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tv   Bloomberg Bottom Line  Bloomberg  April 30, 2015 2:00pm-3:01pm EDT

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>> this is bottom line. the intersection of business and economics with a mainstreet perspective. matt: welcome, we have headlines today. lauren with the unexpected fallout of the collapse of co-rin than colleges and an exclusive interview with the senior money manager on the
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argentina debt crisis. first let's get you to the top stories of the day. cheers rang out in nepal's capitol as rescuers pulled a teenager out alive. he had been trapped since saturday when the eric struck. meanwhile video of the quake actually happening is out. here is a portion of it. >> a socialist from vermont will
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challenge hillary clinton. >> i believe that in a democracy what elections are about are serious debates over serious issues. not political gossip not making campaigns into soap operas. this is not the red sox versus the yankees. this is the debate over major issues facing the american people. >> he's an independent whoa usually votes with democrats. he could force hillary clinton to deal for seriously with the party's left wing or distance herself from it. catch a big sbeer view on bloomberg. ted cruss will join our politics. catch that intersue at 5:00 p.m. eastern today. >> sara is resigning from the new york federal reserve. she is head of bank supervision. she will step aside on october 1
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. consumer spending ended the first quarter on a positive note. it rose .04 in march september. shoppers spent more. economist are relying on household spending to keep the u.s. growing after slumps in business investment and exports. first time jobless claims fell last week to the lowest level in 15 years. the number 262,000 was smaller than the lowest forecast. job openings are at a 14 year high. nasa's messenger spacecraft is ending its four year tour with a crash landing. messenger is expected to slam into mergry in an hour or. so traveling more than 8700 miles per hour creating a crater
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an estimated 52 feet across. argentina's economy minister recently spoke at the united nations calling for new sovereign restruck churing rules . bloomberg's latin america reporter is with jay newman at elliot management. >> obviously the saga between argentina and elliot is a long and complicated one. i want to ask about this myth that argentina can't issue bonds until they settle and pay on their defaulted debt from 2001. last week they were able to sell about a billion and a half bonds to this domestic auction which had international participation from investors abroad. will you take the legal steps -- if you find this is an overseas
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offering will you take legal steps to stop payments on these bonds like you would other international bonds? >> i'd like to talk about that transaction. you've heard of win win transactions this. is a lose lose lose transaction. it was lose for argentina because they had debt at 9% when neighbors had debt at 5%. it's going to cost them millions of dollars over the life of the bond. their interest on defaulted bonds, our bonds, exchange bonds keep acrewing. there was a loss for duche bank. they do a transaction that is secret they've no other bank wants to be a part of and the judge and creditors want to know what was going on. it was also a loser for the
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buyers because they bought arrange tiny bonds and they are fickle about which credit tors they like and don't like. it was a loser for bond holders who took bonds in 2005 and 2010 because they are happy to lose bonds in default and raise money wherever he can scramble together. it was a loser for us because we are not a step closer to any sort of negotiation. >> what does it mean in terms of your legal ability to block payments on these bonds if you wanted to? are you going to try to do that? >> we brought this transaction to the attention of the judge who was extremely interested in finding out what was going on. he granted discovery. that discovery is in process. what i can tell you right now is it's pretty interesting. >> what is the latest? >> it's pretty interesting, discovery is ongoing. >> you mentioned being a loser
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because of this transaction. what leverage have you lost because of their ability to raise money this way. when it comes to you guys sitting at a table, your leverage has been they can't raise money abroad so have you lost something now? >> every time argentina has a loophole to exploit, it gives them a false sense of optimism ability their prospects they can forever avoid deeling with their creditors. that's unrealistic. the injunction that's in place now that has gone through the district court, to the supreme court, back and forth is a measure that is designed to make sure they can't pay other bond holders until they pay the dealt from 2001. i think we'll find the judge quite interested in supporting that injunction. >> you have mentioned you'd be willing to accept bonds as form
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of payment. would that mean zero cash payment? >> the special master issued a statement in february that described just that. creditors made a proposal to him that he communicated to lawyers for argentina that said that we would luke to sit down and negotiate with no preconditions whatsoever and the structure we've been thinking about doesn't require any up front cash payment by argentina. >> what about the me toos, the people like you have that have claims or judgments and want a resolution. argentina said if they are going to settle with one, they are going to settle with all at the same time. what to you envision in terms of coming to an agreement with everybody involved? >> the idea t that it's complex is the latest ruse. it's quite simple. the lawyers representing i would say 98% of the bonds that are in
