Transcripts For CNBC Power Lunch 20130723

A new report is out on who is paying and how. The share of the bill the parents are putting up is dropping bigtime. Well tell you how people are making ends meet. First though to sue at the nyse. They are talking about that burger down here on the floor, ty, but were going to talk about the s p because right now, as you pointed out, the s p, the dow and the nasdaq kind of a mixed performance. The s p is down about 2. 5 points, but the dow is up 21 and the nasdaq down 13 and the russell off just a fraction, but we want to focus on the s p for just a minute. At the 1692 mark just shy of the 1700 mark. Career to date that means the s p is up a full 18 . If we cross 1,700, what does that mean for all of those wall street strategists who are way under that for the yearend targets . Josh lipton and his team have been calling all the big firms out there and joins us live from hq. What have you been finding out, josh . Hey there, sue. The s p 500 nearing 1700, a big filestone for a market already at record highs. The market, it has taken many by surprise, including wall street strategists, many of whom have already raised their yearend targets so where do some wall street pros stand right now . The bank of america, highest on the yearend list with a target of 1750 raised from 1600 on what is called diminished tail risk and then theres david kostin of goldman sachs, target is 1750 in six months pointing out Retail Investors have rebalanced their portfolios to a proequity minutes and Andrew Garthwaite started at 1550 and 1730. Tom lee at jpmorgan began the year with a target of 1580 and now a target of 1715. Likes the relative value stocks and anticipates a second half gdp acceleration. David bianco at 1675 and citigroup at 1615 and say the market is dealing with tapering estimates that are too high and add am parker over at morgan stanley, began the yore at 1344 and now at 1600, and finally theres barry knapp of barclays at 1525. He expects the market to sell off in waves as it has done in watched tightening cycles. Back to you guys. Josh, thank you very much. Stay with us because Kenny Polcari and a cnbc market analyst and so is bob pisani. Bob, lets start, first of all, with the targets and i went to segue into earnings season. If, indeed, were near want to go to rick . Okay. Lets go to rick before we start the conversation. Rick, youve got the auction results. Yes, and ive been vacillating on the grades. Bminus, cplus, but its going to be a charlie plus. 35 billion two years, and, boy, it wasnt a very choppy oneissue market, pretty tight, just like the ranges here. Let go through the internals. Where it went off the rails, 3. 54, ten auction bid to cover. 3. 54 chasing. Every dollar of securities available for sale this. Auction, 3. 08. Well, 3. 05 and 3. 04, the last two bid to covers because they have been drifting lower. Thats key. We saw a slightly above average indirect at 30. 4 and directs 16. 4, six Percentage Points under average. 53. 2 go to dealers. The rate,. 336. That was very competitive, so charlie plus, it just seems the crowds arent enormored with chase and the auctions. Sue, back to you. Ricky, thank you very much. Back to s p targets and earnings. Kenny, if indeed we bump through this 1700 mark, that means for a lot of strategists they either have to raise them or we were trending for the rest of the year. Well, does it necessarily mean they have to raise them, or if we bump through now does it mean well stay through the end of the year . Im of the belief that we hit 1700 and fail at least one or two times. We might pierce it but then i do think as the fed tapers, if in fact its going to be september like so many believe, i do not, but so many believe, i think youll see the market pull back. I dont think it forces people to have to raise the number if we just pierce it. Any year to take the estimates with a grain of salt, this is it. Right sdh when you start the year at 1550 and five months later you go 180 points on the dow, that shows you the longterm value, trying to guess this, is a very difficult proposition. With that said, q3 numbers doing develop. Not dropping their numbers that much in the Third Quarter, and thats one of the reasons why the markets are holding up so well. Josh, what about china . The likes of caterpillar and some of the Big Industrial companies coming out with their earnings and china has a drop in their growth rate. Does that change the dynamic for a number of those companies . Well, i think youre right, sue. Thats obviously a concern, the slowdown in china. You heard the premier in china suggesting they will work hard to keep that growth rate above 7 . Some strategists like i mentioned, tobias levwicz of citi mentioning that as a reason why hes not raising the target. Talked to the bulled up strategists. Some say it comes down to the fact that they dont think this economy is outstanding or spectacular but do think its resilient. They say earnings are better than expected. Q3 guidance not looking too bad and maybe tapering isnt coming so soon. Steve liesman, our colleague, knows the fed better than anybody and says a september tapener steves opinion is just 50 50. A perfect segue because, ty, thatews something youll talk about right now. A constant question, of course, for stocks is how strong is the economy . Where is growth going, and our economics reporter Steve Liesman on what investors should trust more right now, job growth which is moving in a god direction and Overall Economic growth, not so much . This is a really important call here. Maybe the next big macro trade, getting right which of the two data points has the economy right. Domestic product tells the story of a weak and even weakening economy. Take a look here, 3. 