tv Closing Bell CNBC May 29, 2012 3:00pm-4:00pm EDT
"closing bell" is next. hi, everybody. welcome to the "closing bell." we've entered the final stretch on wall street with a nice rally under way. market is up in the double digits. >> yeah, we were up triple digits but we'll take it. europe in many cases, those stocks rallied on positive news out of greece. fell off the highs of the day after a midday decline in the euro, once again at a two-year low. stocks are higher despite a report showing a sharp drop in consumer confidence in the month of may here in the united states. here's the kind of day we've had here. a pretty good rally on the open. now it's up 95 at 12,550. nasdaq up almost a full percentage point. 26-point gain at 2864.
s&p 500 index up to 1328. >> of course, bill, the big story is facebook continuing on a downward spiral. the stock tumbling to a new low and falling below the $29 a share mark. we've got speculation of a facebook smartphone and another potential acquisition, really doing little to drum up business. the ipo price was at $38 a share. the company has now left more than $25 billion in market value just in the last seven trading sessions as a public company. >> ouch. >> yeah. ouch is right. of course, this market is off the highs of the session as the falling euro is taking the wind out of the rally. is this a sign that markets are still locked in the fear trade, bill? >> courtney reagan has been spending the day with us at the new york stock exchange. rick santelli is at his perch.
michael pento is with us and steve with sun america asset management. rick santelli, i'm going to start with you. it seems to me we have two distinctly different traders during the day. lately you've gotten one set of trades in the morning and then as soon as europe closes, the trade tone changes. am i wrong about that? >> no, i don't think you're wrong but i'm not sure that it's a different tone or a different type of character to the participant. we've all heard at great length how high frequency trading is making up a bigger and bigger equity trade and i think they are less apt to take big acquisitions home. and then they get flat or don't have big positions or making liquidity. so i think this stencil of two
different markets is accurate. >> in fact, steve, you feel like we saw a lot of short covering in the opening, which accounted for the rally that we saw? >> yeah. i think some were announcing a chinese stimulus policy and we got it this morning. a lot of the cyclical names. we bought energy names last week. a the lo lot of people were loor the play in china. stimulus play. >> everything except the rally in the market but the euro went lower and -- >> you know what happened, i think you got the trade this morning and then sat around saying more headlines for greece and spain. the news in spain is getting worse. they have the 25% unemployment. banks seem undercapitalized. moody is downgrading debts in europe and will come back to the united states in another three to four weeks looking at u.s. companies. so you have this series of debt
downgrades causing collateral costs. >> so what does this do for the banks? here we are at the implications of a morgan stanley as a result of the facebook really flopped ipo. does that impact, do you think, morgan in any way in your view? and what about the trading loss at this point, given all these downgrades? do you still want to be a buyer of these banks? >> i like jpmorgan and i was convinced when it initially dropped to 36 that it was a drop point. but what i am concerned about it and what do we not own is morgan stanley and some of the others. how will the market react when moodys downgrades down a couple of notches, a couple of notches. what will the stock do? but for the next month i'd keep my powder dry. >> what about facebook? michael, your thoughts on facebook. it's dropping below $29 a share.
is there any value here? >> i'm sure there's value. i wouldn't buy it unless it hit $25 a share. i begged and pleaded with my clients, please do not buy this stock in the first day of trading. i thought it was very overvalued and that's come to fruition. we continue to be held hostage by the central banks across the planet. we walk a very type flat rope between deflation and inflation. any time we get an idea that the ecb is going to launch the ltro or that bernanke is going to say something in jackson hole, then the market rallies, dollar falls, and it's a very high correlation. but the point to be made -- and i want to make this point very briefly, the problems in europe are not going away. they are getting much, much worst. quick example, in 2010, portuguese -- portuguese five-year note was 3%.
