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tv   Closing Bell With Maria Bartiromo  CNBC  July 13, 2012 4:00pm-5:00pm EDT

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earnings. have a good vacation. take care, that's it, the market is going out, we'll finish positive for the week, have a good weekend, we'll see you next week. we continue now with maria bartiromo. it is 4:00 on wall street on a friday. do you know where your money is? i'm maria bartiromo. we're following the close this friday night, the bulls making a statement in a big way. the market near session highs. the market cutting all of the losses for the week and then some. @ is still finishing the day strong with a gain better than 200 points. the bulls can thank the banks today. betting that the worst could be over for jpmorgan, the stock up today better than 5% on the session helping to lift the overall sector and the market tonight. a big day for the bulls.
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here is a look. the dow jones industrial average up 202 points. that is 1.66% higher. and the nasdaq a strong finish as well. the rally strong, but is it strong enough to carry into next week? are financials out of the woods, or will next week's flurry of bank earnings affect next week. we talk to steve gallager and rick santelli. as someone heading the research and looking at money flows out there, do you want to buy or sell in this rally? >> probably not a lot, but looking into late august and early september definitely. i think we're starting to see real turning points take place
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in the u.s. and in china giving me some encouragement about the longer term prospects. i think the end of the summer you want to be in for the longer haul. >> we got number rs out of the of china that showed grout of 7.6%, but we're talking about a decline from 10 or 11%. >> it's great to be here on a 200 point close. it's exciting. going back to china, you know, 7.6 is not good for china, you have to keep that in a context. but what we're seeing there is strong consumer spending in china with slowing production. that means inventors are individu shrinking. we're seeing the beginning of a turning point in china, and that's encouraged. >> yes, rick santelli, what was it like today. what are you looking for for catalyst in these markets next week?
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>> we all look at down here is the fact that we're still a bit under 150 on a ten year yield. there was a time when they used to push bond prices down and yields up. that wasn't the case today. i think this disconnect is giving trader as paud that yes, it came back, but we're going nowhere quick plip we're looking a data next week, especially retail sales, so see if that's more positive, and 7.6% matched expectation. so many traders, somewhat dismissed it. i think that's a mistake. the rate of change for china has been down. these are the lowest gdp levels since 2009, and that has to be factored into what it is. all that matters is that in a tight global experiment, they have much less growth they they
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did. >> jeff, let me get you in here, do you believe in this rally? do you think it's sustainable into next week? >> i think we're in a range for me to get bullish and have to break out above the 1360 to 1366 level. and then you could run to the reaction highs in may. until we do that, i'm cautious right here. >> are you selling into this rally? do you want to be selective? >> we raised cash in february and march and put some of that cash back to work at the end of may and the beginning of june, and right now the kind of stocks i am buying are nonmarket correlated names. >> that's interesting. jeff is cautious about this. now you were hedging your bets a bit, you said you want invest at the end of the summer, but the rest of the summer it wasn't going to happen. >> it's exactly what's happening. you say we're closing the week at unchanged to barely up.
