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tv   Closing Bell  CNBC  May 30, 2012 3:00pm-4:00pm EDT

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and 5 million more than the expected price. that is expensive but what is priceless, it's a q and a. >> join me. i need some people there. hi, everybody. welcome to the closing bem. i'm maria bart roma with the new york stock exchange. red on wall street. >> once again, we can't put two days back to back. and what would be a huge turn around in the final hour, stocks will wrap up this month without back to back gains. we haven't been able to do that. last time that happened is back in may of 2010 around the time
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of the infamous flash crash. and bump it along the bottom there after the selloff on the bottom, 12,444, nasdaq is down 1% and 2841 and s&p is down 17 plus points at 1314. >> bill, let's not forget volume right now. i don't know that we can look too much and talk about losing money, it is another facebook free fall. another day, another selloff and the losses put facebook with a kwurt ter of its value down since going public less than two weeks ago what's wrong with the house that zuckerberg built?
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>> at least he's enjoying his honeymoon right now. with less than an hour to go, it turned out to be not a very good month for the bulls in the stock market. it turned out they sold and went away after all in the month of bha. can things get and rick santelli, hi to everybody. thanks for joining us. let's talk about what is going on with facebook with some of the technology names. this was the group to own for 2012 for short technology was the leadership group. bob pisani, a bit of a reallegation here as we approach the second half. >> it's not just facebook. remember what went on with groupon and zynga? the one that everybody is talking about is linkedin. that's the number one stock that's done very well. it's been a tough ipo time.
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>> you don't like this market at all, do you? >> no. i mean, there's nothing really to like. i love all of these companies. they are all great companies. the trend is not your friend here. money is coming out of stocks and i think what the market is telling us all is that we are not sanguine any longer about the prospects of europe or china. we had a break. >> we have break meaning -- did he just lose his microphone? >> yes. >> are you there josh? >> nathan, you feel like it's a slave to headline risk. not trading on fundamentals anymore, right? >> absolutely. and i think the break that scott was talking about is a break in the action from european ministers and central bankers deciding to put more addiction or a little more stimulus into the economy. and if you think back, other than the $1.3 trillion that they pumped in between december and january of this year, which
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really got us going for the first quarter, we're sitting around once again waiting for stimulus. how can you judge a company's value when you're worried about ministers in europe deciding whether they are going to put more money into the system? >> there really seems to be a break there. we feel like we have headlines out that could alleviate things and then once again we're back to uncertainty. that's what is driving things today as well as an economic data in the u.s. rick santelli, you're in chicago. let's talk about the impact on the economy and fixed incomes today after the pending sales. >> record lows again. >> the treasury market is pretty much doing what it has been doing for many quarters in a row. we continue to see buyers. we continue to see investors move into that conondrum zone. they are not worried about return on principle. you see it in germany n. boone's in two-year negative yields. you even see it on japanese
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securities. the data in the u.s. is still going to matter. remember, we can slip under 2% in the first quarter with gdp. and it might be better than 118 but it's a far cry from the 250 we need. >> you know what's amazing, rick, the tlt, the biggest bond etf in the world is at an historic high today. the volume has been big today. you can get a 15-year mortgage for 3.75% right now. i don't know what bank would lend for 15 years at 3.25. >> isn't it nice that we have bonds doing what they are supposed to do? let's look at asset allocation again. >> can you hear me? >> yes. you said that there was a break. talk to us about your thought. >> well, i think that's really the key here. i want to be in stocks. i don't want to sit in cash.