now it's 15%. back in to 10, portugal was already in a recession. so the situation is getting much, much worse. >> courtney, over here, this facebook story, don't know if it's coincidence or not, this is the first day that they could trade options on that stock and you wonder if that's creating volatility on this issue. >> it would be hard to believe that it's not creating volatility. with that facebook story, it really bothers me the message that it sends to the facebook investor. many of us like the product itself but is it a good investment and all of that coming into question even more than what we've ever seen before and it's very confusing that that retail investor. they understand that they like the product. why isn't a good investment? think about the folks that got in early. it's very confusing and doesn't help the confidence and sentiment when we talk about bringing that retail money off the side lines and back into the market. >> steve, what about this? was it just over rallied from
the get-go? what's the problem? >> one, it was overvalued from the beginning, maybe the company allowing it to come out with a high valuation. it's worth half of what it is now. the question you have to ask yourself is what is the value and the price that should be ascribed to internet advertising and prices per click. now, i think about google and some other big internet companies that sell that product. you know, search and price per click. we're not in them right now. we recently got out of them. they will have panels from the internet companies talking about price per click. if that number comes down, and i suspect it does because of the val you've internet advertising in general, what are the big tech companies going to do for the summer? they won't do well. therefore, we wouldn't want to own them. >> steve, everybody, thank you so much. >> we may be off of the highs but some blue chips are helping sustain that rally.
mary thompson is at the realtime exchange with details there. over to you. >> maria, contributing to the gains are some of the multinationals there up on reports of a suspected stimulus in china. a rare update for the markets this month. the dow is up 26 points. s&p 500 up 10 and nasdaq up 23 despite the continued drop in facebook. we talked about the euro weakness down on yet another debt downgrade for spain's debt. that's keeping currency. pressure on gold which finished lower today and oil under pressure as well. all of this contributing to a e decrease in bond yields. let's look at some of the stocks that we were mentioning. multinationals giving a lift to the dow. caterpillar up 2.44%. facebook trading below the $29
mark. a couple of other stocks that we are watching today, here's an acquisition for you, that being be teledyne. $240 million is the price. take a look at lecroix. lastly, vertex is under pressure, giving up gains that it posted earlier this month, after it reported positive results on a new drug to treat systic fine br systic fine broe sis. the stock is off just about 12% right now. bill, back to you. >> mary, thank you. teledyne. they called it teddy. it was like a $500 stock and so volatile and day traders loved to get in and out of that on an hourly basis. but i'm showing my age here. >> sounds familiar. we've seen a few of those these days. >> yes, that is for sure. we're heading towards the
close. starting to move higher, the dow up 100 points again off the highs. we were up 135 at peak today. >> we have a lot more ahead. you can't afford to miss it. keep it right here on "closing bell." facebook may be dialing up a move for the smartphone industry. will that help the social media giant rake in more revenue or will facebook struggle to compete against apple? jpmorgan selling profits to offset the massive trading loss. trying to jump up short-term earnings at the expense of long-term growth? they may disagree on a lot of things but the left and the right won't see granny getting thrown off a fiscal cliff. is medicare on the chopping block? you're watching cnbc, first in business worldwide. that bringing you better technology helps make you a better investor. with our revolutionary new e-trade 360 dashboard you see exactly where your money is
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time for a quick stat check. the markets, if you're just joining us, is a risk on day for the markets. materials, consumer discretionary leading the charge after the latest polls out of greece overnight showed support for the pro bailout for the conservative political parties there. it's an eternity for the june 17th election there. the s&p materials index rising to a two-week high. the dow higher for only the fifth time this month. right now gaining again. up 105, 103 points as 12,558. it's on course for the worst month since september, maria. >> meanwhile, facebook shares trading at an all-time low. falling below the $29 mark. first time going public. >> failing to drum up support for its stock. a possible acquisition of mobile
tech group. the software company as facebook tries to apple and google. what do you think? >> it might just -- my knee jerk reaction there. rick and mack, gentlemen, thank you for joining us. good to see you. will facebook be challenging apple? >> they've gone after a partnership with apple before. they were not able to successfully get that achieved. >> max, what do you think? one of the areas that they are deficient, they acknowledge, is the mobile arena. will a smartphone solve that? >> i don't think so. we saw them take a bite at it with the status. we've seen the situation where they are in need of
