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tv   In the Loop With Betty Liu  Bloomberg  March 16, 2015 8:00am-10:01am EDT

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the opening bell. we have a great show to start you off this week. did you know that the debt limit goes into effect again? that means we have to find a way to run the government or else we run out of money. former director david stockton jointly on a big week and washington for the budget. why is small better again in housing? taylor richardsons explains the whole ratio effect. tomorrow, we have housing starts and homebuilders begin to release their earnings on thursday. a big week in housing. if you are a big old bug, have you thrown in the towel yet? bay riddle says give up already. gold is going to continue to lose out to stocks. get out of the yellow stuff. first, here's a look at our top stories is morning. john kerry says it is iron a good deal or no deal with talks with iran. the secretary of state hence
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that the u.s. will walk away from the table. use in switzerland with negotiations with iran's foreign minister. there talks about iran building a nuclear weapon. senator kerry reiterated criticisms of senators who sent the letter to iran last week. >> this letter was directly catalytic to interfere with these negotiations. it inserts itself directly to the leader of a another country, saying do not negotiate with these guys because we are going to change this. betty: the deadline for reaching a deal is at the end of this month. vladimir putin makes his first public appearance in 11 days. he is alive. the russian president emerged today in a talk with st. petersburg with his counterpart. his absence sparked speculation about his health. it was his longest disappearance from public view and more than two years.
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one new service quotes couldn't saying as "it would be boring without gossip." the man accused of shooting police officers in ferguson missouri, says he was not targeting them. the 20-year-old suspect says he was aiming at someone else during the dispute. the officers were rounded during a protest last week. and prosecutor says that police are not sure they believed the man story. if you blinked, you missed the oil's rout. the price of oil dropped 10% this week. it is starting this week the exact same way. west texas intermediate traded a barrel before rebounding slightly. the nations storage capacity may be to blame. the dollar peaked against the euro last week. will kentucky go all the way or will they break hearts? the unbeaten wildcats are favored in the upcoming ncaa
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basketball tournament. the other top seeds are due, wisconsin, and villanova. the last two teams that entered the tournament undefeated -- they all lost. those are your top headlines this morning. now to some breaking news right now. valiant agrees to a deal. there joy now with the latest on this. the increased bill got this done. guest: it looks that way. they have been negotiating very hard all we can. it is up to $173 a share now. it looks like sailing has agreed to this. they entered the fray with a cashbox it. this is going to force them to explore whether or not that could be true. valium. a stops out and saying they're going to go hard after this. betty: is this the end of the game? guest: they could try to
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increase again. i suspect that this number will be quite hard to do that especially during the mine that is an all cash deal. betty: that a pretty lucrative good what happens next? guest: assuming that salix accepts this and they do not come with a counter bid, i seal -- i see this deal going through. it is all caps. it will close very quickly. valiant is in the most place to get this done. barring another approach, i think this is it. betty: barring then coming back and saying they are going to bid higher. you mentioned the gastrointestinal drug. what does valiant get out of salix? guest: it is really an area of the market that they are not in at the moment. they want -- salix is kind of a
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leader in this phase field by buying them, they get full exposure in the area. the of arty got a huge amount of synergy. -- they have already got a huge amount of synergy. getting this deal done, they get salix and they come out well from it. betty: thank you so much. breaking news about valeant merging with salix. staying in pharmaceuticals, a new drug and a generous pseudo-calls showing signs that they can reduce heart competitions by half. the drugs both cut cholesterol levels by more than 60% in studies published yesterday in the new england journal of medicine. this is big news because i majority of this country suffers from heart issues. olivia sterns has been following this story and joins us now with more. how much of a game changer are these drugs? olivia: it is a big
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deal. and is a whole new class of drugs to treat heart disease which is the number one killer of americans. another majority of americans are on a step in right now. we're talking about a new drug to replace that. obviously, that could be the next couple hundred billion dollars. the judge were better. there's less rights. -- less risk. the study come out from the new england journal of science. these are from an aa studies and they were funded by the issue is whether or not they can re-create the enormous success that lipitor has had. a few reasons they might not -- there are a lot of portions. they are teaming up together on this drug. they're going to be the first to market, it looks like in july assuming they get the green light from the fda. pfizer has a drug. it is unlikely that anybody has
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the lean time that limit tour -- lipitor have. obviously, is going to make a lot of money. betty: how much? olivia: we just all the price forecast for it depends on what the indications are. the companies are concerned with the way that they would go and request for communications. initially these drugs will only the to patients for whom the statins are actually working. the idea is that over time these trials will send the usage in the patient population. these trials are not definitive and they're both working on multi-your trials that will come out over the next several years. betty: and results? these results were published in the new england journal of medicine. are they the final word? olivia: they are not the final world but they will bolster the case for insurers to cover them. there's going to be a lot of
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competition among the chug companies which is going to betty: mean that they lose pricing power. betty:betty: olivia sterns on some new drugs. ♪ betty: moving and shaking this hour. uncle sam has run up against the legal limits on how much he can spend. this is also known as the debt limit. the ceiling on the debt goes back into effect today after a one-year suspension. the current debt limit is about $18 trillion. last week, treasury secretary hearst -- urged john boehner to raise the ceiling as quickly as possible and not let it become a political default again. even if it does though, this treasury has a way to keep the government funded through october. armageddon will not be until the 10th month of this year. staying on washington budget matters, it will resume much of the weekend this month. the chairman of the house and senate budget panels plan to release their budget blueprints
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this week. the senate on wednesday. the senate under republican control for the first time in eight years. joining us now is the man who understands the washington budget panel. david stockton. david is the former u.s. congressman and best on author. -- best-selling author. i like the new look. david: it is a commemoration of when i first grew facial hair in 1955. the balance sheet of the fed was $30 billion. it is now $4.5 trillion. it is up 150 times. the economy has been up 30 times. you're in a world that did not exist then and that is pretty precarious now. betty: if only it weren't so easy to just save your beer. -- your beard.