1 back in the Third Quarter of 2012 and then below half a percent in the Fourth Quarter. Straighten the bid in the first quarter, and then this is an estimate. Ive seen higher estimates, an average of some of the economists that we follow again below 1 , but in the other corner jobs which have been relatively strong. You can see here pretty constant, up 2 in the Second Quarter or by more than 600,000 jobs while gdp weakened. In fact, job growth didnt weaken in the Fourth Quarter of last year when measured growth fell below half a point. All of this raises the question of just whats going on here and what should investors believe, and equally important what does the fed believe . Thats critical because the outlook for tapering tied to whether growth balances back in the Third Quarter and if job improvement continues. So far it seems the fed thinks that job strength is telling the better story and the Growth Numbers could follow along or be revised. The bulls cite the split between the two measures of the overall economy, the value of everything we produce. Thats gdp and the value of everything that we earn, gross domestic income or gdi. This measure a bit more robust than gdp mentioned last week by fed chair ben bernanke as a reason to think that maybe the economy was not quite as weak as it appeared. The bulls also cite jobless claims. They have remained right around that 350,000 levels for two months now with the fourweek moving average and thats a reason to believe job growth is not on the verge of deteriorating. We want answers. You got answers. Claims come out thursday. Next week secondsecondquarter d along with revisions and economists are looking for 180,000 jobs in july. You would think the jobs growth would pretty much track economic growth. Right. How unusual to have this kind of disconnect . Not terribly unusual, over a quarter to quarter basis, over the year theres a well established relationship between job growth and Overall Economic growth, but right now weve got a divergins here, and we have a divergence with the fed on the cusp of a policy change and thats what makes this a perilous call for investors. Steve liesman, thanks very much. Sue, down to you. Gentlemen, were keeping a very close eye on dell. Shares right now are down almost a full percent. This ahead of that big buyout vote tomorrow. Activist investor carl icahn urging dell shareholders to reject Founder Michael dells deal and calling on dells board to move quickly if michael dells offer is defeated. The wall street journal reporting michael dell is personally meeting with big stockholders ahead of that shareholder vote coming up tomorrow. And dow member United Technologies hitting new alltime highs today. The industrial giant reporting better than expected results, raising the lower end of its fullyear forecast. Right now the shares are up 2. 66 . Different story for traveler, the biggest loser in the dow, beating bottom line estimates and missing revenue forecasts and its down better than 3 . Altria shares down by 2. 5 . The tobacco producer missing top and bottom line estimates. However, the company is raising its lower end of its fullyear guidance. Ty . All right. A stock i always like to talk about, her is his, sue, hitting a new alltime high. Lets take a look. 93. 60. Citi adding it saying hersheys showing strength through its deep portfolio of brand, deep dark chocolate portfolio. Raising hershey estimates and earnings estimates as well as the companys share price target to 110 from 100. The stock is up 30 this year. Thats a lot of almonds, baby. Wendys bringing moment bacon in the Second Quarter, making plans now to sell 425 restaurants to franchisees. The stock booming today, up 12 . 65 in a year. They are happy about that out in dublin, ohio. Excluding onetime items, the number two hamburger chain earned eight Cents Per Share last quarter, two cents hour than wall street estimates and five cents more than last year. Revenue up 651 million versus 646 million a year ago, and first on power lunch wendys ceo emile broelic. Welcome, good to see you. Thank you, tyler. Congratulations on a very nice quarter for you. Youve done a variety of things today with your Earnings Announcement and corporate plans. Lets start with the sale of 425 of your o o restaurant. How does that help you Going Forward . Well, you know, tyler, were constantly looking at how we evalve our brand proposition and constantly looking at how we evolve our economic model, and we think this helps us. Its going to encourage franchisees to activate restaurants more quickly. Its going to give our brand a more stable flow of revenues in terms of rental income and royalty income. It will allow us to take up our earnings per share guidance so were very