Transcripts For CNBC Power Lunch 20131204 : comparemela.com

Transcripts For CNBC Power Lunch 20131204

On the table and some remarks he has been giving. Stallering facts on the income of lower level bank employees. Guess whos paying them . You the taxpayers are to a surprising degree. Well explain that. To sue in the house today. I am, ty. Thanks. Three key pieces of data out leaving about everybody scratching their heads. First up, the adp jobs report showing a gain of 215,000 private sector jobs. Then octobers new home sales, booming up 25. 4 . But ism nonmanufacturing fell to 53. 9 from 55. 4 a month ago. Heres one of the more worrisome factors for the market right now. Take a look at the yield on the tenyear note, 2. 84 . That has put some pressure at various times in the trading day on the Dow Jones Industrial average. Lets take a look at where its sitting right now. The dow down about 37 points on the trading session. The s p 500 is down almost 5 and the nasdaq composite is down a little better than 5. All three, though, are up more than 20 year to date. Lets get to bob pisani at the nyse. Bob, what are they talking about down there . Theyve been focused on the ten year but what else is in the arena . Theyre trying to figure out what they should focus on. Its a simple answer because the market is it telling you focus on the jobs report and jobs outlook and were getting confusing numbers today and thats why the market is having a tough time. Put up the screen. Saw what sue was saying. The adp report, 8 15 eastern time. Strong jobs number. Stocks drop because better chance that the taper would begin earlier. Ism report at 10 00, showed a weak jobs outlook. Stocks rallied on that. Less chance of a taper. Put up the dow intraday and how confused things are. The important thing the market did move up on that numbers at 10 00 a. M. Eastern time but its sending confusing signals about jobs and the bottom line i dont think the market is interested in moving very much ahead of the friday jobs number. Want further proof of the confusion, look at the housing numbers, look at the Home Building index here. The itb, etf for Home Building stocks, that one moved up as we got good news on the october new home sales, but then drifted lower throughout the day because there was a lot of confusion about the september numbers. Earlier revisions downward. Bottom line, bottom line right here sue and tyler, focus on the jobs number. The market moves on those headlines and thats what everybody is focused on down here. Back to you. Roberto, thank you. If you think the dip is done and you believe in a santa claus rally, dominic the big dipper chu has a few stock has run some screens and got some ideas dont you about where you might make some smart plays . Very simple screen. We looked at the s p 500 and said hey, what are the stocks that have done the best over the past five years . On average between black friday and the end of the year . So historically these stocks have done well over the medium term, five years, black friday through the end of the year. Check this out because since, again, over the last five years, genworth financial, Delta Air Lines and micron are among the best performing stocks each Holiday Season. Genworth up 34 , Delta Air Lines up around 19 and micron up 14 per Holiday Season on average for the last five years. Not coincidentally these stocks are among the best performing stock in the s p 500 in their respective sectors so far just this year. Genworth up over 100 , and micron leading the s p 500 Technology Sector up 244 . Some of these names have had great years already in 2013. Now some of the stocks you may want to just step a little bit away from, it may involve the energy names among some of the worst performers over that fiveyear stretch are some big energy names. Check out names like transocean, diamond offshore, noble energy, all down on average over the last five Holiday Shopping seasons. Sue, some buy lists, some maybe stay away from, interesting names for sure. To say the least. Thank you very much. Now to the health of housing, and a monster number on new home sales in october. Diana olick as you well know is on the real estate beat for us. Hey, sue. It is a monster number but you have to takes this with a grain of salt or 20 percent margin of error. We got two months worth of sales data due to the government shutdown. So take a look if you will. Contracts signed to buy newly built homes jumped 25 in october month to month after falling 6. 6 in september from august. But you have to follow this closely. Look, the annualized rate which is how many homes would sell in a year at the current sales pace, was originally reported in august as 421,000 ufits. That was revised down 15 , the numbers fell to 354,000. Thats a 10 drop from the previous year. Then the sales until jumps, rose to 444,000 annualized in october and theres your huge headline. Many, many folks expect that number will be revised down as well. Probably, though, still will be some gains. Because Mortgage Rates after rising all summer, took a dip in october slightly. But guess what . Theyre on the rise again. We warned you online yesterday to lock and load because more positive data today has rates above 4. 