applications. their problem isn't that nobody has their app. their problem is that the app is an underperformer, has acknowledged the technologies and from the newer, leaner startups that are built from the ground up for mobile. they need to put out something on mobile that is as exciting for facebook and that these partnerships are probably expensive and knocked them off the course of staying true to their core value proposition. >> what kind of expansion or diversification does facebook need to do now? i think everybody recognizes only a billion of them, smartphones, huge potential growth here? >> i think the mobile challenge is like the desktop challenge. they have to monetize it,
something that they have not done a tremendous job of. they need to turn those users into dollars, true on the mobile, true off the mobile, and getting distracted by others is just as dangerous in mobile as it has been for others as it monetizes the core business. >> rick, what is the answer to that question? >> before google was able to charge for click, we don't have that same thing in mobile or social. they are trying to push old technology on to the new advertising paradigm. >> finish your thought. >> i was going to say, we don't see these new technologies or acquisitions or even a smartphone moving for that at all. we have bigger issues that need to fry here in the near term at least. >> what about the opra
acquisition? >> quite frankly, android always has a grown and it has 100 million users. >> opra looks to us like it makes a lot more sense than getting into the hand set business. there is not a huge upfront cost which means more disappointments for investors going forward and you can see from the tape today, investors aren't in the mood to be further disappointed by facebook. and i think that it makes more sense for the geography diversification and it's a tough business for competitors and that's not where you go to prove to the street that you can justify ebitda numbers going forward. >> do either of you believe that the trading in facebook, the first seven trades, indicate something -- indicate what its
future looks like? what do you think this tells us about facebook as an investment. >> rick? >> we're bullish long-term but more importantly we think there's so many outcomes that can happen. we need big margins of safety. investors are starting to realize that. >> max? >> facebook has to prove itself again. nobody fell in love with facebook like facebook. we need investor relations. wreer getting tired of that. >> do you think facebook smartphone will be a serious competitor to apple's iphone? tweet us your responses. >> bill, we have 40 minutes to
go before the trading session ends. market holding on to now a triple digit move, 104 on the dow industrials. >> i would say the bottom for sales is jcpenney. it's going to hit the bottom. >> well, jcpenney stock, as we know, wall street and shoppers so far rejecting ideas from its new ceo. why is that man, bill ack 346789 an still bullish. >> and then later, walmart planning to extend its small platform stores. will that spell problem for mom and pop stores on main street? stay with us.
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welcome back. a lot of action there. sharon epperson is at the nymex. >> blame it on spain. the second in a week. that is the big reason we saw the drop in the euro down below the 125 level and as a result we saw commodities fall. mainly oil and precious metals. oil supported by perhaps ongoing concerns about iran and what their nuclear program really holds. we have the cme group that has cut its margins for crude oil. gas futures are positive on the
session. in terms of gold prices, keep your eye on that 1530 level. we have seen significant weakness in gold as it has dropped along with the euro. staying above the 1530 level means that there may still be more upside in the gold market. back to you. >> gasoline has dropped 30 cents at my local station in the last month. it's a wonderful thing. >> it is a wonderful thing. i was on the road this weekend as well. >> stocks are down a third since february. so far the ceo no sales strategy hasn't caught on bill ackman feels that the retailer will turn around. watch. >> i would say you'll start to see real progress and in the second half of the year when you have the new product in the
store. >> let's talk talking numbers. good to see you. mark, what do the charts look like for jcpenney? they've suffered greatly. >> they have. if you look at how the stock has traded over the last few weeks, it's getting down to a level where it's a good risk reward basis, i think. let's look at the long-term chart. it's had two specific times where it's dropped almost 85% from the highs. it's still trading 75% below the peaks right there. but if you look at this fairly well defined uptrend since the last few years, that's what really makes an interesting case for it in the short term. you really focus in on what this says in the short term, we can
get a better idea and you have well defined since the market has dropped. >> what about this turnaround that bill ackman is expecting? >> it's not measured in quarters. it's going to be measured in years. you've got to remember that the typical jcpenney better promotions than perhaps the best 20 to 30 years. it's very unlikely to happen. we think that the comps get worst in the third and fourth quarter between back to school and the holidays when we see more promotional intensity. >> you're not a buyer here? >> no, i'm not a buyer.
i'm still not ready to jump in. >> all right. slightly different stories fundamentally. gentlemen, thank you both for joining us in talking numbers. maria? >> all right, bill, the market closes in 30 minutes. dour jones up 100 points off of the best levels. up next, will the economy please stand up? the news has not been good. why is the market brushing it off? two top strategists weigh in on that. and then do you think a facebook smartphone will be a serious competitor to apple's iphone? back in a moment. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want. tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade.