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so we're seeing major swings. in a market, you want to sell on days like today by the end of the day and buy it when it's lower. playing the range. i think when you get to the end of the summer, you stop playing the range and get in for the longer term, some of the industrial names and name that's are performing all right so far, and they have a lot of upside going into the remainder of the year. >> what do you think would be the more important earnings to watch in the week ahead? to sort of give us an indicator of where things go? should we all focus on jpmorgan today, and next week microsoft, ibm, banks? citi? what do you think is most important for giving us a sense of what's happening? >> i think you need to watch the earnings out of the financials. jpmorgan surprised today and you saw what it did to the overall stock market. >> i agree with financials. son assumer digressionary, autos, and others -- are they
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still spending? yes know their profit margin faded a bit in q 2, but if you see a sense the consumer is gaining strength going into q 3 i think we'll get those types of indications. >> thaupgs, we appreciate your time tonight, we'll see you soon. have a great weekend. >> the dow did not imagine to erase six days of losses, but a good day none the less. bob pi ssani is looking at it. >> it is a four to one in the declining stocks. look at the three major catalyst. china is 7.61%. it's good enough. jpmorgan and wells fargo earnings, beat by a penny. these companies are big, that's improve fg the financial outlook for those stocks, and of course a down in the dollar. there's banks. we're going to get a lot more of
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them in the nekts couple weeks. look at the home builders too. they're helping them. also, blackstone buying some property, and some upgrades as well. for the week, we just barely went down. we just did it by five points, positive territory, the nasdaq down 1%. mar maria, apple was one u unchanged on the weekend. >> brian shactman was at the market flash desk. >> mcgrawl hill, apoll low is exploring that company. >> banks and the big wall street rally in focus today. we have a lot more ahead on this busy edition of "closing bell." >> coming up, is dimon forever? should the jpmorgan chief lose
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his job after the firm's $4.4 billion trading loss? or is he as good as it gets when it comes to bank ceos. the debate is straight ahead. eliot spitzer runs in on the recent rash of wall street scandals and how he plans to fight allegations that he pressed charges against hank greenberg for personal reasons. plus, life in the fast lane. maria takes a lap with the ceo of nascar. it's all ahead on the "closing bell." tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively. tdd# 1-800-345-2550 staying on top of the market is key! tdd# 1-800-345-2550 and the momentum tool, tdd# 1-800-345-2550 it lets me do it at a glance, tdd# 1-800-345-2550 so when things shift, i'm ready. tdd# 1-800-345-2550 then to track the stocks i have my eye on,
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. welcome back, the markets rallying sharply today, and it was about the financials. there was a jump in jpmorgan shares because of the earnings and the clarity on that trading loss. investors taking stock in the solid second quarter earnings and betting that the worst is
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behind the bank at this point. clau backseats are being -- mary thompson is following that angle. >> the first ones for a company not under government super vision, likely to serve as a template for other firms on wall street. and charles saying it's no longer a heads i win tails i win situation on wall street. and feinberg calls them a major step in the right dex. . the pay taken back by recouping restricted stock and cancelling auction grants. three money managers are being clawed back including ina drew who was the head of the chief investment officer volunteerly gave up two years pay.
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she was one of the five highest paid investors. as for jamie dimon and other top managers it's under review. others are wondering why their pay was not clawed back as well saying the company policy calls for one if there is unidentifiable material risk. >> thank you, mary. jaim yip dimon has been upfront about this trading mess. today admitting his employees hid the losses from him. he knows the impact all of this had on the bank. >> this capital is for known and unknown events. this one we shot ourselves in the foot, but there is capital for things you're surprised about. we learned a lot. i can tell you this is shaken our company to the core. >> as a result, several people have been fired there and there will be significant claw backs of compensation, but jim
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rickerts says that's not enough, that jamie dimon should go too. james, good to have you and both of you on the program. you say jamie dimon should leave the firm? explain that position? >> i think that's right. he shows that he does not understand these statistical property risks, and that's a big scary thing in a substitution with multiple expotures that dominate what's on the balance sheet. they're a high multiple on what's on the balance sheet. i don't expect him to know how to build a jet engine, but i expect jamie dimon to understand derivatives risk. the employees would not have been able to blow smoke in his face and hide the risk in the trade if he understood it or had a trusted party that could explain it to him. for a guy to be on top of the
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bank and not understand the risk is not acceptable. >> what about the in fact he said they were hiding the extent of the losses and the risk they were taking on. >> it should not be possible. if you understand any of it you can ask hard questions. ask what's the long, short, the measure of volatility of the trade, how much you lose on every basis point if the spread widens. you could have asked a set of questions, or if he didn't understand it, she should have brought someone in that was independent. the losses themselves came to live because they were too great to high. he should have been on top of them a lot sooner. if he doesn't understand it, why is he running this bank? >> yef, you disagree. you this jamie stays where he is? >> i could not disagree with mr. richards more. and i could fill the rest of the
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afternoon talking about it. you stop me when you heard enough. somebody with incredible transparency, and admitting that he let some of this get past him, and something that has taken all of the proper measures to embrace the shorts that you want to see in a crisis management. he has gone to the regulators and the meet ya, led a step by step, and taking mastery of the fact that this johnson and johnson tylenol fiasco years ago, he did all of those critical steps. you think jet blue, walt disney, they got blaming for something they had nothing to do with. why terminate a guy that really understands this stuff. does he understand risk? sure he does. in 2007, he was trying to explain to hank paulson, and mr.
