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tv   Closing Bell  CNBC  July 13, 2012 3:00pm-4:00pm EDT

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hey little guy, wake up! aw, come off it mate! geico. saving people money on more than just car insurance. hi, everybody, happy friday to you. welcome to "closing bell." i'm maria bartiromo, it is friday the 13th, but a lucky day from the bulls today. >> i'm bill griffeth, the dow and the s&p on track to snap their losing streak. if the dow rallies 200 points, it would wipe out all of the losses in that span. the financials leading the way big time today. investors also betting that the worst may be behind jpmorgan after saying that losses from
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it's recent trading debacle grew to $5.8 million so far, and they seized salary from those involved there. there is the trading so far today. a rally on the open, sideways since then. 173 points at 7746, the nasdaq is up, and the s&p showing a gain of almost 20 points right now. so stocks are higher with the financials leading the way. it seems for awhile now it's been the trend that where the banks go so go the markets. >> jpmorgan disclosing the side and the scope. it's been a dark cloud and it has been lifted from the sector today. will it mean more rallies ahead for the banks?
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we have our panel with us. gary, let me kick it off with you, gary webbush. for putting money to work, do you want to sell or put money to work here? >> i want to put money to work here. i think the markets are at an extremely adraktive level. they're flush with cash, balance sheets are excellent. financing at very cheap rates, and the s&p is trading at a 15% to 20% discount. >> a good rally today david faber. i know all of the pages were sitting up stairs here at the exchange as you were going through them. what did you learn, is it behind them sm. >> for the most part it seems to be behind them, that being the massive losses that jpmorgan took very unexpectedly.
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we're talking $5.8 billion for the total so far. it could go up another $1.7 billion. that is the very limit, at least, according to management as to where it could go, but that is unlikely, again, according to jamie dimon, and all of the senior managers at the bank. for the most part it does seem to be, as you said, behind them. >> gary, what do you think about this? is the worst behind for the sector? a big rally today, what would you do as a trader or investor right now? >> the fact is that what david said is correct, but the vice president vice president people yul relative multiple, that has been able to have on the last four and a half years is gone and done. so if you want to get low on the financials, the only thing you buy right away is jpmorgan, that won't be there anymore. this is what we had yesterday,
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it was a big technical snap back rally. didn't get any news today out of europe or the earnings that people say you have to buy into that tech. i'm not sure earnings won't have a bigger impact next week than the previous week. >> stephanie, you are willing to give jpmorgan the bunt of the doubt. >> we have been buying at closer to tangible value. that's what jamie dimon has been saying is that he will be buying the stock. and i suspect they will in the fourth quarter. but i think if you look at the mind mentals today, mortgages were better, core retail business also better, and the balance sheet is press teen. i think you will book back when they all reported financials, and people say this one of one of the best, absent the trading
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loss and just focussing on fundamentals. >> given all of those expectations up to $9 billion in loss, it comes out $5 billion and a buy on the new story. what do you want to do here in terms of the rest of the financials? are you a holder of the financials here gary wedbush. >> yes, i think the trading situation is identity lated. it's not the first time a bank will make a bad bet and it won't be the last time. jpmorgan easternings are a approximaty for the u.s. banking system overall and i believe it's a great place to put your money right now. >> what did you think of the wells fargo numbers? >> they're strong as well. again, our u.s. banking system is probably the strongest in the world and provides a really confidence backed -- >> as we sit here, the down is
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up nearly 200 points, the s&p is high enough that it is positive for the week. what do you think of the last six trading educations that suffered so much for the bulls. >> if you look at what happened after the fed disappointed in april and different deliver the qe 3 message everybody wants. there was a selloff, a rally, and then in june it fixed. i think we will see this again and that seems to be what is happening. initial selling on the fact that there was no definitive qe. that happened wednesday into thursday, and it seems like you had this move once again. if that's the case, i said, i want to see something out of the earnings picture next week, and it's troublesome.
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>> momentum now, that's for sure. >> gary, we need a new picture for you, the '80s are over. so were here we were making light of the fact that if we were up. 200 points, we'd be positive for the week. we'll keep an eye on this as we head toward the close. >> so are we here on the closing bell, stick around, more headed your way, stay with us. >> coming up, focus on financials. wells fargo ceo joins us to talk earnings, and jpmorgan's recent dust up. how the banks sector can repair it's image. and libor gains. what else did geithner know? and eliot spitzer, the one time
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sheriff of wall street talks to maria about the libor scandal. and the explosive charges being levied against him by former ag dennis fraco. [ male announcer ] feeling like a shadow of your former self?
