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tv   Money Moves With Deirdre Bolton  Bloomberg  December 10, 2013 2:00pm-3:01pm EST

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they are doing a lot of preferred products and medical, moving into china. a lot of irons in the fire. george barrett, who runs it, is thoughtful as a ceo. >> a positive day for cardinal health. joiningu so much for us. on the markets again in 30. ♪ >> look up to money moves -- welcome to money moves. we show you what investors and entrepreneurs are doing as well is what is going on in hedge funds, private equity, real estate, and more. today, as cc capital is getting one step closer to its final form -- sac capital is getting one step closer to its final form. ceo. naming its next
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one former partner will be joining us. and one of the managing directors of a security startup is telling us where he is investing in big data, software, and early-stage ip. first up we are going to get you the to d.c., rewriting rules of wall street. regulators have improved the curve to stop banks from making huge risky bets. that could destabilize the financial system. peter cook is with me now. how will this new form changed the way business is done on wall about? >> we are talking the vocal rule, final adoption of that rule, ushering in an new era of oversight for wall street. it is already changing the way banks are doing business when it comes to trading. they have been fighting this proposal for three years. it was just approved in the last few minutes by federal regulators. the advanced proprietary trading for banks trading with their own money is the mixing their ability to invest in hedge funds
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and private equity funds. it is the push by regulators, particularly the cftc, to sanction the rules that will then -- that will hurt banks the most. banks must show that a hedge reduces or otherwise significantly mitigates one or more specifically identifiable risks. that means no more london whales. fromnks are prohibited entering into the speculative bets. they can hedge their legitimate business risks, but we cannot speculate. what the law and the rule requires now, which is different than it was two and half weeks ago, there has to be a correlation analysis. there has to be a correlation between the risk and the hedge. changesys without those he is not sure he would have backed the bob -- backed the final vocal rule. -- final vulgar rule. volkcer say -- final
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rule. skeptical onle that point. >> there are ways for the banks to work around this. there are actually some areas in the volcker rule word may be an improvement for the bank treated -- for the bank, particularly with the issue of market trading . that still previews the language in their trading of foreign debt. by and large, critics say it will hurt u.s. bank competitiveness and drive risk elsewhere. prohibited at banks and then all of a sudden people are going to go to new hampshire. you're kidding yourself. they're going to take the same risky test -- risky bets as hedge funds. the banks are not prohibited from having those sorts of operations and a more highly regulated environment.
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>> a big key, the rule will only be as tough as the regulators enforcing it. that is why washington may weigh some time before challenging this rule in court. it takes effect in july of 2015. >> peter, thank you very much. our chief washington correspondent peter cook. you are just hearing from peter, the fulcrum rule about limiting risks. -- the volt parole about limiting risks. about volcker rule limiting bets. su keenan is with me now with more on the story. this move gets sac closer to that family office status. >> absolutely the last month they agree to pay a record 1.8 billion dollar fine and exit the hedge fund rule -- hedge fund world, raising the needs for cash and removing this need for unit,ad, a reinsurance
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and it's may fund the reinsurance unit to access extra cash while providing the benefit of being offshore. the statement from the sac spokesman says the firm is now focusing on its transition to a family office. the sales price is estimated to and oneen $500 million billion dollars. >> what happens now? >> according to a financial statement the units now becomes a group led by the former ceo marshall maclennan. the deal will likely be completed later this month and another sign that sac is officially leaving. >> thank you very much, from all assets to more traditional ones, gm is promoting mary to succeed dan ackerson as chief executive she will be the first female ceo in the global auto industry. number car expert matt miller has spoken to her throughout the years. hints beingome dropped along the way. i know you sat down with her in the spring.