excited about it. When you say activate, what do you mean by that, thats a term of art im not familiar with. Sure. Were in the process of upgrading the image of our restaurants across our entire restaurant system, and were going to do about 100 Company Restaurants this year, about 100 franchise restaurants this year and then take that up to 200 for each company and franchise next year, and as part of these process of selling these restaurants, as part of the agreements in selling to restaurants, we will require a certain level of image activation so were very excited about it. Tell me also about the increase in the dividend. Its a 25 increase, though its only a penny, but 25 is 25 , and the fact that youre now going to begin to buy back stock. Youve been authorized to do that before. You havent in the first half of the year. Youre going to start now. Why . Well, you know, we think both the dividend and the Share Buyback are a way to return, you know, value to our shareholders, and as we look to the future, we believe that well examine this opportunity every year, assuming we make progress as weve stated that we believe that we can and ask our board to approve initiatives like this, and we think that they have a very Important Role in our ability to produce earnings per share, growth in the midteens Going Forward. And that would be for 2014. You put earnings per share in the midteens. You say youre trending for 2013 towards the high end of your previously indcrate eicated ran that right . Were trending towards the high range of ebitda and share guidance of 20 to 22 cents and trading toward the high end of that. Now the noise youre going to hear here, mr. Brolick, as i open up the pretzel bacon cheeseburger. Ive had one, its an extraordinarily good hamburger. Tell me about how important a new Product Launch like this and is this a limited time only product so it has a shelf life of a few months . Forgive me here, while i have a boyte. It is a limited time only product, and im jealous i dont have one. Please do enjoy it. Its really good. Its very important to us, but, you know, this is not a onehit wonder. We have a marketing calendar for the remainder of the year that has other Product Innovation in it and even out to next year, our Product Pipeline is very rich and full, and were very excited about it. Wendys historically has been known for Product Innovation, and we want to really regain our stature there and we think a product like this definitely puts us on a start to that road. It is a very, very, very good hamburger. Emil brolick, thanks for being with us here today. Continued good luck. Ill take it over because you need to eat the hamburgy. Same with food, Dominos Pizza beating the street and they are, however, down right now 4 . Profits rose 18 from a year ago thanks to strong global sales. Revenue rose 10 . The stock is up some 45 this year. Dominos ceo Patrick Doyle is on mad money with jim tonight. Thats at 6 00 p. M. And 11 00 p. M. Eastern time. Also on the food front, not to be left out, jw schmucker hitting be a alltime high today. Up. 66 . Taco bell is dropping kids meals and toys at its u. S. Restaurants. The fast food giant says its the first in the industry to make that movement individual menu items including the crunchy taco, the soft taco and bean burrito will now appear on the regular menu. Shares of the Parent Company is yum brands, and they are down 1. 5 at 70. 43. Ty, back up to you. Im supposed to go over here. What are we doing now, john . All right. Let me take it then. Three Big Questions for phil lebeau who covers autos an airlines. Number one, phil, what do detroits problems mean for the big three and number two, ford announcing some hiring. Youre going to tell us why and number three, phil, what happened at laguardia . Wow, sue, still trying to figure that out but the footage, youve got to see this. Take a look at hard landing yesterday by Southwest Airlines at laguardia airport. Nobody was seriously hurt, but a lot of people very scared. More power lunch in two minutes. With the spark miles card from capital one, bjorn earns unlimited rewards for his Small Business. Take these bags to room 12 please. [ garth ] bjorns Small Business earns double miles on every purchase every day. Produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less . Ahh, oh [ garth ] great businesses deserve unlimited rewards. Heres your wake up call. [ male announcer ] get the spark Business Card from capital one and earn unlimited rewards. Choose double miles or 2 cash back on every purchase every day. Whats in your wallet . [ crows ] now wheres the Snooze Button . Ford is revving up its hiring, shares down just a fraction. About. 66 of a percent. Phil lebeau is live in chicago. Where are they doing the hireing . Primarily in dearborn, and not surprising given the fact that they are expanding their Vehicle Development. They will be hiring an additional 700 white collared salaried workers. Expanding Vehicle Development work and focusing on next generation technologies. Take a look at how much they have grown their global workhorse. He had to downsize this company, a bloated company. Got down to 158,000 and now up 10. 