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to date on the latest the bureau is bringing in a demolition company, the top floor of this building is unstable and the demolition is trying to take the fourth floor down and that work we are told could start as early as this evening, as for the people that lived here about 30 people wfr displaced half of them with the red cross those that survived describe the confusing smoke filled escapes. >> the smoke was coming in a way that if you laid eyes on it you knew it was serious, had you to run out. >> edward is thankful to be alive today he had just gone to bed when he heard an alarm and escaped with his i.d. and a few other items. pamela davis was alerted by her neighbor after going back to get shoes on she was disoriented by the thickening smoke. >> by the time i went to get my hats and socks on there was smoke and i got panicky and luckily he was there. and i was hollering for someone to help me i went in the opposite direction. and i came in and got me. >> the shelter is set up at the norristown high school and richard mason donated boxes of warm clothes from the fire victims. >> i just took in 12 or 15 boxes of hoodies and t-shirts to help out. >> stuff that people may have lost in the fire. >> correct. >> police have not identified the fatality of this case, they were a resident. and the borough is bringing in a demolition company and they will start to demolish the fourth floor, it's unstable and they are trying to get that portion down as soon as possible. live in norristown, john rawlins channel 6 "action news." >> thank you. our coverage of this fire continues online today can you see the pictures from the scene as firefighters battle the flames, you'll find it all now on 6abc.com. fire investigators are on the scene in new york trying to find out what caused a fiery wreck that left six people dead. elizabeth herr is live in valhalla where the investigation is going on now. >> reporter: just minutes ago that abc news confirmed the name of the driver killed in this crash, she is ellen brody a mother of three from edgemont what is happening behind me investigators brought in a crane, this to begin the work of movie brody's suv and begin to look into how she got stuck on the tracks. >> a first look at the wreckage for federal investigators now on the grown their task is collecting and documenting the evidence from a fiery crash that killed six people. >> we have one possibly trapped in the train possibly alive and a doa in the train as well. we are trying to get everyone down now. >> nearly 700 passengers were on the metro north commuter train when it struck an suv stuck on the tracks just north of new york city. >> it was a loud jarring boom, a jolt that got me out of my seat. the vehicle was pushed at least eight car lengths and sparked this massive fire, people were falling over each other and someone fell on me as that happened, i just saw chaos and flame. it was about a foot from my face. >> so far investigators located and secured the train's recorders to hopefully know the speed and if the horn and brakes worked properly. >> we want to find out what happened and offer recommendations to keep this from happening again. >> reporter: and as for the injured victims, we know that at least a dozen people were take and to the hospital and doctors say they were treated for various injuries and at this time one remains in critical condition. that is the latest live here from valhalla new york. back to you. >> elizabeth thank you. he is talking about it for a week now but jim kenny, former city councilman is running for mayor. he threw in his hat last month he resigned his seat on city council so would be eligible to run. it's a big field of candidates some jumping in and others gotting out quickly. there are four democratic candidates. >> lynn abraham, nelson diaz and williams and soon there could be six mayor michael nutter's former press secretary doug oliver and milton street is expected to enter the race later this month. we now have the accuweather forecast, there are smiles on our face, adam joseph is at the big board. could you make this last longer? >> sorry i have to turn that smile upside down to a frown but it's not all that half, 46 degrees that is why you are smiling that was the high in philadelphia, a break in the cold the warmest day in a week and a half in philadelphia, if we make one more degree out of this if we get to 47 it will be the warmest day in a month. stormtracker 6 live double scan a front pressing through chicago detroit and cleveland this is sinking to the south overnight, and it's bark is worse than its bite. if we look at future tracker as the front progresses through the moisture will begin to evaporate and pull apart as it pushes through philadelphia the concentrated snow showers will be from new york city to new england, they will be developing a coastal low off the coast and that will rob the energy and that is why the snow showers will genally fall apart. here are the pros for tomorrow morning, they are be scattered and brief and the main roads will be treated shouldn't be issues, the cons if you hit a snow shower it will quickly reduce visibility and could create slick spots but doesn't look like a big deal for tomorrow morning, the big concern is the drop in temperatures and the windchills into the afternoon at 5:00, the windchill 7 in allentown and 8 in reading and 13 in philadelphia right now 46 and tomorrow it will feel like 13 at the same time. when i come back we'll talk about another big jump in temperature for the weekend. the roller coaster ride continues. >> with the snow moving in the early team is getting an early start, matt david and tam and karen will be on at 4:00 a.m. by the end of tonight you could be $317 million richer that is the total jackpot for the power ball drawing the largest in almost a year, people were buying up tickets for the big drawing. can you watch it here on 6 abc it airs during "action news" at 11:00. >> good luck. including us. time now for the "action news" traffic report lets go to mat pellman. >> i'm ready 220 million sounds good to me. we are not exactly having a ball on the schuylkill expressway, here in king of prussia we continue to watch the overturned tractor trailer, you can see the wreckage at the bottom of the screen, the westbound side of the schuylkill by mall boulevard where you get off to go to the king of prussia mall, they have the left lane and right lane blocked and are you jammed solid going westbound on the schuylkill, from the ramps through gulf road as you head towards the pennsylvania turnpike expect delays but you can get by stay left in that inner drive instead, by the way hearing they were carrying girl scout cookies in this overturned truck that makes this story extra sad. in phoenixville, route 23 by the pizza hut a wreck. and a crash in upper moreland at james road and normal delays speeds in the teens along 95 and a wrk in fronk ford at larue, and a crash in pine land and one in elmer street. lets grab the ipad and do the commuter report on this hump day afternoon happy hump day, rough ride on the lincoln drive we are watching a pothole along mid land avenue and the traffic is moving better through east falls than it was this morning. we'll check it again in the next half hour. >> up next the next in the fight against isis and the fallout from the brutal execution that was held hostage. >> and stunning video a plane flies into a highway and crashes into a river we have the latest on the accident and the ongoing search for survivors. >> we want to tell you about a special web chat we are hosting right now today we are talking about knee pain, doctors from main line health are taking your questions and talking about options you can get involved right now at 6abc.com. the fire erupts in media at 9:00 this morning, it spread to a neighbor's house before crews got this one under control and no one was hurt in the blaze and investigators tell us that another providence police officer sped off in an icy patch on west valley road and the officer was taken to the hospital with back pain. >> they promised revenge, promising the pilot that was burned in a cage would not die in vein today the jordanian officials made good on that promise. yesterday isis showed the execution of the pilot and it's so gruesome, we will not show it. and today jordan executed two prisoners on death road, one prisoner was the woman that isis tried to get released in exchange for that pilot. >> at that point that kind of act backfires on isis, at the end of the day they need recruits and to be able to have influence when they so isolate themselves with barbaric acts like this they undercut their ownviablity. >> u.s. officials say that an american woman is still held by isis but there is a grade deal of concern and action being take and right now. >> there is trouble on the home front for new jersey governor, chris christie a new monmouth university poll shows that his approval rating is 48%, with 47% saying they disprove of the job he is doing but two-thirds of the registered voters say that he is more concerned about his own political future than new jersey. and 65% said he only when to england this week to boost his own presidential ambitions and not the state as fortunes. >> scientists created new technology to make sure that the fish you buy is the fish you get. john rawlins live now with more on this. >> something fishy going on at the michigan market or stores these days, the fish may not be what you think you are getting. they are doing interesting work at the university of south florida, they are using hand sensors to see if the fish you purchase matches the labels. grouper is fraudulently mislabeled and can be substituted by asian catch fish or tilapia. ali gorman will tell us tonight how the sensor works and why it's important for fish buyers. back to you in the studio. >> thank you rick. to business now t. was a mixed day on wall street but markets were mostly flat, the dow was up just 6 points and the nasdaq dropped 11 and the s&p up 8.5. one of the big of the office supply companies is swallowing up one of its main rivals staples will buy office depot for $6 billion, and it's one of the biggest names in office supply since they bought office max, and they will always combine under the staples name and they will close and combine locations that executives say will save a billion dollars. adam is back with the accuweather forecast including snow that will make for a tricky commute. >> and a taste of hollywood we have details on the new rocky movie filming in town this week. ♪♪ with the card most accepted in the philadelphia region you have the compassion and security of blue cross. giving you the confidence to move forward. independence blue cross. live fearless. today's mild weather made for a perfect day to check out the atlantic city boat show and dream of that shiny new boat and take advantage of the all new progressive boat show, it's docked here through sunday and tickets for adults are $15 and kids 15 and younger are free. >> you have to dream about that boat weather because it's off there is snow in the accuweather forecast. lets go to adam joseph. >> it's hard to not imagine yourself sitting on a boat on the beach as we look at sky 6 hd, when we get another arctic blast tomorrow. it's pretty nice in philadelphia 46 degrees, 47 in wilmington and down to the south wildwood 41 and 47 in dover but as you head to the north allentown 33 degrees with a bit of a deeper snow pack and i use that term deep lightly, because we are seeing a tremendous amount of snow this winter season has been a straight shot west to east line, to chicago where over 12 inches of snow is on the ground right now and as you lift to the north near allentown, we have 4 to 6 inches of snow on the ground and as you head to the north east of cleveland, 18 plus inches on the ground and new york city, as you head into new england, two feet of snow on the ground right now, the storms are just a little too far to the north can you see how far you go from nothing to being buried to the northeast. as we look to the north and west. charleston 52 degrees and minus 2 degrees in international falls, a strong arctic front is bringing dropping temperatures and snow showers around cincinnati to chicago and st. louis. as this pushes to the east, watch what happens on future tracker it basically falls apart. the best place to see snow showers is north of philadelphia most areas of philadelphia south will not even see a flake fall tomorrow morning. some sunshine will break out but as the colder winds push in there could be a scattered snow shower tomorrow afternoon. as we look at philadelphia and the four different models, with the scattered snow showers two models say nothing tomorrow in philadelphia and on the euro, barely a coating of snow in areas especially to the north and west. 32 is the low in philadelphia and 32 in cape may. the temperatures fall as the winds pick up tomorrow. 33 falling into the 20s in the afternoon and friday it's bright and chilly a high of just 31 and saturday we rebound quickly to 42 but a healthy amount of cloud cover and northboundry comes through and it looks light with the precipitation with a mix of rain in philadelphia maybe mixing of snow in the lehigh valley, and above freezing on sunday as well. >> thank you adam. alicia going to the big board now. what you got cooking? >> you are digging around the office looking for the much needed candy bar or salty chips or just craving a juicy red steak, from sweet to salty to fatty treats we are decoding your food cravings. >> a lot of times it's because we are stressed and sometimes we are upset and craving the comfort foods there are instances where perhaps you are lacking a particular nutrient. >> what do the cravings mean for you, what do they say about your body are you feeling a psychological, emotional need or could your body be sending you a message. doctors track it down for you only on "action news" at 11:00 and the buzz is coming up after the back. >> time now for the buzz, actor johnny depp and model amber herd are tying the knot. they met while filming the rum diaries, this is his second marriage and depp has not said anything about this. we'll see if "people" magazine is on target with that. a brand new sitcom called "fresh off the boat" you meet the wong family, a chinese family that moves to orlando and eddie has to adjust to the fact that no one in his town looks like him. it's hilarious can you catch it tonight on 6 abc at 8:30 and modern family and a fresh off the boat at 9:30, very funny stuff. and then at 10:00 nashville is back, when we last saw raina she called off her wedding to luke, who is having a confrontation with the other man in her life, decon. watch with us and tweet with us it's happening at 10:00 i love watching this show after being on the set and inside of decon's house, i sat on the couch. >> they came to the studio, there was a melt down here. >> all the ladies. >> and a new show, "fresh off the boat" thank you alicia. there is more ahead on "action news" at 4:00 including a look at the bst places to travel on a budget this year. and a california group of cub scouts on a hike accidentally ended up on a nude beach. ble network. so you won't miss a second of that movie, that game they love, or those moments with family. can we sleep over? please! come on! make your house the house. you get more from verizon fios the tv service rated #1 in hd picture quality and signal reliability based on customer satisfaction studies plus america's fastest most reliable internet. and for peace of mind, get a price quote in writing and professional installation from a highly trained verizon technician. hurry now to get this deal that can't be beat. get a fios triple play online for just 79.99 a month -- a price guaranteed 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"action news" continues. >> it is 4:30 and "action news" continues with a pony tale how a single father and navy vet went from clueless dad to beauty school super star. >> and can you sue a parent for refusing to vaccinate their child. the answer is yes but experts say it's not an easy fight even if it means protecting kids from measles. >> a plane dips and crashes over a city, what the dramatic dash-cam video shows about the final minutes. breaking news from upper dash where police say a 68-year-old man turned the tables on a would be robbers and killed him. he was walking near harrison avenue at 2:30 when two masks men pulled out a toy gun but the senior citizen was scarying a real gun and fatally shot one of the suspects no word on the second suspect, the victim was licensed to carry a gun and is being checked at the hospital for chest pains. kenneth moton will have more on this coming up at 5:00. to central jersey where a routine police stop ended up with to people in the hospital, this is what it looked like when a suspect barrelled through a hamilton neighborhood, and before running into cars, he tried to rundown an officer, nora muchanic is live in trenton with this story. >> reporter: hi there it was a wild morning here this involved a shooting by police it happened on the unit block of chestnut avenue in trenton and then a chase through union city and into hamilton and ended where the suspect smashed his car. >> there was shooting going on pow pow pow. >> it was 1:16 this morning within residents on chestnut avenue heard the gun fire. >> heard the shots and i ducked down because you never know. >> the gun fire was from two police detectives that approached a