Transcripts For CNBC Power Lunch 20130923 : vimarsana.com

CNBC Power Lunch September 23, 2013

Well bring you the latest on where things stand on that. And america loves apple again. Huge sales of the this weekend of the iphone 5s and the 5c. How did wall street get this one so wrong . The stock is up more than 4 since the september unveil of that product and up 8 in just the past week. Sue, meanwhile, is at the nyse and lets check in with here. Good to see you. Noticeably Stronger Security today because of the breaking news we start with from kenya. The kenyan army is attacking terrorists inside that nairobi mall. It has been three days since the initial attack on the crowded westgate shopping center. That mall right now is on fire. Eyewitnesses say it caught fire as the army tried to storm the building to kill or capture the remaining terrorists. The government says 62 people were killed in that attack by al shabaab, a group with ties to al qaeda. This is going to be video of what it looked like inside that mall saturday when the terrorists began that horrific rampage killing people store by store. You obviously just heard the gunfire at close range in the background. Still unclear how many hostages. The sti today because the u. N. Is meeting, the president going to be making a speech in the city, even the situation. Attacking what they call in the par lens a soft target. It is terrifying and your word horrifying. Back home, there is the countdown to the shutdown. There you see it, seven days, ten hours, 57 minutes 32 seconds the economys fate at stake, seven days to go. Will Congress Reach a deal to prevent a Government Shutdown . Our chief washington correspondent john harwood live at the white house. It doesnt sound like either side has softened one bit in their positions. Maybe we shouldnt expect it with seven days to go. No softening publicly and there are no real negotiations going on, but were in a little pause in the min new wet that plays out between the house and senate. The house passed their bill extending government funding on friday with a provision that would defund obama care. They know thats not going to become law. Now the senate has it and they have got to go through the procedural hurdles that the senate requires to accept the bill for debate and then accept it for a final vote. Both of those are subject to filibuster and ted cruz said hes going to do everything he can to try to drag it out. The if both of those are filibustered the motion to go to the bill and pass the bill, extend all the way with the maximum amount of time the senate would be voting next sunday to pass a government extension. It would land back at the house late sunday or monday, and so one week from today, the house would then have a decision if all goes according to what everyone expects, on whether or not Speaker Boehner will put on the floor and then the house will pass an extension of government funding to avoid a shutdown without the obama care provisions. As an aide to the speaker told me a couple minutes ago we have to wait for the senate to run out the string. John harwood, thank you very much from the north lawn at this hour. Defunding obama care is, as john pointed out, one of the central topics in the budget battle. What do average americans think about that prospect . Our senior economics reporter Steve Liesman here with the exclusive results of our cnbc all America Survey. What does america say . They say no to defunding, tyler. Our cnbc all America Survey, 800 around the country finds opposition to the defunding the new Health Care Law becomes very strong opposition if it means a Government Shutdown or debt default. Here are the numbers. First if you want to defund it, 44 say no, 38 say yes. Watch what happens when we ask people do you mean defund it even if theres a Government Shutdown, just 19 are left of that 38, whereas 15 go away and say not if it means the Government Shutdown. 18 a pretty High Percentage are unsure for major Public Policy question. Now what were going to do is show you what happens when we fold in those people that say dont do it if it means a Government Shutdown. The opposition grows quite a bit. 60 to 20, three to one right there. Three to one right there. 359s to 19 with 22 unsure. Now lets go back up to the top line and ask on the general question defund health care. Men kind of split. Women much more definitive. 47 to 33 no, do not defund health care. Do not defund the health care rule. Move on and show you the different political groups here. If youre a gop person that supports the tea party, 68 say defund, 65 say of the tea party moving to the independents, 40 and theres all adults there at 38 . We showed you that figure earlier. Whats interesting about this graphic the gop folks who are nontea Party Supporters are much closer to the democrats than they are to other people on the lefthand side of your screen who are gop tea Party Supporters right there. The regular gop all gop, is 51 . How about the difference between those nontea Party Supporters versus tea party, theyre closer to the democrats right there. One other thing i want to show you here is how that falloff happens there. You can see right here. 45 of tea Party Supporters say defund it even if it means shutdown. Go to the right and look at the democrats. You can see many, many more say dont shut it down, dont defund obama care. Thats what that shows you right there. So well have more of the exclusive results from our all America Survey thursday morning on squawk box. We gave you this early because of the news on friday. Lets talk about all the fed chatter out there. Mr. Dudley speaking. You have news on governor lockheart. President lockhart from atlanta says its hard to see hitting conditions for the october taper for a taper in the october meeting. The economy is