5 . Refinance applications hit hard, down 60s from their peak in may and that is a lot of lost bank business. More Online Realty check. Cnbc. Com. Sue . Thank you so much. As you know 2013 has been a great year for stocks with the dow, the s p and nasdaq posting gains of 20 or some cases more than 20 . Were looking ahead at 2014. What can we expect . We welcome back richard, chief Investment Officer at jpmorgan bank. 935 billion under management and still manages to sleep at night. Kenny polcari and bob pisani at the nyse and well get their take on this in a minute. Richard, with you, good to see you again, the last time we see you before the years end. Yes. So look ahead to 2014. The big debate on the floor right now is are we overvalued . Fairly valued . Where do you come down on that . Its funny, i break it down to too far or too fast. Too fast, definitely. Markets are ahead of themselves in multiples. They feel good but very begrudgingly being invested. Too far im going to push back, no. A lot has been the issue of relative valuations which are fair, fair isnt expensive, we feel okay about that, and still biased toward making money in equities neck year. If youre an investor who has a game in this market this year you feel 2014 will be a positive year for equities. We do. You may push back on the answer on this. I would love a little less exuberance. We have a constructive view on the outlook over the next two years. Irrationally exuberant run next year. If we do next year what you do next year you will have me back in september it telling you to sell equities. We have gone so far. What would you like to see in terms of retracement . Are you in the camp that a 10 to 15 retracement would be the pause that refreshes in the market or do you need to see more or less . The answer is yes. I dont think we get it. The reality is you got a lot of investors this year kept waiting for a pullback to come in and didnt. We may get the reverse next year. We may come into the First Quarter and literally see people who say, the lesson i took away from 2013 was, dont wait fors the pullback, i never got invested, get invested. Ironically were debating where we go to the end of the year. We may get off to a rocket start if washington doesnt get in the way in january. How do you invest now given the environment you laid out. Carefully. All the time certainly. But we have the taper looming somewhere out there. Yes. Where do you still find attractive valuations around the world . I would break it down if you let me into two part of a description. Longterm money is easy, dont overthink it, stay invested. Probably the best advice we gave to clients had this year. Short term money is getting harder, liquidity isnt there, volatility is low so weve been dialing back a little bit of the tactical call. The biggest discussion point for investors next year assuming you leave equities win and we do, does the rest of the world catch up with the u. S. . The u. S. Has led so strongly. International markets havent. If you look at the case numbers, pe, any forward valuation, europe weve talked about for a year. Absolutely. Interesting. Japan as well. Are you still as favorable on both of those countries as you were in the past . We are, although i keep saying, its e with a small excitement not a capital e. Europe is about operating leverage and happening and pushing through japan i feel better about because people are doubting it. Were looking at small and mid cap. Great seeing you. Great to see you too. Ty, over it to you. To the two peas in the pod, pisani and pull carry. Okay. You first, you heard richard he says equities win next year and doesnt think a 10 to 15 correctionship is likely. Do you agree or disagree . I agree with that. Weve been talking about that for a while, right. I dont think youre going to get the pullback because there is too much money and 2014 has been the year weve been talking about that people looking forward, not only the turnaround in the United States in the terms of the economy but the globe. The only thing that concerns me about the emerging markets is if the feds does start to taper back what is that going to do to those emerging markets and are they at more risk as a result of a fed pullback . Any kind of rise in Interest Rate is going to kill in emerging markets. Weve seen that so far. Heres what im optimistic about. Maybe an early budget deal, maybe obama care gets less messy. Little optimistic maybe. Maybe the economy gets better incrementally. Heres the thing the thing is going to turn on. Can janet yellen pull off the great deal, convince the world tapering is not tightening . Does she have that power and influence . Thats the wildcard. I dont think see i think the market will make that decision, because weve seen that with ben bernanke and the current fed. Theyve tried to say taper isnt tightening but the market is going to make that interpretation and thats going to be the struggle for the fed next year. The honeymoon will be very short, very short honeymoon for her. Thank you very much. Sue . Ty, president obama speaking today about the wealth gap in the United States. Should the wealthy worry . Part of the story is how you the american taxpayer is now paying to keep many lowerlevel banking employees afloat while the executives make much better money and the pope has weighed in on all of this as well. Talking about major and possible changes in the way that the American Economy work. Thats straight ahead on power lunch. Before the break a nearrecord fine for steelers head coach mike tomlin. 100,000 for interfering with a play against baltimore last week. The steelers coulds also lose a draft pick over all of this. Although that hasnt been decided yet. That story straight ahead as well. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. When the music stopped and the crisis hit millions of families were stripped of whatever cushion they had left. The result is an economy thats become profoundly unequal. President obama speaking earlier this morning about closing the Great American wealth gap as he sees it. His speech on news that almost a third of the nations bank tellers rely on some form of public assistance to get by. Kayla tausche is here with more on that angle and robert frank has a reality check on the numbers concerning income inequality. Kayla, you to first. This is a surprise. It is a surprise and this is from the Washington Post, an article citing data from the university of california berkeley that says a third of bank tellers tap government entitlement programs roughly 900 million as they struggle with low wages in a profitable industry. Compared to the National Poverty line 23,000 for a family of four, the bank tellers in this country make roughly below 26,000. Far lower than other jobs at these banks. Underrioters and Financial Advisors clock in under 100,000. Bank executives to the s. E. C. Make over 500,000 for their salaries. The biggest banks get an average of 15. 