on the upside. it's up $2.16. we're back in a moment. there are hundreds of growers here in the hallertau region of germany, so it's important to know all those growers. we go with them out to the fields and they tell us, you know, this spot has the best quality hops. they tell me, you know, willy, those hops are for you. the dunkel weisse, pale ale, amberbock are great beers, but it takes great hops to make them. so we get the first pick and everybody else is getting the rest. [ male announcer ] there's a family behind the michelob family of beers. michelob. crafting a better beer. i was just in town for a few days, and i was wondering if i could say hi to the doctor. is he in? he's in copenhagen. oh, well, that's nice. but you can still see him! you just said he was in... copenhagen. come on! that's pretty far. doc, look who's in town. ellen! copenhagen? cool, right? vacation. but still seeing patients. oh. [ whispering ] workaholic. i heard that. she said it. i... [ female announcer ] the new office. see it. live it. share it. on the human network. cisco. for a smarter way to trade online. only fidelity lets you back-test your strategies against an entire portfolio of stocks. plus you'll get advanced, customizable trading platforms. and you get the kind of execution you'd expect from fidelity... ...with a dedicated specialist to talk about even your most complex trades. they'll even help expedite the account transfer process. trade like a pro. trade with fidelity. all right. the five-year note auction out, $42 billion. the yield was 2.17%. a collapse of the yield in the meantime. so anybody that bought at that yield has an instant profit right now. the yield down to 2.13% on that five-year note at this hour. dennis? >> facebook's 300 million-plus users all potential shoppers. retailers pulling out the stops to engage them this holiday season. cnbc's julia boorstin has an exclusive interview with facebook's coo cheryl sandberg to take us inside the social network's site's big black friday push. >> she oversees all of facebook's development. we have cheryl sandberg joining us from palo alto. >> thanks for having me. >> how does facebook connect brands and company that is have their facebook pages with nthei users in how does it work? >> brands use their pages to reach out to users. they publish e vevenvents and s promotions. 10 million people fan a facebook page, and so during the holiday seasons marketers can use those pages to reach those users. so, for example, sears has about 150,000 fans on their page, and they gave those fans the ability to shop their black friday specials earlier than everyone else. trying to reward them for their kind of loyal business all year. so what's in it for facebook? i know you sell ads, but you're also putting these partnerships together and helping these brands figure out how to reach out to consumers. >> so what we're trying to do at facebook is help everyone connect to the people and things they care about. we help people connect. this means friend to friend and also people to products and markets they like. we sell advertising and a lot of these companies are loyal advertisers with us. that's part of how they build up their fan base, but the general daily process of connecting around products is something that is core to what we do on the site. >> now, i was particularly intrigued by mastercard's gift finder. it allows users to recommend gifts for their facebook friends. how can marketers take all the information that's on facebook profile pages and everything that facebook has and use it to their advantage without raising concerns about privacy? >> so privacy is one of the hallmarks of facebook. facebook is for a lot of people the one place on the web where you are truly yourself and people give us and the site a lot of information. they do that because we know that we will completely protect their privacy. so you only share information with who you want to share. in the mastercard example, it's a fun site. it's a microsite, and you can go on and look for gifts for your facebook friends. so i did this for you this morning. it suggested things like a pink bunny suit and espresso maker. >> perfect. >> but it also clearly said do you want to share this information back to facebook or not. if i click no, it gives only me the gift ideas and had i not shared them on air with you, you would not know about them. >> okay, cheryl. i'm going to avoid the question on what the heck would have prompted the suggestion of a pink bunny suit and ask you instead -- >> ask julia. >> do i have to go to a site on facebook or will they come to my facebook page on facebook? >> both. >> okay. >> there will be home ads on our home page that you will see. but -- >> but you will also pipe some right to me. >> it will pipe some right to you. >> how well tailored to me individually will it be? if i said i like music by 50 cent will an ad come up saying we have a sale on a 50 cent album? >> potentially. we're the only site on the web where every person sees a totally different page. if we have 300 million ewers, we have 300 million completely unique experiences. information comes to you on facebook tailored to you. you might see an ad, but you also