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i don't want to sit in treasuries for the rest of my life. at a certain point this gets too out of hand and you can come in and do some buying. right now the important thing to understand is the trend is against you. there is really no compelling reason to jump in. everyone understands the uncertainty. the question is, when will the market get over it. that's what the first quarter was about. the europe stuff is terrible but we have better news on employment and housing. now those two things, the weight of improvement is slowing and so in the absence of that, there's no compelling reason to get very long stocks. >> why would there be? is there anything going to take place before the election in november? >> no, absolutely not. >> it's not just treasuries. you're talking about money market accounts, savings accounts yielding close to zero. you're just not getting any action anywhere. >> and nathan, when facebook would bring the little guy back to this market, what impact do you think that's going to happen on market psychology as well? >> well, when you can't get
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facebook to go anywhere, that says it all. the little guy won on facebook because by the time the little guy thought to get in, it had lost 20, $30 billion or whatever it was and say, you know what, maybe i don't need to be like the fat guys for a change. i think they said the emperor has no clothes. >> would you buy it here? >> not yet. i like the way the options are going. i think it's got a long way to go. $67 billion of market cap this morning on $3 billion worth of revenue? come on, guys. give me a little something to sink my teeth into. i did that in 2000. >> call me when zuckerberg gets back to his office. >> what is your entrypoint on facebook, both of you? >> maybe 25. >> 25, wow. >> if you want to buy it, if you really want to be in the stock as an investor, buy a third of what you're planning to buy right now. you may buy it at two or three or five points too high but you have time to scale in, if you
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want it. i don't want it. >> why don't you want it? >> it's a great company but how do i make my money back at this valuation is the bigger question. and i just think there are easier ways to do it. >> it's a generational thing. >> you're right. >> i talked to a young trader from deutsch bank and he said they've got all of this data. when they start mining the data. mine the data first and then up your stock. they are convinced that they have all of this data. >> they do have a lot of data. but it's an interesting metric if you're writing a technology article. data under management is not a wall street metric. >> wait a second. let's face it. nothing is growing as fast as data. it's got to be organized and protected. >> maria, you're right. buy the companies that facebook is going to hire to process all this data that can then be resolved by the software names that are going to participate. >> all right. very good. gentlemen, thank you. we'll see you soon. appreciate your time. the markets giving back some
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gains and then some today. let's go to mary thompson who is at the realtime exchange. >> down day for disappointing home data and fiscal weighing on u.s. stocks. dow down 1.25%, down 59 points. s&p worst day since september. nasdaq weak as well, up 1.2%. all of this reflected, the increase here about what is happening in europe and the vix is up in today's session. gold rebounding, up $16.90. yields on the ten-year note, as rick was mentioning earlier, dropping to a 66-year low as investors saw a safe haven in u.s. treasuries. weakening once again to the dollar falling to a two-year low. but let's talk about the silver linings because those are some of the bright spots in today's
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market. among them, monsanto, strong in north america prompting the company to raise the full-year forecast. sallie mae adding another 400 million to its stock buyback plan. take a look at shares of hamilton. it's up 13.6% after the fourth quarter profit doubled a year ago while the market is also higher up. the company reported better than expected fourth quarter results. bill, back to you. >> all right. raise your hand if it's your birthday today. anybody? anyone? >> come on, mary. >> there you go. >> happy birthday. >> thank you, guys. thank you. >> she's such a public person. she love it is when we do that. >> all right. where were we now? heading lower again with 50 minutes to go. down 160 points on the dow jones industrial average. >> we go out on to the floor
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next. take the temperature of traders. >> somebody has his hand in your pocket. it's the hand of big government. it's taking away about four months pay from what your daddy earns every year. $1 out of every 3 in his paycheck. >> where did we find that? that is hilarious. nearly 50 years. that's barry goldwater's commercial there. the fight against big government gets bigger. why is the former economic council saying that americans secretly love big government. they just don't know it. >> this i have to hear. >> our twitter question of the day, is it realistic to expect the cuts to social security and medicare in order to shrink big government? tweet us your responses. we'll share them later in the show. back in a moment. that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip.