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space as well. maria, back to you. >> let's go to courtney reagan. i think we are going to call this the courtney rally. suddenly with you here today it's going up. >> hardly, bill. with you and maria, it's the magic hour. take a look at the energy movers. beyond the commodities themselves, we have chesapeake moving as carl icahn and then the four directors are being removed. peabody energy is being added to the buy list in addition to a handful of other names. goldman also increasing its rating on eog resources to a bias well. last but not least, patriot coal. it's been a battle for a number of reasons for a number of days. today shares are moving higher as new executives are named. we'll see if they can turn things around. bill and maria, back to you.
>> stocks holding on to solid gains. what is driving the market? are we looking at europe, china, our own, none of the above? what is going on? >> gary is with us, capital market editors, and jonathan and joe quinnlan. thank you for being on the program. let's talk about sort of the issues and catalyst for this market. what do you think is going to be the most important issue to look at? is it europe or something else? >> near term, maria, it has to be europe and the spanish banks. i'm not worried about china. and then the focus is going to turn on the united states as we get closer to that. >> we have the ism and jobless numbers and the market is going to focus on where the macro noise has negative impact on the underlying economics and if you have a good friday i think the market -- not a big celebration
but the market is going to be pleased with that. >> we'll take what we can get. >> gary, what do you think is going on here? who do we look to for direction, do you think? >> i think today was one of those holiday weekend come in, trying to do bargain hunting expectations for the number is baked in. i don't think there's going to be a surprise either way on the upside or downside. as you watch what happened with the euro, when it was making the interday lows, the correlation with what happens with the u.s. and equity markets, that's going to be the playbook for the rest of the summer. >> what do you make of the activity with facebook? i was pointing out the coincidence or not, this is the first time that they could have some sort of a connection today with the fact that options listed. however, what i think really happened with facebook today was the portfolio manager who is had
a very overweight position in this name, we're hoping for a bounce last week, didn't really get it early this morning and it became very apparent, contacts i had on the institutional trading desk told me that this thing was going to break 30, they were going to test the stop loss orders and this is the realization if you have a big overweight position, you're waiting for a bounce. it wasn't coming. >> what do you think about the impact on morgan stanley, on nasdaq, on the other sort of leads to this story? i'm looking at morgan stanley because it's interesting to look at how the stock has performed quite well. >> yes. >> in the face of all of these issues with facebook. >> everything has been well publicized. i want to hear what morgan stanley has to say so i'll be listening to what you get in the
sense of, do they want to take some of the additional blame on how this distribution of the security went. because clearly they've been pointing all fingers at nasdaq. it would be interesting to see what they tell you. i will have all ears listening. >> we have an interview with james thunderstorm thorman on thursday. >> maybe they were going to dip their toe in the water with facebook. >> it makes them more bullish, bill. >> spoken like a true veteran of the market, joe. >> every time i see a headliner, i want to buy. >> there y o. do you agree, jonathan? >> ultimately there was an opportunity to get the retail investor back in. but the bottom line, if stocks continue to languaish, if we ge anything like it, i think the retail investors is going to get
dragged into the market and the volatility is scary. >> what do you want to avoid? >> companies that have growth but not as europe exposed. let me give you an example. consumer discretionary and tech, they don't get hit as badly. on the other side of the trade you have energy, financials, materials. when things go badly in europe, they are very sensitive. >> financials, maria, giving the risk with the spanish banks. >> we'll leave it there. >> that's what you would avoid? >> yes. >> appreciate your time. thank you so much. see you soon. heading towards the close. 24 minutes left. dow still holding on to a 100-point gain. >> we're still looking at jpmorgan. is the company throwing good money at bad? they are cleaning off the balance sheet. after the bell is amazon planting the seeds to evolve from an internet retailer into a wireless provider? what is jeff up to now? we'll look at if at&t and
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>> announcer: just before the break as part of "the dividend," we asked which stock has climbed the most this year? the payoff, united continental, which has risen over 25% year to date. and if you're just joining us, the facebook fade continues in a big way today. the stock hitting a new low for the lifetime below $29 at one point. seem ma moo seem ma moody has details. >> facebook is worth $4.5 billion less than the day of the ipo. social media stocks following facebook into the red. pandora rallied on better than expected earnings. one piece of news weighing on
the stock, samsung. that's stealing apple share. that's a look at some of the social media stocks. back to you. >> thank you, seema. we have about 20 minutes left. the nasdaq has been doing well here. about 28 points. the nasdaq snapping a two-session losing streak on the hopes that greece will stay in the euro zone. nasdaq up 1%, as you can see there, trading a bit better but certainly off the best levels of the day. bill? >> about $25 billion, the value of jpmorgan cashing in to soften the blow from the london whale losses that we've been hearing about. all of that and said, the bank will pocket a billion dollars in sales and use that to offset the more than $2 billion in trading losses that it has suffered. but is this the right move?
