Transcripts For CNBC Closing Bell With Maria Bartiromo 20130

CNBC Closing Bell With Maria Bartiromo January 25, 2013

Is it significant to this market . I think it is. It is very interesting the overall reaction to the market, the leading stock over the last couple years, apple, down significantly and the overall market is continuing to go higher. I think thats the interesting topic we should be looking at. Well talk again soon. Thank you. My pleasure. A few seconds left. More now on the second hour of the closing bell. Stocks rallying again. The dow less than 2 away from its all time high. Welcome back to the closing bell everybody and happy friday as well. Im mandy drury coming back to the table. Well also be hearing from maria in davos, switzerland. In the meantime lets look at how we finished the day that was here on the street with the dow up by 68 points, the nasdaq up, i think today about the best day in weeks up by about 19 points and the s p 500 finishing up above 1500 and a gain of 8 points. Wrap up this week in the markets. Back with us once again joe tennie from jp morgan funds. Mark travis from Intrepid Capital funds. Joe, you were with us last hour. Youre constructive on this market. You want to see it moving higher but maybe were getting a little ahead of ourselves. Joe is not ready yet. Eric marshall are you finding value in this market . The hodges funds are big value players. Are you finding value even as we sit here at fiveyear highs for all of these major averages . Right. I mean, even though weve seen a big move in the market we wouldnt expect, wouldnt be surprised to see some volatility around earnings season, which at the hodges funds we think we can take advantage of as active investors. But, you know, right now youre looking at 15 times earnings for the s p 500. You take the inverse of that and look at it as a 6. 5 to 7 earnings yield. Thats very attractive relative to bonds and the other investment alternatives out there. You still see value. Yeah. I think you have to really focus on individual stock selection. And we really see an environment here where its really going to be a golden age for individual like which ones . Stock selection and active managers. Pin it down. Give us some names. Okay. Well, we like the theme of oil by rail. Trinity industries which makes cars that move rail. We like a derivative of the housing recovery briggs stratton. We also like names where there is kind of secular Growth Opportunities and we see a Shoe Carnival as a small retailer regardless of what happens with the consumer we think they can really grow their store base and do it all organically. Got it. Shoes on a ship . Shoe carnival. Marc travis does the dow get back to the record high in the next week or next week or two and then what happens . You know, i would hesitate to annualize up 6 for january. You know, im like eric. Im searching for Equity Securities where there is a discount between price and value. I would differ a little bit with eric in the small cap space. If you look at the russel 2000 it trades at 16 times operating income. The inverse of that is 6. 25, which to me the russel, about 25 of the russel index makes no money and a lot of people feel like junk bonds where we also have some exposure are richly priced with a six handle or slightly below that. Yeah. So i dont think that is a giveaway. An environment where we at Intrepid Capital want to put money to work at six to eight times operating income. Okay. There are some opportunities out there. Just not prolific. Okay. I really think that, you know, im hoping the politicians will give us an opportunity to put some of our cash to work over the rest of the quarter. All right. I dont expect it to go up 72 for the year as weve done at the rate were going. Right. Waiting for politicians before he invests. We relocated joe. Got lost in the caverns of cnbc studios here in new jersey. Walking out the wrong way. We finished on the highs of the day. This market just keeps moving on here. Well take it. Youre just going with the trend here. I think there is a fundamental reason behind the trend. Everyone is talking about earnings now. Earnings just kind of slowing down. I tell you what. If you take a look at this quarters earnings season youre still looking at 5 or 6 earnings growth. I think that is in line with what well see over the next year. Some of the gains false though . When you think about how much the expectations have been ratcheted down for this particular earnings season right, therefore when you get a beat, is that just a beat off a really low base or a really low expectation . I think it is a little bit of both. You are absolutely right. Expectations have been coming down. I tell you what. I think the negative guidance were seeing from a bunch of companies is actually healthy because if i look at expectations into the end of the year, you know, consensus estimates still look for double digit earnings growth. I think its out of whack. Youre only looking at 5 or 6 . Guess what . Sustainable, low growth and earnings along with more clarity around all after the issues and risks weve had to deal with over the past year. I think the upside is going to be multiple expansion. Weve been watching carefully this the tape between exxon mobil and apple. Two very Different Industries but two companies that have at times in the past been hallmarks or bellwethers for the stock, the overall u. S. Stock market and the economy. And theyre converging right now. Eric marshall, at 417 billion dollars in market cap on both of these companies, who do you see is having the best value opportunity right now . Exxon mobil or apple . I would be hesitant. Theyre both very two very different companies. I would use two different methodologies to value them. I can tell you at the hodges funds we believe that the future, any stock price is really just a function, a future earnings and cash flow. Those are the things that we