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welcome back, if you're just joining us, a good rally on wall street today. the gdp numbers from china overnight were as expected. the jpmorgan report this morning was not as bad as feared, so jpmorgan has been the strongest today with a gain of almost 6% right now. and that's powering the market higher. the dow is up 194 points. if we finish up 200 points on the dow, it will be positive for the week. we're seeing that right now. amazingly the market is setting those metrics. >> what a move, really strong.
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wells fargo among the names leading the mnl mark-- financia . wells also avoided the controversies that are facing peers like jpmorgan. let's get more reaction to the news with timothy sloan, it's great to have you back. >> thanks, great to be here. >> let me ask you about the jpmorgan trading mess. they made a move today to clawback compensations from executives involved. is this good for the industry? >> i'm not familiar with the specifics of the jpmorgan announcement this morning. we were focused on our own earnings. i think shareholders have the right to expect that the management operate the companies
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in a appropriate way, and if we don't we should not get paid. >> we don't see clawbacks, right? do you think we will see more? this is a big deal for the business and the industry. >> i think it's a big deal for the industry, but it's absolutely appropriate. our shareholders should expect that we're going to continue to operate in a appropriate way. if it turns out we don't then actions should be taken. >> let me ask you about the quarter and about wells. obviously the mortgage business continues to surprise doing very well in terms of origination and refinancing, how do you characterize where you are right now? >> the mortgage business was very strong this quarter. we're the largest originator in the country. o quarter was about flat, but we ented up about 29% from the
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prior quarter, but the good news is that wasn't the primary driver for our earningings. it really reflects the broad based nature of our company. our earnings were $4.6 billion. up 9% from the prior quarter. we really did that in addition to this performance in the mortgage business. nice loan growth and acquisition and home sale. our wealth brokers and retirement business, deposits were strong, and credit was good. the other metrics we talk about that was roa at 141 basis points were also the strongest in years, so it was a good quarter. >> yeah, and you mention the expens expenses, even though they were down, are still high.
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what are your planning going forward to ensure that you do continue to get a hold on expenses keeping them on the klein category and moving revenue up? >> we think we have our arms around expansion and we need to. with the economy growing slower than we would like, and we have had a lot of regulatory change, we need to develop our products and services in a very cost effective way. we're going to continue to focus on doing that, and that is really just looking across the entire platform and seeing where we can save money, and we have been able to accomplish that. our expenses peaked at 1303 and 1304. we hope our expenses will decrease and we will be in the
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ratio of the guidelines we provided. >> where's the target? where do want to go from that 13%? >> that's it, the target that we provided at our investor day in may, was we would like to be able to operate on a quarterly basis between 59 and 55%. generally they're higher in the first quarter, so we would like to get down to that mid-50s level. >> can you get any bigger, tim? where are the opportunities to fill in holes, acquire smaller banks, what's the vision? >> i think first to be focused on good products and services to our customers. if we can do that we can continue to grow. we have been growing over the last few quarters as others have been shrinking. on the acquisition front, we
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have been able to acquire some good businesses and good portfolios over the last year. it's very unlikely we would be purr classing another bank in the u.s. >> do you have exposure to this libor scandal? >> no. we were not part of that group. >> people are expecting estimates to come down, what is the appropriate growth level for investors to expect from wells through 2013. >> i wish i knew for sure, we believe we can grow not only the top line but the bottom line for the west of the year. >> thank you for being on the program. tim sloan joining us. and here is our question, you
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can tweet us @cnbcbell. well put your answers on later in the program. >> the dow up almost 200 points, needs to be up to finish positive for the week. the s&p is positive for the week. >> we have jpmorgan, citi group is posted on monday. is it on the verge of a breakout? we will talk city numbers next. >> and tim geithner may have given the bank of england a heads up on changing libor four years ago. why dnts he sound the alarm them. >> and coming up a low down on tax havens how they keep things running without income tax revenue. we'll be back.