vehicle parked in the street when the occupant in the car hit the gas the car was aimed at the officers and one officer was struck. >> the suspect was shot in the neck and arm and he drove away from the scene and went on an almost two mile street and ended up on east state street in hamilton. >> came in and saw the car in the street and was turned sideways and all the cops got out of car and was pointing a gun at the guy. >> sanchez was taken to the medical center for treatment of his wounds the detective struck was treated at another hospital and released. sanchez left a trail of damaged cars on state street and he had smashed his car into at least four vehicles seriously damaging them. >> totalled. >> dante kelly says his sister just purchased this silver altima, and it's a mangled mess. >> she is upset she just got the car it's like some things you just got to deal with. >> back live, jeremiah sanchez is facing two counts of attempted murder and multiple agencies are investigating the shooting including the mercer county prosecutors office. i'm nora muchanic channel 6 "action news." >> thank you. north philadelphia toddler is back home today after slipping away from her grandmother's house, the 2-year-old girl was found wandering the street near 21st and norris just before 1:00 this afternoon. police picked that pajama clad toddler up and brought her to police headquarters the toddler was not hurt but dhs is investigating. an overturned tractor trailer is making a mess of westbound i-76 chopper 6 hd was over the area of mall boulevard in upper merion, the truck flipped on to its side just after 1:00 this afternoon and the driver was treated at the scene and we learned that a portion of westbound 76 will stay closed until 5:30 impacting the evening commute and matt pellman has details in the "action news" traffic report. >> and messy parts of the lehigh and delaware valley may be dealing with a rough drive tomorrow but right now -- >> it's temperatures in the 40s and lets take it in and look at the shots on sky 6 hd in center city. 46 and it's dew point 46 and winds 10 miles per hour from the south and not much of a windchill. and still a little snow on the grown in northwestern chester county and a glow on the horizon and it's wind is calm and the dew point is coming up a bit to 23 double scan live radar will show that we have an arctic front marching into the ohio valley and a stripe of snow from cleveland and cincinnati, as the front pushes through here tomorrow morning, a lot of this moisture is going to fall apart. if you want to see an inch or so of snow, get in your car and drive to pennsylvania north and west that is the best opportunity of seeing that tomorrow morning. >> there is another front that is linking with moisture sunday into monday. we'll let you know what we are thinking coming up. >> wherever winter weather hits keep an eye on our 6 abc storm tracker app, and we have your hourly and seven-day forecast along with your team of meteorologists here on "action news" and the "action news" morning team will be up early tomorrow join matt tam and david and karen at 4:00 a.m. the most bizarre story you'll hear all day. an upper darby man is facing charges because of a bathroom room emergency he pulled the fire alarm because his toilet was stuffed with potatoes he is charged with making a false alarm and disorderly conduct, he looks none too pleased. it forced the evacuation of that complex in 12 degree weather. >> you done hear that every day. the civil rights at the university got a big boost from a prominent dwradate. the nelson diaz chair the first endowed chair for the study of latino civil rights diaz graduated from temple in 1972 and is now a democratic candidate in the philadelphia mayoral race. delaware is testing out a new way to reunite lost pets with their owners, the no lost dog program relies on front yard signs like this one anyone that finds a wandering dog needs to turn it over to animal control and they will put a sign outside of your yard with a description. >> the first night we did this, i picked up a dog i put the sign on the front yard and the people who were out looking for the dog they saw it and the dog was returned within two hours. >> the program was brought to delaware after a similar program had success in arizona. turning now to the return of philadelphia's son rocky balboa, the next movie is filming in our area and eva pilgram got a sneak peek at the locations, she joins us from the steps made famous by sylvester stallone. >> it's 38 years since rocky ran up these iconic steps and jumped around here at the top. well sylvester stallone is back here if philadelphia filming a spinoff movie creed. in kensington it will be closed down starting tomorrow. >> kensington and all that is one of our things we are proud of. >> joe black is a trainer at front street gym where the filming begins tomorrow and he got us inside to show us where the cameras will be. >> i saw real fighters. >> are you excited. >> jim has owned the gym for 25 years and boxing starts here back in the 50s. lots of boxers came through here hank quinn a lot of good fighters came out of here. >> it's an old school boxing gym, just the essentials and now movie props all the pictures on frank's office wall are for the movie. >> we are losing the fight game again, hopefully it will bring something back. >> for neighbors it brings a renewed sense of pride. >> it's something new and there is a lot of negativity down here and when we see something positive it's good for the neighborhood. >> when there is a movie around here it's good for the neighborhood and it keeps peace p everybody likes to get together. >> everybody is waiting to see this movie it will be out just in time for the holidays expected to be released on thanksgiving. eva pilgram, channel 6 "action news." >> you nailed that rocky thing at the top of the stairs. >> i looked so awkward. >> we are totally saving that tape. >> the franklin intoot is celebrating one of the world's favorite toys, a work created entirely from legos made its debut, the art of the brick features lifestyle sculptures including remakes of masterpieces including the mona lisa. the dazzling display opens to the public on saturday and runs through september 6th. >> definitely want to check that out. very cool. >> my legos are very simple. nothing quite like that. hair hero, still ahead a dad goes to learn a simple braid and turned into a beauty school super star. >> and dramatic dash-cam shows a plane slamming into a river what we know about the victims and survivors. >> frightening video some people are considering taking legal action to stem the spread of measles, experts weigh in on whether parents that don't vaccinate their kids can be sued. and adam joseph is back with the full accuweather forecast. change is coming once again. "action news" continues on this wednesday afternoon. 25 people are confirmed dead after a plane crash in taiwan it was captured on dash-cam video, 51 people were on board and it banked sharply and clipped the bridge and crashed into the river rescuers initially pulled 15 people from the wreckage alive, the death toll is expected to rise as crews search for the submerged fuselage. the pilot radios that he lost an and begin just before that crash. turning now to another scandal brewing in the nfl arthur blank the owner of the atlantic falcons admitted that they piped fake crowd noises into the georgia dome for the home games and was going on for the past two years the nfl is trying to decide how the falcons will be punished. the team could be fined or lose a draft pick. here at the big board with the big talkers the latest outbreak of measles is causing a discussion between parents. can your child get sick from an older child getting sick from a younger child not vaccinated. with measles cases on the rise there could be an uptick with civil actions. there are exceptions for students with religious objections. some southern california parents are furious after their cub scouts saw a whole lot more than what was on the itinerary for the trip. it happens to be a nude beach, the fourth graders were exposed to dozens of fully exposed beach goers and some parents are outraged. >> what are you doing? we are in the middle of a nudist beach, and they are like this is a natural beach. >> the organization says that the scouts were rerouted to avoid the naturalist beach and after the meeting the parents said it was determined that it was proper protocol followed but i don't know if they get a badge for that one but the kids had some excursion. and what some dads do for their daughters this dad in colorado is raising the bar one braid and bun at a time. this is greg, he was having a tough time doing little izzy's hair up dos and braids it's hard for a guy. he went to learn from the pros at a cosmetology class and he has skills. >> you want a bun? a pony tail. >> just learning how to do it taking the time to lrn how to do it. now it's simple to do these styles. >> is he cool or what? he shows off his fancy work on his facebook page and the images are pretty cool, he manages to get the bun the french twist, he is getting creative there. >> my dad tried to do my hair. >> how did he do? >> not too good and did not try like this dad to improve. >> alicia thank you lets get a check of the roads. matt pellman is until the traffic isn'ter with an update for us. >> traffic is tied in knots in fact brian and shirleen because of this overturned tractor trailer westbound schuylkill approaching mall boulevard hearing that the tractor trailer was carrying girl scout cookies not a load you want to spill out for sure. the traffic on it is jammed solid from the new rams at south gulph road and henderson road and they may block all lanes entirely on the westbound schuylkill, if you are headed westbound and you use the chink between the blue route and the pennsylvania turnpike i recommend you don't bail out on the blue route and head to mid county and from there you can jump on the pennsylvania turnpike or if are you trying to get to paoli get on the 30 and run that to chester county and it's getting lifted after this morning's awful fire at the apartment complex. a crash in abington at 611 at the starbucks and on the big picture, a crash has cleared and there is a water main break at south philadelphia by amato's deli we'll check it again in the 5:00 hour. >> thanks very much, adam joseph is back with the exclusive accuweather forecast. coming up next. hey. these are good. what have you been feeding us all these years? kfc popcorn nuggets. 100% white meat, extra crispy, and made from the world's best chicken. try our kfc bucket and popcorn nuggets meal. these don't even come with a toy and i don't care. thank you, cable for the slower internet upload speeds. for fewer video on demand titles. thank you cable, because if we never had you... ...we wouldn't know the incredible difference verizon fios makes. in customer satisfaction studies, fios is rated #1 in internet speed and reliability - 8 years running. plus, fios has the fastest wi-fi available from any provider. period. see the difference for yourself. get a fios triple play online at an amazing price guaranteed for two full years! plus, get a $300 bonus with a two-year agreement. adam joseph says if you have not gotten outside to enjoy the day, take the opportunity. >> the warmest day in a month we have 47 degrees this afternoon and it felt really nice a day ago. and more coming in tomorrow as we look at double scan radar the arctic outbreak, nothing going on radar wise as we have a decent amount of sun today. 47 in wilmington and dover and millville 46 degrees, as you look to the north, you see 30s in allentown and the snow pack is deeper and that has an influence on the surface temperature will or will not do. that is why it's colder to the north, as we look to the south we have a strong jet stream in the southern part of the united states with a lot of moisture, that stays separate from the arctic front and the energy coming in from chicago, as it pushes in from the south and east, the low will develop and kind of steal and rob the moisture from the front, as we look at future tracker at 7:30 tomorrow morning up until then, it's generally cloudy in the area, scattered snow showers in the poconos and the lehigh valley and as this line progresses towards philadelphia, all the snow pretty much evaporates and is robbed by that storm and generally cloudy tomorrow morning and philadelphia down to the south and in the afternoon the sun returns and as the winter winds whip back in there could be scattered snow showers in the afternoon with the stronger winds and dropping temperatures tomorrow morning will be above freezing in the morning at 33 degrees, and 10:00, 30 and by 4:00 tomorrow afternoon, temperatures are tumbling close to 10 degrees, and in edition to the temperatures the winds pick up 21 in atlantic city and 34 in the poconos and that creates windchills in the teens tomorrow afternoon then we speed up time to sunday and friday looking good and saturday looks good and strong to the north with cold air and a stalled boundary draped pretty close to our area it's the battle of the mild air to the cold air and with ripples of energy that stay week as they pass along this front. we see light precipitation on sunday and depending on where the front sets up some could see light snow showers and some could see light rain showers to end the weekend. tonight turning cloudy and not as cold, 27 to 32 for the overnight low the exclusive accuweather forecast, the big story is the drop in temperature and the kickup, falling into the 20s in the afternoon and bright and chilly on friday and 31 and the weekend we bounce back into the 40s under a mainly cloudy skies and light rain for the city of philadelphia and as it looks right now a mix in the lehigh valley of 38 degrees and the winter mix continues as the front doesn't move all that much on monday and tuesday and wednesday we start to clear things up and the temperatures stay below normal between 35 and 37 degrees, as of right now in the seven day nothing looks like that big snow storm we are hoping for. >> yet. >> who is hoping? >> a lot of people on twitter and facebook. they want it. >> saving with 6 abc is coming up. as a small business owner you wouldn't deliver just half of what you have to offer to your customers. so why are you settling for half-fast internet? only verizon fios comes with speedmatch-- upload speeds as fast as your download speeds so files go out in a snap. call today to get $200 back when you switch to fios internet and phone for just $99.99 a month with a 2-year agreement and get $200 back. just call 1.888.774.4418 today. time to save with 6 abc, and if your vacation bug is biting before you book, you might want to consider one of the top budge destinations of 2015 let start with salt lake city, it's price line's second most affordable city dallas coming in first with the average room of $88, a lot of people are talking about heading south talk about orlando, if you avoid going during spring break it's also on price line's list of less expensive family vacations. how about the road trip up the eastern seaboard to providence rhode island they say it's an artsy hot spot where you can spend a little and shopping great for the family too. for overseas travel consider china, shanghai is about its cruising industry with trips around asia that costs a fraction of the price when you compare it to traveling cheaper. >> and puerto rico is one of the cheapest spots in the caribbean and fiji more flights are heading to the south pacific get away and can you get good deals on hotels. more on 6abc.com. >> they all sound good right now, that will do it for "action news" at 4:00, for shirleen allicot, adam joseph and alicia vitarelli, we are back tonight at 10:00 for a full hour of "action news" on phl 17. "action news" delaware valley's leading news program. with jaime apody, meteorologist, cecily tynan, rick williams and monica malpass. wednesday night and the big story on "action news" is breaking news from upper darby police tell us that a 68-year-old man shot and killed one of two men that tried to rob him while he was taking a walk. kenneth moton is live at the scene with the latest tonight. >> reporter: rick and monica, it's an active scene in upper darby, this all happened across the street of this row of homes on the 6700 block of church lane,ality 2:00 p.m. inside of this block two men armed with a stick and guns ran up to the man and demanded cash. >> it was an easy walk in the park or so a 68-year-old man thought when he went for a walk, investigators say a man was on a path when the masks men put toy guns in his face and unfortunately for them the man had a real weapon and opened fire and killed one of the robbers. >> i'm glad they shot him. this is a dangerous park, my neighbor was robbed in the park and they almost killed him. >> after he ran into the park and spotted the suspected robber dead. >> i knew he was dead and he wasn't moving and i called 911. >> upper