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did you get any inkling that she was -- >> i think a lot of people thought it was coming not only because dan ackerson at one point said, look, there are no car guys running general motors or the detroit automakers anymore but there will be a car gal running one of these companies someday soon viewed but also because she is the head of product. she is one of the most important executives. >> she has an impressive background there and she is clearly built her career there. if you're going to pick a hometown hero, a home-grown talent, she is it. >> especially after the obama administration gets done with you. it looks fantastic to have a female ceo. i think that is going to be the one thing people say tom a just because she is a woman. otherwise her resume is absolutely spotless. >> she is an electrical engineer, she went to stanford. fine, she is a woman -- it is
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everyone else involved thinks it is a home run as well. i'm not sure how people will feel about being passed over for the role. i asked her if the car show in new york what she thought about eating a woman and working with gm. listen to what she told me. >> i worked at general motors for 33 years. i've worked with ed ton of wonderful people -- with a ton of wonderful people. we work and we come together as a team. truck on the road or a car on the road as a team sport. i see myself as part of a team. if i could encourage young woman science andp on pursue technical careers -- i love doing that. general motors -- i think i have the best job on the field there, to be able to workaholics all day long. it is really a great thing. >> i want to bring in someone who has worked and worn many
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hats in the auto industry in detroit. -- also running chrysler tom, thank you for joining us by phone. let me ask you about your previous experience. what you think about the choice the choice? about >> she is just a fantastic executive. she has the background she has the engineering background, she is well-educated, and more importantly she is a great team player. this is a good news for general motors to pick her area she is best to pick her. i am really proud of her accomplishments. this is great news for her and really for the industry. >> i want to pick up on something that matt actually told me, which is one of her views is she is going to make management and the management team more streamlined. is that with the industry needs right now? >> yeah, there are still bureaucracy in any pinnie at any company. she is already looked at doing
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that based on how she is structuring the organization. is ake layers out and she great people person. get down to the rank and file where it all happens, she is a great operations executive and has surrounded herself with great financial people. gm has got a great team now. >> we are looking at her resume here, and she started working at the plant at 18. she got her mba at stanford. people think of her as a human resources person but she really just sort of got that role when she was running manufacturing and ran both for a while. then she was the first head of product development. tom, she was the perfect person in the perfect position to change general motors's culture when it needed it the most. right? >> absolutely. where you make or break a company is in product development. it is about cars and trucks. that, combined with a great
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sales forces where she is really going to work. internationally, gm is very solid in china. i don't think that is a big worry for her. europe is going to be a big pain in the neck for her to get that fixed. generally speaking, the united states has great product. i would hate to admit it working at chrysler, but i knew her and she's a great operations executive. general motors a somebody who knows cars and trucks and can bring it to the market. >> matt was also telling me, just as far as the way gm is going to be run, you are people need to approve new design. -- fewer people are needed to approve new design. this may make gm even stronger. >> you have to get rid of bureaucracy and gm is full of it still. people may not agree to that what you hear it on the street. i worked there and knew there were too many layers to make the call. she will separate that, she knows the great players for building a team. positioning to be an
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for 10 to 12 years. gm has had a revolving door at the top of the host. the organization doesn't really doesn't around the -- really rally around the revolving door people. i will bet throughout the plants and company this will be big news. there is a lot of applause going on. >> she has already done a great job with the product. no matter who you are, they have done a fantastic job putting out 18 new cars this year, 14 next year. musclehuge fan of the car, i love the dodge challenger. but when i asked mary about the new corvette and everybody was going on about the stingray, she said her favorite was the camaro . she is a car gal. >> she really is. she is a great person and great for gm. although the chrysler product, it is superior in some of these categories, you guys know that, right?
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[laughter] absolutely. >> as i said earlier, this is going to be great news for the industry. quite frankly, the fact she is a female is a super benefit. but she is also a great executive. person for thet job. thank you very much. joining us there, the former ceo of chrysler. and matt miller is right beside me. >> my pleasure. >> be sure to check a bloomberg television tonight because c suite caught up with the cadillac brand at the l.a. autoshow. it comes your way at 9:30 p.m. eastern and pacific. when we come back, we are going to tell you what high net worth individuals are doing with their money. , $5s a family office billion under asset management.
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sucks our next guest cofounded a family office several years ago. they have $5 billion in assets under management. with me now, paul, great to see you. x it is christmas in new york. >> that's right. -- >> it's christmas in new york. >> that's right. in the new year, what are your clients telling you? >> i'm feeling pretty good. it has been a good investment year. 100 25%.p up >> people are feeling good but they are cautiously optimistic. people are not overjoyed. as we look at numbers on asset allocation, we see people take money from fixed income. much of it is not going back into the market. a lot of it is going into cash. what the u.s. household net worth actually rose in the third quarter. in theory -- and i know you're
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dealing with high net worth individuals. in theory people should be feeling very good. you told me there are not the exact same levels of confidence you have seen in the past. >> definitely not. if you think about household net worth going to the highest ever recorded, people were feeling flush. our view is it is going to be a good christmas season but investors over main cautiously the >> what do they want when they call you. yield, preservation of capital, but specifically what are they saying. you need help me with this, you need to help me think about this? >> this year, especially with taxes, tax rates are up and you have that four percent surcharge, a lot of people are focused on taxes. they have had a good year and they want to harvest any tax losses. fortunately we haven't had a lot of those. they are very focused on tax planning and what to do going forward. our view has been we still like the market. but we still might present some of our exposure and hedge fund and other asset classes.