might see a friend of yours saying, i just listened to this 50 cent song or julia saying i just bought this book. >> do you think most of the 300 million registered ewers realize this they have basically signed over the right to receive those kinds of ads or will there be some kind of backlash because i didn't realize i had signed over that right. >> well, much like everywhere on the web, ads are targeted in a specific way. what's really important is they have not signed over the right to give their information to anyone. so if someone is targeting an ad to you that says you like 50 cent, we would never tell the marketer anything about you. they're just targeting -- >> didn't you tell them i like 50 cent? >> no, the marketer would get on and say i want to buy men who are living in a certain geography of a certain age who are interested in music. and then they would be targeting ads in an aggregate way at that whole population. they're not targeting an ad at you as an individual and that's really important to understand. >> but my question is how can facebook get a cut of the sales that must come from these kinds of marketing campaigns? if mastercard directs a facebook user to buy a gift onamazon, does facebook get a cut of that purchase and should they? >> no, we don't get a cut of that purchase. you know, our goal is to keep people coming back to the site and engaged and then we sell advertising on the site. the more people use your products and our site, the more advertising we can sell as well. we're really happy for our advertisers and for users to be provided a great experience because it keeps people coming back to the site. we don't need to take a specific piece of that transaction. >> well, it sounds like you're having a very busy holiday season and we look forward to seeing how all of the retail campaigns continue once that shopping season is over. cheryl sandberg, coo of facebook. thank you so much for joining us. >> julia, we'll be going to your facebook fage to read the explanation of the pink bunny suit. >> that would explain the gun ads i get. >> good one. >> coming up on the half hour. we'll check back with our market reporter steve grasso is standing by on the floor of the new york stock exchange with his forecast for the rest of the day. >> what do you mean i have to wait three days? i'm angry now! plus, the retail details. exclusive results of a new survey on holiday spending. will luxury stores be the surprise bright spot? we're going to tell you. "power lunch" is back in a flash. >> two more days. >> you're watching "power lunch" on cnbc, first in business worldwide. ♪ their hopes are as different as their headquarters. their styles as unique as their strategies. for 200 years, the hartford has helped... businesses of all kinds... protect themselves today. and prepare their employees for tomorrow. visit thehartford.com to learn more. and with the hartford behind you, achieve what's ahead of you. ♪ (announcer) we understand. you need to save money. dow jones industrial average off the lows of the session. still down 37 points, 10, 413. nasdaq is lower by 12. the s&p down 2.5%. 1103. >> we are, indeed, less lower than we were before. good call, dennis. >> right, for now. right once a day for a couple minutes. >> let's get to scott wapner. the economic data kind of pushed us around this morning and now we've settled in. >> probably the most important data moving the market today was gdp revised lower. that sent the market a tad lower, but clearly it's still a watch on what's the dollar doing. traders said we're looking at equities and then i can tell you what the dollar is doing. the dollar is flat to slightly on the upside. one of the weaker sectors today, financials giving some back if you want to look at the bkx, the banking index, down a half percent. it's moved off the worst levels of the day. some of the home builders are down today. what's interesting about telecomes, they were higher yesterday. verizon and at and tme t. ant&te best performers yesterday. humana, united health, and health net and medtronic were out with earnings today and boosted the outlook and that stock was getting a nice bump by about 5.25%. waiting on the fed minutes top of the hour to see if that's another market mover. let's head to the nasdaq -- back to sue. >> we're going to go back down to the floor of the new york stock exchange and we are going to talk to steve grasso of stuart frankel and find out what he's watching into the close. >> is scott on the floor? i haven't seen him? >> he's around the corner from you. >> where is he? >> steve, there aren't that many people down there. >> it's unbelievable. >> oh, it's unbelievable. >> how is the end of the day going to look? it's obviously a holiday shortened week, a lot of people taking timoff, but how does it feel to you? >> we've definitely kept the floor of 1100 in. we're right there, 1103 in the s&p. but tomorrow has that rallying ability with the jobless claims so i think that during a light trading week on volume, i think you have the ability to really tick higher if we get anything that's substantially lower than 500,000. >> all right. >> what about -- i just heard -- is that scott talking to you in the