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gree greenspan of the fed -- >> this is the opposite of trading. >> i don't know why they say he was bailed out. they said they didn't even need the money. the feds told them they had to take it. >> that situation to a new situation of nontransparency because they not being transparent about the libor exposure. that could be in the tens of billions of dollars. they put in a small provision for legal fees. that is the next cover up. it will come out. the people buying the stock today are not being told about the libor situation risk. >> sometimes systems break down. you want to stick to the issue on the table right now is what happened in this situation, there is individuals dpsh you know, a ceo doesn't manage the whole operation. he takes responsibility for this
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getting past him. they have to delegate something and sometimes there is misconduct, and some students can misbehave. he had some that misbehave and he took appropriate corrective measures and he's learning from that. ted lewis from the bank of america, he was so transparent, and they thought they should make a change there. >> what has jamie dimon been doing the last four years. >> he is not a grandiose self promoting ceo. >> he certainly was decisive on this. he came out right away and acted when the news came out. thank you westbound we'll have you back to talk more about this. we want to know what you think. our twitter question of the day, do you think the worse is over for jpmorgan chase? send us a tweet and we will broadcast your responses in a few minutes on the program.
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and spitzer in the hot seat. eliot spitzer will join me next, and we'll ask him to respond to new accusations that his case against aig was personally motivated. the former head of peregrine is recovering from a financial suicide attempt, and now he says he's been making it up for years. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start.
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welcome back, he used to proudly call himself the sheriff of wall street. it came crashing down over a prostitution scandal. now eliot spitzer is trying to resurrect his career. he is spending a lot of time on his show talking about the rate rigging scandal on the heels of what we have been talking about. we'll talk about that in a moment and explosive new allegations facing mr. spitzer about the hank greenberg case. let's starths driving the news today. thank you for joining us, mr. spitzer. >> my pleasure to be on your show. jpmorgan and specifically revelations that traders basically lied to jamie dimon about the trading losses, i know you have talked a lot about this, what's your reaction? >> it's not surprising that
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su -- employees would try to cover it up. we need to know when he first had contact with the traders. what he knew and what they reported back to him. i don't the we have the complete story about what he was told about the magnitude of the risk. i want to get beyond the buy fair choice of jamie dimon there or not. does this frame a more important question which is our banks of this scale simply too big for anybody to manage. >> what do you think about the jpmorgan situation? >> they can absorb the losses if it's $6 billion or it creeps up. but i think the real question is too big to fail too big to manage. we know there are so many conflicts of interest, silos there, and you cannot get honest
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reporting up the chain when people are driving their own incentive driveen crazy trades in london. i think one of the arguments in favor of a smaller more fractured banking system is you don't get these conflicts and you have institutions that should be managed. >> this rate rigging scandal could get a lot bigger. tim geithner flagged the problem five years ago. why didn't he do more about this. he the bank of england, said he was worried about the approach, did he do enough? >> i think it would be be too early to say one way or the other. i think the fact that he knew about it back in '07, from what i have been seeing today, he knew in '07. did he follow up on in? libor is the heart and soul and the blood stream of the financial system. if anybody is playing games with
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it, you must follow up anybody in the regulatory position that tim geithner was in. in my view, the most important position is in the world. how do you not follow up and say what have you done? was this the memo that was being sent at penn state where you just kind of push it aside and ignore it, or was this an effort to do something. this goes to the very real question if the new york fed, which in my view, which i've been clear about this, did not do it's job all the way through leading up to the crisis, it's this one piece of evidence that's contrary to that or one that supports it. >> what a comparison. >> maria, this is unfortunate, when you see memos at the top like that, you never know. what proceeded it, what came after, otherwise you don't understand the techture of what was being done.