PhoenixvillePennsylvaniaUnited-statesShanghaiChinaChester-countyDelawareCaliforniaMillvilleIllinoisMontgomery-countyNew-york veteran of the publishing world. i worked for harper is a senior editor and vice president for many years and went on to work at simon & schuster as well. so i have been around the block. i'm a bit of a veteran in all fields, but we have learned so many things in this conference so far. it such a delight, such a pleasure to the wonderful keynote speech about the importance of words and the report from the frontlines of so many countries, south africa and russia, marvelous and to learn that the first encounter between europe and the new world, between the conquistadors and the quinta was over a book and on and on with the heritage of thomas jefferson and the wonderful discussions that you just heard. at such a vibrant discussion. and wonderful to know that it will go on on in the sum of as we go forward around the world. now what we have learned in the whole process is that the book culture is changing, although we all know i think in our hearts that the world of books which we have known for so long, to which we have dedicated our lives, will shift as it did and has done from scrolls to books from monks to people and from leather-bound to pocketbooks. i just finished writing a book which will come out next year and bolivar would take a printing press onto the battlefield and he would carry it along with the canon and the muskets and the horses and the cattle. there was a printing press and the spanish would laugh at him. why was he lumbering through the jungles with a printing press. he, in the course of liberating six countries change the language because it was a spanish that was very different but was very vibrant and was not that dusty old cask alien that was spoken or written in before and somebody asked me just the other day, i bet if olivo were living today he would have been using social media. and i'm sure he would have. would he have change the language? i don't know. of course that is what we are here to discuss. which would bring us to the subject of the may king of books which is you know the bible tells us, there is no end to the making of books and we are very fortunate to have a great panel of speakers. we are still waiting for the fourth one to calm and i hope she will, dissenting on us like an angel from on high, but we have two representative -- i wanted to make sure we had two representatives of fiction from different houses and i chose nan talese and geofrey kloske because i thought they were two very different corners of the industry and it turns out that jeff, i think it was 10 days or week ago penguin and random house have merged making probably the largest trade publishing conglomerate in the world. although i thought i was inviting people from two corners of the world, they have become one corner of the world even as we have gathered together here. we also are very fortunate to have karen lotz of candlewick and walker, company that consistently has been one of those innovative children's pug -- publishers around and niko pfund who represents the very revered scholarly publisher oxford university press. before introducing each of them separately, i want to say a few words about publishing in general and a few cameos of the notable events of the past year just to set the stage. let me start with the events of the past year. first, after 244 years, the encyclopaedia britannica announced in january of this year that it's stopping presses, seizing its print publication and going 100% digital. the britannica's last print version is a 30 2-volume, 130-pound 2010 edition of one cameo. another highlight from the year, number two, in june library announced that for the first time in history, all of its shakespeare library additions will be available in e-book format for less than the price of a market paperback. each of the bars work is now downloadable, electronically readable and principle on-demand. cameo number three, publishers weekly which is the official magazine of the publishing trade and now its choice for publishing choice of the year, not hillary mantell who was the first woman to win the book prize twice and not anything like the publishing people of the year in years past like david shag for instance who is ceo of penguin who really managed to balance nicely the digital and print publication company. he was the choice last year, and not the choice before which was, anyone like the choice before who is it arnson noble who managed to divert this company at a very critical time, and not going under. he was a choice in the -- this year. the choice was el james. not pd james, el james, the author of "50 shades of grey." this is a publishing first of the year. the rationale? the cost end of quote, per trilogy connects people who are not regular readers. [laughter] so this is progress, folks. now to the industry in general. we recently have had dramatic, dramatic changes. i'm just going to talk about just very briefly about the last five years. the united states as we know is the largest producer of books in the world and over the course of the last decade we have seen that production verging. when i began editing books at "the washington post" in the '90s american publishers were producing 50,000 books a year. 10 years later still in the same position in 2003, they were producing 330,000 books annually. look world at the time, we were getting 150 books a day, 40,000 books a year and of that 40,000, only 1600 could be reviewed. in 2007, that number climbs to 415,000 books a year published by american publishing. in 2009, a mere two years later, 1,100,000 books are published in the usa according to bowker. two-thirds of them, or 725,000 of them, were self-published. so you see the whole idea of self-publishing, social media, the facebook culture, brought about a huge wave of self-publishing. in 2011, just last year they reported 3 million books published in this country. i suspect only 15 or 20% of those are published by mainstream university or were small presses. this means that readers are faced with exponentially more and more books. but it also means less and less of a market for each title. the average book in america, believe it or not, sells 250 copies a year. when you average the millions that steven king might sell and the one that you might sell of your life if you were to self-publish. even so, the american association of publishers concluded that actually this is the really interesting part to me and i hope we will discuss this. book sales overall have actually been increasing steadily since 2008. adult trade book sales are definitely up. children's book sales are up. e-books in 2011 outsold hardcover books for the first time and interestingly enough, mass-market paperback sales have plunged. now that makes sense with people reading popular books are more likely to read them on their handheld devices but it's important to keep in mind that book publishing is a very unpredictable and very eccentric business. every book is a new start up. think about that. requiring some product research and development, its own production, its own branding, it's a marketing strategy, its audience development. and you can't sell a book by ian mcewan with the same strategy you would use to sell patricia cornwell. each is like a different company unto itself. so it begs the question when you put an ad in "the new york times" or "the wall street journal" for a book it's not like putting in an ad for a honda or for a cadillac or chrysler, it's for one book. it's not random house advertising all of its books. it's one book. it's a very very different and very subjective business. which means that you can only plan so much when it comes to marrying books to readers. books for which publishers paid a great deal of money and i remember being at simon & schuster when simon & schuster paid $8 million for the record number -- record size of advance for ronald reagan's memoir called american life. now to earn $8 million, and you know the math as well as i do, you need to sell 4 million books. isn't that right? the million-dollar fans to sell 250,000? the books actually sold 300,000 copies, so it was a spectacular failure even because of the comparison of the size of the event to the actual sales. so it's a highly complex business with a thin margin of profit and you had to that the dramatic changes in technology and the public demands for new ways to read and you have an industry that needs to redefine itself. nobody knows that more than these people who are sitting on the stage here to talk to you ouscrale to survive or are going to take an adage of the unprecedented opportunity and that's what we are going to talk about today. i have asked each of the panelists, still waiting and hoping that man comes. we will see if she does. she is taking the train and should be arriving at the station but we will see. if she does, we will certainly bring her appear. i would like each one to give an overview of his or her career, bit about their personal philosophy of book publishing and how that philosophy has changed in the course of their career. first up is niko pfund who is the president publisher of oxford university press united states. he joins new york university press in 1990 and rose to become its director. he began at oxford in a junior position in law and social science before he rose to the ranks of the institution to become its head executive. sum of the books on his list, barbara rogoff's the cultural nature of human development, david kilcullen's the accidental guerrilla, peggy pascoe's book on law and race in america, daniel walker howe's history of america between 1815 and 1848. ladies and gentlemen, niko pfund. [applause] >> thank you very much for coming here and listening to his talk on friday afternoon. i am so delighted by many of you who have chosen to spend your afternoon here. i spent 10 years working for a library and and half of that time actually physically working in a the library because as director of the press i've reported in the library so i'm thrilled to be here to talk to you about publishing. in terms of marie asked us to give you a quick overview of our personal philosophy of publishing was found to little pretentious that i would say in terms of how i look at what we do, it is squarely driven by oup. oup oxford is about fundamental education. we often say that we don't exist to make money but we do have to make money to do the things that we exist to do. and that really doesn't form all of the work that we engage in. personally one aspect of what we do at oxford that i particularly enjoyed, and that is the kind of publishing that i think oxford does especially well and is specially important these days is to essentially take the work of scholars who often exist in fairly influenced environment speaking to members of their own discipline-based tribe and try to help them translate their work to a larger audience and that sometimes can be a real challenge. but it goes to the heart of what oxford should be doing which is not publishing works to very small groups of intellectuals, although that is a crucial part of what we do, but also trying to identify works that are broader input and trying to bring those works to people who are interested who did do not reside in the academy. so i think the subtitle of the session today is the publishing world today and tomorrow and i want to look back a little bit and tell you the differences that i have tracked in the last 25 years of my time in publishing through the prism of how people have responded say at a cocktail party when i tell them i'm in publishing. it used to be that there were essentially two. the first response was to ask me whether i've read anything that was published which is obviously completely impossible and the other was to tell me about the book ideas. and that of course is exactly as it should be. that is their lifeblood as publishers for people who want to write but i was always reminded of the statistic that appeared in harvard's index many years ago, and those of you who know how they juxtapose statistics sometimes. the first statistic was they asked a group, significant group of people, large number of people, how many people, what percentage of the population should write books? if i recall correctly and i'm sure i'm not going to get this right but it's more a -- them a quantitative one. the number was three to 4% and a asked the exact same group of people well, what about you? do you have a book in you and something like 75% of the people said hell yes, i have a book in me. [laughter] and i think that is in some ways, that is where publishers live. and that goes into some of the things we we are writing about the explosion in the number of books that men publish and i will talk about that a little bit in a second. now when i tell people i'm in publishing there tend to be two reactions. in addition to those two that remain and the first is that people instantly launch into this impassioned monologue about their own personal reading habits. it used to be a few years ago it was how much they loved the print, the relationship between their thumb and forefinger when they're holding the book and all of that and it what's very interesting is how that has changed and people now who i once would have thought, actually one of our sales reps no less, who i would never thought would have started reading on a handheld now says he only reads on a handheld. but the point is less that it is change. the point is more that people feel incredibly and passionately about this issue and they will talk to you about it ad infinitum. it doesn't really matter whether they are shifting, doesn't matter whether they have switched entirely. the point is it is something that people feel it certainly passionately about and if there's one thing i hope you will come away from, at least my comments, thinking is that things really aren't quite as dire as they may look sometimes or some people may have you believe. i think it's a challenging time in the publishing industry and i'll think there's ever been a better time for reading. i think that's a really crucial distinction because reading is a fundamental human experience. there is a fantastic prose by john updike that says reading is the encounter of the mind. that is really important. the publishing industry is important in facilitating that but there is an enormous difference there and i think it's important to highlight. the second new reaction that people have is essentially commiserating. they look at me and they say oh yeah, it must be tough out there in publishing. every time i pick up "the new york times" and read david carr's column, the phrase the crumbling publishing industry comes up. i think it's worth pointing out relative to the point about the publishing person of the year that last night as i was sitting in my office trying to finish up, was writing a letter to our staff informing them that as one of the gifts we are providing to our staff over the holidays, we are giving everybody a free copy of a short introduction to american history by the paul buyer who was a documenter's who wrote a marvelous book about american history. just as i was putting the finishing touches on the memos somebody sent me an e-mail which was an article from "the new york times" who had gotten on line about how random house had given every single member of the staff of a 5000-dollar holiday bonus. [laughter] that was obviously a little discouraging. but i think it's crucial to highlight that there is a direct connection between the publishing of a book like that which has been obviously fantastically successful and the ability to sustain the publishing industry even has a stunning host of other things. i think our company differ slightly with murray on that particular book which i'm going to point out that i haven't read yet but my wife who is a teacher says sometimes it's actually -- to get people reading and the notion somebody while ago mentioned to me in a conversation that "harry potter" was essentially a gateway drug to books for an entire generation. i actually thought that was a really pity way of putting that. i want to read you a letter that appeared in "the sunday times" magazine last week and it reads as follows. as i'm about to self-publish my novel, i watched -- all they do is put their imprint on the products. no thanks. amazon may end up being a monopoly for everything we buy but right now it's given me the chance to have with the industry tonight me, access to readers. i get that a lot. we all get that a lot in publishing and my response to that is yes and no. i think one of the best things for readers and arguably even for publishing in the last decade has been the democratization of dissemination, the way in which technology enables anybody for a few hundred books to print out the short stories, their poems and family history and the mars. that's a really good thing. it might not be a great thing in terms of all the books that are being printed but environmentally, but i think it's actually a good thing. the trilogy action started that way but it's also important to point out that there is more to publishing that assets and there is more to publishing now than there has ever been. one of the things in business you hear about is double running cause the idea that you are doing one thing and trying to build a new business related 2-year-old business and you are having to do two things at once whereas before you were just doing one thing. to me netflix is a perfect example of this because they obviously have to know in 10 years people won't be watching movies but shipping physical objects -- [inaudible] and so they are creating this cable delivery system even as they are building so publishers are actually in a position i would say where we are almost triple. we have on the one hand we are doing old things in old ways. we are still editing and acquiring and working with authors. we are marketing and we are promoting and doing publicity. pretty much all of that is exactly -- some of its gotten a little easier