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litigation in new york would fit in this small room. and the me toos include not people with pursuing junctions. so it's a very small group. it's a cohesive group. we've thought the resolution would involve solving it for everybody, not just a small group. we welcome me toos because we are the me toos. >> bond markets, you look at bopped prices it's pretty optimistic. you defaulted bonds trading above par which is interesting. they are pricing in optimism about a quick and easy solution to this probably in the next government assuming somebody comes in that wants to put this behind them. is in your opinion the market being too complacent about a quick and easy solution? >> the market has been extremely
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overoptimistic and remains overoptimistic. if you go back to 2011, the market thought that christina would turn to more orthodox policies and exchange controls and price controls, import controls, inflation, overvalued currency. then we got to june of last year when just after argentina told the supreme court that it would certainly abide by any decision the supreme court made and it turns out that argentina had no intention of abiding by that promise. the market was optimistic then too. then between june 18 and the grace period and july when everyone thought they will never default. they'll reach some resolution and then turns out they chose to default and i do mean chose because they had a choice. in the period after the default until the end of the year, the excuse they used was the roof to clause. then that expired and the market
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had tremendous optimism about settlement in the first quarter. we're in the second quarter and there has been no negotiation whatsoever. and the market is telling itself the next administration will surely resolve this. we heard yesterday he said they don't leave problems for future governments because the future government will be us. >> so you sound a little bearish on this. >> you asked about overoptimism and i think it dramatically under states the market. >> appreciate your time. up next fallout from the collapse of colleges. questions being asked about where the education department, the u.s. education department is recommending students go next.
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>> only any care a splire of drugs and nursing homes is drawing interest. let's go to the breaking news desk fft story. >> bloomberg news learned omni care trawing interest from cvs and others. they say initial bid are due in may. they help deliver drugs and help senior living fasstiss manage scripts. for any of these potential bidders only any care would offer a way to boost earnings. serve looking for growth in this
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environment as well. this is their trading. the stock was dropping or had been posting a loss before this headline crossed. once the headline crossed we popped up and went into a gain of almost $1. we've given back a little bit of that pop but are still up by 1.2% decwrofere all this. is a gain for omni care on the reporting we've done here it's drawing interest from the likes of cvs and express scripts. we'll keep you up to date on any developments that come along. >> now some of the day's top stories. the world's largest energy company posted its biggest earning surprise in a decade. exxon was 41% higher than estimates. meanwhile con coe phillips last more than $200 million in the
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first quarter. still beat the street estimate. shell drilling helped ease the pain from the collapse in oil prices. >> who could be the buyer? microsoft, oracle and sap have the resources. has a market evaluation of $49 billion. the company is working with bankers to field takeover offers after it was approached by a potential acquirer. >> look at top stories today. coming up at 2:30 a round table discussion on raise i can't and europe. and a special report on innovative cancer treatment research using nano robots.
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>> check out the newest edition of bloomberg business week. hits newsstand and your tablet today. on monday 16,000 students of corinthian colleges found out school is closed forever. corinthian college is shutting down all its campuses due to fraud investigations. it's the biggest for profit collapse shut down in u.s. higher education. what are students options now? decwran net lauren joins me with more on this fascinating story. my thought was they don't have to pay their student loans but some of them may have to. >> the education department put out some lists for these students to consider.
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here are lockes of other campuses that have similar programs within 25 miles. it's up to the student do they want to continue with this type of program, if so they have to determine if these campuses would even accept their credits. on the list were some community colleges and some for profit colleges that are under other types of investigation. >> the u.s. department of education giving them recommendations and some of the colleges they recommend redirect examination other for profit colleges that are also underation for similar things. so they are recommending students choose other institutions that may also get shut down in the not too near future. >> the list of where they possibly could go. it's up to the students to do their own home work and determine do these colleges even have what i want. we've talked about loan forgiveness in our stories. if the stupets decide not to continue they do have the option to apply for loan
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forgiveness. even if they dropped out within 120 days of the school shutting down, they have that option. they have to get in touch with their loan servicer and that is the operation that does the federal loans and would be the first step for them to figure out if they are eligible. >> these are federally backed loans, we do that so students can get lower interest rates and not be saddled with huge enter payments. because of that the u.s. department of education said if you keep crour credits you have to pay the loans f. you are willing to forego go all of the credits you've earned you can apply for loan forgiveness. >> it really depends on what the program is and if they want to continue and can find a place where they can continue. i spoke to one student that had been at one of these colleges for 15 months and things got so bad she decided she doesn't want to do it anymore.