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>> what you make of the vulgar rule?- of the volcker >> our clients are not talking about it. i think this is a wall street phenomenon and the news media 20 carry it. probably, if history is our guide, they will over regulate and make some adjustments over time. but i think the concept of the full parole is good for the markets. >> you think -- of the volcker role promotes the markets. -- is good for the markets. >> you think it promotes stability? >> i think it makes it more stable and we have to make sure the banks and big financial institutions do not trade against clients. it is one thing to provide liquidity and another thing to trade against clients. perhaps before the regulation came and we had gotten too carried away. >> brinks were -- things were known to have done that. you mentioned hedge funds, more money going into there, where specifically do you see
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opportunities? >> as i said, i think certain hedge funds provide great risk opportunities. i have told you before, we like japan. it has been one of our biggest positions for the year and has turnout deceptively well. it is the third or fourth inning, early in the game. japan, after 12 years of difficult markets, we are in an interesting time. >> the hedge fund tree is up 50% this year. askedis a closed etf, change traded fund. -- exchange traded fund. ifis sort of a double dip you think the yen is going lower. >> great to see you. cofounder of constellation wealth advisors. we have a quick break to take. when we come back, tensions are flaring in the ukraine. the eu's foreign policy is how -- is trying to help the country
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addressed the political and financial crisis. we talk about the economic and global applications -- global implications. ♪
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>> demonstrators are active in the ukraine. -- richardnt falkenrath is the former white .ouse security advisor he is rentable at the chernoff group -- chernoff group. basically you have the ukraine favoring russia over the rest of its relationship with the eu. what is at the heart of the matter? >> it is a historically divided country. it is not the entire ukraine, it
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is the current president that represents the ethnically and linguistically russian portion of the country. the other half of the country is ethnically ukrainian. they are historically more oriented toward the west. is thes happened here democratically elected president has made a choice to favor his ties with russia instead of the european union, provoking these protests. >> what is the leverage over the ukraine right now? what factors are at play? >> vladimir putin has been very aggressive in potentially coercing the president of ukraine to do this. he has control over ukrainian trade and exports into russia, which is the single largest market. and then most importantly, ukrainian energy surprise -- energy supplies. he has the ability to unilaterally jack up the price
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of heating and electricity in the ukraine. >> this has been bubbling for a while. there were pipeline issues, there were even armed people were taking shots at people working near the pipeline, this has been brewing. >> it has only been an independent country for 20 years. since then there have been in norma's controversies over natural gas supplies, cost, and that. the gas was shut off into the ukraine. held that should this crisis gets? >> it can get pretty bad. it could end up defaulting on the foreign debt. the currency is under extreme pressure right now. eight --uld you tally could retaliate. the european union could increase pressure on russia.
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it could be an explosion of blood shed into the street. >> can anyone come in and just sort of smooth this over? player isongest russia. the united states is a by standard, that is a by standard -- united states is a bystander . has ansident, who electoral mandate, shows no sign of giving., as richard falkenrath joining me there, contribute in editor at the chernoff group. it is 26 minutes past the hour, that means it is time for bloomberg on the markets. i want to show you what is going on. you will see red on your screens there, you have the u.s. stocks dropping. this is on fed bets on mid budget talks.
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gm stocks going higher as the new gao -- as the new ceo announced more trade. ♪
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>> this is money moves, where we focus on innovative alternative investments. here are your bloomberg top headlines this hour. in johannesburg, leaders from around the world joined with south africans to mark the life of nelson mandela. the ceremony at the biggest soccer stadium was the first of three major public events this week. president obama was among those paying tribute. never see the life of nelson mandela again. let me say to the young people of africa and the young people
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around the world, you too can worth your own. >> and the first female ceo in the global automotive industry, she started her career as an intern more than 30 years ago on the factory floor. in charge of product development and quality in all of gm's cars and trucks for a little under two years. person is jet -- ackerson is retiring january 15 and changes at the top of lulu lemon. chip wilson is stepping down as chairman. the president of toms shoes will be the new ceo. we turn to private equity and venture cap. raised $2 billion across seven funds, focusing primarily on software, and tonight and business services.