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mitch mcconnell said that i am not going to let the government shut down again in the face of another debt height. do you believe him? david: yeah. when push comes this shot of -- to shove, he clutches. he is not willing to face his political monster. they made a huge mistake last time when they went for two or three weeks and capitulated. it is clear to everyone that repulse in stew not have the will to do anything about the deficit. -- republicans do not have the will to do anything about the deficit. i did not believe that after five years of recovery, the idea that if i hundred billion dollars deficit is progress. it is not progress, it is just getting in harms way. we have not abolish the business cycle. sooner or later, there will be a recession. sooner or later, we will you back -- you back in the chilean dollars. -- in the trillion dollars. i think we are in a careless place. the bottom is falling out of the economy. the kingseynsian followers are a
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cacophonous chorus trying to explain what is going on. betty: let me parse one part of your statement. use that -- you said the the economy is falling apart. when you say that -- where do you see that? david: china is sliding a slippery slope. japan is recovering. europe is in a constant turmoil. commodity prices everywhere are collapsing. this is a sign that we have deflation worldwide. we are not going to escape it. there is a big story this morning about how the industry is getting nailed in the united states -- is a big issue. it is not just a little sector. in other words, there's so much over investment in mining and manufacturing worldwide due to financial repression that all
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the central banks. we now have massive capacity. china and the rest of the em is producing all they can to pay their debt. that is flooding the world economy. it is going to hit us. exports are going to cool. imports are going to rise. the oil industry is the major source of job growth that we have had in the last five years. all the jobs that have been created since 2009 are in the five shale states. no new jobs outside of the five shale states. look at what has happened to the rig count. in october, it is down 43%. this is not a minor thing. this is an overnight collapse that is going to ricochet in many directions. betty: let me just pile on the bad news. there's a timeline of what is one to happen in washington. , april, doctors are going to see their medicare payments drastically cut. this is all part of the
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agreement made in congress. in may, the highway trust fund is also going to be looking at running out of money. this is for most infrastructures of in the united states. in june, the bank will see you there -- if their charter will be renewed. in october, that means the government will run out of money. what do we do about that? david: they ought to let it expire. for crying out loud i was trying to do that back in 1981. if ge and boeing cannot finance their own exports, then shame on them. for crying out loud, all the money goes to about four or five big companies. everybody knows that. betty: that a solution number one. david: we happen expiring on highway trust funds every single month for the last couple of years. they will find some way to put a rider on a personal mission bill -- an appropriations bill. if they believe we need more
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highway investment, raise the gas taxes. if you want to spend more, raise the gas tax. if you do not, reduce the program. is that simple. the debt ceiling -- they often face it down because we have able budget momentum that is out of control. someone will blink and they will send it. it is not necessary because we do have the power to allocate expense. we are not going to ever to fail to face our interests or social security. betty: it is kind of like a fake threat. david: it is a total fake threat. betty: david, hold on. you'll be staying with us for a little bit rate coming up, and big event for tesla on thursday. a deal that elon musk tweeted out yesterday. a press conference on 9:00 a.m. on thursday. ending anxiety on a software update. that has a lot of people excited.
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we'll be right back. ♪
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betty: here's a look at our top stories this morning. in a famous cold case, robert durst is being held in new orleans. he has long been linked to his wife's disappearing and to kill. this was just before the finale of an hbo documentary. he was caught off camera saying "he killed them all." people familiar with the proposed deal say that the risk of unraveling between the two sides on financial terms and leadership. the merger would be worth $40 billion. another sign that ge wants to reduce its role in consumer finance. ge has agreed to sell its consumer lending business in australia and new zealand to an investor group. the deal has an impressive five -- an enterprise value of $6 billion. the company is reducing its reliance on the capital unit.