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in that case she can apply to get her loans forgiven. >> 16,000 students. $200 million worth of debt that you and i and u.s. taxpayers are stuck with if all the students decide we're out? >> that's correct if all 16,000 decided to apply for this. it may not be so easy to apply for it. we're still waiting to see the details of how it works. >> many will want to keep the credits they worked so hard for and actually graduate? >> right. and the education department put out some numbers it was at least 40% of the students were within six months of finishing. >> what are other schools under the same investigations and how likely is it they will also shut down? >> shut down that's a pretty extreme thing. >> why did corinthian go that far? >> they started to unravel last year and last year when the education department put them on
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this heightened management. and it slowed down their access to federal loans. some of these schools, the for profit schools are 90% reliant on federal aid to operate. so once that happened that really sort of slowed things down for the college and things started to unravel. then a few weeks ago the education department said they were fining the school $30 million and that accelerated things. >> other schools may be getting fined and not shut down. there are other options is what you are saying? >> yeah. we don't know. for example i.t.t. is being investigated by the consumer financial protection bureau over lending practices. they got a wells notice from the securities and exchange commission. it takes a long time for these investigations from state's attorney generals to wind things through the system. we'll have to wait and see. >> very interesting story. you can check it out on
2:26 pm if you are using the terminal you can look her up and find all the stories she's written. we're going to bring in our chief europe and middle east economist and our chief asia economist for a discussion on the global economy. stay with us for that on bottom line.
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>> welcome back to bottom line. thanks for staying with us. i want to get you some of today's top stories. first off the price of crude oil and the close of floor trading. see a gain to almost $60 a barrel for west texas interneed yat. it has not been a bad month, up more than 20% for new york crude. in russia the central bank is cutting interest rate more than expected.
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lowered the one week auction rate from 14.5 to 12.5% and could be more rate cuts if inflation keeps slowing down. russia is interesting it's first recession in six years thanks to western sanctions and the lower oil price. financials are growing more pessimistic about greece. they are calling a greek exit of the eurozone. they believe greece will leave the euro. 43% say greece will stay in. the country is running out of cash as we've been saying for the last six months. bloomberg is reporting both sides hope to have a deal by sunday. for more on greece and the global economy i'm joined by my
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bloomberg colleagues. i want to start with you jamie, it seems every time i read the headlines i have to say greece is about to run out of cash. but it's been happening for almost the entire year. when are they really going to run out of money? >> there are a couple of dates. may 12 is the first. the other date is july 20 and that's when greece will have to pay back the e.c.b. 3.5 billion you'res it borrowed. if they don't pay that back their banking will be shut off from the ecb and they have to make a decision. >> what day is this? >> july 20. >> that's still a long way off. >> you'll be hearing it in the headlines for some time to come.
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>> they don't seem to be doing any of their home work. they come to negotiations. sometimes they are ok. sometimes they are spectacularly bad. but the sense i'm getting is si pruss never does any of the actual footwork that is necessary to stay involved in these talks. >> i think the question is whether they do the footwork when there are large disagreements on the table that don't need any numbers. there are concepts that need to be agreed between them. i'm vaguely optimistic we'll get a bit more progress. the shuffle in the negotiating team should take a more savelproach. >> even you have to be annoyed, well you especially should be annoyed by the term grexit. it's a horrible cliche. a bubble in the chinese
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investment sector. it's bubbled back up again. do we see a bubble here while we're at serious highs for equities? >> there has been a huge run up in the equity market in the last few months triggered by speculation about easing by the central bank. >> and then by actual easing. >> and sustained really by just vast numbers of retail investors pouring thaskically into the masket. a week or so ago the shanghai market crossed the 4,000 threshold. a lot oh of investors saw that as a critical moment so you saw institutional funds heading down to hong kong. seemed like a turning point. it wasn't. the market continued roaring upwards. >> one of the greatest pairs of stories i've seen recently is that the chinese government is diswading these mainland whales
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from going to mccould you but they are allowing them to have retail investment accounts so that's wru see all the gambling going on in the equity market. >> for china there is a lot of bad news. growth is weak. concerns about the real estate sector, the export sector. the equity market the bright spot in china's economy. it provides positive mood music. the hope is it's going to have more substantial effect. you'll see a wealth effect. households feel richer. growth companies can raise finances more easily. that gives the economy a bit of a kick start. >> we talk about growth in china with high numbers for americans. what is the real growth out look for china minus inflation? >> so we saw 7% growth in g.d.p. in the first quarter. that's what the government says it wants for the year.