unlikely to change much by that next fomc meeting that is next month, tyler. He worries about the impact of government budget battle on the economy and says the taper in september was a close call. Not to taper. October the next meeting. When is the one after that . December. Thats the last one of the year . Thats the last one of the year. Do it by then probably bernankes last meeting as well. Probably bernankes last meeting. Thank you very much. Sue, down to you. All right. Guys, do you hate to be being told to told off your cell phone, ipad, ereader, new rules nor devices on planes and phil lebeau is in chicago with the details. Hey, phil. Well probably get these new rules the proposal at least by the end of this month. The faa has an Advisory Panel looking at this issue for a number of months and theyre close to making some recommendations. Essentially what theyre doing is reviewing what the rules are in terms of use of electronics on planes, particularly takeoffs and landings. Thats the area where theres most of the problems and basically going to call for a relaxation on the restrictions. So what will be allowed most likely and what will still be banned when youre on the airplane in terms of electronics. Most likely whats going to be allowed, listening to ipads, ereaders, watching downloaded videos and podcasts. Thats probably going to be okay. In the future, if youre thinking about sending an email or a text or using wifi, taking off or landing thats likely to still be banned. The faa expects to maintain the ban on inflight calls from cell phone. Theres been discussion for some time, should Airlines Allow this . The faa will step in and say youre not going to be able to do that. The airlines are concerned about devices interfering with plane instruments. The bottom line is this, tyler and sue, we will see a relaxation here but youre still going to have some restrictions in terms of personal electronics, mainly i comes down to whether or not theres a signal out of that device. Thats what the airlines remain concerned about. Right. You know what, its progress. At least we willble able to use a few things. Profit estimates for the industry are being cut. Why . International air transport Association Says its likely going to see an 8 decrease in Global Airline profits this year. Two reasons, some weakness had in parts of asia, not china, but other parts of asia and slower demand for freight traffic. And thats been a bugaboo for the Aviation Industry for several years. It sure has. Phil, thanks so much. Appreciate it. Ty, up to you. All right. Apple a big stock to watch today. The tech giant knocking it out of the park with its weekend sales figures for its new iphones. Almost doubling estimates. Apple raising its revenue forecast. There you see the shares up almost 19 a share or 4 at 486. 33. Josh lipton in san jose with the numbers hi. Hey, tyler, apple announcing record sales, 9 million of its new devices accompanied by 200 million downloads of the ios 7 platform, its operating software, all good enough for apple to give us guidance. Investors can expect total Company Revenue for the fourth fiscal quarter to reach the highend of previously established guidance. 34 to 37 billion Gross Margins also near the high end to 36 to 37 . Two differences for this launch to keep in mind. One apple selling two devices, the 5s and 5c and china, the first time one of the launch countries. Many analysts surprised by these results. They were looking more for 5 to 6 million units. Rbc covers apple, two reasons he says, nobody thought the 5c would sell that well, not too different from the 5 or so the street thought. As for the 5s, there were real supply constraints here. No preorders. Analysts thought that would limit sales. The bottom line, they say, worries about the declining revenue and eps next year. They are off the table. Now the question, he says, just how much can they grow the bottom and the top. Apples broader strategy focusing on profitability rather than market share. Seems to be working at least for now. Tyler, back to you. Interesting story. Josh lipton, thank you. To dominic chu for a market flash. Some of the component suppliers for apple moving higher on the sales success of the apple 5c and 5c. Serious logic, skyworks all to the plus side. Back over to you. Do a littlep analyzing this and that. Jj burns is here. Welcome. Hes president and ceo of jj burns. How did you figure that out . President of jj burns and company and your name is jj burns. Thats thinking. You guys made me too popular here. Lets take a look at apple. You know, we have a downgrade on the stock, downgrading shares of apple to hold from buy. They cite valuation stating forecasts are still within guidance so where do you stand on apple on the back of those numbers that josh was describing . I do agree with them. We own apple and we would be certainly buyers of pullbacks but keep in mind that apple has a lot more penetration into the market. Theres less than 50 of the world that actually has smart foensz or handsets in general. Only like a 15 penetration apple has had. If youre a mobile carrier, you want to keep your apple stock on the shelves. The reason is, is because the apple type of product has a very sticky method of getting to its customers. On top of all that you got 11 times forward earnings multiple going forward. Youre not paying for much growth at all. Buying on a pullback here is likely a good investment. You do not quarrel with the downgrade to hold from buy . I dont. I dont. Apple has made quite a bit run here. I would not be selling my shares. I might not look to add to more of them. Unless theres a pullback . Exactly. Blackberry the other stock to watch in the handset market. Maybe even in technology. Sending out a warning to the world last week, Second Quarter earnings not