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once considered a big growth for general electric. elon musk will make a general announcement on thursday. he will reveal a solution to a major drawback on electric cars. it is called range anxiety. that is the fear of running out of juice as you are driving. elon musk says that the range anxiety issue will be addressed with a software update that will be deemed down to tesla owners. very high tech. that is your headline. vladimir putin has made his first public appearance in 11 days. that fueled intense speculation about his health. that was his longest disappearance from public view and more than two years. it comes just hours after reports on full combat ready this -- readiness and western russia. ryan chilcote joins us now in our studio with more. has been reporting on the
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kremlin for so long for us. you were saying that he looked rough? ryan: he was sweating a lot and he was very conscious of the fact that he was dealing with neighboring countries. betty: role some pictures of putin. ryan: he was very conscious of the fact that the press was looking at him. he made a joke about how it would be boring and there was not any ghost of -- if there was not any gossip or rumors. he said and made a point of saying to the president of courtesy and that we were meeting as we agreed. he felt a bit in battled, to be honest, for a guy who has an iron rule over russia. he felt like a bit on the defensive. betty: look at those pictures there. ryan: he works out like a madman. his 62. he is probably in better shape than i am. betty: we have all seen him
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without his shirt on. ryan: let us not go there. betty: there's speculation of a coup attempt. ryan: that is laughable. he is very much in charge. basically, no one can watch -- launch a two against val vladimir putin. -- 162 against vladimir putin. these are the hawks. these of the old guys that are supporting a policy in ukraine. many liberals against the grain would not have the power to do it. betty: what about the troops in western russia? ryan: people are worried about whether they are going to go back into the ukraine. that is one thing that the russian president clearly likes to do. betty: i know that you were in eastern ukraine just last week. ryan chilcote here at bloomberg and a new tablet made by saul -- samsung with
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technology from ibm. is this the beginning of a new partnership ♪? ♪
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betty: you're watching "in the loop with betty liu" live on bloomberg television and string alive online. this is a story that made us all smiled. 18 millio,716,000 miles -- that is how many miles he got for an 18 -- an ancient chinese ceramic. he used it to fly to his family in new york over the weekend. the spending do not end there. he just flew to hong kong. he paid $45 million for 15
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century tibetan ceramic. he must be unlimited. it is 26 minutes past the hour on bloomberg television. you're on the markets. we look like you are making a little bit of money if you are a bull on the markets. scarlet fu is here with more. scarlet: crude oil is trading at a fresh six-year low. it is falling to its lowest since march of 2009. oils declining by more than 9%. the question is that is there more downside ahead or could this be finally overdone? joining me now is bob, who is a chief strategist. good morning to you. is this a matter of supply and storage? is that what is tracking oil prices lower this weekend go? bob: it is coming to quite
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ahead faster than physical oil shops would. the amount of oil that is being stored when those higher prices are not coming to wii had a bit of a rebound a week or so ago and when you consider the strength of the dollar which really has a negative correlation between the dollar and crude it has not been on the tip of everybody turns. -- of everybody's tongs. oil actually rebounded quite a bit. i think when you take into supply considerations in the storage situation and the continued strength of the dollar. it is following a little bit today, but we think that strength will continue. there much more downside for oil. scarlet: quantify that for us. how would you be trading oil right now? guest: i would trade short. i think you cannot sell into the hole. because at certain times, trades put you in a situation where the reward does not exceed the risk. there is plenty of reason that
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crude could rebound temporarily. i do not think it will be above $50. if i was with put this trade on, i would wait until the $49. generally when we approach is even numbers, we see more pull back. i would sell crude around $4 9.10. i think you will get down also $35. -- that would be the prudent thing. crude is going to put its news lows and look for a recovery at that point. scarlet: $35? when will that take place? guest: if it does not happen before may, you will see a rebound that will sustain and till the summer driving season. the second quarter is the weakest time and demand for crude oil. that will push the supply into a tighter situation in terms of the shortest. -- shortage. production will continue to grow.
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i do not think it will happen before may. the downside is that all production has not slowed yet. scarlet: what will be the catalyst for oil this week? is this a knock on effect? guest: i think it is a dollar. i think the f1 see is going to start to telegraph this rate hike. i think the rate hike will come in july. i think of symbolic in normalizing the rates. it can push the dollar higher before may. they will take the patient's language out. it is not going to be a cycle of rate hikes, but there will be this coming in july. that will be the catalyst. there is a warning out of the u.s. embassy in saudi arabia. brent will top and wti will rally you. scarlet: geopolitical concerns as well. thank you so much. bob viaiaccino.
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betty: thank you so much scarlet fu. here's a look at our other top stories this morning. john kerry says that it is either a good deal or no deal when it comes to talk to iran. the secretary of state hints that the u.s. will be willing years in switzerland that today for more negotiations with iran. >> this letter was absolutely calculated directly to interfere with these negotiations. it specifically inserts itself to the directly of a leader of another country saying we will change this, so do not negotiate . betty: the man accused of shooting two police officers in
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ferguson, missouri says he was not aiming at them, he was aiming at another person after a dispute. a prosecutor says the police are not sure they believed the story. and president of an island nation in the south pacific says he must rebuild everything. the storm killed eight people injured 30. it is one of the world poorest countries, and the president is leading for aid from the international community. and an auction house is under pressure after a record sale last year. sotheby's said tad smith was named ceo. and the live-action cinderella
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took in $70 million. a seven minute short was shown at the beginning of each showing a frozen. groundhog day for u.s. crude hitting a six-year low. david stockman describes what is really driving the market. ♪
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betty: a little under an hour to the start of trade. back to our breaking news desk scarlet fu has a look at the action this morning. scarlet: this news broke 30 minutes ago, eight takeover offer -- a takeover offer. the new bid is $173 a share. valianteant is all cash.
