This year last year hewlettpackard was the worst performer. This year a best buy . Until it left the dow it was the best performer. We see the springboard and some names is what people might be able to do with those in 2014. Were get a realtime check on the consumer during this Holiday Season. William lauder will join us chairman of estee lauder. That stock has done very well this year. Did you see this amazing moment in ukraine . Historic toppling of the statue of vladimir lenin. Its more than just a youtube moment. It could mean a lot more for anyone who owns emerging market funds, for example. Michele Caruso Cabrera will join us to describe the implications. Lets get a quick check of markets. Starting off pretty quiet. The dow is adding 16 points. A couple points higher on the nasdaq. On s p 500 perhaps more significantly, bill are simply the levels were looking at. 16,000 plus on the dow. 4,067 on s p. Lets talk about todays Market Action in our Closing Bell Exchange with jem ma godfrey, we have anthony chan from chase,on n onon john naplatano and gem you tweeted, the headline allocation. Were starting to see rally fatigue. We think that will support the rally. Good news is good news and bad news is good news. The fed is likely to remain supportive. This rally fatigue means people are reallocating away from growth into value. The biggest beneficiaries of this could be lets say, european equities over u. S. Equities where valuations are looking tight. And opportunities within the Financial Sector and also risks there so you have to be selective. Well get to that in a second. On this point about how expensive some value names are, how do you call it value if were paying these multiples . Do you expect that to continue . John . Yes, sir. Hi bill. How are you doing . Im doing okay, thank you. Good to see you. To kellys question. Yeah. We feel growth is a little cheap compared to value. We do think theres going to be there could be an issue with the valuations or value stocks, per se. The terms of allocation, what are you saying to clients . They should still is there a compelling reason to be long those names . Or are you saying you want to look at more cyclicals, cheaper growth names, if you want to use that terminology . Yeah we do want to look at some cheaper growth names right now. We are concerned about a little euphoric feel and maybe a little overbought situation out there. Were thinking correction time could be near. Anthony chan our resident economist here. The rally after friday is the market preparing itself for tapering or i mean whats the message . What do you think the feds thinking right now . What the fed is thinking is Financial Markets are getting better. The real reason why the Financial Markets were so scared of a tapering of several months ago and certainly midyear because they werent sure if this fragile economy had any legs. Now were seeing those legs. One thing i was really encouraged by was the slight increase in Labor Force Participation rate. You can see that across a lot of hcohorts. The only one that went down was initial one 16 to 25. Other than that the other cohorts they were rising. That sort of increase lakreescrease legitimizes increase. And people retiring who might have stayed in the labor force during the recession. Things look like better. Theyre retiring. The unemployment being where it is may stay down there despite the upward pressure may not be as high as some thought. Haum more months before we hit 6. 5 on the Unemployment Rate . I have believed for a long time well see 6. 5 Unemployment Rate by the fourth quarter. Keep in mind, even with todays Federal Reserve flow of funds data showing another record increase in Household Network worth. A lot of people that lost money in the financial crisis they got it back and are even ahead of the game and theyre feeling more comfortable. This they want to retire theyre retire. Youll have that cohort retiring because they can retire as opposed to working because they have no other choice. Rick santelli, is 3 on the tenyear yield inevitable this month . Especially as we get closer to the fed meeting. My answer is yes. Theres a possibility i could be wrong. Its all about timing. I think well not only cross it but slice through it a bit. Today there wasnt much going on. I found it interesting that 10s and 30s are unchanged. Some wiggle with the yield curve. Big story is the weakness you see on the dollar index. Thats year to date chart. As far as the taper and stocks and all our guests saying you know the economy is improving, hence, stocks deserve to be where theyre at, of course the economys improving. But the issue isnt that stocks should go up when theres an improving economy. We know that. The issue is have they overimimproved based on what the fed is doing . Illi i will continue to say the market is looking for more growth in buybacks. All this easy money created a dynamic where the supplies of stocks is more important than the fundamentals. The real yik issue will be once the taper is there for all to see, what are stocks going to do . I can tell you what Interest Rates are going to do. Stocks are the question. Its a great point on buybacks. I want to push back on something. It comes out of japan today. Its this notion that a lot of the japanese are looking at u. S. Debt here and saying i can get a great yield but i cant get it home where real yields are negative. Im going to pile into the long end because there isnt Inflationary Pressure in the u. S. For now. Why is it some of these forecasts from a minutes beneficiaricy, the u. S. Tenyear will be at 2. 