looking so good. The company says its going to post about a billion dollar loss. That would not be good. It is planning to cut 40 of its work force and concentrate on the Enterprise Market saying byebye to consumers. Analysts upgrading the stock. Credit suisse raising its call to a hold. It cant rule out a takeout. The stock down nearly 20 on the news from last week. Jj where do you stand on this one . This is pretty much in a des pile from our perspective. The thing about blackberry youve got a large Shareholder Base but no one in corporate world is looking to add blackberries to the corporate marketing in technology. Thats number one. Number two, youve got more employees that are being let go and thirdly, analysts are now jumping on board with blackberry to determine the sum of its parts. Would it pay for us to sell some of its parts or could we take it private, et cetera. That might be a reason why Credit Suisse might be upgrading it. It could take a little bounce up. There you see 822. One wonders in a breakup, a takeout, what would it go for . Sure. Who knows, 10, maybe more, who knows. Not a place to speculate right now. Not for the longterm investors, the average guy watching our show. Well have you back in a little bit. Sounds good. Sue, down to you. We have other big tech stories were watching today as well. Microsoft unveiling a new surface tablet. Plus, believe it or not the nasdaq up 25 this year and then internet stocks have really surged. Should investors buy or bail . Then the ipo fever hitting the markets. Were on track for the busiest september since the year 2000. Cnbc reporters are all over these big stories. Well begin with seema in new york with microsofts latest tablet. Hi, seema. Microsoft targeting the consumer at home and business professional with the surface 2 tablets. The surface 2 which you can see here as well as the surface pro 2. First, access to Microsoft Office suit. Second the ability to run two applications at the same tomb. You can watch a lecture online and take notes with the companys integrated dual screen. Third is the accessory, the insertable keyboard that has access, that also acts as a battery cover. This is microsofts attempt to stay competitive in the tablet market which is dominated by apple and samsung, although with access to 200 gigs of Cloud Storage and fast micro Processor Microsoft is saying this is not just a tablet, its a mini laptop. Back to you. Thank you so much. Back out now to josh. The internet stocks have soared recently. Should investors buy or bail . Its been a great 2013 for internet stocks. Look at some of these moves. Facebook up 70 . Priceline has soared 60 . Yahoo has surged 50 . Now analysts chalk up the moves in part to q1, q2 results which were mostly positive. So which internet stocks are still buys . The team at specific crest did a deep dive, among their favorites, amazon, they say upside drivers include the growing mobile and digital ecosystem, faster delivery times. Ebay, they argue ecommerce shares continue to gain and priceline which they call the best position travel company. They talk about its focus on international and hotels. Stocks where they see risk, though, they would include facebook, yes a great q2, but they think valuation with will limit upsides and comps tougher in the second half and in 2014. Back to you. Thank you so much. To sheilas at the nasdaq with a look at whats been driving this ipo optimism. Hey there, sue. The ipo market is hot hot hot. In fact, year to date we have seen 140 Companies List their Companies Going public. That, in fact, beats all of 2012. Were on track to do about 200 ipos this year which would put us back to the 2007 predownturn level. Really big action in the public markets. For the why . Nick from Renaissance Capital says its a one, two, three punch. The market momentum and rally and companies and investors want to take advantage of it. The average ipo this year has returned 38 so beating the overall market. Investors want a piece of that action. Finally the jobs act out there. Helping it make it easier for companies to file. Here at the nasdaq we actually have 11 ipos that will price this week. Tyler, all eyes are on this one Company Called pattern energy. If you can believe it its one of the First Wind Energy companies to go public. So perhaps a new wave of ipos coming. Sheila, thanks very much. About a week away from the end of the Third Quarter and fears are growing about the health of bank earnings. Kayla toush has been looking at the numbers and can tell us more. Kayla. Tyler, analysts arent going to wait until the end of the quarter to start sounding the alarm. It becomes clear trading volumes plummeted and unsalvageable. July and august greater nothan normal activity. Spreads on existing bonds fell two and yields rising. Equity trading not hit as hard as expected to be down as well. Jpmorgan analysts say revenues will be down 10 as a result. Atlantic equities says it could be down as much as 20 and today it lowered its estimates for Goldman Sachs, Morgan Stanley and citigroup. They made a similar cut to Morgan Stanleys full year estimate last week. Analysts had been bracing for weakness at the banks where executives warned revenues will be far lower than last year at jpmorgan and wells fargo, lower by around 30 . Thats because Mortgage Origination has been grinding to a halt. Tyler, this onetwo punch for the banks, its not going to be pretty for bank earnings. A lot of investors are trying to get ahead of this and were seeing selling. Trading and mortgages. Exactly. Sue, down to you. Ty, the kenyan hostage crisis continuing a third day. Armed militants holding those hostages in nairobi. About 60 people have been killed and the militants are said belong to an Al Qaeda Linked group. Nbcs

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