7 to 175,000, and, remember, ford is going to be reporting its earnings tomorrow morning, and sue and tyler, a big focus of those earnings, north america. Many are saying its going to be a blowout quarter perhaps with 2. 3 billion in profits. Big numbers expected from ford tomorrow morning. You know, phil, can we switch gears a little bit and talk about detroits bankruptcy filing. What, if anything, does it moan and what impact might it have on the big three automakers . Obvious lire they are concerned. Never good to have a major city by your headquarters go bankrupt, but at the same time theres a team talent pool in the detroit area, and when ive talked with executives in and around the detroit area, almost all of them say the same thing, listen, enough talent in this area that well continue to hire and thats borne out by the number of executives they have brought into these companies, whether at gm and downtown detroit and ford at dearborn and chryslers headquarters out in auburn hills. So they will continue to hire and attract talent so they are not happy to see detroit go bankrupt. Obviously not. Certainly no one is. Lets talk about the airline accident yesterday at laguardia in new york. Whats the latest on the southwest incident . It was a collapsed landing gear. This video is just unbelievable, phil. Yeah. What is southwest saying, and is this an isolated incident . At this point they are trying to figure out why the landing gear did not function because there was no indication to the pilot, to anybody, that the landing gear would not function as it was supposed, to so they are investigating that at this point. They finally cleared it from the runway. Remember, laguardia had massive delays. Oh, yeah. Last night it was closed for a while, sue. Using one runway this morning, and now they have got both of them up and functioning. Finally working through the delays. Its going to take some time but you can be sure that they will figure out exactly why that landing gear was not working, tapped gave no indication it would malfunction. Thats the most disturbing part because, you know, the pilots cant cant prep the cabin for that. Absolutely. Phil, thank you so much. I know youll be working that story for us. Phil lebeau, ty, up to you. Amazing to see how that aircraft tilted forward on its nose as it came down with obviously flames as the friction, as the nose hit the runway. Defense sector hitting a record for the fourth straight day. Big numbers on housing as well. Diana olick in the house and jane wells all over these stories. Spring apparently did sprung, if you can say it that way for housing. Whats ahead for the next half of the year . Well have the numbers. Jane . Diana, what sequester . Lockheed surprises the street and maybe even itself. Well have those numbers after the break. Golden opportunity sat and experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] yeah. 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Home values jumped, and the housing recovery took a more solid footing nationwide, according to a new report from zillow. Prices up 5. 8 and up 2. 4 from q1. Lets go local. Markets in parts of the northeast, midwest and southeast that had been slow to bounce back, finally started to move. Of course, the biggest jumps continue to be in the west with the highest appreciation rates in sacramento and riverside, california, as well as in phoenix. On the rental side. National rents fell in request2, the first quarterly decline after nine consecutive quarters, either increasing or staying flat. Rents are still up 1. 6 from a rear ago. This spring surge comes as a warning as different toips of buyers enter and exiter the market. The landscape will change. What were talking about is investors. They pushed prices up so high in some markets that they have priced themselves out of the equation. Moveup buyers are coming back and rely on mortgages and also need something to move to. Tight inventory continues to be the number one negative in this recovery. Tyler. Diana, thanks so much. Four days, four records for the Defense Sector. Today Lockheed Martin hit a new 52week high as profits jumped 10 from a year ago. That was better than wall street estimates. The stock is up about 30 this year. Jane wells is covering the story for us in l. A. Hey, ty, the street expect the Lockheed Martin profits to jump, but as you say they were up 10 and the Company Raised fullyear guidance. The stock took off like a rocket or a missile. A lot of the credit for the surprise goes to missiles and fire control sales. Lockheed shares hits a new 52week high and earnings per share were 264. The top loin did fall half a billion from a year ago but still came in better than expected and cash from operations fell 25 and the Company Raised fullyear earnings to between 9. 20 and 9. 