4 next year, what have they got wrong . Japanese got everything late. The line from greenspan, irrational exuberance. That was in 9 6. He said its been ten years since anythings gone right for them. That was in 96. Look at the dollar yen the euro yen, the pound yen and the tenyear and what its starting to do move up a bit. I think theres a lot of danger with the outcome of abenomics. He says he thinks the economic recovery is sustainable in your region. Were here with a strong jobs report. Are we looking at stronger economy and is that the time to start selling stocks here . Are we going to sell on the news, do you think . Actually, the biggest divergence were seeing is this talk about winding down support in the u. S. Whereas they are starting to come out rumors that in europe theyre considering Additional Support, additional lending schemes for banks. That shows a sharp contrast. Its not necessarily growth is substantially picking up because its so weak in the european area but its more a case if you have Additional Support will that boost sentiment. From ricks point about sentiment overshadowing fundamentals sometimes this could provide another boost Going Forward to stocks in different equity names, especially as i said in the Financial Sector when actually the economy itself has significant potholes they need to overcome. An important reminder whatever the fed might not be doing, perhaps the European Central bank picks up stimulus from here. Well see. Thank you. Thank you for staying late gemma, as always. 50 minutes left in the trading session here. Really the bias is a wash at this point, according to art cashin. The dow is up 15 points, adding onto that monster rally whoa saw on friday. Last week the theme was selloff into the close. Today we seem to be sitting around the levels where weve been all day. Coming up next well take the pulse of the consumer this Holiday Shopping season. Well speak to estee lauder chairman, william lauder. Well introduce to you a conservative republican businessman who wants to raise californias minimum wage to 12 an hour and he says it would save taxpayers money in the process. Hell explain his reasoning coming up. And will this years dogs of the dow be the darlings of your portfolio in 2014 . It has been a winning trend over the last couple of years. So stick around to see if it will work out this time. What are the names to avoid for next year as well . Coming your way. I want to spread a little love this year [ male announcer ] this december, experience the gift of unsurpassed craftsmanship at the lexus december to remember sales event. Some of the best offers of the year. This is the pursuit of perfection. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. As markets try to build on fridays big gain dominic chu has stocks making big moves today. The deal news of the day. Cisco, the food company, announcing its merging with u. S. Foods in a deal worth 3. 5 billion, sent shares of cisco soaring and still up 7 on this news. Given imaging is spiking more than 26 after kavidian said its buying it. They make pills that take photo inside your body. Another stock popping, twitter, up more than 9 session highs. Some investors are expressing optimism about the new tools for advertising and advertisers. One other stock showing healthy momentum going into the Holiday Season is estee lauder. This is the sometime of year when consumers flock to cosmetic counters for holiday gifts. Will all of that holiday traffic translate into profits for the perfume producer . Back to you. We are just two weeks and two days away from christmas. Kelly and i have not begun shopping yet. After a somewhat disappointing black friday for retailers, were wondering what companies have done to try and drive sales in what is a very competitive shopping season. Lets check in on the consumer with william lauder. Thank you. People want to know how is it cosmetics are doing so well, whether its you, rivals. Do you look at it as a cycle or a sign that the consumer is in a better position than 2008 . I would like to say the consumer is in a better position than 2008 but thats a relatively low standard. Its a very approachable indulgent luxury for yourself. The consumer shopping, one for mom, one for me. One for dad, one for me. The price point is easy and we can afford that and we try to make it easy for her because of the price points we offer, the service we offer, the convenience we offer. All those make it very easy for her. And the benefit of a brand as well, obviously. Your grandmothers name just jumps out at people when they see that on a counter. Do you try to leverage that . I hear so often a company like yours will want to be a, quote, lifestyle brand beyond just cosmetics, to use that brand to further the consumer. Estee lauder a family of 30 brands. One of the most well known is estee but donna karan, mac, bobby brown, clinique. The consumer likes to buy multiple brands. Im sure kelly has a whole drawer, and your wife, too, a whole drawer of products shes partially used and try again. We try to use the credibility of our brands to bring consumers to the counter. We show you what she thinks she wants