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welcome become, we're in the final stretch of trading for the week, and we are rocking and rolling here on wall street today. 40 minutes left in the trading week, and a market up better than 200 points. financials leading the way on the heels of the jpmorgan
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report. the stock is up 5%. all of the rest leading the market up. commodities seeing upside today. we have money moving into a number of commodities there including oil as well as some of the economically sensitive names. we continue to see money moving into asset classes across the board today as we end what has been a volatile week very shortly. we're looking at the rally in commodities, and then we'll look at stocks. >> it looks like commodities are joining this party. the weaker dollar has a lot to do with it, as well as speculation that we may see stimulus out of china. were also, of course, looking and some traders thinking some of their fears may be lessens, but look at the big gains we have seen today in copper,
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coffee, cotton, gold, and oil. you have to keep in mind that these are many of them down sharply over the last 12 months, and traders telling me they're really going to look at what happens in terms of europe and any stimulus for the week ahead. >> breaking news, we want to get to the money desk with courtney reagan. >> macy's has won a preliminary injunction against martha stewart, because they're trying to keep her from creating products and going back into the jc penney stores. now it's retreated a little. jc penney and macy's mostly falling in line today, but macy's won a preliminary
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injunction. >> all right, courtney, thank you very much. lets get to the markets, a 200 point rally today. the banks are hung the strongest leading to the upside, jpmorgan is the strongest of the dow components today. now we think about city group th -- citi group who we ported monday morning. on the technical side, richard ross, and the chart, what do you think? citi has been a laggard among a strong group. now it's doing well today, what do you think? >> i think putting it as a laggard is putting it kindly. this is not a pretty stock chart. that's just the weather and we're traders, weather men don't make money in this business. we see 393% decline, and we see
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a stock that has not been above it's average in 50 months. this textbook triple bottom, we tested and he'll that level on three separate occasions going back to last december. we think this set you up for a sharp move in the other direction. it would be a 38% retracement from that march high to the lows from just a month ago. >> even i can see that double bottom there. >> it's extremely well defining, but it doesn't mean it's not going to work. some say the technicals are self-fulfilling, that brings you to your 38% retracement and your 200 day moving average. you see your 50 day coming in here. what we really like about this moving average, you see the slope is starting to level off and flatten out, it's gently
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rising at this point. the long-term trend might be improving in this stock. we like citi here for a summer flunk, but don't fall in love, she will break your heart. >> not a long term investment. rich ross, thank you for talking numbers. citi will be out. >> i like that analogy. thanks, we have 35 minutes before the closing bell sounds for the day and the week. the dow jones up, and the nasdaq on fire, 46 points on nasdaq. and two of wall street's top strategists are coming up about if we have staying power, and why didn't tim geithner do more four years ago after he made suggestions to change libor. we want to know what you think. give us feed back to the twitter question of the day, send us a
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all right, thank the banks if you're a bull today. bob pasani, is this a turning point? >> we -- the bottom line is this, for six down days and one up day, we're essentially unchanged for the week. the dow jones is unchanges, the nasdaq is to the downside, but apple is unchanged, and the s&p is still on top there. germany, spain, china and brazil, germany is on the upside there. spain, china, and brazil to the
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downside. thank you. we focus on another hot button topic, taxes. with all of this talk in the current economy, we decided to highlight countries that offer something different. income tax free living. >> according to the congressional budget office, the u.s. federal government took in $2.3 trillion in revenue in 2011 and income taxes were a little under half of that. there are places in the world where governments don't collect income tax at all. some of the oil and gas rich regions don't tax citizens because they're a state run commodity business that is so profitable they don't need the extra revenue. consider the largest natural gas reserve in the world, they live tax free and don't charge
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capital gains tax. . bahran also doesn't tax personal yk. the kay men islands, bermuda, don't tax personal income. they generate revenue from taxes businesses and imported goods. these places are not company places to live. property prices are on the higher side, and food can cost more. especially produce that can't be locally grown. you may be living tax free, but the cost of living is higher. >> and you have to give up your citizenship. yes, i could have stayed there and lived tax free, or you can have duel situation, give up the u.s. piece of it and pay taxes elsewhere. >> like you need an incentive to
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move to the bahamas, taxes? give me a break. so how much do the new york fed know about the rate rigging ska scandal back in 2008. timny geithner pressed the bank in june of 2008 to change the way the libor was set. he suspected something was amiss. >> in a statement released this week, the fed says it received occasional reports of problems with libor in the financial crisis. but i don't think suggestions no action was taken. should they have used louder alarm bells? mark, of the cato institute,
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says more should have been done. thank you for joining us. you say geithner should have taken more responsibility. >> some of the reforms he suggested would not have been able to be implemented by just the new york fed, but certainly he could have asked the primary dealers that they supervise to implement controls. could have lead by example. i think this is another example where the fed pots a. problem like mf global or something else. if the fed is going to be the new uber regulator of our financial markets, they need to start taking responsibility. >> couldn't they have done more? we're talking about four years later when they suspected that four years ago, why wasn't more done at that time? >> a lot was done.