and we don't take enormous chances. we can do multiple short runs. but were still doing all that. secondly, we are doing all these altering said new ways so when you start selling e-books you have to create a whole infrastructure according to e-books. social media, the promotion of social media requires a whole different type of expertise. for press likes oxford which is almost split between research publishing an english language training and english as a second language publishing, we have about 50 offices the world over and we historically have looked at a lot of overview market just as that, as markets and now we are moving more towards thinking. all the places we should be publishing content from and that is an enormous shift. and then finally, we are doing completely new things that we have never even thought of or done before. we have something called oxford biographies on line and just as an example of how something like this emerges where we went out and ask them what do you want from us? you are the dog and we are detailed. how do you want us to weigh? we obviously are publishing books but what else should we do? and what we kept hearing over and over again across disciplines regardless who you talk to, we are pinned to the wall by this fire of information. what we want is somebody to help us make sense of it all and we want them to help us make sense of it all in their business because we can't keep up. we walk around at the annual convention and look at the new books and that's impossible. there's too much stuff now. so we created something called oxford bibliographies on line which attempts to do precisely that and it's not a sterile bibliography. it's a quite subjective and opinionated resource that tells callers what we have decided through our long-established overview system what is good and what's not good. and that has been extremely successful but again it requires a whole host of different ways of thinking. and i think it's important when one makes a point like i just made about triple running costs, that sounds like a little bit of a wing. we haven't really hard and that kind of is beside the point. if what we do is no longer valuable to people, we will go away. people will vote with their wallet and the ominous phrase disintermediation has been hanging over publishing for 15 years since negroponte first debuted it and so i don't worry about that too much. i am actually quite confident we will be fine in that respect. just as a few closing thoughts, there's the notion of being agnostic raised in the previous session and i would say i oxford amendment publishers i know have firmly embraced the notion of agnosticism. we want to get book to as many people as we can increasingly in a globalized world in a world where there is a booming middle class especially in china, we want to try to get as many books and journals and as much access to on line content as we can to as many people as possible at lower prices as we possibly can while still sustaining our mission and doing what we think we should be doing. i think that's a really critical distinction. i was meeting earlier this week with the gentlemen of the copyright printers and ernie said something that i wrote down because i thought it was so interesting. he said if you can get people to pay for content they are all ready reading or using for free if you offer to offered to them at a reasonable price. i think that is quite debatable notion and by that i mean it is actually generally debatable. i think it's true with some but less true with others. in thinking about how we should be doing what we have long done and how we can do that differently, we have party change the way i think. a colleague of mine was walking down the street and there were all sorts of kiosks on the street and she saw some of our english language training books were prominently displayed. she thought that was terrific. it was like a newspaper stand essentially and then she was doubly thrilled to see they had the ministry of education, a hologram on them. antenna was somewhat dismayed when she looked more closely and realized a was a pirated edition with a hologram on it. [laughter] and i say pirated because i'm not entirely comfortable with that term in that context. you can make the argument that even though it may not be desirable for people to be taking her content and giving it away or selling it it is creating a consciousness of oxford as a publisher in that market that did exist before and again from a mission standpoint it cno, they are worth the time. finally, i would just admonish you to mistrust the theologians when it comes to future books and future publishing. wikipedia denigrate or is, the book will never die bibliophiles, the book is arty dead technophiles, you know everybody stakes out their extreme positions and the reality as i can tell you the conviction from the vantage point of a publishing house is a billion dollars a year. we publish college textbooks and highly specialized academic research. it's just a messy time right now. everything is splintering and fragmenting in one of the ways in which we are struggling is to figure out how to continue fulfilling our mission while sustaining the back office and back aspects of all these dissemination models. a lot of it has to do with tedious hard work and that is what i mean when i say there is more to publishing that access. and finally to close on i hope encouraging note and i touched on this briefly moment ago, i really think that there has never been a better time for books. i can't remember a time in the 25 years i've been doing this, i can't remember five years. not great boom like this when you have a conversation like this because people really do care about looks. people have a deeply autobiographical relationship with books and given that we traffic and industry of books -- [inaudible] thank you. [applause] >> thank you nay. thank you for keeping the standard so high and indeed, there are wonderful books being published today. there seems to be no shortage of good books. next is geoffrey kloske. jeff is vice president publisher of riverhead books, a dynamic maverick armed of penguin books. he has been an executive editor of simon & schuster and an editor of little brown. at riverhead, he has managed to infuse the imprint of his own very distinctive personality. in the course of his career he has published such authors as david the karis, david edgar, bob dylan, ceravolo, and juno diaz. geoffrey kloske. [applause] >> thank you mari and thank you to the library. for holding this summit. of future that is we have discussed it a read in the papers is very much always in doubt. i teach a course at columbia about publishing and one thing that i always do is read them headlines about publishing, but "the new york times" and i quizzed them as to when they think those were written. there are things like you know editors don't edit and good books on published anymore and the decaying of our book culture and their intellectual culture and so forth. you can't find them in different forms but fairly similar forms almost every decade for the last 120 years. book publishing is a melancholy industry for some reason. we are always in a fallen age. i have been doing it for 20 years and the golden age ended right before i showed up. [laughter] and it really was in high swing, depending on the age of the person telling the story. but it has always been the case that looks have the spirit of not quite being what they used to be which is amazing because we show up everyday and we do it again and we find new authors and publish publishing of books and get excited about things, which maybe makes us book publishers strange people filled with incredible hope, a rational hope sometimes like the fine memoir by president reagan, many books fail in any way of looking at it critically, commercially. but we live with that failure and we continue to find new authors with a great deal of hope and the vision that we will find readers for those books. i work in the penguin group which is the largest english-language trade publisher in the world and we have a number of imprints doing different sorts of things. there is a course paperbacks which everyone has heard of, starting in 1935. seeing an opportunity for really low priced paperbacks. he published in his first year 10 different titles and within the first two years sold a few million copies of these low priced paperbacks and really created the format of the industry. we also publish putnam books. the putnam started as booksellers in boston and its many booksellers do, they want to sell good things and so they became publishers and publish people like nathaniel hawthorne all the way up to today when they do patsy cornwell and tom clancey. we also have viking, which is the storied imprints that published "the grapes of wrath" and steinbeck now publishes many best-selling fiction and nonfiction writing. the publisher of riverhead and riverhead is a specialized small literary imprint and our goal is to bring new voices, new perspectives to readers. so we are always looking for something, something appealing that we have not heard before. the first book i mentioned that i ever published was the book by a guy heard on the radio. i could remember his name. it was something so fresh and distinct about his voice that i had to call them up and buy that book. that was david sedaris. it turned out i was not alone. many people wanted to hear that same voice. that is what we look for. we have this irrational hope in the midst of a constant state of collapse and we continue to do it. it has been touched on here at the summit and we will probably talk about it today. the history of book publishing is a coming together of format around successful publishers who have adapted new formats and amalgamated them into a single company. paperback and riverhead publisher cease to be separate which was a problem for paperback publishers because they needed products, so they bought or started hardcover imprints. ultimately it's about the book and as most of those support we are at gnostic about format. we just want to bring books to readers, readers that are waiting for them and enjoy them whether it is neal james or one of the writers at oxford. at riverhead we look for those fresh voices that we have not heard before and we take a lot of care in developing them over time, working closely with the writers and publish them with a great deal of marketing, to try to create that readership and we have been doing it for now 18 years. our authors include people like chang lead the native speaker, juno diaz who won the pulitzer a few years ago. those are the kinds of authors that we look for in the publish with this enduring hope in a state of collapse. [laughter] [applause] >> thank you jeff. obviously jeff has been enormously successful and he is very modest about it. i am so glad to see that man has made it. hello, nan. we have been mattering on about the publishing business and i have explained that what i've asked of you is for you to tell a little bit about your career and about your personal philosophy about publishing and how that philosophy has changed or held up or modified in your very long quite illustrious career. nan talese is's senior president of doubleday and nan a. talese doubleday books. she has worked at simon & schuster, houghton mifflin before becoming part of the random house pool. she has published some of the most distinguished and popular authors of our time. among them, margaret atwood, ian mcewan, thomas -- barry underwood, valerie martin and pat conroy. nan talese. [applause] >> i do apologize for being late. the amtrak engine decided it wanted to put on the brakes and he did it by itself. i had a terrible time getting it going but here i am. as marie said, i have a very long career beginning really learning publishing at random house at a time that publishing -- i think were often referred to as the golden years but roger straus on for our strauss, charles scribner and knopf owned alfred knopf so it wasn't a joke. in fact you had enough money to go into the whole thing to begin with. but i started and my interest has always been serious fiction and nonfiction. so that is what i publish through the 60s and in the 70s i was at simon & schuster, where i first began to publish being mcewan and margaret atwood, barry unsworth and i commissioned schindler's list at that point. tom conneely always submitted to books to be published at the same time and one was perfectly wonderful and the other was i thought a clinker. i made an offer on one and i never got to publish in. one day i got a letter from him handwritten saying i have come upon these remarkable files in a letter shop and are you interested? you have always been so nice in liking my work. i said well can you tell me a little bit more? so he rode a little bit more and we had to have a -- we didn't have a literary agent for him in dealing with this because i found out later schindler, his life had already been sold to a think mgm so tom had to pay back mgm in order to write schindler's list. i was dealing with a lawyer the whole time and snyder who is the head of simon & schuster then said, nan, don't bother with it but i was quite keen on publishing a book in publishing this author so eventually i did. and it paid a shocking price to today's market, $60,000 for world rights and of course the book has never been out of print. that went to more notice when steven spielberg did the movie and i remember when tom was in poland and he telephoned me and he said, steven is really making a good film. and i was with simon & schuster until 1981 and went to houghton mifflin, and i learned a great deal at simon & schuster bed houghton. houghton was much more the kind of old-fashioned publishing that i've really felt at home with. and with me came on their own sedition market atwood, gary young's wood, ian mcewan, and it was wonderful that my authors just followed me. i was active for about six and half years and that was at the time they there were all of these takeovers. at random house, random was the first one to go public, and he was called into his office in he said now we are going to go public and there's going to be a stock government me tell you what's going to happen. i am not advising anyone. i'm just telling you what we are doing. and then rca bought us in then i went to simon & schuster and when i was at simon & schuster golf and western bought simon & schuster. at houghton, houghton was already a publicly held company that maxwell was trying to buy it and only 10% to general books. i remember the director kept coming to me in those first few months and said, you know they are not going to sell the trade division. i said, you have just brought me here. stop telling me this, you are not going to sell the case that i've come to. but they were very smart. it was very hard on general publishing. 90% of the company's was a very profitable textbook division and i felt, as much as i loved houghton and did not want to leave, i felt that the general books were given short shrift. and the new york office and the boston company so i kept having to take the shuttle back and forth. the last summer i was there i realized i was traveling 900 miles a week and not really doing anything worth anything. so i resigned and as i said i resigned from the boston shuttle, not really from houghton. it was a wonderful company and i loved it dearly. but happily margaret at work, ian mcewan and buried unsworth came with me to doubleday. when i was at houghton, pat conroy had a new editor for every single book and they assigned me to him and he got along terribly well. that was the prince of tides. i remember -- every writer is very very different. pat sends a thousand plus pages and it's up to you to do with it what you can. having never worked with him i didn't know what to do so i've made like a movie scheme of timeframes, themes, characters and when he came to new york to work with me, he looked at it and shook his head and said nobody had ever read my work this carefully. so as you know it was quite a success and so we signed him up for another book. just after that time, i went to doubleday and pat came to me and said, i really don't want to stay here without you so i will come to doubleday too. i said you have a perfectly good contract. i can do anything about it. it's entirely up to you. what he finally said was he was never going to write another book so he came to doubleday and after i had been there two years and it was rather chaotic, i said, i can't work in this chaos. so i started my own imprint and that was in 1990. i have continued to publish the same, the same ever since. i have done thomas cahill's books of history but all of the books that i have done, each one of them has something in common and that is they use language beautifully. they are story tellers and they passionate about what they are writing and whether fiction or nonfiction, that is what goes on in my imprint. obviously in the last year and a half, it's been a very dicey time to say the least. i am sorry i missed everybody else talking about it, but i feel i have just been going on doing the literary fiction and nonfiction and flying under the radar and the independent booksellers are great supporters of my authors. with e-books of course in america we started it much earlier then it's been done abroad. we are beginning to get a sense of what the e-books, how they are going to be done and the other night i saw a presentation, what was called and e illumined. it was a book, it is a book by richard