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there are some downward pressure. real estate is the main contributor to demand in the chinese economy. we're seeing sales contracting. so there is a lot of pessmism there. >> what are we looking at when you take out inflation? >> after you take inflation out t it's still 7%. china's economy -- >> that's not bad. >> it's pretty impressive. the joke about china is they've slowed from being the fastest growing economy in the world to still being the fastest growing economy in the world. what a lot of pessimist por get -- forget chine that is a long way from the lower bind. they have fiscal fire power. so even though there are concerns about downward pressure on growth we can be optimistic that the government has policy space to address them. >> back to europe. i'm going to tie these two regions together in a moment.
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but what we're talking about disappointing growth i read positive headlines about span irk growth today at 0.9%. they are still at 24% unemployment. how are these other non-greek southern european countries doing as far as recovery finally from what seems like the longest recession they've had in the sentry? >> fundamentally there is a lot unemployment is really high. it seems unfair to write all these people off as if they could never be employed. there is lots of scope for growth as you close that gap. all they need is for things not to go bad for a year or two. we had tightened policy when it wasn't needed and austerity. there should be a bitless impedestrian meant to growth. >> i wanted to ask about western central bank policy and how it
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affects asia but we have run out of time. thanks for joining us. after the break we'll have the thursday latin america report and a live update from mexico city when bottom line returns. stay with us for that. ♪
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>> toim for today's latin america report. >> let's start here in mexico the state owned oil company posted quarter loss as a result of low oil prices combined for one of the company's most challenging quarters in recent history. it widend to $6.5 billion from a
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$39 billion earlier. production fell to the lowest flelve 24 years. now where the volcano started spewing again this morning. it erupted twice last week prompting the evacuation of more than 6,000 people. it erupted for the first time in 42 years. there is heavy rain expected for today and tomorrow. that could turn the ash into rivers of mud. so more evacuations are expected in that region. these are the top stories making the headlines here in the region. back to new york. >> thanks very much. that's your latin america report for thursday. still ahead a huge earn action surprise from the world's biggest oil producer. more on exxon's strong first quarter when bottom line returns.
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>> today's top stories.
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bloomberg exclusive. omni care is drawing enter from potential buyers including express scripts and cvs. omni care has a market value of $8.2. omni care is working with bank of america to explore options including a possible sale. >> aston martin secured an investment of over $300 million to fund production of the dbx crowsover. the 102-year-old auto maker is among high end brands breaking into the crossover market. the company revealed the all wheel dbx last month. i will be speaking with asen martin president tomorrow in a first bloomberg interview. i believe they'll produce that
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crossover in the states as well. coming up on bloomberg at 2:55 the markets with a chat with daniel and manny pacquiao ahead of his big bout with floyd mayweather -- did i read that right? is manny pacquiao really going to be on? unbelievable. the world's top designers and business leaders together to discover how design makes the world better, cooler, smarter and more innovative. one of this year's presenters tells us about his innovative cancer research using unanimous know bots -- nano bots. >> i have a lot of emails and i save every one of them from
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cancer patients. those people really inspire us. the problems with current cancer treatment, the drugs are terrible and they make you sick. the goal is to poison the cancer cells but they potentially poison every cell because they are not targeted. how do we make better drugs to treat cancer safely and effectively so it doesn't disrupt meem's lives so much -- people's lives so much. nano technology can sound really scary. so i thought that bringing these two terms together nano and robot. the robot is evock cative. people have an idea of what that might mean but nano is something most people haven't thought about much. nano is a billionth of a meter.