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endo of 9/10 of 1%. whiting petroleum, with this m&a continuing on monday. it has them trying to sell itself after the plunge and oil prices. and analyst says that an outright sale is a low probability event, he is looking for near-term weakness in the stock and discounting the likelihood of an outright sale with the spread to wide according to him. elon musk has announced a new unveiling announcement on thursday. he says tesla will be updating the software in its model as to address the range anxiety so
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that people can drive for longer without looking for a new charge for their car. tesla by 2% in early trading. netflix down by 1.7%. intensifying competition, apple and hbo, means that netflix will need to spend more on its in vestment while returns are in certain -- investment while returns are uncertain. betty: thank you. the bull market gave investors nothing to celebrate last week, not with concerns over a soaring dollar. weekly losses of over 1%. six years of continuous monetary limitation by the fed, and it's fellow traveling central banks has generated a ticking time bomb. david with me this morning.
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when? david: who can predict it since we are in uncharted waters rate i do know that 78th months running -- 78 months running has never been tried before. no one thought of it as a possibility until the last few years. the key thing is, they say we can keep interest rates at zero because there is no inflation, but that is not the issue. interest rates are the price of money, the price of debt, and impacts all of the pricing in the world. tens of trillions in cash stock, bonds. hundreds of trillions in derivatives. the fed has fundamentally distorted all of those prices. betty: but it is working for us right? we just celebrated six years of a bull run.
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david: but how did it work when we got to p, and it crashed all over the floor? we have the housing boom, subprime bust, and it crashed all over the floor. the market is running way ahead of the real economy. the real a car will meet -- real economy of the world is friday to a halt. there is now a huge deflationary cycle in all of the materials and in most of industry. in the oil market. that is a sign that the world economy is grinding to a halt. betty: so our answer is to raise interest rates? david: get the fed out of interest markets. i know that when you have interest rates at zero for six years, you have given a massive
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signal to it erroneous false signal to governments who are financing themselves for nothing, for traders sure making overnight money, two em countries, they are scrambling to couple or third dollar exposure -- cover their dollar exposure. everyone has been extorted by this -- distorted by this monetary madness. his wife is a ticking time bomb. we are in a more dangerous financial environment than we have ever been in history. betty: i do not know if i am convinced by that. i am not sure if americans are as exposed as they once were to the stock market. but the second thing is valuation's are still fairly reasonable. you do not believe that?
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david: i do not believe that for a second, the only thing i believe is what the corporations report to the the on penalty of jail. gap earnings. gapper earnings were $102 in the quarter just ended. the market is trading at 20.5 times trailing earnings. it has never been that high when it has, there has been a correction. a huge amount of distortion because money is not free. when you make money free, you're going to cause all kinds of distorted behavior, all kinds of excesses. the market is highly leveraged on options and futures and all kinds of derivatives that are not being done by the home gamers it is being done by the professionals. as soon as they move confidence, here is my point, there is going
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to be a cacophonous chorus coming out of the central banks and the fed as we move through the next three or four months. they should never have been on zero, now they have to get off of zero to be credible. betty: they are off of zero because the economy is getting better, david. hang on a second, because i have a greenspan soundbite i have been saving. i want to run this comments that alan greenspan said to us last friday. alan: it tends to suppress the domestic price level, but the problem here is we are not right or in where the problem on the exchange rate comes from. whether it is a strong u.s. economy, which is a questionable issue or a weak rest of the world which is a little bit more credible. betty: where do you think the stronger dollar comes from?
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david: it is the cleanest dirty shirt in the laundry. betty: the laundry is a subzero game. david: it is a big bubble that nationally has all of the countries in a race to the bottom. what mario draghi is doing in europe is insane. look at the euro, it is down 25% in the last year. in his thinking by the day. look at what they are doing -- betty: should they have never been at these levels? david: look at what they are doing in japan, in china. somehow, people who are in the market every day failed to record nice that the central banks are out of control. they are printing money expanding their balance sheet, distorting markets, undermining pricing in stocks and bonds and derivatives like never before. that is the problem. it is creating a deflation. there cannot be any consumer inflation. betty: i cannot get over the
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idea that the remedy you are saying is going to bring about -- what you are saying is let us just put in the medicine we need to raise interest rates to the level they need to be. not a quarter percentage point but up to 2%. if you do that, you're going to bring about the very disaster you're talking about. david: it is not going to help the economy, but sewer are later we have to get off of the monetary heroin. we cannot have all of this speculation, we cannot have bubbles inflating and crashing. betty: just moved to antarctica. [laughter] i do not mean to cut you off. david: there is a day of reckoning. this has been proven over and over in history. i think we are at that point. i think this market has been
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laboring since september. we had the s&p 500 to 2000 september 2. where are we today? i do not know if it is going to be 2015. we made a couple points of game in the last few days but the market is laboring. the buy the dippers have not been able to stimulate the economy as much as they can because they're going to lose their friend at the fed, and they're going to panic and have a hissy fit and that is going to ricochet throughout the system. betty: it is true, the market is tired right now. people are saying we are going back to the normal way we should have been in the stock market. good to see you, the former white house budget director lovely to see you this morning. back in two minutes. ♪
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betty: here's a look at our top stories this morning. a corruption scandal is widening. new testimony alleges that he bribed in return for contracts. vladimir putin makes his first public appearance in 11 days. he emerged for talks in seeing peter -- in st. petersburg with his counterpart. he fueled speculation about his health with his longest to disappearance in more than two years. he is quoted as saying it would be boring without gossip. the unbeaten wildcats favored in the upcoming basketball tournament the other top seeds are due, wisconsin, and villanova.