mason and he and his partner have developed an e-book on the ipad that the story takes place -- it's the pleasure seekers and the story takes place in amsterdam. there's a there is a picture of a street in amsterdam and if you put your finger on it will take you through amsterdam. if you put your finger on the text it will be read aloud to you. there is music. this is what everyone said e-books were going to be that this this is really a tonight do think that what is going to eventually the fault, that will be the e-book because people will want it because you can listen to it and you get a good deal of history. not every book is adaptable to it, but i think the literary books, lot of them well. but i continue to publish as i did at random house. i'm afraid i don't have any new tricks except marketing. we do a lot more marketing on the internet than we ever did before. publicity, although it's important, celebrities and big authors of party established. i'm not sure how we are going to continue to nurture young writers. it was the eighth book i think. i published seven books of ian mcewan before americans had any awareness of his being around. the big changes are going to be smaller advances for authors. and that something very topical and fought over. i think that i remember there were 9000 serious leaders -- readers in united states and i was very impressed because i thought there were 4000. [laughter] and so, as far as what i'm going to do is continue to publish -- someone came in the other day and you probably read about the bonus that we all got because of seven shades of gray etc.. she came into the office and she said, i can't believe it. i'm still selling in still pushing that book. i said it's just fine. i am continuing to publish my good looks. thank you. [applause] >> thank you, nantes. she does publish incredibly good looks. so glad you could make it. karen lotz has been the president publisher of kennewick press since 1999. among her many books, the marcy watson series by kate d. camillo, what color is my world i careened abdul jabbar ,-com,-com ma letter to the moon by maya soetoro in. last year she took on the additionaadditiona l responsibility of being the managing director of walker books, candle wicks british parent company. the mother of two young children she manages to split her time between london, the home of walker publishing and somerville massachusetts where kennewick is based. she is truly a global publisher. please welcome, karen lotz. [applause] >> thank you so much murray and thank you everyone and their good friends on call. at such an honor to be here to be included in the summit and thank you all for your attention. one of our speakers earlier today, former congressman tom allen who is now at the aap talks about how the world of publishing is divided into many different industries really now and i would say that the corner that i hail in children's publishing is rapidly becoming even more different from our big books, partners on the adult side. we actually call it a dull publishing and we take it into this neal james family means one thing into us it means adult books versus children's books. children's books, it's interesting when he think about the context of yesterday as well because we been looking at the past and talking a lot about classics and very ancient and beautiful books such as the ones we saw last night. the entire field of children's books is actually fairly young in the scheme. the whole idea of creating literature specifically for children is rather new in a large history of publishing. and i think that is something that is very interesting when you look at also some big, big titles that have united us over the past couple of decades. "harry potter" which has been mentioned, twilight of course. a lot of these books have come out of the children's and teen arena and they have united readers actually of all ages in this sort of imagined community. but there was a time not that long ago, time when i began my career when that wasn't really true. i think i was probably always destined one way or another in the world of books. i think my father knew this because when i was just about to head off to college, he took me out for breakfast and he didn't live with me at the time but he took met for breakfast and he he said i hope you find your college education as long as you promise this one thing and the one thing was, don't major in english. [laughter] he had a good insights. he was hoping, virtually everythineverythin g else i could've picked would have been fine. with that wisdom of youth i agreed and i've went to college and studied croatian poetry. and even more direct path to the job market was mine when i graduated. and i definitely wanted to go in the publishing. i had lofty ideals of what i would do and what i would publish in the types of books i would work on. i went to what was then a radcliffe publishing course and now is the -- publishing course but i hadn't did my homework and there is a tremendous amount of homework you had to do big for you should do the course and begin showing my wisdom, i did not do my homework and as a punishment i was put into children's books. at that time nobody wanted to be in children's books. at first i protested and i thought this is awful but actually when i met the practitioners who are teaching the children's book course, they were amazing people. they were so dedicated to their craft and that one summer they completely changed not just my view of what children's books were but my entire life are going going to that going go into new york and working for one of them in what was then the ep dutton. the day that i arrived was also the day of the announcement of the first of many mergers which would take ep dutton through penguin and now of course penguin and random house intermarriage. when i arrived it was this office on park avenue that have been its home for 100 years and one of my jobs is the lowest assistant on the totem pole was to keep something called the key to the centennial library. the centennial library was actually in the lobby of the building. you would walk in, roll out the carpet, but the key in the door and the wall would swing open like in batman or something. and behind it was the archives. in that archives there were just amazing treasures. there was for example ernest munster who invented the -- book. how to make the first pop of books and things like that on also in my little cubicle which is actually a closet, a locked file cabinet. i always wondered what was in that file cabinet. cabinet. one night i found the got it opened and the thatcher was full of royalty checks that in the system did not want to mail and instead he kept them in the filing cabinet. [laughter] the bottom drawer was filled with original art from kernan shepherd, loss for dozens of years and ended up in the children's museum in new york. all of this was going on for me, the sort of entry into the world of publishing and this discovery by publishing past when all these mergers and things were happening at the same time. we were very quickly moved out of those offices, combined and put into larger much offices and that is how my career went, watching this amazing world of big business intersect with this artisan craft and am comfortable tension between those two things. them one at a chance to move to a company called counter would present summerhill massachusetts i was very excited. candlewick was a new company. we are only 20 years this year so i've been there for 13 years out of the 20 and we publish only children's books. we start with zero and go off with two teenagers and publish some books about the craft of children's literature as well. and we are part of a group of companies that have its origins by man named sebastian walker who is a bread and a publisher in corporate england. he decided he needed to make a place where authors and illustrators could essentially calm as a haven. he founded this company and when he died he he left has accompanied to his family and have to the employees. we eventually purchased the whole company. so we have now walker books australia, a children's television company that's very small in new and we have the two big tresses in the united states. in london, but we also have our owners 150 of our authors and illustrators who publish for us for a long time and invited them to be partners in the company. what this usually means is they are as depressed at the end of the year as of the year as the rest of us when there's not a tremendous amount of profit to share. in the good years that also means we are able to thank them for everything that they do. i think it's also a fabulous reminder to those of us who work on the creative teams that illustrators are really what it's all about. they are part of the strategy the company and with this model we have him so long and we have been able to really publish some amazing books and amazing authors. as i said we try to do it globally wherever possible and wherever practical and we are really i think an incubator in a way for the connectedness that is now affecting all industry. basically in order to get our print runs big enough to work and to have the company survive we have always had to work with each other. even though we are sharing a common language, there is a lot of challenges to that in our day-to-day process of the. that is candlewick press and walker books and that is who we are. the other thing i just wanted to quickly say about the sort of challenges -- ave say we are talking a lot about the place where digital and print publishing meet and for the wide a portion, young adult portion, when you're talking about children's books and you are talking about looks for children zero to three or zero to 26, what does that mean? i think it's just a whole other question and a big new set of issues. there is a phrase that often comes up in our meetings when people are getting very stressed for one reason or another. the margins aren't working and sales aren't happening or something is going on a loop in the room and someone inevitably obey says okay, these are children's books, it's not brain surgery. but a few years ago, it suddenly hit me, actually it is brain surgery because what we are doing is creating the books that are building the reading brain, hopefully. that is something that we keep very much in mind. we are trying to make the best books for children always end our definition of that really means the hoax that will help children grow up to be lifelong readers. that is their definition of the best book. as they are figuring out how in their own mind that part of us, that speech that is inherent in part of us, that vision is inherent in putting it together and learning how to read in learning how to write, what does that mean in the world a world of tablets and devices and apps instead of a tactile world of beautiful objects? i think it means only good things but right now i would say we are definitely in the middle of the big squeeze. if you'll pardon the metaphor, maybe it's the birth canal and we will see what happens will make him out on the other side. but it is a very very interesting time and i think it's important for all of us to -- who clearly cares much about books to remember with this golden age of production that's going on, we need to figure out how to make those connections with the very youngest children and get them reading right away. that is the key to any future that we want to have. thanks. [applause] >> i think that is the first time i have ever heard children's publisherpublisher s being referred to as brain surgeon but it's very true. in fact i'm going to ask a question about that in a moment. we actually have time for a very few questions so we only have 15 minutes. which means i will limit it to the big question in the big question, i have two big questions really. the first big question to all of you is really, are there too many books? i remember bill keller of "the new york times" complaining that there are just too many on the market and certainly self-publishing amazon and google have in their rush of publishing have her haps taken a different stand on the standards and perhaps even lowered the bar of quality in the kind of books that nan is talking about are all of us are talking about really. because they see it as a money-making business. the margin turnout -- the larger the turnout the more money you're going to make. doesn't matter if it's self-published books or whatever but what happens of course is the publishing enterprise that requires gatekeeping and judgment and a notion of what is it that makes a book great and lasting an enduring and a piece of literature or a piece of important information, sometimes that goes by the five when you keep making more and more books. so i ask you, are we making too many books? certainly the librarians in the audience who have been archiving them may be are a little careful when i quoted the figures about the 50,000 going to 330,000 going to 1 million going to 3 million. are republishing too many books, nico? >> those of you in the audience who are readers of the new york review of books i'm interested to know how many of you have noticed in the last year or two how many of the ads in the new york review of books are actually ads from what are called vanity presses ,-com,-com ma i universe, author house because what struck me, and i traffic in moving circles that will pay a lot of attention to advertising in the real books is how remarkably few academics see those ads. i think that is actually a youthful -- useful metaphor for all the 3 million new books. i actually think they are largely invisible. i don't think they clutter the literary landscape in the sense that people think they do. i think the people just don't see them and i think you could make the point that in each of the last issues over the last year or two i would say it has been one of the top to advertisers for the new york review of books in for a press like oxford who publishes nonfiction i think it's fantastic. what it means is shoring up the important review vehicle for us without necessitating our advertising dollars. [laughter] and so what it is, every author understandably wants to be red. you are making a comment earlier about the importance of hope over experience and we all traffic in that and without that they wouldn't be able to go to work every morning. but i think the question is actually more a question about are they doing books published by traditional publishers? i think they probably are but i don't have any idea how it goes about preventing that or whether that is actually genuinely a problem. >> you no, i think there are too many books and i think there are always will be too many books that you know of all the arts, the book is the most personal. we see paintings and photography and museums together. we see -- listen to music together but when you open the book, it's you and the readers voice and that's all. because it is very personal, people have a lot of different tastes. i know a lot of bestsellers are books i have passed on because i didn't think they were good enough. i think one thing, there are too many books on the other thing is now we all have to understand more in the global community where i think i do quite a bit of -- which may be 2000 copies or so. bit by bit they will grow and is just that people have very different tastes, and with amazon and self-publishing, the "50 shades of grey" was not self-published. is just a small publisher that published it in australia. i think their eyes will be, but i think editors, probably there are too many editors requiring books and we will see if that goes down but the one thing you mentioned in the new york review of veaux, and i always ask that my books be put in the new york review of books because i think that is where the serious readers are. so for my type of book, that is perfect for best-selling page turning. "usa today" is probably the best place to advertise but we always have too many books. >> jeff? >> i think the notion of publishers as gatekeepers is a false -- and now with the author of services, everyone should just give it up. it's never been a case. there are no gatekeepers because there are no gates and self-publishing and distribution has actually been possible in the physical form for decades. so, it's the wrong way to think about it. some people now like to talk about while it's more like eurasian. i think that's the wrong way too. it's more enthusiast, the publisher is enthusiast and you have millions of books published and you have to pick the good ones and share the enthusiasm with a lot of people. that is a challenge. focusing on the number of looks. is that me? [laughter] it's the wrong way to go about it. >> i like that, enthusiasm. how about you? >> i think that we can flip it and say the fact that there are so many books being published beans there are so many more writers and there is no great consumer book so therefore they're a lot more readers. if those writings would buy more books we could get those -- [inaudible] and then build out. >> a little loving circle. >> that's right. >> nel james job. [laughter] >> now i want to ask a question that has concerned dr. billington the librarian of congress who he has posed the question to me personally and to people at the library. it's something obviously that concerns him very much and concerns all of us, and that is -- you publishers, as you said so well man, you are publishing a book that is going to be opened and shared as a kind of brain experience to the reader between