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>> let me move on to something you spent a lot of time on. i want to talk about the explosive allegations around hank greenberg when he ran aig. you brought eight charges, six have been dropped. six charges have been dropped -- >> let's deal with facts. we brought a charge that their accounting was fraudulent. they admitted that. the companies board removed hank greenberg. because of the silliness that is attached to this claim pm people saying i did this out of personal animosity. i don't know if this will make hank feel better or not, i have no emotions about in one way or the other. maria, he is one in a litany of corporate executives that defrauded the market. we prosecuted them, the charge
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that his motive is flawed is the refuge of the guilty. >> the only problem -- i have a problem -- >> let me finish this off. hank greenberg was thrown out by his own company's board. >> under pressure from you. some people say that the collapse of aig falls at your feet, because hank would not have allowed that craziness to go on. >> let's deal with reality here. hank greenberg's accounting was fraudulent. >> you can't say fraudulent because there is no indictment, you can't just throw around the word fraud. >> here is the federal judge's opinion that he was a conspirator? >> the answer is we cleaned up
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the company, got it into leadership, and the southern district said we'll bring the charges. >> and hank greenberg is still not running, you know, living his life, so all of these charges that you throw away so cavalier, there's no evidence to support that. >> maria, i hate to say this to you, deal with facts and reality, not what pr machine wants you to. his company payed $1.6 billion in a settlement, acknowledged his accounting was fraudulent. these are in facts, reed the federal judicial opinions. he is the one that began as a federal judge, instigated the conspiracy. >> you're still not answering that. i want to take you back three days ago because we talked with
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your predecessor. he says he heard you make comments that demonstrate you had a personal vendetta against greenberg. let me play what he said three days ago so i can get your reaction. >> it wasn't that he was hammering his fist on the desk or the table siting allegations of wrong doing or corruption. his tirade was much more personal in nature, and it left me with an uneasy feeling there was a personal annamous that was driving him at that time. i was surprised and taken back after comments that hank greenberg made recently, my recollection is that greenberg said something to the effect that spitzer was prosecuting him for murder for essentially jaywalking. but what followed from that comment, was rather a startling
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personal attack that i was surprised by. >> after the interview, we're told that you placed a call to hank greenberg's lawyers. you told them because your firm is in bed with someone like hank, you will have to bear the consequences. i have a bazooka pointed at you and everyone at your firm. >> david is a good friend of mine. they have made representations. they made unsubstantiated briefs, and they had to send letters saying that's not right. they tried to challenge my motive for bringing the cases. they're hired guns and paid well to say what they're saying, and they've been wrong repeatedly. >> are you saying you did not say it or did you say it?