is it throwing good money after bad we wonder? >> one the issues is selling assets at a time that perhaps you're not getting and pfizer of the world. >> always good to be here. thank you. >> well, let's be real here. jamie dimon. and it now looks the reason that they are selling fixed income and a gain to offset that. >> what is wrong with that? >> if that's in fact what they are doing, the question becomes how do you replace those higher yield fixed income investments
that he's had with equally high yield investments and in this marketplace it's harder to find those. that's in fact why they've got a gain. >> you were the chief accountant at the s.e.c. what do they do? they have a huge loss and quarterly earnings are coming up. >> i actually would disagree. jamie dimon has got a great track record. i think investors realize that in general. he needs to manage the bank for the long term, not from quarter to quarter. if it starts to look like jamie dimon is managing this bank on a quarter by quarter basis, that's going to cause investors to take a second look at his management. i think managing it long term as he did through the subprime crisis, he deserves great kudos for it and needs to stick to that track record. >> dick, what do you think? is it shortsided for doing this? >> i kind of agree it's a necessary step to take if the
company is showing weaker earnings as a result of the trading loss. they just show it. who cares? the bottom line is, this company makes more money than any other bank in the world. in the world. and that's tens and thousands of banks. this is the number one in terms of earnings. it makes more money than any company in the united states except five. so, in other words, in terms of being a hugely successful institution, you can't find a better managed company anywhere in the country, period. it's got $330 billion in cash and government-backed securities. the cash in government backed securities is so huge that it's almost double the amount of equity in the company. earnings will be up this year and up 15 to 20% next year. >> dick, is now the right time to be selling assets in this environment? you yourself have said, as far as the european banks and i'm not comparing them to jpmorgan's
balance sheet. i get it. but you yourself have said that these banks are selling assets at the worst possible time. they are not going to get the price that they would have gotten at another time. >> well, you know, again, i don't think it's a great idea to sell $25 million worth of higher yielding assets at this point in time. but i don't think it's going to have an impact on the long-term growth. it's timly a move to do you think jamie dimon in the london office, like he's taken -- he feels this personally and that's why he is doing this? >> well, i think any ceo that has gone through what dimon has gone through in the last month or two would have to fill it personally. he's the guy in the corner
office. i don't know how you don't fill that. on the other hand, i think the key thing is he needs to stay focused as he has in the past on the long term and not quarter to quarter. when you have to make tough decisions as a krt eo, you're paid to make those tough decisions. >> a 25% book value is 100% cash. so why wouldn't i? >> all right. we'll leave it there. appreciate your time. thank you. >> thank you. ten minutes before the "closing bell" sounds today. a market is on fire. up 133 points on the dow industrials. >> we're back to the highs of the session right now. market rallies here but we're going to talk about that coming up in a smokes. plus, do you think a facebook smartphone would be a serious
competitor to apple's iphone? that's the question right here on the "closing bell." tweet us your thoughts on that @cnbcclosingbell. stay tuned. stay tuned. recently, students from 31 countries took part in a science test. the top academic performers surprised some people. so did the country that came in 17th place. let's raise the bar and elevate our academic standards. let's do what's best for our students-by investing in our teachers. let's solve this.