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those are your top stories. if you're not watching housing this week you are in trouble because we have housing numbers out at 10:00 a.m. this morning. thursday, earnings off from lennar and katie holmes. -- kb home's. playing the millenials they were the biggest homebuyers last year, one third of the market. joining us now is nela richardson. are you seeing the same thing? nela: we help people buy and sell homes every day, 50% of our clientele or first-time buyers. the first of them are millenial's so people are entering them market for the first time since the housing
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bust. betty: what has changed? nela: there are industries in this country that tend to be clustered in urban areas that pay young people really well. there are fighting jobs for its limited millenial's, and that the are like everybody else, they buy into that american team and they want a home of the room. betty: are they buying the mcmansion? a three-bedroom apartment? is it truly want to go smaller? nela: they cannot do anything but go smaller, house prices have soared the last few years. accurately, millenial's are trading off this idea that they want to go immediately to the suburbs . that is old school. new school is staying in the
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city stay close to the bike lane, and getting something smaller. betty: what does that mean for the luxury segment of the housing market? nela: the top end of the market has been driving housing the past two years. buyers today, whether they are millenial's, gen x, boomers they want value, affordably priced homes and that means a lot to the housing market especially for builders who love mcmansions. if they can shift to affordable new construction starter homes, those of the ones who are going to be successful of the next two to three years. betty: luxury homes, the price is increased in the last quarter. how does that compare to the overall market? nela: the overall market is looking to be for 4% to 5% higher.
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that could be hinged on a bunch of affordable inventory hitting the market this spring. we're still waiting for it to come online, and if it goes online it is -- the demand is there. betty: i saw a lot of young families looking to buy in my neighborhood. thank you so much. still to come after the buyback and payout, what is next for gm? our investors handicapping the giant or setting it up for growth? ♪
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betty: coming up, the great gold rush to the accident. and expected rate rise by the fed. let's, march madness. one company drafting sevenfold this year.
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betty: welcome back, we are 30 minutes away from the opening well. -- nbell. futures will be mixed at the open. the drugmaker raising its bid. they sealed the deal, responding to a rival bid. john kerry says it is either a good deal or no deal in the nuclear talks with iran.
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the secretary of state would be willing to walk away from the table. he is in switzerland today for more negotiations with iran's foreign minister. the deadline for reaching a deal on the talks is the end of this month. the man accused of shooting two police officer says he was not targeting them. he says he was aiming at someone else after a dispute. the officers were wounded in a protest last weekk. >> we have charged him with firing a shot, it is possible he was firing the shot at someone other than police, but struck the police officer. the charge is still assault in the first degree for striking those two officers. the weapon was recovered that has been tied to the shell casings that have been recovered. he has the knowledge to his participation in firing the shot
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-- acknowledged his participation in firing the shot. betty: police are not sure they believe the man's story. tad smith has been named ceo of 70's. sotheby's. we are only 30 minutes away from the opening bell, we are counting down the top 10 headlines on our radar. julie hyman and pimm fox joining me this morning. let's start with a little bit of vice. some say it is good to be bad. certain vices of in spending.
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gambling, alcohol, and suites. coffee and cigarettes declined in spending. pimm: no real way to find out why the numbers are this way, unless you go back to 2007 and 2008. no one wanted to spend money on anything, and now business is back. automobile sales are up. they feel better. julie: one of the interesting sub trends in the report is that alcohol in particular was up. if it was take-home booze, that was not strong. as part of the trend we have seen restaurants spending pickup. betty: why is coffee a vice?
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it is good for you. pimm: they need to reclassify it. betty: blackberry releases a modified samsung tablet that it was able to use with ibm software. pimm: does that come with a guarantee? really, you're going to guarantee that the cia or people in russia, people in china are not going to be in the access your information? you can let your executives go to china with the same device you're using the united d states? julie: it seems like companies with apple losing some ground in tablets, it is interesting that some of the others are stepping
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up to target corporations and government. betty: this is backlackberry stepping up its secure marketing. the question is whether or not this is really true. staying on security, yahoo! unveiling at sxsw this weekend. upon signing, and on-demand password is texted to a mobile phone. this is designed to ease anxiety around password memorization and improves security if you are around your phone. julie: it is very secure, as long as no one can get your phone. pimm: on the watch it will have
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to mobility, and they will embed that feature. betty: i am compounded by the fact by most of us are terrible when we think of passwords. we still use our names birthdays, 1, 2 3. we need someone like yahoo! to take care of this for us. number seven, they story on wall street that everyone is talk about. the shocking omission from the air about one of the biggest real estate fortunes. he is still being investigated for the unsolved murders of --
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disappearance of his wife. i have not watched the documentary, but now i want to. julie: i saw the first three episodes, and he is deeply eccentric. he was arrested for the killing of an acquaintance. he dismembered the guy, and was let off on self-defense. betty: it is bizarre. pimm: scary. betty: number six, let's move ahead. markets accelerating this week. gold is moving at the fastest pace in four months. money managers are cutting their net long heges -dges. pimm: when everyone else is
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selling, is that now when you want to be taking a look and -- i don't know, maybe those apple gold watches maybe a publicity bump for gold. betty: the fact is, a lot of these theories about why gold is going to take off has not panned out. pimm: no inflation coming cannot get inflation going. betty: we have deflationary issues. we are not going to see you just because apple has not actually started selling the wathch. i will help to keep this market supported. coming up, hedge funds are the only one getting out of gold. why the metal could be bracing for a brutal month. ♪
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betty: we continue our countdown to the opening bell time for a deep dive. we are diving deeper into gold. gold is hovering around a three-month low. it also has history going against it. over the past four decade, bu ll gold futures have fallen in the fourth month, and that is not about to change. you wrote a recent column about that old bugs -- gold bugs should just gogive up.