would be focused on. When you look at apples valuation coming down here you really have to dissect and look at what are they going to earn over the next few years, what type of cash flow are they going to generate for the shareholders . And if you think that that is a good value at this price, it certainly is a lot easier to make an argument than it was when the stock was at 600 or 700. Do you like it . Need to be focused on. Really do you like it . Sounds like you do. Well, you know, were focused in our small cap fund. We dont own apple. We own cirrus logic which is a supplier to apple. That stock is beaten up as well. Right. The company is generating 15 20 cash flow yield. Has a great Balance Sheet. We think there is opportunity around the sell off at apple. You want to weigh in . Exxon mobil or apple . I think it reminds me back of the argument with the horseman in the late 90s when everybody had to own cisco, nortel and whatever else was in the top end of the nasdaq. Apple is in a very difficult space historically Technology Changes rapidly and quickly. Theyve lost steve jobs. You know, i think once you get to a certain point there are no buyers at the margin when youre as big a percentage in the market as apple. Would you rather own xon at this point . I think with the changes in india and china in terms of Oil Consumption ill put my bet with exxon on this one. Okay. All right. Very good. I dont own it. It is too big a company for us in Intrepid Capital but that is where i would bet. Not exactly the small world. Thank you, gentlemen. Have a good weekend. Appreciate your insight. Thanks for joining us. Thanks for having me. Glad you found your way back. So the dow is ontrack for the best january since 1994. It has lost ground in only four sessions this month so far. Indeed. Weve got the weeks winners and losers. Positive Economic Data and earnings fuel the nasdaq and the dow excuse me the dow and s p 500 to new highs. Lets talk about the individual movers. First proctor and gamble the big winner the profit beat street consensus thanks to higher cost and new products it added to its portfolio. In health care as a sector it was a better performing sector for the week. J j topping the list. Growing optimism around a potential sale or spinoff of the multi billion dollar diagnostics business has been getting the street excited. That is why the stock ended higher. Active stocks on the s p 500, netflix staging an extended twoday rally after posting an unexpected profit. On the losing side hasbro getting hurt after announcing a 10 cut to its work force due to weaker demand from the holiday season. And now to tech. The story of the week at least here at the nasdaq. Apple getting sliced. Keep in mind the average large Growth Mutual Fund has about 7 of its assets in apple shares. That according to morning star. A lot of people are watching the stock. Apple has lost 246 billion in market cap since its september high but nonetheless the nasdaq was able to eek out a gain for the week. Online travel players actually helped lift the index. Piper jaffary highlighting pricelines dominant position in the Online Travel space specifically in emerging markets. So that positive commentary helped priceline, expedia, and trip adviser and higher for the week. What a week. Back to you. Indeed. Thank you so much. Enjoy your weekend. In the meantime the yearn to earn. More than a fifth of the s p 500 Companies Post their results next week. Wow. A really big week. Our panel of market pros preview what could move your money big time on the other side of the break. Apple falling off a cliff this week again hitting a 52week low losing its distinction as the worlds most valuable stock. Is it broken . Stick around for our heated bull bear debate on apple. And speaking of heated this is not an honest guy. This is not a guy who keeps his word. This is a guy who takes advantage of little people. The quintessential example that, you know, on wall street if you want a friend get a dog. Well, goodness me. A very lively battle to put it mildly between activist investors bill ackman and carl icahn right here on this network just a few hours ago. Find out what all the fuss was about and also tweet us by the way who you thought won the fight. Our twitter handle is at cnbc closing bell. Mandy cnbc. What are you these days . I am bill griffith. Just bill griffith. Speaking of very rich people, bill gates, maria caught up with him in davos. She was not pulling any punches. Microsoft has not had an easy time recently. Would you ever return to the ceo office . With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. More than 100 s p 500 Companies Report their Quarterly Earnings next week. Brian shactman has been covering a whole pile of them. Just give us the highlight. Not going to make you do all 100. There are so many. I almost dont know where to start. Ill go on monday with caterpillar. Pretty big deal. Dealer stats released today show a little weakness. So well see how they do in earnings vs. Estimates. After the close might get more attention when yahoo reports. People want to analyze marisa mayers turnaround the stock under performing this month but up 28 in the last six months. Tuesdays interesting because dow component pfizer will be somewhat over shadowed. We get numbers from ford. Big deal. And amazon with the latter the revenue number to watch is 22 billion. Are they still investing heavily . Interestingly enough the street average price target for amazon is 293. Only about ten bucks or so up from where they are now. On wednesday a lot of focus on boeing. Many dreamliner problems post date the quarter but it will still garner attention. The other is facebook of course. The stock is up 20 this month and now in striking distance of its ipo price. Thursday, a lot of volume. Not quite the names of the previous three days. U. P. S. In a lot of ways is the key over here. Its a nice proxy on growth. The stock is up 