hi, welcome back. a less than stellar report on home prices. >> i can't believe i'm the one pointing this out instead of you, but volume is very, very light today. so i wouldn't take too much in terms of market sentiment but it could be that the market is sensing the consumer confidence data, you look around, you don't see very strong data. it could be that they are expecting the fed to do something about that at their next meeting. >> it could be. we have the jobs numbers out on friday at this point people are expecting the unemployment rate to tick up to 8.2%. but that we're going to see 120,
130,000 new jobs created. so that's very critical for this market. my prediction after tomorrow, the focus is all on the u.s. and europe takes the back seat. >> we'll see. as i said earlier, it's an eternity before the june 17th election. >> yes. >> it was rather encouraging and the market did take comfort learning the poll numbers out of greece showed that they favor the more conservative party which favors sticking with the bailout plan that has already been negotiated and remaining in the euro zone. that is what comforted the market early on. >> it's hard to know if the greeks want to stay in the market or not. a majority want to stay in the euro but yet don't want the austerity. it's one or the other. >> you can't have it both ways, that's for sure. of course, we all want it to work out to our benefit. there's a photograph in this morning's new york post of mark zuckerberg with his bride. they are in rome on their
honeymoon and where are they eating? >> he's at mcdonald's. you couple that with the fact -- i know this is too easy. you couple that with the fact that as they are dining and honeymooning in rome, the value of the shares have gone down 25% in the last week. the line comes about -- i don't know if that's fair or not. >> i don't think he's watching his pennies. >> if i'm 28 and i'm a multibillier dollar ceo of a newly publicly traded company, i'd probably go on the honeymoon, too. right now he's not on the job as his company is suffering and everybody is talking about the future growth strategy. >> what a weekend. take my company public for $104 billion and then let's go get married. >> life is good. >> life is good at 28. >> we'll take a break at the market continues to rally. the closing countdown for this
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okay. four minutes left on this tuesday, on track for the biggest monthly decline since last september, even with today's rally. it's not had a two-day winning streak since the middle of april. for those of you at home keeping score. and this is the straw still stirring the drink right now. this would be the euro. this was the point that i was making earlier. there seems to be a selloff and we're near this two-year low for the euro against the dollar. that sends everybody fleeing to the safe haven. you saw that with a ten-year
yield which continued lower. we're going to continue the ten-year yield any moment now. actually we're starting to pick up a little bit as the market rallies. you buy stocks, they are selling bonds so the yield on that ten-year treasury is coming off the lows. oil down today just off the lows and that turns again as europe is closing. you get a tug-of-war for oil. it's not just economic but it's geopolitical as well. there's what the dow did today. the open this morning with a gain of 130 points at this hour. and the yellow flag continues for the cboe. that's turning late today but we're still above 20 at this point. what's this market telling us right now? and, again, you get two different kinds of markets. in the morning and then after europe closes in the afternoon. what is that about?
>> you know what, this market used to trade on news in the morning and now we trade on news every hour.our these guys are moving the market real quick. and then on friday they went home short. it's the end of the month and now they've got it covered. >> short cover rally? >> now you've got a short covering because tomorrow the market is up 20 handles and these guys are dead. they are covering right now also. >> jonathan, the kind of sectors that you would buy, this was a risk on kind of day. technology, consumer discretionary, material, would you buy those right here? >> yeah. ultimately i still think you want to be long the market but short those names that get beaten up because it's going to be a very noisy environment. if you look at what happened, we have an up market and overseas it was closed. we got a lift from that.
we also got news that it's more likely that greece will be staying in the euro because of polling data that came out. >> it's early though. >> yeah, it's still a little bit early but what they said is our clients are still underweight upside if things go better than expected, people decided to chase this thing on the way up which is why we got this kick in the afternoon. >> do you think the market is looking for any more quantatative easing? maybe they are looking for a white horse to come up here and save the day. >> you're right. they would like to see qe 3 to keep it alive. one thing that they can manipulate is the qe 3 for sure. >> just off the highs of the session with a gain of 120 points, don't go