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>> no, i had a nice conversation where i said can you send me the statement that david made. you have made statements that needed to be withdrawn, please send me the statement so i can see what it was. let's come back to facts, hank greenberg was removed from his own firm. >> come on! >> the board of aig -- >> you went on sunday morning television and said he committed fraud and you have no evidence of this so many years later, still. his people say you destroyed his reputation and caused the collapse of aig. >> unfortunately i have in front of me the transcript of what i said on sunday morning tv, you want the transcript. these were created for the
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purpose of deceiving the market. that's fraud, it was a black box run by a ceo that did not tell the public the truth. >> you used the word fraud, that's the point. that's the point, and then you color everybody else's pin even though to this day we don't have any charges of that. the charges are being dropped. >> here is the federal court judgment. facts matter. i know this is cable tv, but facts matter. >> i'm aware of facts matter. >> you need to understand that aig was being lead by a ceo whose accountant was fraudulent. hank, you know -- >> i know he is trying he is trying to get your personal e-mails because he says you also tried to get him -- bring him down. are you going to release those e-mails? >> as i said to people, will
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ain't no such thing. hank greenberg at aig committed fraud. the record of on -- >> you keep saying it again, fraud, but there's no charge of fraud. >> here is the 29-page federal court opinion. i don't know why you keep saying there's no evidence. >> i say it because when you're the judge, jury, and executor, it's important for our viewers to understand what went on and give people the benefit of the doubt if there is no evidence supporting that. have you read this opinion? >> i'm waiting for an answer. >> what was the question. >> have you read the opinion? >> yes i have. >> does it say that he's a conspirat
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conspirator. let's talk facts. i'm going to be very serious. i'm not under oath for you, and i'm not in your courtroom. you're on my show, and thank you for joining us eliot spitzer. >> i'm asking you a question. >> you said you read the opinion, because is say that hank greenberg's action east led to fraud. >> you said it, you have continued to say it, and you say it all the time, and i just want to get to the facts here. >> maria, here is the problem. the problem is that you want to repeat ad nauseam things that are coming out of the pr machine of hank greenberg that defie factual record. maria, i will give you to give deference to a guest. the reason the wall street environment is falling apardon me is there is an inability on wall street's part to acknowledge what happened. if they said those were flawed,
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we should not have done it, we won't do it again, we're done. that's what we did in most of the cases. he continues to this day to dispute facts that have been proven beyond any dispute. berkshire hathaway and warren buffett came to us and said it. it's all documented. this is the history, it is clearly known. i think if the public were to understand what was going on at aig, they would agree that if anything, more should have been done. the justice department looked at it, the fcc looked at it, we all forced that change at aig, there is no doubt about it, no dispute about it, this is what we need in terms of smart prosecution. >> it's good to have you on the program, i enjoyed this. very good exchange. >> here is the deal, next time you come on my show. >> i'll see you on current tv. we'll see you soon, thank you.
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welcome back, you just heard strong comments out of eliot spitzer, he is still going off of hank greenberg. >> if anyone has concern about if el jot spitzer has personal annamous against hank greenberg, you could see it right there. no one, of course, ever brought any criminal charges against hank greenberg. mr. spitzer brought a civil case against hank greenberg alleging a massive king fraud. he dropped all of the charges except for two transactions. neither of which was material. the federal government -- not against mr. greenberg. he was reading an opinion that didn't have to do with mr. greenberg, he was not a
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defendant. now all of those charges are in the process of being dismissed. i think he is living in an alternative use verse when it comes to bank greenberg. >> why, you think there is a personal vendetta? >> we don't know what he said about hank greenberg, but he has a history of threatening people and bullying people that don't do what he wants them to do. i'm just looking at the facts. the facts are. >> rick: that 7 years later, his case was base less. he's reading bits and pieces from cases that didn't have to do with mr. greenberg. >> he kept bringing up the $1.6 billion fine as part of this. >> yes, and he is admitting that when mr. greenberg was forced to leave, he brought an indictment against aig. then under gunpoint, they agreed
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to a $1.6 billion fine. after mr. greenberg left, mr. spitzer appointed his successor, and then three years later waig failed. >> i think if anything, he owes an apology to mr. greenberg. >> thank you for your time. thank you for joining us. we appreciate it. this story continues. a story that just keeps getting more bizarre and shocking. coming up, the ceo of peregrine financial is under arrest and he is now spilling the beans. and jpmorgan surged more than 6% today. how do you play it if you think the worst is behind? stay with closing bell. don't forget our twitter question of the day, do you think the worst is over for jpmorgan? we'll air your responses later
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rapids, iowa. scott, a confession now? >> it certainly seems that way, maria. russell wassendorf. a one time icon in the chicago foouchs committee, will appear before a federal judge on charges he lied to the cftc about the financial statements of the firm that filed for bankruptcy this week. recall that he tried to commit suicide on monday, and in the criminal complaint, excepts detailing a fraud that was, at the same time elaborate, but really basic. he says it began 20 years ago. should i go out of business or cheat. i guess my ego was too big to admit failure so i cheated. and basically the way he cheated? forging the bank statements for the customer segregated funds
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account. basically forging them through excel sheets and documents, saying there was a lot more money there than actually was. and we know that some $200 million in customer funds are missing. we'll see what happens in court today. this is an initial appearance, so he won't enter a plea, but a lot of damming information in this suicide note that he has not denied. >> thank you, scott, for following this. up next, fast cars and a sputtering economy. the head of nascar will be with me on his take on the dollars and fan base. and where are the jobs? my observation on the affect the economy is having on our nation's young people. wouldn't e if there was an easier, less-expensive option than using a traditional lawyer? well, legalzoom came up with a better way.