1 million. But in an industry where the skillsets range from highly specialized and risky to relatively administrative, you can understand why there is some sort of a pay gap. But when you compare a tellers salary to what the bureau of labor statistics said are comparable clerk jobs they fall behind. Half of what postal carriers get. Less than Customer Service representatives. Less than typists, ambulance dispatchers. Look at some of those jobs and wondering why a bank teller isnt making that much. Brancheses going digital, these jobs fewer but more specialized. Even if youre not closing the gap in this profitable industry you could argue they are they parttime employees . Half and half. Robert frank with details on the wealth gap. Get us through the numbers and give us a reality check. President obama said in his speech that rising inequality is hurting the economy. He said inequality leaves the average family with less, Consumer Spending slows while the more concentrated wealth is less likely to result in Consumer Spending. The problem is inequality today is lower than it was when the economy was much stronger. Look at the two biggest spikes over the last 20 years, they both came during economic booms. The first was in 99 and 2000 and then the second spike was in 2006 and 2007 just before the crisis. In fact, the top 1 had more in 2007 when unemployment was only 4. 5 , than they do today. This is not to say that inequality is no the a problem and it has been growing since 2009, but even conservatives like Rupert Murdoch are warning about a, quote, Class Society and decline in opportunity but inequality driven more by rising stock markets and Capital Gains by the wealthy than the decline of those in the bottom. It is a byproduct of growth more than a cause of recession. I think too many people are conflating the recession with inequality. All right. Robert and kayla, thank you very much. Stay with us for a moment as we talk a little bit more about the wealth gap and to do that lets bring in eamon javers in washington. On that report that bank tellers comes at a bad time for the banks when theyre making tons of money. Yeah. Look, tyler, this is an extraordinarily profitable industry, high paying for those at the top. A couple caveats about this study in the Washington Post today. The Washington Post reports it was released by a labor backed group and just so coincidentally happens to come on a day when a labor backed president is making an inequality speech. It may not shock you to suspect there might be politics involved and the agenda of t the people putting out the survey. Nonetheless this is the kind of thing that can get some political bounce largely because were seeing the president talk about it today. It raises the question of whether this is some kind of a backdoor taxpayer bailout for the banks and anything to do with bailouts for banks is sensitive. And, of course, it comes just a week after the pope of all people started a worldwide discussion about inequality and profits over people last week with a very provocative publication by the vatican. All that. This is definitely in the mix of the national and global conversation right now. It comes also at a time when there is renewed discussion, amman, about raising the minimum wage which the president i assume touched on today in his remarks. Big debate. Protests across the country that weve seen. This is definitely part of a coordinated effort to go out there and raise this question of who is benefiting by this economic recovery that weve seen. People criticize the recovery for not being strong enough, but there clearly are some winning more and some who are winning less as the needle begins to get back to normal on the u. S. Economy. The question is who is being left out of all of that and that seems to be the question that these folks are raising right here with the bank tellers. Interesting also to talk about bank tellers. I mean this is an industry in change. I mean i cant remember the last time i went to a bank teller. I use the atm or i use my online banking. It is a dwindling job, but i was surprised, 500,000 bank tellers in this country . 541,000. We have roughly 95,000 brancheses. That is down slightly. Youre if not seeing the branches go away. You are seeing them become a little more digital. You have the video kiosks where you can make a deposit and talking to someone on a screen and not live. And you have a lot of those jobs that traditionally were at the drivethrough or desk and going away. They are becoming specialized. Banks want to put more Financial Advisors in the branches so when customers are going in there theyre getting real advice about whether they should refinance their mortgage or put money in the stock market and those are jobs that should be higher paying. We seem to have an economy where the wealth gap, despite your numbers there. Yeah. Showing it. Inequality is on a move. Since 2009, with help from easy money from the fed, the asset rich have gotten richer an this is the the asset rich. The global fund. What i liked about obamas speech he pointed out this is a global phenomena and the question is, whether youre talking about new york city and de blasio or obama and the rest of the country. How much do you as a country or a nation want to offset these much bigger Global Forces and when do you kill the goose that lays the golden egg. Thats the question. And you know, no country really does income quality terribly well that i kn

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