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>> the goal the narrative has just not worked. -- gold narrative has just not worked. the dollar is at 12 year high. the narrative is constantly trying to find something to grab onto and they have been unsuccessful. whether it is china, in switzerland india, or even the apple iwatch. betty: if you're a diehard believer in gold you're still going to continue that. inflation has not reared its head, but it will. barry: we were warned that qe
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was going to cause all sorts of rollins, and none of these things have occurred yet. so at a certain point i always warn investors to be aware of a great story. to beware of the data. 20%. reserves in gold, that was voted down by the swiss. the last one was the apple iwatch is going to consume so much gold it is going to take a third of the annual production and that obviously is nonsense. betty: there are some smart people in the hedge fund world who have invested in gold. i have gotten out as of late but there are people figured it out and that that we think that gold is going to rise. is there any compelling case to
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be in gold? can you think of one? barry: there are smart people on both sides of the trade. whether it is oil, there are people on both sides who have been wrong. they will eventually be right. but if you look at the underlying the story that drives gold go back to 2000 and what we saw. a weak dollar, robust inflation, economic activity, and the potential for crisis. fast-forward, post crisis you have strong dollar, not only is there not hyperinflation or even strong inflation and i do not want to say there is not going to be another crisis, we know there will be another crisis. betty: that will be when gold comes back. barry: exactly right. i do not know what that will be the next decade or the next
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year, but it always happens when you predict this, after five years you become the boy who cried wolf. betty: thank you for being here and speaking about this. i want to bring in scarlet fu. scarlet: industrial production increasing want 10 to 1% of the month of february, that is half the rate that economist were looking at. more concerning, in january and has been revised lower to a drop of 3/10 of 1% when the initial read was an increase of 2/10 of 1%. futures as measured by the futures context. the 10 year yield heading to session lows and the dollar
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extending some weakness. we will have more in the loop after this. ♪
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betty: let's get back to bringing you the most important stories you need to know before the bell. julie hyman and pimm fox join me this morning. number four, and m&a deal. the fed is has said that the $173 share offer for valeant is on the table. it has been a big aggressive takeover company.
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julie: i was asking someone on our pharmaceuticals thank you this was unattractive -- team why this was so attractive. it is a situation where you can get the instructor of the company and just have your own salespeople sell their drugs. it is attractive in that way as well. pimm: this is what they do. they acquire companies and they make them even more profitable. betty: this is a drug company that is better at making deals rather than making drugs. number three, tesla. elon musk leaking out -- twe eting one of his solutions to one of the biggest problem, the range problem. you are always looking at the dashboard, wondering if you are running out of electricity. pimm: does it get 300 miles?
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betty: it does limit people like me who are extremely nervous -- [laughter] julie: matt miller says the same thing as pam, if you look at other electric cars, this range on the test law is extraordinary. -- tesla is extraordinary. pimm: clearly, you are their market, they have a solution for you. betty: i think the solution is to make charging stations as numerous as gas stations, and make it is quick to fill up. pimm: people with cords coming out of their business. betty: number two, ge announcing
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it will sell the australian and new zealand consumer lending operations. $6.3 billion. they have been reducing the company's dependence on ge capital since 2008 and 2009. pimm: this has been a major online. they are going to be a lot of history books written on not only how they unlock all of this without it collapsing from underneath them, but how he remained executive at ge. julie: it sounds like there is more room to go. based on some other finance operations that could be wound down. it sounds like they will keep the aircraft leasing unit because it makes sense with their existing businesses. but there are others that do not have anything to do with what we think of when we think of general electric. betty: this is such a flashy
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company. they used on nbc and have stars of the red carpet. pimm: now that you say they are no longer in these flashy businesses, there was a big engineering acquisition. betty: it turned it into a ge was before, and industrial the riot -- and industrial giants. betty: much more ahead, the u.s. plunges again, falling to a six-year low. will it ever end? ♪
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scarlet: breaking news this morning. it will be valeant and salix joining up. ♪
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betty: welcome back. we want to get back to bringing you the most important stories you need to know before the bell. julie hyman and pimm fox joining me. the number one story the dollar. slipping before the treasury meeting. crude has fallen to below $45 a barrel in the last two weeks. the fed is expected to ew - remove the word patience.
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pimm: if you believe bill gross and he just wrote about how this race to the bottom in terms of interest rates to stimulate the domestic economy if it falls in other places in the world, it will not have to raise, the dollar will naturally rise. there may be some internal political thing to satisfy people in washington and all of this. but as far as the money? betty: whether the dollar is a problem. julie: inflation is nowhere near their target. pimm: this is what i never understand, it is because the math does not work out for corporations. if sell things in euros, and it's translated back to u.s. dollars, you will gain fewer dollars. but the issue is not bad, you sell the same number of units.