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with me now is a managing director. tank you for joining us. -- thank you for joining us. i know your firm, trident, is focused on security. year?do you see the new where do you make investments? trident focuses on general technology. we are experts in four areas. applications and cloud- based applications. andtization of the internet solutions for the health care industry. been focusing in these areas for 10 years. >> what is changing the most? really shifting right now and those businesses that are going to make you money? >> we are seeing the enterprise
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very aggressively. and cost controls in the health care industry is also driving solutions. security remains a top issue of mine, particularly as we move to mobility. finally, as the world is moving to digital, there is continuous interest in how to monetize this , particularly through online advertising. thesenow trident has functions, equity growth -- that makes your company a little bit different. how you change the way you're making investing decisions? >> we go after companies that
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have little to no institutional capital. we are going 10 to 20% per year. we use our expertise in the four sectors before to improve that in the four sectors i'm -- in the four sectors i mentioned before to improve. >> i know normally you are in palo alto. how do you see the two coasts developing? calexico no longer be looking for opportunities. >> you cannot just stay with the good weather. >> that's right. there are 25,000 companies in north america within our area of focus.
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>> bright role are two of their portfolio companies. are they based anywhere that is in the ?iddle >> it is a new york based company. it is a big data company that is addressing the problem of analyzing data in order to help companies better understand their consumers and customers. it is a global company headquartered in san francisco. in order to improve the targeting of video advertising -- which is a big deal. >> what kind of growth? it is going to be exponential, right? in the case of online video, it is growing very fast. it is probably going to be in the $7 billion market in the next couple of years.
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portfolio of buddies are going in excess of 60%. xelade, withith e companies organizing their dated assets we are seeing significant growth. >> thank you for joining us. at tridentrector capital. speaking of israel, began trading on the nasdaq. company's cofounder and ceo spoke with our middle east editor. >> we take about 0.5% from the market. we can grow 160 times bigger.
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-- are youlocated to looking to get into other areas you go -- other areas? >> of mission is to take business and move it online. when we think about business online we think you should have a website, you should have a mobile site, you should have an the businessid application runs sufficiently online. we are adding new products for mobile app development. from tel aviv to the u.s., ups does the math with a new algorithm that is saving the world's largest package delivery service millions of dollars. we are actually going to take you to louisville next.
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>> this year, the world's biggest package shipping company, ups, introduced o'brien, a system that crunches data to save on driver posterity roots. that includes cost savings in the millions. ups has been working on the algorithm for a decade. take a look. o'brien, the algorithm that makes ups kick. >> algorithm is not a word you would expect here from a ups driver. -- or ryanchanging is changing package delivery. -- orion is changing package delivery. it is the program 10 years in the making. its objective is to find the fastest way to get packages to your doorstep. deliveries, there are more ways to serve those
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customers. orion is looking for trillions of things. it's going to run 200,000 different alternatives and say this is the best way to deliver. truck has 200 sensors that monitor everything drivers do from turning on your vehicle to unloading boxes. that goes into a mathematical equation that prioritizes a variable. >> our goal wasn't that we would dramatically grow efficiency by doubling and tripling. it was trying to take a look at some small gains. on our scale small turns out to be rather significant. efficienciese of -- starting with the company's first the livery car. 11 years later, they built the
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first conveyor built system for handling packages. -- conveyor belt system for handling packages. >> we're here because of orion. >> how is it a game changer? >> by the end of 2013, we are only going to have a portion of our fleets deployed and orion is going to save 1.5 million gallons of fuel. here's the new plan. >> when people think ups, they don't think technology. >> everybody uses google maps. google maps are not accurate enough for a ups driver. >> you are better than google maps? >> absolutely. we have a world-class i.t. group that many people do not know about that makes magic. >> our chief correspondent carol massar is at world port, the company's hub in louisville, to that louisville, kentucky.
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how widespread is all right in? louisville, kentucky. how widespread is orion? to be a gradual ramp up to 2017. orion makes a big step toward those businesses. you told me ups trucks have that monitor when they unload boxes, turn the admission, what else do they monitor? acceleration,t whether drivers are accelerating aggressively or not so much, fuel sensors, there is gps and these cars. they can track the starter motors.
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a lot of information gets put into a orion. it also saves the money -- save the company money. >> what is the return on investment? i heard your guests say it is better than google maps. >> they are pretty confident in terms of their technology. yearspent $1 billion per on technology. most of that money is looking at new technology and new ways of improving the system. it is hard to say. we will have to see over time what the payoff is. they would not make this investment him as were pretty confident about it. 2017,hey roll this out in if they could shave one mile off of each ailey route, you're talking about saving $50 million. each little fraction adds a lot here. pretty significant, back to you. >> our national correspondent
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carol massar and we take you inside ups. when we come back, matt miller's day two of the coin. -- day two of bitcoin. ♪
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>> it is day two on matt dider's 12 days of bitcoin yesterday he bought one bitcoin for $800 and today he is shopping. you have a christmas present for me right? >> i got a couple of things today. i have learned so much over the past couple of days about how bitcoin works, how much fun it actually is to use. there are, obviously, limitations. earth of all, not a lot of merchant's except bitcoin directly, yet.