background? >> that's scott. he's shooting spitballs at my leg right now, too. seriously volume was incredibly weak. >> yesterday we didn't even do a billion shares which was unbelievable. it's the trend of this really weak volume. >> and that's what they always say. you follow the momentum as you into the week, especially on thanksgiving where you have a slow, light volume trading week, you want to follow whatever that push is originally on the monday. >> i just jumped in right on your segment, i'm sorry. >> you're the professional. >> were they impress eed with t auction? got an "a"a"m a couple people around here. what did they think? >> i think right now we're dealing the most important thing is, it's a holiday week, and we have to hold onto 1100. end of story. i don't want to make it too simplistic, but it's all technicals right now. as long as we hold onto the 1100 level we open the door to 1125 next week. >> didn't you say yesterday that how you generally start thanksgiving week is how you generally end it? >> you're going to do a spinoff soon. >> i think we're going to end the week higher. you're nailing my coffin on that, aren't you? >> it's a feet actually. you hold feet to the fire. >> would you explain one thing, i'm sorry to be simple here, but i thought the weak dollar bad for america, and yet weak dollar stocks go higher. at some point won't stocks go lower because the dollar is so weak? at some point far out? >> no, i think you're better off saying at some point the dollar is going to rally and that's going to kill equities. i think that's probably the first thing that's going to happen is that dollar trade, short dollar is going to reverse at some point, as we have seen it sporadically happen, but i think you will see it for a longer duration. >> so it's going to kill equities because stock investors don't like a strong dollar. >> we'd like to keep going abbott & costello, but we have to break it up. in a cnbc exclusive fti consulting is out with its 2009 retail report, an annual look at holiday sales. details from senior managing consultant bob duffy. thanks for joining us. results are not so good. >> they are not. we're predicting we'll be down another 2% off of last year, which is awfully significant given that it's going to be two years in a row where we're going to see holiday sales down off the previous year. >> and, in fact, you don't see a turnaround in retail at least until 2011. >> no, we don't see a turnaround until 2011. we think 2010 will continue to be very difficult for many retailers in the country. >> mr. duffy, that is -- that's a horrendous forecast because last year was terrible, and we've seen other assessments from different groups saying that it's going to be flat to slightly positive. down 2.1% compared to last year is really, really bad. why so bad? >> well, it's bad for a couple reasons. first, you've got significant people in the country who are very concerned about unemployment. unemployment at 10% is record levels. in addition, you have the drop in wages. those two really has provided fear in the economy where consumers aren't going to be going on into the markets and buying the way that retailers would like them to do so. >> are you surprised then that luxury apparently luxury goods are going to be the standout and why is that? >> well, it's going to be the standout because the market is up. wealthier consumers are willing to be at least a little bit more open with their checkbooks than they were last year, and they are going to buy. so both luxury goods and luxury retailers should show some sign of improvement over last year. >> some of the hardest hit areas, home furnishing, home improvement, electronics, jewelry do you feel will be the hardest hit areas? >> those four will clearly be the hardest hit areas. they will have very difficult seasons. >> so the level -- >> there's a lot of discounting going on. won't that help? >> that will help but it won't be enough to drive the holiday season and return to the levels these retailers need. >> how good are you fti guys at these forecasts? what did you say about last year's christmas season? >> last year we were one of the few firms that predicted year-over-year it would be negative and, in fact, we were out on our own and we said it was going to be negative. we were light, we weren't negative enough but when everyone else was predicting positive we said negative and we were in line. >> so you said and how much was it? we said down a little over 1% -- >> but it was down 2.6%. >> and i think most other people were predicting up. this year we're saying down 2% which is a little outside of everyone else. >> i'm praying you're wrong there, bob, but thank you very much for being with us. >> and still ahead, is the pay czar making it harder for aig to turn around its business that we taxpayers own? are comp limits a backfire for taxpayers? >> i'm scott cohn. how do you like my new ride? this is one of the trucks, the giant trucks, that they use to haul gold around. it is obviously very valuable these days. we'll show you this and we'll show you what's going on in gold country when "power lunch," and we mean "power lunch" returns. m! tdd# 1-800-345-2550 trade large-cap... for