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julie: it is a conundrum for the fed. betty: stocks she thinks the stronger dollar is going to bolster a stronger economy. all of these bears are coming out saying watch out the stronger dollar is going to get the u.s.. >> it's going to change the math for some of the corporations. it does detract from these exports. if you look at the economy iraq boards are not the driver of the economy. -- our exports are not the driver of the economy. you can see that we have upgraded the forecast for the consumer and downgraded exports because of the stronger dollar. the net result is a net zero. it is a perfect offset.
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if you think about the things the consumer has going for him or her, lower gas, housing prices, higher stock prices, jobs. not to mention jobs. he add to that the greater purchasing power, i think that keeps it as a function. it is keeping inflation lower. the lowest trend was down 9%. i think julie said it perfectly. this is a big conundrum for the fed it. itbetty: alan greenspan was on a friday. jim bullard was on as well. about a month ago. i asked both of them about if the dollar will be a factor to the fed. they both look to be like i was weird, why are you talking about the dollar? pimm: he was doing it in a nice
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way. julie: it amounts to the same thing. >> it's not an explicit target. that's why the reaction. it is rolled into the international development meant. i think the other thing to consider is the fed thinks the dollar strength will assist for the next two years. i think the answer is no. the answer is those are forces stronger dollar, lower oil that will cycle through. if nothing happens and we stay at the same level of where the dollar is today, we will see inflation pickup. the fed knows this. pimm: i know you are just in california and miami. anecdotally based on the people that you met and the people you spoke with, what is your feeling
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or analysis about how the economy and your connections are performing. guest: the consumer sentiment is that it has strengthened. you can see the way people go to restaurants and the way people shop. you see it in the data. the university of michigan says consumer confidence surged for the first time in seven years. the levels are consistent with an expansion. up until this year you would look at consumer confidence and you would think we are in a recession. that is how the consumer has felt. that has changed. you are looking at consumer related investments. julie: i noticed when you make your picture looking at otto's and real estate, you're not looking at rings that people are actually buying. there was not a big services
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component area talk about your rationale there. guest: autos stand up. if you look at one of the costs for the auto industry, it has to do with oil. plastics are a big input. we know how. that is a big contributor to the margins of those auto companies. at the same time if you look at the consumer, it is one of the strong suits in some of the retail numbers we are seeing a. couple that with the average age of car in america. that is why you get a very strong positive tailwind for the auto sector. for the real estate sector, that's another one. house construction has not performed well last year. that is turning this year. you have the renewed boost to consumers. betty: you have three themes. you say the momentum is behind
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information technology, consumers, the contrarian play is an energy. why is energy contrarian? guest: oil prices are down 50%. there is a lot of worry about companies not been able to meet their debt obligations. how can you make money? pimm: we talked about exxon making a bid for whiting petroleum. guest: so do the costs come down as well. contracts get renegotiated. one of the encouraging signs is they did not sit by and say we will see what happens. we have to let people off or it that is not a good feeling. it does help the bottom line of those companies. in the second half of the year
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the wealth that we have in the system runs off. you might start to see conduct -- growth. that pop in oil price could be beneficial to the oil companies. betty: it is great to see you this morning. she is a global marketing strategist with jpmorgan. still ahead, we are looking at the markets this monday morning. we are looking to be in the green it, rebounding from last week losses. we have a lot of m&a deals to tell you about. coming up, what is next for gm? are they ready for growth? more on that next. ♪
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betty: trading is just underway. i went back to scarlet fu. we have a lot of m&a action. guest: it goes beyond the
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pharmaceutical space. life time fitness is being taken out. a group that includes the ceo is taking this private for $4 billion. life time fitness is at a record high right now. king digital is at the highest so far. they are the makers of candy crash. it is off to a strong start. he is excited about new games that could include new genres. netflix we mentioned earlier. net flicks will need to increase its investment but returns are uncertain in this competitive environment. dupont is getting a double notch downgrade. they are cut to an underperform from a by because dupont has fundamental headwinds because of the stronger dollar.
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i want to highlight oil prices. crude is at a new secure low. it has fallen to a low of $43.57 and storage capacity is the new concern there. new york manufacturing missed. that is pushing money into treasuries. the yield is 2.08%. betty: thank you so much. scarlet is at the breaking news desk. gm agreed to buy back $5 billion in shares in exchange for harry wilson given up his title for the board seat. this left them at the lowest and of their cash range. wilson explains his activists action last week. guest: i think it's important.
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this is a radically different business than it was before the crisis. the cost structure is lower and the balance sheet is much better. they lay out to the public how much cash they need. that is $20 billion. betty: he says that will weather the crisis. i want to bring in our resident card guy. matt miller is taking a look at gm and ford. brian johnson has a buy rating on gm. matt, how does jim compare to fortinet other carmakers? guest: i thought it was interesting when i pulled up the balance sheet. i always think of fort as a much smaller company then gm. it produces fewer cars a year. after gm ties back $5 billion in shares, it will have $2 billion left in cash. if you look at them by the
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numbers, ford will have about $22 billion. ford has more debt almost 5 billion more in debt. they have not nearly as much an unfunded pension liabilities. gm has $24 billion in unfunded pension liabilities. they don't go away. ford has about $9 billion. the question is, is gm perfectly positioned or is it too little for the things it needs to invest in the future like buick, cadillac. our credit ratings at risk if they want to beef up finance? betty: movies came out with a statement that was less than approving of this deal. brian, i want to bring you in on this. are they putting himself at risk by holding?