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sort of holding land? >> there are different companies that help you, me, the consumer, the merchant. people are watching the transactions. yft,e is a company called g which has a lot of merchants where it has gift cards, like nike, footlocker, a lot of clothing stores. what i do is i go to gyft and i buy a dollar denominated value. i today i bought game -- today i bought one for gamestop so i can get ran theft auto v. that middle ground makes everybody feel better. >> there was a company and today we spoke with going base.
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they help the bigger companies do bitcoin transactions. if i want to buy a lamborghini or tesla, elon musk does not take on the currency risk of the bitcoin transaction. the dollars hem wants and they take as many they need from the consumer. you can buy a seat on virgin galactic with bitcoin. >> there are a lot of famous people that are really backing this via >> richard branson is very much into this. a seat on virgin galactic is $200,000, which is the equivalent of 200 bitcoins in change. you can buy big ticket because of the call -- big ticket because of this. >> there is a large group of people that are more than happy to have a virtual currency, especially people who hate the
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dollar. >> one of the best things bitcoin does is you can move large amounts of it in minutes with noational borders transaction costs. millions of dollars for a nickel. who doreat for people not want the government to know about the money they are moving around. it is also good for immigrant workers and for micro- transactions. i could give you three dollars and it costs me nothing. >> i guessed we are going to follow you next on a plane. matt miller joining me with his 12 days of it going. -- of bitcoin. howomorrow i will tell you it all works, how the transactions are secured, mind, everything like that. >> inc. you. -- thank you. a full update on the markets when we come back in two minutes. ♪
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>> tomorrow on money moves, following matt miller's 12 days of bitcoin, we are going to be speaking with the head of mit's tech review about the future of digital payment options. is almost 56 minutes past the hour, which means bloomberg television is on the market. julie hyman is with me now with more on trade. what are you seeing?
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we are seeing a little bit of a pullback after a two-day rally that took the s&p 500 once again to a record. the nasdaq is down 2/10 of one percent. something else going on, a sector report improves that approved the volcker rule. -- a sector report approves the volker rule. i want to bring in the vice president of the carrington home -- carrington holding company. have readow if you this 900 page thing at this point. >> the banks have been implementing the rule for two
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years. >> is there anything in here that is substantively different than what they're planning? >> not really, they're quibbling over a principal trade over hedging and things like that. it is not clear to me the regulators can tell the difference. is ity to your question is going to reduce the ways it can make money and reduce market liquidity. i think the volker rule sets us up for a really bad day. if you go back to june when chairman bernanke had his press conference and the bottom market had a couple of very volatile days, part of the reason for that is banks cannot employ capital for their own account. last example is the london whale. the folks that worked at jpmorgan were essentially market makers. preferred securities are gone. >> the london whale situation was made worse because of the crab? >> that is the only reason we know about it. i worked with several of those people. it butd not know about
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for jpmorgan's early implementation of the rule. kulaks i was talking with one credit trader who said some of the measures in the rule may actually increase inc. exposure to treasuries. can you walk me through that and whether you think that is going to be happening. hard to say exactly because no one really knows about hedging. if you look at the mortgage market, nation star, penny mac, they got annihilated. to the extent banks cannot hedge their book effectively, it is going to hurt them or could hurt them. >> at the same time, everybody's been preparing for this. if you look at bank earnings over the past year, yes they have been more muted. but isn't that part of the whole purpose of the thing? >> the volker rule is the wrong answer to the question.
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the problem was security fraud, the problem was off-balance- sheet vehicles. even if it wasn't the core of the last -- isn't it a point to decrease? >> i can tell you might believe, i don't think the chairman knows either. i don't think he knows what this does and i don't think the regulators do. >> i guess we are going to find out. good to talk to you. thank you so much for coming in. street smart is up next.
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like so much for a record here. stocks falling as the finer -- final rule for years. welcome to the most important hour of the session. 69 minutes to go until the closing -- 59 minutes until the close of trading. pretty significant. three years in the making and finally has happened. >> some clarity. about iting to talk certainly in the show. there are some aspects more stringent and somewhere they loosen up a little bit. >> going right to the big excerpt.


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