50 a share, the street expecting 9 even. Sequester, so far not impacting lockheeds cash cow, the f35 or really anything. While the pentagon supports the fighter, how much money it will have to spend on it is still unclear. In terms of any impact that we might see, it will be back filled by International Opportunities because you can see thats where well ramp up. Over the next five years, close to 50 of our orders will come from the international customers. Lockheed is in the middle of completing negotiations for the next two lots of f35s expected to close in the current quarter. The aircraft represents 15 of total sales and the ripple effect, the rocky report, philadelphia Defense Sector index at an alltime high. Sue, weve got a lot more defense earnings coming out later this week. I know youll be very busy, miss jane. Thank you so much. Gold hovering at a onemonth high. Prices are closing right now. Maybe a little bit of profittaking there. Sharon epperson tracking the action for us over at the nymex. Hi, sharon. Hi, sue, seeing a bit of profittaking but just a little bit after we saw the tremendous runup in gold prices in the previous session. Not able to see that same type of momentum sustained today but traders say a close above 1325 is still very supportive for gold. Weve seen gold prices that have really been on a tear the last two weeks or so and this is perhaps going to be maintained if we see gold prices going towards that 1350 level, the key technical level traders are watching next. Looking at whats happening in the copper markets, bucking the trend and seeing more positive territory in this session. A lot pointing to the comments from the chinese premier about the economy and how it will not allow it to slip too far as a reason for copper prices getting a bit of a boost. Back to you. Thanks, sharon. Lets get to the trading action. A very busy bob pisani hanging up with a source here on post 9. Whats interesting, diana was mentioning how well some of the Aerospace Companies are doing, Lockheed Martin. The whole Aerospace Sector is on fire so bea systems, put that up, a new historic high on that, another reason why weve got the philadelphia defense index at new highs. Raise guidance. At an historic high and beat expectations and right across the board the Aerospace Technologies is doing strong. Great numbers on aerospace as well as Otis Elevator so this industry is doing very well. Economically sensitive stocks, commodity stocks doing better, better than expected earnings from freeportbeing moran. Freeport a good number and dupont pretty well. Weaker u. S. Dollar all helping these companies, of course, right now. The important thing is i think most of these companies are saying things will get better in the second half of the year. Ellen coleman, very typical comment. Expect they will be significantly better than last years second half, one of the reasons the market is holding up so well because were not getting dramatic drops on estimates. Big ipo, phillips 66 partners, essentially a spinoff from the ole phillips 66 oil pipelines. This was 23, an ipo. The price stock was 19 to 21. Priced to 23 and is now at 30. You can see the demand for the oil and Gas Pipelines have been huge. Most of them throw off very nice dividends as well. Up almost 31 in its first day of trading. Yeah. Bob, thank you very much. All eyes are on the nasdaq when this afternoon apple will get ready to report its earnings after the bell. Seema mody is there for us today. Hi, seema. Anticipation is definitely building ahead of apples report. The street expecting a 21 drop in Quarterly Earnings which would be the largest drop in its earnings per share since 2004, and thats primarily due to heightened competition in the smartphone space. Morningstar analyst Brian Colello is interested in the hint of some Product Launches. Whats the big question, whats the new products that apple has up its sleeve that could offset the losses associated with the iphone. Another reason we care with apple so much is because of its weighting. Without them the future earnings estimate would be 4 , and the s p tech sectors estimate would be negative 2 instead of negative 5. 5 . Switching focus to apple suppliers, Texas Instruments reporting upbeat earnings and take a look at broadcom, ubs analysts telling me shares may be moving lower in response to Texas Instruments announcement last night that its licensing its connectivity business to a customer. Back over to you, sue. Very interesting. Appreciate it. To the bond market where rick selly is there as usual, and hes tracking the auction postauction. Im trying to say tracking the action postauction but it came out backwards toe sake it away. You know, backwards or forwards today in the treasury market there isnt a lot of huge action. Maybe the most significant issue happened before we really got up this morning. That was the fact that we continue to hold this kind of 2. 48 area. Thats been the setman two sessions in a row, friday and monday. As you see on the 24hour chart. Elevated a bit but well within its recent range and the auction at 1 00 eastern didnt give too much volatility. Look at dollar index. It took a hit around 10 00 eastern. If you look at the euro currency, that was the beneficiary. Why . Because they had their advanced july Consumer Confidence release, and it was minus 17. 4. Thats good news. They are expecting a bigger negative number. Sue, back to you. Thank you very much, rick. Lets take a look at lexmark shares. They have been soaring, right now up about 10 or so and the earnings at the printmaker more than doubled from a year ago because of a onetime gain from the sale of its ink jet business. Capital source shares at new highs. The bank being bought by pack west bank corp for about 2. 