free. tdd# 1-800-345-2550 trade small-cap... for free. tdd# 1-800-345-2550 trade international... for free. tdd# 1-800-345-2550 trade one, trade a few... tdd# 1-800-345-2550 ...for free! tdd# 1-800-345-2550 only schwab clients. tdd# 1-800-345-2550 only online at schwab. tdd# 1-800-345-2550 tdd#1-800-345-2550 i'm sharon epperson at the nym nymex. gold holding steady even as the dollar rebounds slightly here. we are looking at gold demand, investment demand particularly for the gold etf helping to support prices here. we're up about four metric tons since friday. right now the gld has about $42 billion in assets. and where are gold prices headed? b of a, merrill lynch saying gold could go to $1,500 an ounce and the rally in gold may take ail along with it. why? because of the strength of the gold market. dennis, back to you. >> all right. demand for gold is coming from investors and from central banks which are now buying gold rather than selling their reserves. one big reason, the weak u.s. dollar. once again we're offering sense on the dollar. scott cohn is in new york's diamond district with another installment in our series. moments ago you saw him on that big huge bulldozer thing. he's obviously superman. scott? >> yeah, dennis. i mean, there is really almost no commodity that is more dollar sensitive than gold, as you've heard and as you have been seeing for many, many months now. and here in the diamond district of new york, for those who aren't familiar with this, aren't from here, it's a full block, 47th street in manhattan that's all jewelry stores wall to wall and jewelry dealers up above. so this is the heart of it all, and you can go up and down this street and there are lots of people who are willing to buy your gold, and for those people that mine the gold, well, it's a good time to be in the gold business. >> reporter: some are selling it. others are buying it. so at the nation's largest gold producer, newmont, they keep on mining it. >> produce all you can as quickly as you can at the lowest cost you can is the formula. >> reporter: the formula is working for newmont, it's stock is up almost 60% this year. for ceo richard o'brien, life is good. >> you can be nervous, you can be thankful, i can tell you i'm pretty joyous about it. >> reporter: this is what makes it all worthwhile. this is a bar of 90% pure gold. it weighs about 70 pounds and at today's prices it's worth around $1.25 million. and richard o'brien thinks it could go even higher, maybe to $1,300 an ounce next year as the federal budget deficit continues to grow. >> with the printing presses on, people are anticipating inflation. that inflation will probably lead to higher gold price because it will lead to a weaker dollar. >> but just a small amount could be worth up to $1,000. >> reporter: those commercials telling you to sell your gold, o'brien says beware. >> i would say if you're going to sell it, there are lots of people out there who are thinking gold is a great investment and you're probably going to get a fair price for it but i think a year from now you're going to regret it. >> reporter: o'brien does acknowledge that gold can't stay this way forever. at some point the dollar will improve and he actually believes in the long run in the national interest it should improve, but he doesn't see that happening anytime soon. a lot of people don't see that happening anytime soon, and so for now they are mining the gold as fast as they can. the process of making those gold bars that we were holding is fascinating. you can read a lot more about it and see it on cnbc.com. guys? >> scott, last time we had a huge underrurunup in golds "nig news" was showing people in the dimond district selling every piece of jewelry they had because the prices were so high. we don't see that yet, right? >> oh, no, we do. he see all these dealers that are buying gold, and we've seen people that walk in to sell gold and as people walk in to stores, you will see the people standing out in front of some of the stores saying are you selling? come on in here. they want to buy it, and, yes, there are people who want to sell it, but you have to believe if you're going to sell it that this is the highest price you're going to get, and a lot of people don't believe that as we've seen and sure enough the price keeps going higher. >> dealers are still buying. that's interesting. still buying at this point. coming up next, you know who owns aig, right? >> we do! >> so do you. it's 80% owned by taxpayers. who gets hurt if aig doesn't make a come back? we do! so do you. >> and some say pay limits for aig and others make it harder for the company to recover. so are compensation limits a backfire for taxpayers? that's the "power grid" debate with michelle in just a minute. i've been growing algae for 35 years. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can help to meet... the fuel demands of the world. the government apparently having second thoughts about pay limits because restrictions could force top employees to flee, particularly when it comes to aig. check out "the wall street journal" headline, "aig's rescue bedevils the u.s." are pay limits backfiring? joining us is julia. we were supposed to have jack but -- >> come on over! >> not since gorbachev and reagan -- i will give you the first 30 seconds, are the pay caps backfiring when it comes to aig? members are treasury are saying they're having trouble hiring people to run aig. >> my belief is aig needs to be wound down. we should sell it, the government should get out. but while we're on the government dole, i don't think we need to pay them the exorbitant money they made been. >> what if these are new people who are so good at what they do they're actually going to get far more money for you the taxpayer when they unwind this company? >> because i have heard the song before and i don't believe aig is salvageable -- >> let's say you're right and it's not salvageable and the key is to get as much money as possible for selling the units, don't you want the best people doing that? >> i want the taxpayers to be protected. right now we're not protected. tim geithner did a disgraceful thing with what he did at aig by giving them 100 cents on the dollar when chrysler and other shareholders. >> it's water under the bridge. >> i don't think they deserve to have unlimited compensation at my expense. wind it down, get it out. >> how was traffic? >> good to meet you all after 15 years. good to meet everybody. >> julie says the pay caps are not backfiring. do you think the pay caps are backfiring? >> the government should never have been involved in any of this, but if we are going to spend billions and billions, the last thing we want to do is micromanage these companies into the ground. i agree with julie. i said what hank paulson did last year was tantamount to an attack on the united states. i criticized my president, george bush, for doing this, but you can't bring in ken fineberg, cut the bay down. it's almost like the airlines. people are working for nothing. the danger is the federal government will destroy the taxpayers' investment. i didn't want that investment. i wanted the free market to work. we agree on this. but you can't have -- ken fineberg is probably one of the most brilliant tort lawyers in the world, but he probably knows less about bank salaries than i do and that's sad. you can't have a situation where this guy is going is set up a romanian style structure. >> ken fineburg okayed mr. benmosche getting $3 million cash to run aig. but he realized at some point you have to pay up. >> and what did mr. benmosche do as soon as he got that money? he started trashing the government. i would love to have the government out of aig but as long as the government owns 80% of aig i do not want my money spent on exorbitant salaries. >> if you don't bring a qualified person in to do that, look at the airlines. you have kids running the airlin airlines. it's silly. >> and dangerous. >> aig was a monopoly market forces were trying to break up. the government in its stupid decided to preserve that monopoly and compound the problem. the best we can do is make sure this thing runs right and the only way to do that is by bringing in qualify people. >> the only people who were trying to preserve the monopoly were its counter parties like -- >> you're right. >> i as a taxpayer do not believe that we should keep throwing good money after bad which is what i believe these exorbitant salaries would be. wh >> what do you think it takes to wind down an aig? do you think -- >> the market. >> well, you know, you're not wrong about that. the market -- look, yes, i believe you're right, the market does need to wind down aig but as long as we control ai gisg, h we do, no, i don't think -- >> selling a business requires a skill set, a really high -- business is as complicated as that. >> i don't disagree except for the fact that we saw what happened with other incredibly qualified businesses like lehman brothers, like aig with greenberg. all these qualified multimillionaires ran this into the ground. all of a sudden they will have a new come to jesus where they will make millions of dollars and this new crop of geniuses will come up? >> whether we like it or not, and i don't like it, aig is the most important financial company in the world. it is sad, i know. it's a quasipublic entity. it's the centerpiece of the u.s. financial system. i don't want it that way, but it is. to walk away from it now. >> they're wrapping me. all right. thank you. nice to see you in person, you too, julie. who gives more money to charity, brad and angelina, or blankfein and dimond? "empty calories" coming up p welcome to the now network, population 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on a vacation. that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. right now get a free 3g/4g device for your laptop. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com (announcer) some people just know how to build things well. give you and your loved ones an expertly engineered mercedes-benz at the winter event going on now. but hurry - the offer ends soon. according to the rost recent data in 2008 brad pitt and angelina jolie donated $6.8 million to various charities. it's triple what lloyd blankfein and jamie dimond gave away combined. the blankfeins donated $1.5 million to 50

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