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the new york fed made recommendations to the authorities in the united kingdom to improve the method. it was deeply engrained into the capital markets and it can't be changed quickly. the fett advised the u.s. regulators and followed the problem pretty close hi. i think that's all it was expected to do, especially because of the time. there were a lot of problems in mid-2008. >> but you know mr. geithner and you worked with him. you say he did the right thing, but there was something else that should have been done given the fact that he came out with the warning back then? rather than having this continue and engulfing so many other banks? >> he gave, you know, specific
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recommendations to the bank of england. they were in a consultation between the bank of england and the british bankers associated. it could have been impossible to detect immediately if those reforms that the british bankers association were putting in were enough. the concerns were not really about individual traders manipulating libor for personal gain or their friend's profits. the general concern was that the libor rate wasn't fairly reflecting at the rates at which feds could borrow. >> darrell makes a good point, let remember what we were going through in 2007, 2008, and 2009. they had bigger things to worry about than libor at that time. >> absolutely. i will emphasize the primary
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responsibility for getting libor vigt with the banks that are reporting. and i agree with darrell that most of them could not have been done solely by the fed. some of them could have. looking at the basic internal controls, if you don't have them, b what other internal controls do you have missing? what other problems do you have. it's unlikely in my opinion that a bank will have a problem where they're misreporting libor and everything else seems to be this is particularly important in the context of the primary dealers in which they're overseeing. so much of their reaction was you have to make sure the primary dealers are there. we lose more on the impact on monetary policy. so again, the new york fed says on it's website, we have higher standards, let's see that be true.
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>> okay, very good, gentleman, thank you, complicated issue that's not over yet, that's for sure. thank you for joining us. >> 20 minutes until the closing bell sounds for the week. a market up 195 points here. >> for the most part, the dow erasing much of the six-day losses. is today a real turning point or a blue monday for investors. we'll talk to two top strategists. >> he called hms the sheriff of wall street. i'll speak with eliot spitzer and the charges against him. it's all coming up. don't go anywhere. first, before we go to break, the dividend. which stock is increased the most so far this year? a state, family dollar, or time warner cable? the dividend pays off after the break. surprised some people.
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>> just before the break as part of the dividend, we asked which stock increased the most so far this year. a state, family dollar, or time warner cable. now the payoff. time warner cable that shot up about 30% year to date. >> this market continues to rally into the close, the dow a few points short of going positive for the week. the nasdaq on track to wrap up a tough week. we have a round up of today's big movers now with seema mody. >> tech stocks have been declining, but the s&p technology is under performing the s&p 500 still. it is in response and other tech
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stocks sold off as well. green mountain coffee was a notable loser today. they sited rising competition in the single service cup competition. >> everyone was holding their breath, the markets are up because of jpmorgan. we knew they would set the done for the day, and the pulls were holding their breath on this. here is something important to think about. financials are the second best performing group in the year. most broader market rallies this year have been led by the banks. >> yes, is today a turning point for the banks in the broader market? it's good to see you on the program. what do you make of this move in financials, david? is it telling us something about next week and the rest of the
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year? >> we like when the banks move well. they're the body guards of the market. >> because there is touch a big portion? >> the financial system and stability is retrekted in the banks as well. it's a good thing the banks are rallying, i would like to just thank god and others for inventing the color fuchsia so you could wear it today. thank you. >> a hard act to follow, mike ryan. we'll try anyway. those six consecutive days, it looked like the markets were just losing altitude here, fearing the slow down would take a toll on these markets, and now we have a rally like today. >> my initial thought is i might regret this color of tie. today was a relief rally built
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on following. we came through six sessions where the market was beat up. i think sentiment was depressed. so the absence of bad news was good news. this powers expectations that china can do more, they have more latitude to ease, it's not driven exclusively by domestic situations. i think the proof points are ahead of us, not behind us. we're going to get all of the banks reporting -- >> what's your estimate on earnings then? do you think they keep coming down for the second half? >> maybe not. you think about it we were down for about eight weeks in a row. and now earnings have ticked up a bit. i think the bar has been set low enough that we can see companies beat that low set par. by consider is the second half of the year, those are the real concerns i have. >> we think they will be down
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for next year, down 1% next year. on telecoms take your big ones this year, and buy ka ncanadian telecoms. they have bigger upside. 5.2%. bce, they're big bell up there, so sell some of your u.s. telecoms and buy canadian telecoms. better upside with further penetration for their wireless. >> you were nodding your head on this. >> we don't like the deep defensives here, the utilities and the telecoms. we think they're trading at levels that are unprecedents with the premium. so we want to have some of the less deep defensive stocks, and
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some of the beat up reciprocals. thank you for joining us, david i'll seon on the countdown. david's new book is called "voyager 3." >> thank you so much. >> 12 minutes before the market closes for the day. >> when we come back, more on what is fuelling the late-day rally and the final moments of the week. >> and my interview with eliot spitzer,ly ask him to respond to allegations that hank greenberg was motivated by personal reasons.