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we're at the lows of the session right now and concerns about europe and during that time we look now at the dow industrials falling to the lows of the day and down to 12,402 right now. and all sectors have lost ground today and pretty much a broadbase selloff. >> down 184, things are accelerating on the down side as it continues in the home stretch. we bring in two guys on the
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floor. and warren myers, we were just talking about this during the break. >> it's up to the europe and the euro. and there is so much uncertainty, every day that goes by is a hint of a resolution and we're hitting lows on the euro. >> do you see any conviction out there? where is sort of the conviction on the upside? >> that's a tough one. what is acting well today, it looks like gold maybe took a bounce and money going into there. utilities a little bit, telecom. >> there is also the fear
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factor. >> yes. >> when do you start to become a contrarian? joe talked about the lack of public participation. >> i'm a born contrarian. even though the housing numbers were not what we wanted and the prices of homes are starting to increase and to me it's -- you can't even -- the value of that u.s. economy is -- we'll see it as a summer that falls out. >> very good point. now you're at 88,000. as it comes in, it will start
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loose sooning up a little more. >> what about the economic data in the u.s. and does the focus return to the u.s.? >> i think certainly the focus is there. the question is, is it going to be good enough to draw in the flow that we'd like to see? i think everyone is waiting for that to happen because the u.s. is that far ahead of europe and most other areas. we're not showing the strength that is really going to build that conviction that you're looking for. >> any catalyst on the horizon? >> it's a tough call. you need stability, consistent numbers. maybe not spectacular growth but consistent. we haven't gotten there yet. >> we have the jobs number on friday and greek elections on june 17th. anything else? >> you know what, i'd like to focus can on the u.s. economy and normally it doesn't. i think to me it's a little overblown also and i've said that a couple times with yields
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and i think it's a little overblown. you're looking at companies not spectacular earnings but really good earnings and they have a good momentum going forward for the third quarter and fourth quarter. start investing in individual stocks and the macro picture, more at the micropicture. that's my thing. >> boy, you are a contrarian. >> i am, absolutely. >> thanks, guys. we're in the final stretch. 45 minutes until the "closing bell" sounds. market down to 16 p. not at the lows but close to it. >> fears of europe may have hammered shares of morgan stanley this month. is it time to bank on this beaten down stock? >> tomorrow i'll speak to james gore man live from the company's headquarters. find out how much fallout they are facing from that facebook ipo. that's tomorrow right here.
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jackie? >> we're watching shares right now up more than 3%. news out today that the company is acquiring an israeli photo company. this is part of it. also, the company ceo speaking at a conference today. he's talking and making comments about recession resistance. also, the low-price points for the business making continuous and not and look at the train day on this one.
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and still a competitive business environment for this business and ones like it. >> you just never know where you're going to find courtney reagan. >> i'm here at the nymex and crude oil, especially sensitive to moves in the euro today. falling more than 3% to settle at 8788. that's the lowest that we've seen since october. marking a 16% slide for the biggest monthly drop since december of 2008. we're going to be watching any headlines out of europe as well as those economic data points, including job claims that come out tomorrow. gold, however, die verging from the euro. going the opposite way and pairing those losses and moving higher just after the equity markets opened. i'm told it's mainly on some technical buying but rbc george
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says european buyers coming into currency efforts. >> morgan stanley and the stock down a staggering 23% on concerns of a downgrade and of course for the month of may and the macro editor of risk reversal and jeff hart is with us as well. he covers the name. good to see you both. thank you for joining us. let me kick this off with you. let's talk about the chart of morgan stanley. what it's telling you and how much of the europe problem is priced into the stock. >> absolutely. the first chart we have is morgan stanley versus the european banks. it's a five-year chart and what is amazing to me, which is really incredible, is how
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closely the two tracked each other. and anyone who thinks that the interconnectiveness of the financial system should take a look at this and this is a second chart for morgan stanley and you can see that euro crisis lows in the fall of 2007 retesting that level now and morgan stanley is going to follow them. even though it's oversold, they are signaling that the chain is weak. >> if you're on the other side of that, do you not worry about the european exposure here? >> well, when i look at morgan stanley, what i see is a great investment. a good entry point for that. i can't tell you whether it's
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going to be a good month, week, quarter. that's going to be very macro dependent. morgan stanley has shown a correlation to europe. really the whole u.s. banking structure. it's not as though the citigroups of the world have avoided that either. at the end of the day, the europe is the second biggest economy in the world. if it has got problems, all of the banks have problems. i don't know much on a fundamental basis. it's a morgan stanley problem more than it is a large cap investment bank problem. >> what about the facebook ipo. any more fallout that you might expect there? >> i don't think it will be too bad. it's a lot of embarrassing headlines, even if they did nothing wrong, the headlines are coming back at them. twh when it comes to tech ipos, they have been a leader as long as i can remember. in my first impression, it isn't
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too damaged. make no mistake, it's a negative to be on such a large high-profile ipo and have it go down. >> real quick, anything that reverses your opinion? >> i think the ecb intervention -- >> that would make you positive? >> absolutely. >> good to have you on the program. thank you so much for that. don't miss my exclusive interview tomorrow with james gorman. live from the trading desk. that is tomorrow at the headquarters in new york city. from the facebook ipo fallout and the exposure to europe. 4:00 p.m. eastern. >> a lot of buzz on the floor. it should be pay-per-view. 30 minutes left here to go. dow off the lows of the seg. the next guess says the united states is what could do our market an economy. he's got a big warning about friday's jobs number as well.