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it is less than what they had before. guest: we don't think so. management range before the activists action was $25 billion of gross cash. they have a revolver capacity of about $12 billion. that gives you over $30 billion in cushion. the point made earlier, there cost structure is lower. they don't have $5 billion of health care outflows every year. we think they can operate within that. we can see them buying back shares through the end of the decade. matt: if this is the case only 10 have a buy on afford. if gm is doing this perfectly and shareholders appreciate money back, does that mean ford is too conservative?
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is this company controlled by the family a much longer term deal? are they too conservative with cash? guest: we have always thought that ford was positioning itself more as a dividend growth place. you can debate whether if that's because the family collects dividends. i think they position differently in the investor marketplace. ford is a dividend growth place and jim is a share buyback place where it betty: does anybody know the appropriate amounts? is $20 billion enough for gm? you can guard against as much as you want in a crisis, do we know if that's enough? matt: the problem would be if there is a triple whammy. if they need to invest in some
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new technology and these are big cash outlays when you want to develop 's for your brands. they want to invest $12 billion in catlike. -- cadillac. a driverless car for example that will deplete a lot of reserves. at the same time to worry about the possibility of a downturn. we don't think about that as having great potential right now. auto sales continue to climb and they will this year and next year. is that going to last forever? betty: do we know with the $20 billion will protect against? guest: they get a sensitivity last week. it showed the 20 billion being the swing in an average recession. if you had a repeat of 2008, you would be looking at drawing the revolver. in terms of the cap x, that is 6% of sales.
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they are guiding into that range going lord. we think if they -- forward we think if they deal with their redundancies on similar projects that even with driverless cars and they appear to be ahead of everybody other than tesla and nissan that is money to work with. that puts them in the same range as volkswagen and toyota. they are probably less efficient than toyota. betty: thanks so much for joining us. also, thanks to matt miller our resident card guy. we will return with "in the loop." ♪
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betty: chad smith will take over the auction house. he was the ceo of madison square
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garden. they are up 1%. he has a big job ahead. the firm is under pressure to increase profitability. we will bring in stephanie ruhle who joins us. you are digging deeper into this. stephanie: he is the guy behind this area --. bill lost. he won control. bill is out april 1. he walks out of the building on april 1 read the question is which will be the april fool? he is the consummate all-american sepia -- ceo. he's got an american psycho look . super handsome. that classic ceo.
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you want that. he has only been at msg for a year. the dolan family is well-known to being hard to work for. they might say that thad is perfect. he was at cablevision before that. he was a mckinsey consultant. that is what dan is looking for. someone who can take the approach and use digital media. needs a digital makeover. betty: they will be delving deeper into that. they are not making as many as they should be. thank you so much. the men's basketball term it starts tomorrow. have you finished your bracket? millions of america late fantasy
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sports. the ceo of draft kings will be here next. ♪
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betty: as you fill in your bracket yet. march madness starts tomorrow. nearly 70 million of us including president obama will take an hour to fill out our racket.
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-- bracket. this leads to $1.9 billion in lost productivity. this is also a bump in vanity -- fantasy sports gaming. revenue from seasons are up seven times from last year. paul lieberman joins us from boston. up 7%, does that exceed your estimates? guest: this is been a great start to the year. march madness in college basketball has really taken off. this exceeds our estimates this year. betty: how does this compare from this year compared to last year. guest: a lot more people are starting to get into daily fantasy sports. last year people did not think about march madness. most people think of fantasy teams for football.
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after a huge less season for football, we see a lot of people playing and they are playing college basketball and having a lot of fun. betty: how you make your money? guest: for every game we run it a percent goes to draft kings and the rest gets distributed as rises. betty: how much are you expecting to make up march madness? guest: we are going to be running millions of dollars worth of games. we don't give away our revenue figures because we are still of private corporation. we will be giving away more than $1 million in prizes. betty: there is fantasy football as you mentioned. there is gaming with march madness is their sport you would like to do that you haven't done yet? guest: we've done a lot of
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games. we've done everything from golf to mma two colors basketball. we have not done cricket one of the largest sports in the world. we look into international expansion. nascar, every sport that people enjoy watching we want to make a fantasy version of that sport. betty: which sport makes you the most money? guest: right now, basketball is a huge port. every day we are giving away huge prizes. betty: who you think is going to win? guest: i'm not sure. i can't speculate. betty: you can't bet on air? all right, thank you so much. paul lieberman is the ceo of draft kings. that does it for today. tomorrow, let the madness begin. we will kick it off with hat trick oil.
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-- patrick doyle. much more on the housing market. right here on "in the loop." ♪
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>> live from bloomberg in new york, this is "market makers." stephanie: too much oil and no place to put it. that will put more pressure on prices that are already at a six year low. ukraine's real underground economy, meet minoers who struggle to keep their town alive. welcome to "market makers."


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