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it's building things out of particles. it's basically tiny. the patriot toe type we built is simpler than what you might think of as a robot. you start with a box or cage and we wanted something that could open and that requires we take that box and put hinges on it so it can pop open. you can put a drug inside and keep it safe and away from healthy cells until you send them and compute the identity of a cancer cell. for the specific patriot toe type we built, we had a make or break moment where we put our nano robots together with cancer cells and looked at if we could target one type of cell and not another in a test tube and that worked. that was a great moment in the lab. it's first about convincing yourself that it's possible. but then the way science works
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is you don't just convince yourself, you have to convince the rest of the world. usually there is a 10 to 15 year lead time from something that works really well in the lab to seeing clinical trials in patients. so we're working as fast as we can. >> tomorrow founder and c.e.o. of little bits will talk about the impact she hopes her company will have on future generations and their relationship with hardware. exxon posts biggest earning surprise in at least a decade. alex and our resident oil guru joins us on set to talk about what happened. it's a cool story because we're all thinking about the extreme drop in oil prices we had in the first quarter and they come out and beat. >> we forget about they are an integrated company. they drill, they move the oil
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but also refine it. this is where we are seeing bill oil shine. they are making a lot of money on their refining business. the lower oil gets, the cheaper it is to buy the crude and make it in products. that's a big reason we saw exxon do so well. overall pumped about 2.28 million barrels. that was a jump of 6%. b.p. and shell the same thing. >> what are the problems then for big oil? >> the problem is you still have to find production and big oil has to run hard to stay in place. exxon did creep up a little bit but shells fell about 2%. also will these refining margins stay awesome? we've seen oil prices rally. if there is not demand you have to store products and eventually the prices may come down sour
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not making as much because your products are worthless. >> i haven't been able to think about anything other than the fight for the past few days. have you pacquiao on your program? >> we do at 4:30. we're going to be talking about this amazing fight coming up this weekend. the biggest fight financially in all of boxing history against mayweather. it's going to be exciting. going to talk about how is he feeling, what is he doing. this has been a fight six years in the making. they were a lot younger when this fight was first floated. how are they training. what is he going to eat the night before? >> he has an entrauge of 900 people traveling with him. >> how much money are these guys going to make? >> a ton of money. >> an enormous fight. >> mopefully they make enough to shave those goatees. >> thanks very much. quick break. we'll be right back with more.
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>> get the latest headlines at the top of the hour. that does it for this edition of bottom line. ♪ >> bloomberg television is on the markets. volitility is back while you see
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it in the bond market this week. it is showing up across asset classes. s&p 500 falling the most in two weeks. treasuries represented by the t.l.o. losses for the fourth day. these swings are creating a new challenge for investors trying to protect their portfolios. joining me with suggestions on how to ride it all out is manager of global e.t.f.'s. let's start by getting your read on the weakness and selloff in bonds. is this temporary or start of a new direction? >> the flows we see seems to be temporary. you have had an impressive run in equities for some time. we have overhang of a lot of geo political events. have you greece issues and europe. you have had secular trends.
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q.e. 3 ended last year in the u.s. i think people need to take a pause. earnings announcements have come out. >> is it a matter of people fleing the u.s. or other asset classes thr ago tractive. we -- >> we have seen very strong flows from many different types of client channels into europe but overlaying that have been more volitility in currency. the approach has been let me get european exposure. let me make sure i manage volitility along the way. >> you like dividend paying stocks. do you presume that companies will return cash to shareholders through dividend and buy backs even if the federal reserve noves september? >> i think so. the money is increasing in cap
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back prompts but we still see the theme and investors being rewarded returning that money to shareholders. dividends were a popular trend. we saw the pull back to share buy backs. i think that combination we're seeing quill lib brum being paid out by companies to pay to shareholders. >> you seek out low volitility. what qualifies as low volitility in this environment? >> what we try to do is if you think about u.s. investors when you look at unprecedented monetary policies, rates are so low. perhaps irned shift to fixed income should be lifestyle moving but it's too risky. by default dividend yields are higher than treasury rates. i'm going to stay in equities
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but let me do it in a less volatile way. in a simple way but a form of risk management. i'm over weight equities but managing my risk in a different way. >> thank you for swroining us. we should mention as we head into the final hour of trading u.s. stocks hit their session lows. the dow jones off by 210 points twhile s&p 500 losing 24 points. street smart is up next.
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al alix: welcome to the most important hour of the session. stocks around the lows of the session. small-cap shares really leading the way lower. we are expecting a slew of earnings. we will bring you those numbers as they cross. manny pacquiao joins me from las vegas to discuss his fight with floyd mayweather. you do not want to miss it. "street smart" starts now.


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