a reader and a writer. we have known what that has meant over the course of centuries of reading and codex form. but what happens to cognition, to the way we think, to the way we process information, to the way we are inspired, to the way we are moved, to the way -- our desires. what happens to all of that when the process of reading has changed? is this something that you are thinking about them publishing? is this something you were thinking about, nan, when you are looking at that handheld device that does pull those things that takes you to reading, or what are you considering now as publishers of enthusiast, people who will have to work with this new technology as we move forward? what are you thinking? what are you planning. >> i think one thing is, i just have to share this with you. pat conroy recently wrote to me and he said in the summertime -- and they all have those candles. we are going to have to invent some sort of bubble that tells people when they are reading. but i think if, i mean right now, part of the transition is that people are fascinated with technology and in new york, to go to new york people don't talk to other people. they are on their iphones all the time. i think for 10 years or so we are just going to have to hold herself together and think less of the process and more the importance. when you think of how books change the world, it's rather amazing. now i think, i remember norman mailer said when television became so popular, he said it's not what's on television that's harmful. it's every few minutes there is a commercial and there is no sense of concentration. quite frankly, i think in the younger generations, they never learned the ability to concentrate. somehow we are still going to get readers that we are going to get fewer numbers and hopefully the education system improves. he cannot be a hyperkinetic human being reading an 800 page book. >> one of the distinctions we try to make at oxford is the difference between them are separating which is what most of us talk about or mean women talk about reading and then the more extractive research-based work that happens a lot in the world of the academy. i think that has proved to be a very helpful distinction as we try to transition a lot of our books on line and as we try to create a on line resources for our constituents. a good example of something that we just launched called oxford scholarly on line editions. the definitive work of major thinkers all over the world throughout the ages. we are focused on the last 200 years. i think the value of that in terms of people's research, in terms of what we are doing at the press to enhance knowledge is vastly improved by the fact that all of the content is on line, searchable, it's far more valuable and far more useful than having the enormous volumes open for you. so i think, i think there is a great to be gained on the extractive and research site. i think the question about immersive reading -- i have a kindle and i actually don't want to upgrade to the tablet because i think one of the reasons i love my kindle and one of the reasons people love their e-readers is because they make you a better reader. you can do all those things. it just does one thing. the idea that we are moving towards this conflation of all sorts of functions and utilities in a single object, i ask they don't want that and i think carrying around an extra thing that weighs a calm is a price well worth paying. i would argue that kindle makes me a better reader. i find it a more immersive experience than reading print. >> jeff? >> i don't have any predictions of how reading will change but i do know as publishers we have spent a lot of time investing in technology and in new strategies and have to experiment and fail to make any sort of progress in trying new things. at penguin we do a lot of iterating new forms to see what works and ultimately if a good open market will decide for us. >> a i will stop you there because i see your readers as being you know quite a young generation. your readers are i would say between 17 and what? 35? no. [laughter] and these are perhaps -- can you sense that there is a change and are they still reading the way that you read or the way that any of us in the audience have read in the past? >> i think they want great stories and distinctive voices and what has changed a lot is true is how we market and advertise. that tends to change rapidly and you have to adapt to it, but work like juno diaz is very popular but also very dense and very complicated and she has young readers as you say that will calm and just get really excited about this aggressively complicated work. >> karen? >> i think about cognition and reading all the time especially women talk about the young books and one of the factors that's important to remember is the digital age can be very input oriented and when we are learning to read and we are talking about books that are read aloud to us, there is a constant change in the interaction between the reader and the one read to us as one read to is getting a little scared or little exciter. the reader tap for telling. is the old storytelling. at story telling to an audience, not something that a device can do. we are learning how to read and we need to understand what's happening, the nuance that will allow us to grow up and take in the information. but don't get that early on through that human interactiinteracti on we won't get it later. >> as we say these four panelists have made me keep the faith. [applause] it has been wonderful. i want to thank congressman larson and senate to read for suggesting, and i want to thank dr. billington for holding it but i want to thank you especially for coming and giving us a bit of your expertise. it's so good of all of you too, and thank you very much. [applause] >> this program is part of the 2012 international summit of the book. for more information visit l all maxie.gov/international -- book-summit. >> providence was founded in june 1636 by a prominent baptist preacher roger williams who was forced to flee massachusetts because a religious persecution. is one of the original 13 colonies of united states and is a rich literary culture steeped in history. with the help of cox communications booktv brings you interviews and torso the area all weekend long while we visit. >> i am michael chandley, proprietor of cellar stories bookstore here in providence rhode island. we are in southeastern new england, that largest rear bookstore that you will find. this is the greatest in the world. it's just never knowing what you are going to see, what kinds of kind of books will come into the store, what people will come into the store. we have had famous authors come into the store, shopping. we have had people performing in rhode island or massachusetts come into the store. it's exciting to not know what's going to happen every day and to be surrounded by all these great books. it's just wonderful. a friend of mine had a romantic idea about starting a used bookstore. we both had english degrees and we used to go read two different bookstores and thought it would be neat to open one. we did and quickly found that we didn't know anything about business or the book business. he drafted out a pursuit of -- and i kind of stuck with it. at that time, there was a magazine called the antiquated lien book lands we. the first 25 or 30 pages were articles about the book trade and the rest of the magazine were listed books for sale and in the back of the bag is seen, books people wanted. so that was pretty mitel i learned about the book business going through that magazine every week and quoting books to other dealers in reading articles. we started this in 81 in the basement of a building up the street, and hence that was the name, seller stories because we began in the basement. while we have a little bit of everything, we also have in-depth collections of rhode island history. we have a lot of math books. we have art and architecture, modern first editions. the sale of veaux is popular culture pretty much however -- has been the best-selling in the store and that is kind of heartening. people are always reading that kind of thing. providence always has been a wonderful place for used books just because it's one of the oldest colonies. so there are vast collections of looks in providence and we have been able to tap into that over the years. and to buy collections from some of the oldest families in rhode island. we just had a wide read the books that most or some have because of our geographical location. we get collectors coming in from all over the country prominent with the renaissance city. tourism in providence has picked up over the last 10 or 15 years and we did get an awful lot of tourists coming in, people who use their vacations to go looking for books in different cities. that has been a real boost to the store. we have a two-volume first edition of madam bovary published in friends. that is relatively scarce. there are not too many of those. once i got a call from a person in providence, who got a donation. he was running some kind of outreach program that was a donation of books at about eight or 10 of them had been signed by ernest hemingway. that was a really great find. there were other books in their signed by an author that wrote about old fights so it was related to hemingway who was also an aficionado of old fights. there was a book signed by john steinbeck. it was just a great catch. when we get something like that, either collectors or other dealers are quick to come in and make burgesses. we started out as a pretty small store and slowly grew over the years and have been able to adapt to the changes in the book trade which have been pretty substantial with the introduction of the internet and changes in people's book buying habits. the people coming into the store was the dominant driving force for sales. we did some mail-order but it was pretty small. once the internet started, especially amazon, that kind of changed people's buying habits so we saw a reduction of people coming into the store, of walk-in traffic and an increase in mail-order traffic, people ordering over the phone, especially ordering over the internet. it has affected us in a couple of ways. one is that has driven down prices for average folks, for run-of-the-mill books, even some of the books that were priced slightly higher, people thought they were fairly scarce. you could go into five or 10 stores and not find a copy of the book but then you look on the internet they were readily available. so prices went down for a lot of things. on the other hand we have been we have been able -- used to be we bought a book about a city in oklahoma and we would have to wait until someone from oklahoma came in and was interested in them look. now with the internet, we can list that book and someone in oklahoma finds a listing the listing and we sell the book pretty readily. with publishers producing fewer books every year now, if they don't patronize stores like this are independent or independent stores they are going to find that they're not going to be books around. there is already a decrease in the number of books that are available because
New-yorkUnited-statesAustraliaChinaRhode-islandBostonMassachusettsRiverheadCroatiaRussiaWashingtonDistrict-of-columbia long this weekend. >> no. >> you want to rein in your horns? >> if i want to buy something, i'll buy protection and in the puts and vix but i won't go long. >> are you going to be buying what he's selling, matt cheslock? >> if you want me to. no way i'm throwing in the towel now. the market has gone away from me. i'm going on the same premise as ben. volatility has been awesome as far as trading goes. a 170-point reversal. >> dow down 116 on the open and then -- >> even more than that. wonderful trading down here but maybe a sign of a little bit of a top. >> you feel we are getting a distribution top here. not accumulating. >> no way i'm going home long. the sky isn't falling from sequestration so that's a good thing, too. we're focused on hoops right now. got a little playoff game. >> good to see you guys. have a good weekend. >> pleasure. >> 15 seconds left. the dow up 25 points, a volatile week comes to the end. what will the month of march bring? we'll resume that again on monday. have a good weekend. if i don't see you later, maria continues now with hour number two of the "closing bell." >> and it is 4:00 on wall street. do you know where your money is? hi, everybody, welcome back to the "closing bell." i'm maria bartiromo today coming to you from the equities trading floor of barclays headquarters in new york. a reverse afl fortune today on wall street, the market erasing early session losses to end the day and the week in the green. we'll have to wait at least until monday for the elise you have new record for the dow jones industrial average. we did end with gains, as you can see. the dow jones industrial average on the upside as was the nasdaq and the s&p 500 on the heels of an earlier selloff, the market reversing those numbers by the close tonight. closing out first day of march and the eve of the sequester deadline with modest gains. with us today stephanie link, cnbc contributor from the street. mike queen and michael dayad and kenny pulcari from o'neill securities. stephanie, interesting market here. teflon situation. the sequester just did not matter. what do you think happens now as we get into march? >> it's how impressive this week that we're even up at all given all the uncertainty that we've had, with italy at the beginning of the week, continued concerns about what will happen with monetary policy down the road and then sequestration. even economic data was kind mixed this week but the pillars of strength have been housing and manufacturing and the consumer, and we got good data points this week on all fronts. in fact i thought the ism number was very impressive, particularly the new orders. consumers, they are actually hanging in in terms of auto sales and retail sales and if oil prices continue to come down, maria, i think that group can continue to work, so i think we're in better position to handle the uncertainties, and i think what you want to do is certainly take profits when you have them but go back to these areas when these stocks and sectors get hit, this is where you want to be buying. >> mike, would you be buying? want to put new money to work in this market? >> we actually would. we think stephanie made some very good points. we know we're in march and the fund manage remembers thinking about the reports they will put out the end of the first quarter. they are largely underinvested. they will continue to fund the market so we're not worried about the next 30 days. >> what about earnings? i mean, the next 30 days will be the end of the first quarter. michael, what are you expecting in terms of first-quarter earnings? are you expecting pre-announcement? is that going to be the lever that takes this market reversing course? >> maybe. i think in general there's a pretty strong conservative bias in terms of continuing to see surprises on the upside. it's the risk-off trade that's been getting a bid. as i've been saying to my 25,000 plus amazing twitter followers, the market is broken. someone has to explain to me if we're so excited about dow new all-time highs why are yields on the ten-year back to 185 and dividend sectors outperforming, and why is it when you look at a price ratio of small caps to large caps, those areas most sensitive to domestic growth expectations, when you look at that chart we're seeing underperformance kick in in high beta names relative to global growth large caps. very significant weakness that means that at some point the gray-haired bears are going to come back roaring. >> it's interesting that you mentioned 185 on the ten-year. what are your expectations there. any reason to believe that we're going to see a spike in the ten-year, and what would be the rate that would concern you the most? >> you know, 2% has been kind of the panic level i think on the ten-year. what would actually concern me is if the 30 year breaks 3%, then i think you have a very strong risk off and deflation pulls. there's a complete inconsistency here. told that the bond market tends to be much more ripe for the stock market and nouveau bulls cannot see how much is in equities. >> i just look at the earnings have been pretty good, much better than expected, and it's a stock picker's market. look at the stocks that actually started to outperform when the market was falling this morning, which ones were doing well. those are the companies that posted good solid strong earnings like an adt and chicago virgin island and eaton. people will go back to the stocks that are delivering in a tough environment. >> and those have been largely lower beta sectors outperforming. not consistent with growth. >> that's not really truth, but, okay. >> what's not true, stephanie, that they are not low beta sectors? >> i certainly wouldn't call chicago bridge and iron a low beta name. >> from an average perspective. i put out a led league, the low beta sectors have been outperforming while the dow is nearing the all-time highs. >> staples have done well, utilities have done well. there is your opportunity to look at some of the companies that did well in some of the cyclical areas for upside. financial is one area, especially headed into the stress test coming up. >> and the stress test coming up, that's just in the next week or so, and we'll probably see dividend increases. kenny, i want to hear your take on what