3 billion in cash. Ty . Sue, the quarterback for the Green Bay Packers, i know they are your team, just bet his whole salary in a tweet and lost, so now whats Aaron Rodgers going to do . Well tell you the story coming up. Plus, new members new numbers on the cost of college and who is now paying the bill. And talk about a diamond in the rough. One of the most famous bond cars ever being auctioned, you wont believe how it was found and how much its going for. And a modern day real life take on jonah and the whale. Thats what it is coming up next. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. This man is about to be the millionth customer. Would you mind if i go ahead of you . Instead we had someone go ahead of him and win fifty thousand dollars. Congratulations you are our one millionth customer. Nobody likes to miss out. Thats why ally treats all their customers the same. Whether youre the first or the millionth. If your bank doesnt think youre special anymore, you need an ally. Ally bank. Your money needs an ally. Take a look at this. A diver off the coast of california nearly gets swallowed by a humpback while in one gulp. I cant speak for the whale. Look at that. The diver was in the water. The well was doing what whales do and eating plankton or crabby patties or whatever. And the man literally almost wound up in the whale. The gulls are just waiting to see what happens. We got some good video. Everybody is okay. Everybody is fine. Man is good, video is good. Sue, down two. Did you see how fast that diver got out of that water . I mean, can you believe that . Man. Talk about a close call. A whale of a story to tell. The cost of college, a whale of an expense and now getting word that parents are shelling out less money to pay that big bill. Music to some parents years these days. One way of looking at it. A new stud fry from sally mae, look at how parents and students are paying for the cost of college. Heres the headline. Families are spending less. The peak was in 2010 when the average cost was just over 24,000 a year. Thats now down to about 21,000 for the 2013 Academic Year that just ended. Families are spending less because of income and budget restraints and the choices they are making to pay for college. 25 of parents are working more hours. 47 of students are also working more. 57 of students are choosing to live at home to help cut the cost of college. How are the College Bills actually getting paid . Families, both students grants and scholarships 30 , parent income and savings 27 and student borrowing 18 . Families, both students and parents, are approaching the investment in college through a comfort consciousness lens that we didnt really see before the recession. The recently graduated class of 2013 got their diplomas, and on average racked up just over 35,000 in loan debt. Just in the last hour education secretary arony duncan on a Conference Call with supporters announcing a nonpartisan plan working its way through the senate to keep Interest Rates low on the most popular government student loan programs. Sue . Hampton, thank you very much, appreciate it. In todays Yahoo Finance question of the day we ask with parents now paying an average of 27 of tuition down from 36, whats your strategy. 27 say investing in a 529 plan, 20 say saving in cash, and 19 say relying on those loans and scholarships. 34 say they are on their own. Ty . All right, sue, the s. E. C. s former top cop joining a law firm and getting paid many millions. Another case of the revolving door between government and the private sector. Should we be concerned about it . How so . And how much . Plus, many lawyers are being let go in this economy, and many firms are going under. Law and disorder next. If youre serious about taking your trading to a higher level, tdd 18003452550 then schwab is the place to trade. Tdd 18003452550 call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. Tdd 18003452550 see how easy and intuitive it is to use tdd 18003452550 our most powerful platform, streetsmart edge. Tdd 18003452550 we put it in the cloud so you can use it on the web. Tdd 18003452550 and trade with our most advanced tools tdd 18003452550 on whatever computer youre on. 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Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus, which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Former s. E. C. Director joining the Corporate Law Firm Kirkland ellis reportingly getting 5 million a year as a partner at that firm. Is this another case of a revolving door between the government and private sector in washington and a big article in the new republic today about the end of the golden age for the big american law firm. Two things to talk about, and we have the editor at above the law and cnbc. Com net net editor john carney, both former lawyers and both know each other very well so nice to reunite you guys on tv. Good to see you. Nice to see you, john. John, let me start with you. The revolving door. Weve known that its been in existence for a long time. Look. I dont think this is as big of a deal as people think. Theres been studies that actually looked at whether s. E. C. Guys who later on go in to work for the big wall street law firms, whether they are easier