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welcome back, for a time, nascar was one of the fastest growing sports in the country. while the excitement may still be through, the attendance has not been as robust. they're trying to use technology to keep fans drawn in and keep
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them interested for longer. joining me is brian france, and it's good to have you on the program. >> good to be here. >> let's talk about the business of terms of growth and the bottom line, what are you seeing. >> we're seeing one in five four chun 500 companies joining us to market their products and services. >> attendance, as you know, ticket sales are down 38% over the last five years. is that all a reflection of the economy? is that all to it? is there a nascar specific issue? >> i would disagree with some of the numbers.
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>> you have got voex wagon, bmw and vehicles being manufactured in the united states. will we see a german manufactured nascar by the end of the decade. >> we're the place where car manufacturers get the most value. i wouldn't be surprised. a lot of companies now looking at us. we worked very well with toyota. they are winning races and competing well. who knows. >> that middle product, the championship car there. these cars are amazing. they are so tiny in size. you are really tapping technology. tell us what is going on inside the car. >> we're doing a number of
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things. we're a sport that lives on technology and information. we're going to do a glass cockpit much like a passenger car. information back and forth to the fans. lit be relevant to car manufacturers. everywhere we turn, we announced a deal with hp. we will be taking advantage of the mechanical side of things. >> people will be able to see what is going on in terms of all of the data, they will have access to information in the car. >> it will make the experience ritcher. >> good to have you on the program. we will keep following your story. jp morgan earnings certainly impressed the street. are there still traders that are bearish out there? let's go straight to the trading pits and get some answers.
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>> as soon as that happened, you saw one option trader sell the july 35, 37 call spread. basically they were willing to get short 450,000 shares of stock at $35.69. certainly option traders taking a market. >> how does this effect the way the stock trades? do you think it was appropriate that we saw 6% rally today? >> certainly it seemed a little bit overextended. >> let me ask you in terms of the stock on monday, how do you
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think it trades. >> i can see us backing off over the week. the stock backs off. i would be a buyer here longer term. hold a longer term core long holding position. they have access to the fed discount window which is the u.s. dollar, the most sought after commodity in the world. i think they are in good shape going forward. >> all right. we will see. brian, good to talk with you. thanks so much. be sure to catch more options action. now to today's twitter question, we asked you is the worst over? solomon says yes. thank you. roderick tweeting absolutely. i think he has a firm grip on the situation. and then there is steven. no, more to come in august. brian says everybody should be
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so lucky if their worse is a 44% earnings surprise. >> whatever happened to the american dream. the plight of young people in our country as they face a vastly diminished jobs market. [ male announcer ] trading's like a high-speed train. and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account.
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>> under employment through most of your 20s and that will lower earnings potential for years to come.
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this is a vicious cycle. the trend leads to something called disconnect youth. that is young people who are neither in school nor working. this group is at greater risk of raising children in poverty this is a problem that is not isolated to a single generation. it will fall more on the backs of taxpayers. it may be a cliche but it's the truth. the children are our future and our children are not able to find work. >> this is a happy story. up one and two-thirds percent. volume light on this summer friday. no surprise there. one and lf


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