but those things she didnt knew she wanted. We try to make sure were prepared for her desire to buy gifts, for others and perhaps for herself. As we get closer and closer to the Christmas Period the consumer gets a little more desperate, a little more anxious. What have you got . We make sure we have prepared gifts as well as wrapping things for them right then and there. The first point about price points because this reveals whats happening in this country more broadly. Pp when i think of cosmetics, its mac cosmetics. To me, if youre spending 30 on a lipstick or blush or single items, that adds up quickly to the hundreds of dollars. Sad but true. Its affordable to say, a pair of 500 shoes but it does still mean your Customer Base and this may explain why your sales are so strong is, frankly a higher income customer. Youre right. Weve seen a trend over the last few years, since 2008 of a movement from the consumer en masse to class. Shes moving from blister pack pegboard master brand shopping in other venues and moving into retail environments like macys like nordstrom, because one of the values we offer her is service. The Service Aspect is very important because the absolute value price differential between the top end of mass pricing and the opening end of prestige is not very much. Research weve be done shows, for example, we reduced consumers concern about a choice when i think about service, i think about people jumping in your face and waving perfume at the counter. You used mac, for example. Makeup artist show you the right techniques. In the store. At the store. Macys at estee will help you find the right shades for your skin and help match it for you. When you realize, that Service Aspect helps confirm for the consumer shes made the right choice the expert has helped her make the right choice for herself or someone else and that Value Proposition is worth something to her because shes confident and she doesnt have to do it again. And you have a great relationship with a lot of makeup artists at a time when the proliferation of content means demand for makeup is going to be pretty strong. Absolutely. We see great demand for our makeup, skin care makeup, and fragrance. This year is heavier for fragrance, traditionally but during the rest of the year makeup and skin care make up a bigger percentage of it. People want to look good, feel good and smell good. I may wear makeup but i know nothing about it so i leave that to her. But im focused on brand. How does it translate overseas . Is it american aspirational for a company like yours that people are drawn to or can you tailor a name like yours to focus on the asian mind set or european mind set at the same time . Im glad you asked that question. A lot of what we do is we think local, act global. So by giving the consumer especially in asia, a global brand, aspirational products relevant for her needs, relevant to her, especially in asia where the consumer is very particular about what she wants and we found that our one of the big engines for our growth over the last few years has been our focus on that asian consumer predominantly in skin care giving her what she wants. Surprising her for what she didnt know she wants 37 making sure its tailored to her needs. Then shes shopping for that same brand around the world. And the halo effect is she sees the brand at home but while shes traveling and theres ever more traveling asian consumers, as she travels, she buys. And then one other important factor. The average western consumer american and western european uses an average of five or six products in the morning and the evening for her beauty routine. The average asian consumer uses 12. Really . Wow. So i guess youre hoping that does converge. Very quickly, how is the consumer doing . Lets focus on the u. S. Because thats where we are. The evidence of what we see, she seems to be doing pretty well. The numbers seem to be holding up. You know, theres a lot of confusion because six fewer days shopping days between thanksgiving and christmas. All the numbers we hear from Retail Partners seem to be pretty good. And the transactions are pretty much falling in line with what we expect. A little bumpy ngs because of weather, whatnot. No one is saying this is the best or no one is saying gee, are we concerned. Twoplus weeks to go. Its early. We havent started shopping yet ourselves. I wait until christmas eve. Shop early and shop often. Thank you very much. Appreciate it. One more check of markets before we take a short break. Dow is adding 15 points. S p 500, the nasdaq are also up by a couple. Twitter is one to keep an eye on as that flirts with the 50 mark. Up 10 . Big move. Stocks generally building on fridays momentum from that huge rally. When we come back our buddy vanguard founder jack bogle will tell us how much more room he feels this market can rally. Did you know jacks own son prefers active investing compared to index investing, which his father pretty much invented . Great story. They also may be making investors howl this year but next year we have names of underperforming s p 500 and dow stocks that could be heading out of the dog house and into the Winners Circle next year. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back with the perfect vehicle thats just right for you, no matter which list youre on. 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