went on at the end of the day here? >> listen, we had a lot of consolidation between yesterday and today. early part of the week, all the volatility and the market is really trying to find itself. it was preparing for this anxiety over sequestration which we got nothing of, and i think the market is just telling you it's not really concerned about $40 billion in cuts over this year and 40 billion next year. i think that we're going to -- we're stuck in this 1,500, 1525 trading range. i think as it pulls in, like stephanie said, you look at some. names that get overly beat up and jump back in, the ones that keep delivering, financials for sure, consumers and i like even the industrial names, infrastructure-type names which i think will really do well. >> and where are you seeing the conviction, kenny, in terms of consistent buyers? which sectors or stocks? >> well, from my point of view and customers that i'm talking, to i see a lot of activity in financials and technology. >> financials and technology certainly have been the leadership in 2013. go ahead, michael. >> i'm just saying our high net investors are risk averse and asking us to focus on technology, energy and health care where they feel the balance sheet strength is and where the dependable earnings are coming from. >> what would turn the situation around? mean, we know that we have a couple of cat lifts on the horizon, continuing resolution and end of the month earnings season when the quarter ends march 31 and then the debt ceiling debate. with the fed right there sort of continuing to tell us that they are going to keep rates where they are, is there any reason to believe that any of that matters? do fundamentals not matter right now? >> not really. i think the fed is still driving the show. well see that lift all the boats. i don't see any reason to fight the trend right now. >> and i would agree with that and i think central banks around the world are running the show, mario draghi, the fed, the ecb and the market is being artificially stimulate and that's where the disconnect is and why individual investors get frustrated because they see the market attempting new highs but on the other side they don't feel the robustness of the market turning around. >> the disconnect is in the deflation that no one is focusing on and that makes it a very, very risky juncture in the here and not, not for the year, but a very short juncture where behaviorally it's acting like we're in the midst of a correction. if you look overseas, everything is weak. >> monetary policy around the world is going to continue so i would just say, maria, one thing to be concerned about or just to watch for would be the strong dollar because if that continues, then your earnings story certainly has some -- some hair on it, if you will, but for now these companies are able to offset it with better pricing. >> thanks, everybody. have a god weekend. see you soon. the document for investors big and strong, warren buffett's annual later has been sent and what did buffet have to say this time? >> warren buffett's berkshire hathaway reports, here are the numbers. 1704 per share. misses the estimate which was 1755. per share book value increases 14 hadn't 3%. underperforms the s&p 500 by 1.6%. only the ninth time in 48 years berkshire has underperformed the mark. the second disappoint in 12, buffet saying, pursued a couple of elephants and came up empty-handed. todd cole many and ted weschler outperformed and left me in the dust, buffet writing in very tiny font. maria, back to you. >> thank you so much. the first trading day of march in the books. a lot more action here on the "closing bell." i'll talk exclusive with the ceo of barclays to talk about the global economy and the state of banking today and automatic spending cuts to kick in between now and midnight. what does it really mean for you? does the other side have the real story. we'll talk about that when we come back. back in a movement. thank you welcome back to the special edition of the "closing bell." 2012 was a controversial year for barclays. the rate-rigging scandal taking its toll on the firm's global brand. financial standing and it cost former ceo bob diamond his job. in the fourth quarter the bake announced a major reorganization that will cut close to 4,000 jobs, close several business units, and this is just the beginning. the new ceo antony jenkins said there's no going backed to the old way of doing things. antony joins me now to tell us about his new plans for barclays. thanks for joining us on the program. >> thanks for coming to barclays. >> another active day with the markets the way they are. these capital markets have to be a positive for the firm regardless of, you know, putting this new transform reorganization aside, what's been going on in the market has to be a positive for the firm, no? >> yeah. we're happy with the start to the year. i think it got off to a very good start in january and continued into february. seen a bit more volatility in markets this week because of what was happening in italy, but by and large it's been a good start to the year and we're cautiously optimistic about the rest of the year. >> let's talk about your plans, you have said the plan is to get beyond the missteps. you are launching or you have already launched a restructuring call transform, project transform. tell me about it. what are you trying to achieve is. >> two weeks ago we launched the transform program and the program is designed to deliver what i call the go-to bank and that's just the place a big customer or a big client will come to to do banking business. there's really two key parts to t.one is about delivering a return on equity above the cost of equity for our shareholders. that's really important to them, laying out a clear plan around cost and capital and the other part of it is about doing business in the right way so we can sustain those returns for our shareholders over time. that's what the program is about. >> when you say doing things the right way, i mean, you were doing some things the right way before, right, but the libor scandal obviously has become the cloud and the trigger for you to make this change. >> yes, that's true, but i would say that across barclays we have 140,000 people who come to work every day wanting to do the right thing. partly this, of course, is stopping bad things happening but equally important it's about powering the strategy forward, creating the right culture to deliver for our customers day in and day out and to do that in what will be a much more challenging environment going forward. >> how do you do that? this is an enormous trading floor, just this one floor and you've got others. >> yes. >> how do you get that culture and everybody on the same page? >> just about being clear what you expect from the organization. communicating to people and holding them accountable and recognizing and rewarding people doing a great job for customers and clients, doing great work inside the organization and that's how you change culture. it's do believe. >> i recognize that this have a very, very controversial here in 2012, a big hit to the firm and you want to make a big push that this is transformative. i was talking to an analyst at morning star who said barclays plan to exit four business units is representing a combined 1.4% of revenue. it's just not that big of a deal. >> well, maria, since i did the launch two and a half weeks ago, i've spoken to over 30 different groups of investors, and the feedback that i've had has been overwhelmingly positive on transform. what we did is broke the business down into 75 different units. we analyzed them through a strategic lens and through a financial lens, and actually we said 39 of those business units are just fine. 36 of them need to be changed in some way, either repositioned in their market, costs reduced, portfolios sold off and businesses exited and so on so it's a little bit more comprehensive than the analyst was quoting, and i do think that this is a very important time in barclays 320-year-old history. >> are you still in it? do you still have cutting to do? >> i think we've announced the major cuts that are going to happen in the foreseeable future. we've remained committed to our major lines of business around the world. investment banking very important to us and cards and payments, retail banking, wealth, corporate banking and to our major gearing physical here in the u.s. and again very important to us, the united kick dom and africa. >> let me ask you about that. i want to ask you about africa. i know this was an important part of the world and i'll get to that in a moment. what about the cost of these issues? i know that the new normal in your business is lawsuits and you've got, you know, carry-ones and the regulatory issues begin and then investors and lawsuits follow. how much is this going to cost? i know you talked a bit about this with analysts and in your strategic review. one analyst is talking about a 10% reduction in profits on account of regulation. what is the regulation headline risk going to cost you? >> so, we've baked in our expectations and the cost of regulation into our plans for the next three years to the extent that we have clarity, and i do believe there's much more clarity around the big regulatory changes and that's baked into our plans. that's why we're can have dense dent in making the commitments and we can get our returns above the cost of equity in 2015. >> a lot of investors were happy that you didn't really take the knife to the investment banking business. that's the golden goose, the real money-maker. why, and tell me what your vision is for that part of the business. >> so actually, maria, when we did this work we looked at each of the 75 unit to decide whether they were businesses we wanted to be in and whether we could make money out of them. there were many units in the investment bank that passed those tests and we're very happen we our investment bank. it's a big part of the group. it does things which are really important for large companies, financial institutions and governments around the world and we think that we can do that in a way that's good for our clients and also good for our shareholders so we intend to be committed to that and will be one of the very, very few global investment banks in the world. >> could you worry that eventually you'll have to split the businesses up, that there's real financial changes going on in financial services, regulators all over the world and regulators in europe are thinking something different than the u.s. regulators. how do you keep this firm together knowing there's pressure on the too big to fail and splitting off plain vanilla banking from capital markets and investing? >> we have discussed this before and we are operating in a fundamentally different atmosphere than the one that affected the industry in the last 30 years. more regulation, more nationalism and certainly a weaker macro economic environment. we took all the factors into account when we did the strategy, and we think this is the best way forward for our shareholders so we can deliver the returns that they want and give them the diversification this a universal banking model beginnings. >> when i was talking to various investors, stakeholders, analysts, many of them questioned your targets. i know you've got to put the bar up here in terms of where you want this firm to go, but in terms of profitability, 2015, '16, what are your targets and a lot of people questioning if in fact your targets are too high? >> we expected quite modest income or revenue growth. we're committed to take 1.7 billion pounds out of the cost space, an absolute reduction of 1 billion pounds from the 2012 number and that allows us to be confident that we can deliver a return on equity above the cost of equity in 2015. that's the main commitment that we've made. we've also committed to progressively increase our dividend over the time period and, of course, we've said that our quarterly capital ratio will be above 10.5% in that time period. as you would imagine, maria, i wouldn't have gone out publicly and made these commitments if we hadn't done an enormous amount of work to really ground them, so i'm confident in those commitments, and the good thing is now we've done the planning, we're into the heavy work of execution and that's the really exciting part. >> the dividend increase will come in 2014 or 2015. >> commence in 2014. >> 2014. while you do all of this, you also have to ensure that you are going to retain talent. >> yes. >> we all know and you've said it yourself that it's all about the people. >> yes. >> we know what happened yesterday in europe, the european regulators saying we're putting cap on bonuses. we're putting cap on salaries. how are you going to deal with that? what's your plan to keep the people here that you want here when you know you can't pay them what you want to pay them? >> it's all about talent. you're absolutely right, maria, and of the 140,000 colleagues around the world there's great people in barclays. what was announced in the eu on wednesday is in fact just a very preliminary statement. we've not seen any of the detail about it so i don't want to comment specifically on that but we've invested a lot of money in building our business here in the united states and i feel very confident that we'll be able to pay people competitively and pay for performance in this market. >> this is going to be a major problem for all of the banks, by the way. if the european regulators are saying the european banks cannot pay their people more than this, they will all go to jpmorgan. they are going to go to citi. >> i think we've got to see exactly what the regulation is before we can conclude that we can't pay people. my view is we'll be able to pay people competitively in this marketplace notwithstanding the regulation. >> let me ask you about capital, one of the major issues for your company and for the entire industry. are you complaint with basl 3 today? are you expecting to go back to the market and raise capital in the coming year? >> well, as you know, basl 3 is phased in overtime and we're complaint with the phasing in that over time. we're prepared to raise equity capital. >> there are questions about whether or not you have enough reserves, enough capital. at some point how do you get the numbers up? >> we intend to build our capital base over time and we're very confident we can do that. that's why i was able to make the commitment on the quarter one ratio for 2015. >> what about europe right now? >> europe is a difficult place. a lot of economic pressures, as you know, and we know the authorities there are working very hard to stabilize the economies and get them through the difficult time that europe is going through. it is difficult, but progress is being made. >> is it being offset elsewhere? do you think the u.s. is sort of the better game in town versus europe? i mean, do you want to invest less in europe given the troubles there? >> well, our core economic assumptions assume that the u.s. will grow by about 2%, the uk by about 1%, and europe will grow basically zero over the planned period of three years so obviously when we think about capital allocation, we want to allocate it to places where we've got strong franchises and where the economies are growing, and that would be the uk, the u.s. and africa. >> isn't it interesting that even with the problems in europe, the uk banking system, plain vanilla banking, is doing very well. can you get a bigger piece of that market share? >> we are getting a bigger piece of that market share, and last year we grew our market share in almost every category in the uk because the last three years we've focused on putting the customer at the heart of the business. >> you keep mentioning africa. why is africa an opportunity for barclays? >> i think africa is a great opportunity and the macro economic environment is very favorable and increasing social and political stability. we've been in many of these countries for over 100 years and that's a real franchise that we can build off. >> and certainly there's an enormous amount of money moving in there right now. you've got to participate. antony jenkins, i know you've been through a very challenging year. you've taken the lead for this firm and are showing this big culture change. we'll be watching. good to have you on the program. >> thank you, maria. >> so appreciate your time. >> antony jenkins, ceo at barclays. >> josh lipton and more on berkshire hathaway. over to you, josh. >> warren buffett in his letter to shareholders taking his fellow ceos to task. let me share some of it with viewers, buffet writing there was a lot of hand-wringing last year among ceos who cried certainty when faced with capital allocation decisions. a thought for my fellow ceos, buffet said. of course the immediate future is that america has faced the unknown since 1776. just that sometimes people focus on the myriads of uncertainties that always exist while at other times they ignore them. he concludes if you are ceo who has some large profitable project you are shelving because of short-term worries, call berkshire. let us unburden you. maria, back to you. >> all right. josh, thank you so much. up next, mission impossible. no deal between president obama and congressional leaders to avoid the automatic spending cut. we'll take you live to washington and see what happens now besides morphinger-pointing and austan goolsbee, once the president's top economic advisers, what he has to say now and late err top regulator gary gensler says those cuts will make it tough for them to stop the bad guys on wall street. we'll find out how in an exclusive interview with the chairman ftc. back in a moment. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn. welcome back. we have breaking news on auto sales. off to phil lebeau we go. phil? >> all day weave been talking about february sales being solid but not spectacular. now the research firm auto data has calculated total sales coming in at a pace of 15.38 million for the month of february. that is roughly in line with estimates and compares with a pace of 14.5 a year ago. again, maria, february auto sales, the pace 15.38 million. maria, back to you. >> all right, phil, thank you so much. well, the deadline a little more than seven hours from right now. there's no deal to avoid $85 billion in automatic spending cuts. president obama spoke earlier today, and he hinted there may not be a deal for months. that's right, months he said. let's go live. john harwood in washington and get the latest on this. over to you, john. >> reporter: the last-minute deal between president obama and bipartisan congressional leaders in washington did not produce a deal. we didn't expect it to, and what you have is a public pressure campaign being put on by both sides. president obama came out into the briefing room and said he wants to get rid of the sequester as son as republicans agree to what he sees as an evenly balanced plan. >> i do believe that we can and must replace these cuts with a more balanced approach that asks something from everybody, smart spending cuts, entitlement reform, tax reform that makes the tax code more fair for families and businesses without raising tax rates. >> reporter: the problem is that republicans see it fundamentally differently. house speaker john boehner came out and said, yes, we had a tax increase, but, mr. president, you got one shot at that. you don't get another one. >> let's make it clear that the president got his tax hikes on january 1st. this discussion about revenue in my view is over. >> reporter: maria, you mentioned finger-pointing before the break. that's what we're in for several weeks but it's not finger-pointing for no purpose at all. it's finger-pointing for the purpose of getting public opinion to put pressure on both sides and we'll see which one can pressure public opinion enough to try to get the other side to break over the next several weeks. >> all right, john. my next guest -- thanks so much, john harwood. growth will go down and unemployment will go up as a result of these forced budget cuts. he had a courtside seat at previous economic white house face-offs as the former chairman of president obama's council of economic advisers, now a professor at the university of chicago booth school of business. we welcome back to the "closing bell" austan goolsbee. thanks so much for joining us. >> thanks for having me, maria. >> okay. so we're talking about $85 billion in a $13 trillion. what are you talking about, 2.5% budget cut. is it really that dire, austan? >> i would say it's a negative. it's not tremendously dire, but it will probably cut the congressional budget office said maybe 0.6 off of the growth rate. the only thing is to remember the growth rate wasn't that big to begin, you know. the forecasts were for at least 2.5% 2013. so if you cut off 0.6 of a point and we get down below 2%, then i think we ought to expect the unemployment rate to start drifting back up again because that's slower than productivity growth. >> so what are you expecting in the next couple of showdowns? you've got the march 27th continuation resolution when the government shuts down unless congress extends funding. how do you think that plays out, and then you've got the debt ceiling debate in may? it feels like cliff to cliff, austan. >> i agree with you, and i'm glad you raised those because in the discussion, you know, that the people were just having, it was all about just the sequester, but really all of this is setting the stage for the continuing resolution and will the government should down because we fundamentally don't have an answer to the question if we're going to do the second half of simpson/bowles and the grand bargain. we've basically done half but we've done the easy half. the tax rates on high-income people went back to what they were. through the debt ceiling we had some cuts with no revenues, but now we're to the hard stuff, and if we're going to do that, is it going to be all cuts, or is it going to be some cuts and some revenue? that's a key -- that is a key factor that hasn't been decided. the american people got to make up their mind and it seems like what both sides are trying to do is highlight to them, look what the other guys want to do is no good so the administration is pointing out here are these cuts. if we do all cuts they are going to be painful, going to go on spring break and will have a big line at the airport because they will have to cut back on tsa personnel, and -- and the republicans are highlighting, well, look, if you have to raise taxes, here's what would be bad about that, and i think it's -- it's we the american people who got to make up our minds, and i think they will follow. >> let me ask you this, austan, because it feels like at this point in the cycle where we've been talking about this for so long the fact that, you know, the three major drivers of our debt, medicare, medicaid, social security and you're talking about the average guy and gal out there that both sides are trying to appeal, to i think the average guy and gal out there understands and sort of gets it, that these programs are going bankrupt. they do need to be restructured. you know the president very well. you've worked with him so much in the first term. if the president was really serious about getting to where the problem is, cutting medicare, medicaid and social security, how come he hasn't done it yet? >> well, let's back up to the first thing you said, that everybody gets it. in a way they get it, but in a different way there's massive overwhelming majorities of people saying let's not cut social security. let's not cut medicare and anybody who is proposing those things, they are getting mad at them, and then if people come in and say, okay, fine. if you don't want to cut those, then we've got to raise taxes, then people say, whoa, whoa, wait a minute, we don't want to raise taxes so that's what i mean so until we the voters have a little more clarity to washington what we want i think we are likely to see continued stalemate where both sides are saying but i think america is on my side. >> so i think -- is the stalemate even worse than having a decision? i mean -- >> yeah. of course. >> unemployment is going to get impacted. the stalemate is really the problem, the fact that -- >> it's a problem. 100% right about that. definitely every year we go by that we don't act it makes it worse and worse because the problems build up, but also the stalemate in which we just keep saying, all right, well, fine, in two months let's revisit this. a lot of people don't know what to do. they say, well, okay, kind of if you came in and told me that the taxes are going up now, at least i understand what's going on, i don't want to make a bet on well maybe in two month the taxes would go up and maybe in two months they are going to start a program to cut the entitlements. i think that's a big problem. >> all right. austan, great you have to on the program. thanks so much. >> great seeing you again. >> we'll see you soon. austan goolsbee. unable to go after the bad guys, the top cop on the futures and swaps market warning the spending cuts will hurt enforcement. gary gensler will be with me next exclusive in a few minutes. don't miss it and it will go down as one of the greatest good-byes ever. groupon ceo andrew mason got a deal he wasn't looking for yesterday when his board handed him a big slip but jaws really dropped after he is sent his farewell e-mail. jane wells on how mason's missive stacks up about other notable exits. stay with us. friday night, buddy. you are gonna need a wingman. and my cash back keeps the party going. but my airline miles take it worldwide. [ male announcer ] it shouldn't be this hard. with creditcards.com, it's easy to search hundreds of cards and apply online. creditcards.com. a new ride comes along and changes everything. the powerful gs. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection. how many times have you heard this line? i'm leaving to spend more time with my family. it's an old standby used any time a position of power is ousted from his perch and yesterday richard mason ripped up the proforma resignation letter and got canned. where mason ranks in the resignation letter hall of fame. jane? >> reporter: you know what should be banned, saying you're leaving to pursue other opportunities. well, duh. that's because you got fired. at least andrew mason said, quote, i'm looking for a good fat camp. joins a special camp of those who have gone out in style like jetblue flight attendant steven slater or this hotel worker who hired a marching band. >> all of you out right now. >> i'm here to tell you that i'm quitting. >> one, two, three, four. ♪ >> reporter: this is classic. this video has gotten nearly 4 million hits and merck product director who quit online invoking aido. quitting on youtube is now really the way to take this job and shove it and so is resigning through the "new york times" like greg smith in a scathing letter about goldman sachs calling clients muppets or aig's jake disantis saying we have been betrayed and then there's mocking the quitting for family reasons when perhaps the company's poor performance and when stryker steve macmillan left for family reasons there was also the board lost confidence over an inappropriate relationship with an employee but this is what sets the letter unique. it made it all the way to the tubes without dying on his first ever play through. bravo. if only groupon daily deals were as captivating as his letter, maria, he might still have a job. >> that is wild. jane, thank you so much. jane wells. spending cuts showdown as ax hangs over spending programs that will put hundreds of thousands out of work and potentially slow down the economy. i'll be talking next with gary gansler. the head of the commodities tradings commission says the cuts could help him stop bad actors on wall street and later taking the stand. jc penney ron johnson facing off against macy's lawyers over who has the rights to sell murtd products. we'll recap the courtroom drama. back in a moment. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're readysiness. 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(announcer) scottrade. voted "best investment services company." welcome back. we'll try this again. my next guest warned cook that massive automatic spending cuts that take effect at the stroke of 12 will wallop market activities. joining me right now is gary gensler, chairman of the commodities future trading commission >> good to be with you, maria. >> thanks so much for joining us. >> absolutely. >> what enforcement actions have the cftc put on the shelf because of cuts? >> maria, we are an agency that was sized to the 1990s to oversees the futures market and now we oversee a much larger market, more systemic in size, the swaps market eight times larger, and what i indicated to congress is we are overseeing these two markets now but don't have the resources and have been shelving. enforcement matters and we're not examining the firms that we need to examine, but it's far more ready than the sequestration. it's not sized to the new job. >> i understand because i think you guys were squeezed even before this, right? originally the cftc watched futures and now you're policing $650 trillion swaps market, so how does all of this stuff impact that, i mean, put the sequester along with all of the other dysfunction and the cuts are coming? how is that impacting it specifically? >> to put it in context, think like the national football league, if there were eight times the number of games but only the same number of referees, you'd probably have mayhem on the field and the fans would lose confidence. i think that could happen in our oversight. we just don't have the people to oversee this vast market, but the good news is we've completed the rules. we've got market transparency coming with these rules and the public will be better served if we have little resources as well. >> so was it a bad idea in dodd/frank to -- to have so much more overseeing of so many more markets and business if you weren't going to get the appropriate resources? >> well, i think it was a good idea in dodd/frank. i think the public will be well served, but i do think that we need to have the resources as well to answer market questions but also to have cops on the beat and we'll continue advocating with congress to do that. >> but are you going to get it? let's face it, gary. this is where we are. money is tight. are you going to get the resources or will you have to make do with less? >> we are making do with less. we are finding efficiencies wherever we can, but just to note we've done three large enforcement cases this past year in the interest rate rigging of libor, and along with the department of justice that alone brought in $2 billion in fines. it's not why we pursue these things, but we are a good investment to the american public to try to promote market integrity and to keep the markets working for the rest of america, not just a few. >> a few. >> yeah, i'm glad you mentioned that and brought up libor. you've said libor is unsustainable. what has your task force done in terms of coming up with the replacement? how will that impact markets? what would you like to see in terms of a replaymate for lib-- replacement for libor. >> it's something that is referencing a market that doesn't largely exist today. it would be like a realtior saying, here's where the transactions in your neighborhood were, but there were no sales in that market place for years. what we think needs to happen is, we need to move to a reference rate that's based on real transactions, so that the market can have confidence that it can't be rigged or manipulated. >> all right. so we'll be watching then, as you come up with replacements and this story develops. let me ask you with this lawsuit. the cftc suing nymex. what's this all about? >> well, i'm not able to speak specifically on an enforcement matter, but we take very seriously at the cftc our obligations and of course market obligations to keep information appropriately confidential. and i think i'll leave it there on that suit. >> you can't go more on individual cases, i totally understand. good to have you on the program. thanks so much. >> terrific to be with you, maria. >> chairman gary gensler joining us. embattled j.c. penney ceo in court today. the struggling retailer warring with macy's over legal rights to sell martha stewart products. courtney reagan has been covering it for cnbc. >> well, j.c. penney ceo had to put disastrous earnings behind him in order to take the stand today in the case where macy's is suing j.c. penney and marth stewart living. when johnson arrived today, he was in a good mood, telling us, he was wearing a j.c. penney tie and shirt from stafford. our producer caught up with johnson to ask about the trial and those earnings, no comment on both. back in court, macy's lawyers used many e-mails to try to show j.c. penney understood macy's contract with martha stewart living, but pursued an equity stake in the company anyway. in e-mail december 2011 johnson e-mailed dan walker, chief talent officer, saying, i'm chuckling, he, lundgren, now has to work again. walker reply. check, check, check mate. he really doesn't know what's happening to him. that's just an example how this case has gone beyond business and beyond two retailers fighting over martha stewart, but really two ceos competing to win. >> all right, courtney. thanks so much. it was the week that wasn't for j.c. penney. ron johnson testified in court as we heard. we'll have more on that story as it develops. is this the end of the story? j.c. penney shares were pummelled this week, over 20% after they posted disappointing earnings. is the worst behind? let's check in with brian, "options action" contributor. do the traders see the stock falling even lower? >> it's interesting bets here. we saw some short bets. one big trader sold 10,000 may 20 calls for a little over a buck. they were not buying puts and be aggressive. but certainly they're saying it won't trade above $21 over the next couple of months. ron johnson walked into the situation, wanted a new opportunity, something to motivate him in life. he left apple, thought the grass was greener on the other side. not only was it not green, it was burned brown. you read articles about the store being dishevelled. one store offering free wi-fi. that's what i want to do, spend my day in j.c. penney for free wi-fi. the stock is in trouble. i don't think it's in huge trouble where you short it here, but certainly i don't want to own this stock. the only thing i would touch is maybe if you could find a locate on some of the high-yield corporate bonds. that's where i would touch the stock. certainly it's a big mess, this stock, right here. >> thanks so much. we'll see you soon, brian. be sure to stay tuned for "options action" top of the hour. when we come back, my thoughts on standing tall when you get kicked to the curb. 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