12 this month. It yields about 3 . Friday we close out the week with two oil giants, shevron and once again bill mentioned this a few moments ago exxon now has the most valuable company in the world moniker. We also see tyson as another one to point to, guys, because it is good insight into the health of the consumer depending on what tyson products. Right. Delicious. Okay. As Earnings Seasons shifts into overdrive what can we expect and what will it mean for the markets as well . Lets look ahead with our guests. Good to see you both. Nick, what are you expecting out of next weeks earnings and will it help or hurt a market that feels like it wants to go even higher here . I think it is going to be a little more of the same where we see Companies Beat the lowered expectations. And then after they report cutting guidance. The good news is though the rate at which theyre cutting the guidance is becoming less severe. Thats been a good thing and one thing moving the markets higher. So, matt, what do you think are some of the names that could potentially move the markets significantly next week . Mandy, my eyes will be on caterpillar first off on monday. That is a Cyclical Company that people, if caterpillar beats, which i dont think it will, they could use it as fuel for thought that the economy is strengthening that theyve surpassed issues of weather and sandy and if it has good numbers i think people will use that as a catalyst to propel the market higher. Okay. Nick, who are you watching . Take your pick. Any particular category, any particular stock next week . There is plenty to choose from. Absolutely. Theres been a wide range of companies and industries reporting next week. So far weve had 147 companies in the s p report. A lot of them this week have been the Financial Sector so domestically focused. Right. Next week well have the materials, energy, and industrial sectors and caterpillar one of those to see, really look and see if well see in the data what Global Growth is doing if there is a pickup. Were seeing it in the global pmis pick up. We want to hear from the companies as well. That can be a real dermer if the market rally will continue. Apart from caterpillar what sectors or names have the potential to disappoint the market . I think yahoo has the potential to disappoint. I think facebook has the potential to dispoint. I think a lot of the store names out there that have paltry earnings that are propelled higher on hope this far so far have the potential for profit taking. When you look at the market at this time since Second Quarter of 09 youve seen roughly 74 of the names at this time report on a positive. Right now its only 69 so youre seeing some names come out with strong numbers. But the market as in the case with apple or citigroup or b. A. C. Is really punishing the losers. If you see some people out there who are going to get beat up itll be some of the low quality names. Some of the Higher Quality names as you see today with Procter Gamble if they out perform the market will reward them. I look to take profits on some of the lower quality names. One of the leaders in this group, in the stock market in this rally, the transportation stocks, which a lot of people take a lot of comfort from, transportation usually is a leading indicator. As long as youre moving stuff from point a to point b, that is a good indicator the economy is improving. U. P. S. , the autos, some of the key transportation stocks reporting next week. You have High Expectations for those . The market does. The expectations, we could say theyre lowered expectations. The guidance is going to be the key. The other key here, too, is the delta. So while 69 of the companies are beating this corridor the historical average around 74 if we take the same 147 companies on the clock right now with 69 beating, only 57 of them beat last quarter. More importantly here i think this is a real key. Last quarter the 147 companies, only 45 topped the sales expectation. This quarter its 70 . So relative to expectations sales of earnings have been much better this quarter and that rate of change upwards is a reason to be positive. Were on the topic of transportation and obviously part of the reason were seeing such a stellar rally in the dow transport is the airlines. Boeing obviously in the news for other reasons recently but it does report on wednesday. Its problems wont show up obviously in the quarter they reported. Nonetheless what do you think they might say if anything about all of the recent problems and the ongoing investigations . You know, that is going to be a key question. Might need a lawyer to answer that one. Its going to be tough for the guidance in terms of boeing. When you talk airlines it is a one company issuing the s p 500 and that is Southwest Airlines and the revisions upwards have been positive there. Thats been a key driver for the airlines doing well. All right. Gentlemen, time go ahead. I think the transportation a lot of the growth if you look at the rails is inflationary. Youre seeing the theyre able to increase pressures or pricing and i think that shows that inflation is real even though statistically the government doesnt tell you there it is coming back and youre seeing that reflected in earnings. I think i would look at u. P. S. To see what they come up with. My concern is how they handle the fuel costish yew. Theyve been tempering expectations recently for sure. Trading places in just four months. Research in motion zooming to a 52week high from an alltime low just in september. Meanwhile, as we all know, apple dropping to that 52week low from a recent record high. Next week it is all about the blackberry 10. What will that do to the stock . Will blackberry be cooler than iphones . That is all coming up. Stay with us. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Humans sometimes life trips us up. And sometimes we

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