or harder on the companies that they end up representing, and they are not easier, as it turns out and actually probably a very good reason for this, because if the s. E. C. Is tough on these firms, and on these Financial Companies that they end up representing, then they have to hire these guys. So in a weird way it might actually be a benefit that these guys end up going to work for them because they have an incentive to make the rules as tough as possible so that they later on have to hire s. E. C. Guys. What do you think, ellie, do you agree . I would agree and would point out these laws are extremely complicated there. Arent 1,000 people in the world that actually understand whats going on here so any time you have the institutional memory of a top s. E. C. Enforcement chief, you want to kind of keep that in the institution, right, as opposed to losing that, so thats why these guys can demand such a high premium when they go into the private sector. They know what they are doing. You know, what about the appearance, john, of a conflict of interest especially at this time . I would actually point out that for years and years whats happened here is that hes actually given up a lot of money, if he was in the private sector for all these years hed be making more than 5 million a year so net net as we say on my website. Shameless plug. Coming out behind at 5 million is not that much money for a lawyer at his level. The appearance we need is the appearance of competency. We need the appearance that the people who are actually regulating and the people who are talking to the regulators actually know what they are doing, and i think thats what you get when you have a guy who goes from the s. E. C. Like Kirkland Ellis or one that goes from a firm of that stature as Mary Jo White went from my firm to the s. E. C. Ellie, ill stay with you for this, the report or perception and some of the reporting thats been going on about the demise of the big law firm and that people need to rethink whether or not the law degree eventually pays off. Hey, man, if youre not making rain, then youre not going to shine. I think thats really the lesson of the new economy, right . I think when you talk about lawyers being pushed out, especially at the partner level being pushed out, what were seeing is the demise of what we used to call the service partner, you know, the person who was really kind of an expert but maybe didnt have the client contacts, didnt have the great golf game, didnt know all the things that you need to know to get to make that rain and get that business, and those guys are being pushed out. Its no longer good enough to be the best lawyer. Have you to be the best at generating business if youre going to be a partner at one of these major law firms in. Is that what its about, john . I think the entire law firm mod sell broken and deeply broken. I think the inability for Young Lawyers to get jobs is just the beginning of this. I think what were going to see is law firms be broken up. Many more are going to fail and were going to phase out of this system where only partners can own law officials. Well see combinations of Accounting Firms and see combinations of different kinds of Business Models running law firms. There will have to be legal changes for that to happen. Right. But the oldstyle law firm, the kind that i came from and the kind that ellie came from thats over. The pin stripe Corporate Lawyer. I did it for years and years, and ill tell you im so much happier outside of law and even when i quit being a lawyer seven years ago, there were so many miserable inside of law firms. I think whats going to happen right now is really that were going to see two tiers, well see one tier of the kind of traditional of lawyer like canadian, a lawyer like me who goes to a top school and goes to one of the firms and still has a relative chance of being one of these partiers, at one of these great shops, then youll see another tier of lawyers, i think, not making these kinds of salaries that are not living in manhattan or chicago or whatever and really working in smaller environments, more kind of like the outsourcing model that we see in other places. Very quickly, would you, ellie, recommend, that somebody go to law school . No. Okay. The top schools in the country. Dont go to the top schools in the country unless you can go for free, if you can somehow get a scholarship. They do Public Service scholarships at my old university, the university of pennsylvania law school, if you can go for free go. Dont go into debt to go to law school. Its dangerous for your life. World needs plenty of plumbers, lets remember that. There you go. Or bloggers. Or bloggers, right. Thanks very much. Fascinating conversation, sue. Appreciate t. Green bay packers quarterback Aaron Rodgers just bet his entire years salary and lost. Well talk about that, plus the iconic 007 bond car up for, a. Its all in the power rundown, next. [ shapiro ] at legalzoom, you can take care of virtually all your important legal matters in just minutes. Protect your family. And launch your dreams. At legalzoom. Com we put the law on your side. Now get the unmistakable thrill. And the incredible rush. Of the mercedesbenz youve always wanted. But you better get here fast. [ girl ] yay, daddys here. Here you go, honey. Thank you. [ male announcer ] because a good thing like this. Phew wont last forever. Mmm. [ male announcer ] see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. But hurry, offers end july 31st. On the exhilarating c250 sport sedan. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Faso you want to save on autoof insurance . Drive a hybrid. Get good grades. Lose the bling. Go paperless. Combine policies. Make automatic payments. And of course, talk to farmers. Hi we are farmers bum pa dum, bum bum bum bum were waiting for the etrade baby to come out in london. If they do, well go there realtime. Has apple lost its luster, its mojo, robert . I was looking at the numbers, and their share of the Smartphone Market has fallen from 17 versus samsungs 33 . They have half their share, and the share of the tablet market is down to 40 , so, you know, they have got a long road ahead of them if they are going to make up that lost ground. Got to be a bigger product. They need some new juice. They do, and investors keep lowering the bar and even the beat is not beat the earnings per share, shrinking by the quarter and the bar is very low for them to put out the socalled bait. Keep seeing new stories about them coming out in something that they do and thats a bigger screen phone because bigger screen i think is where they are losing some of that Competitive Edge against samsung, htc and others. Lets move on to a very curious story about green bay quarterback Aaron Rodgers, one of the best players in the nfl. Made a big bet with a twitter follower and lost. He put his entire 2013 salary on his friend ryan braun being clean. The Milwaukee Brewers outfielder has since been suspended for 65 games for drug violations. Kayla, does rodgers have any alternative other than pay up . Look, im biased because im a Green Bay Packers shareholder, probably the worst investment, doesnt pay dividend or do a whole lot for me but i do love the packers. I hope rodgers doesnt have to give away a salary, but when you make a bet like this, tree falls in the forest. Two rules of thumb, never bet your salary or anything and never bet your salary on a professional athlete being clean of p. E. D. S. Exactly. He didnt say with salary. It could have been his salary from book sales, for instance. Okay. Theres little room out of this one. Robert is consulting his available for hire. That was dumb. That was dum. Diamond in the rough, one of the most famous bond cars from the film in 1977 the spy who loved me going on auction this fall. How was it found . In 1989 a long island man bought a storage unit, buy a lot of Storage Units on long island, never know what youre going to find and sight unseen and this was inside. What happened . Pout it for 100. Went back the next day, a pile of plankets, uncovered it and even then he didnt know what he had because he had never seen a james bond movie. Only when he put it on his truck and brought it home and said you have james bonds car and could sell for 1 million, maybe 2 million. This guys life is going to change after he sells the car and in my mind this is the best james bond car. What sort of Lottery Ticket is this. I mean, who buys a storage unit sight unseen. Storage wars, its a reality show. Thats so bizarre. Who says im going to buy this for 100, and its like the price is right, the boat, the trip and Door Number Three and get whats behind Door Number Three. Id say he did pretty well. High wifes family lives on lock island, found a new business, will buy Storage Units and flip them. That will be Aaron Rodgers on line two for you. The biggest winners in todays trading, and maybe the baby in london. 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Steady as she goes for the Dow Jones Industrial average, up 39 points, a little bit of a decline in the s p, just a fraction of a percent right now, and the nasdaq is off a quarter of a percent because apple is coming out with its earnings after the bell today and everybody is kind of holding their breath to see what the bottom line is for apple. Biggest winners today, leathernecks mar, hologic, United Technologies and Texas Instruments, all with significant percentage gains led by lexmark up better than 7 . Very interesting market. Some earnings coming in better than expected. A couple of disappointments here or there, but very interesting to see what caterpillar announces given the news out of china with its growth rate. Going to be very fascinating. What show gives you cheddar bacon pretzel burgers, maneating whales, lawyers fighting and Aaron Rodgers contract and big bet. Thats power lunch, and thats power lunch for today. Street signs begins right now. Well see you tomorrow. Apple earnings out tonight. The world is going to be watching them like a royal baby, but do apple even matter to the market anymore . Do earnings even matter. Its a huge debate. Were going to dig n. Speaking of digging in, can junk food save the world and solve the obesity crisis. It just might. Well tell you why, and why you may want to move to detroit and why i think maybe one big bank should move. Hi, everybody, happy tuesday, lots of cool stuff on the show today. Let us start though by doing what we do best,