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>> welcome back, we get to the close with about 10 minutes left. and we talked a lot about all of the programs fating the markets, the european debt crisis, the low down in the economy, the
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u.s. equity market held up pretty well until last week and we had six consecutive down days. we thought maybe the air was coming out of that balloon until today, and now we're back again. >> there are so many huge numbers being thrown around. a week and a half ago we heard $9 billion was possible, and then $7 billion. all of these high numbers being thrown around, $5 billion is not as bad. with these high numbers, the expectations were beat -- the numbers beat the expectations. >> it's tough to tell sometimes what really is the focus for the markets, if it is europe. are they getting their act together? now we're focussing on earnings. we have a lot of big numbers
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next week, so it will be interesting if we get follow through. and what's the one fly in the ointment for today? >> volume. it has been lower, and it's not picking up much today as well. >> the volume, it's so anemic, but the upvolume, the bulls clearly in charge. >> that could signal a launching pad. >> we'll take a break, and we'll review what happened on closing count down. >> i'll be talking with ellioio spitz spitzer. >> and the arrest of the peregrine financial ceo. it looks like there was a
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. five minutes left in the trading day, what a crazy week it has out to be as we were talking earlier. it looked like we wereading south, and then we get a rally. >> i like that the focus is returning to the domestic store. the earnings picture. they will probably continue to come down the second half of the year, but we're rallying on expectations that perhaps the banks are able to generation profitability and revenue growth in the face of all of this upset. next week is a tough week for technology. >> this week, here we were but thinking okay, six straight down days for the market, and now we have this rally coming back. this is a risk-on kind of a day. look at the yield on the ten year note for this week. we had that ten year auction -- treasury auction this week with a record low yield. so people -- the demand is still great for this note, and we're
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finishing the week below 1.5%. here is the one i think is very interesting, the grains for this week, corn, waet, and so i beans had a great year, right? we established that, the commodities are done very well. and just this week, corn is up 7%. so you know, less rain, the heat that's been going on, and you're seeing that move higher, but that has not stopped the rally in the stock market, it has not pushed the yields higher in the treasury market, it's a crazy market right now. >> it's nice that assets are seeing changes across the pord. people are taking more of a risk on approach. putting money into stock and those commodities you mentioned. >> kenny is putting on the finishing touches. >> what are you looking ahead? i know you're going on vacation
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like i am, will it be an earnings growth market? >> yes, i think the focus will push back to the earnings next week for sure. any news coming out of europe will trump it, but i think we will took at them going bard. >> do you know what the best performing sector was? the utilities. they rushed to the safe haven there as the market was going lower. >> that goes right along with your comments on the tremendously low yield on the ten year treasury and the 40 year very ri also. i would say when we're talking about a low yield,y a company like johnson and johnson. they have 70 billion in sales, 14 billion in a 20% margin, they're in 120 odd countries, over 120 years old.
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they have only 20% in emerging market sales, and they have this new chairman that was interviewed by maria, they have a phenomenal product set. that's the kind of thing you want to the buy in an environment like this, bill. >> you sounded skeptical -- >> yes, i think we're going to hit 1325 again. i'm worried about what this scandal is going to do as we move forward over the next couple months, i don't think we're all clear yet, we have to -- >> don't chase it. >> use this to rotate into other stocks. use this as a chance to row case into coke, pepsi, and a time to rotate into better quality stocks. >> but if tech stocks have week


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