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the dow is on track to close lower in two years. bob pisani? >> consumer names and health care as well as the rest of the market, the industrials and materials and energy stocks, take a look here. the major sectors, energy getting destroyed here. 3% decline for natural gas, 3% decline with oil, that will do it to you. the u.s. is the place to invest. maybe the rest of the world, the u.s. is in the middle of the pact. china is doing better, australia isn't, france and brazil, they are still on the down side. guys, back to you. >> one of our next guests says we have enough problems here in the u.s. to worry about. he is here to scare the kids. he says his biggest concern is friday's jobs report.
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>> he joins us along with anthony chen. good to see you. let's stop right there. the jobs report. the expectations are for the employment to tick up. 120, 130,000 jobs accounted for. >> when you look at how many jobs we're going to have, they are not going to be at the high income variety of jobs. look at 77% of jobs created in the last six months. retail, hospitality, leisure, low-income jobs, therefore you have to expect that the gdp going forward is not going to be that great. another reading tomorrow, friday, it's going to be miserable. >> how come you're so negative? what happened in the last month that has created this negativity? >> the participation rate is going to go up. men and women are on tour and they are looking for jobs. also grads. you have to suspect that. have your viewers do a simple search. pages and pages of layoff announcements. those companies aren't hiring
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because they are firing. >> you're the economist here. do you agree with him? >> the participation rate has come down to the very low level and there's a chance it can pick up. i'm certainly not that bearish. i think 120,000 or a little more on payrolls is certainly feasible. >> but that is not -- >> that's still not where we are supposed to be. >> the at turn alternative is a lot worse. it's still consistent with an economic growth base of 2% or somewhere in that neighborhood. >> and you think the market is priced in. >> no way. we're talking about europe. it's a headline-driven market. and then friday is obviously the big whirlwind number. >> what kind of a reaction will we see. let's say we get fewer jobs. do you think we will see a
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further selloff? >> i don't think we're going to see a further selloff. this market in the first quarter, we can talk about earnings all we want. macro data and all of this and that. it's all about further accommodation. you want quantatative easing and that will happen. >> are these the economic conditions that would warn economic easing from the fed? >> at this juncture i don't think the fed is likely to react. you've certainly heard the comments and you're hearing more and more noise from the european bank that they are ready but they are not chomping at the bit to do more. if things deteriorate further, other central banks and other fiscal policies will take place in places like asia, china, and certainly in other parts of the world. >> i'm wondering if it's a negative if the fed comes back again with more quantatative easing? do people say it's overkill
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here? it's an issue because the fed is manipulating the market. >> it's never a positive when you have to take antibiotics when you are sick. you'd rather not take the medication. at the same time, if you don't take it it's going to get worse. >> we're asking investors about facebook right now as it has come down in the last couple of weeks, would you buy it at these levels yet? >> i used to be a fan of facebook. here's my concern. you have to suspect with all of the retail interests in this stock and the ipo, you probably had a number of their users buying this stock. they've lost money. you think they are loving this website right now? you not only risk hurting investors. i think you risk hurting your base, your clients. that's troublesome for me. they are going to have a lot of trouble. plus, what is with this phone? >> are you going to sell it at 28? are you going to short it? what's the play? >> i've changed my opinion on this. i'm very bearish on facebook. i think the stock is going a lot lower here.
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definitely short at this level. >> that's why we've brought them in, flown the flames around. i'll see you later on the countdown. i've got interesting questions for you on deflation. >> thank you, gentlemen. we'll see you soon. we have a market off of the lows, down 146 on the dow industrials. better than 1%, though. >> more on facebook, they be may acquiring a deal to pop a mobile presence. our next guest says that would be -- and i'm quoting here, another stupid acquisition by facebook, quote, end quote. he joins us next. >> interest rates hitting new lows. take a look. could the low rates be hurting the recovery in housing? don't scoff someone here. >> back after this. [ technician ] are you busy? management just sent over these new technical manuals.
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and the performance evaluation and maria, sending it back over to you. >> seema, thank you so much. >> instagram, the trip chowdlry, julia boorstin is in lovely southern california out there in the sunshine today. so, trip, you think a potential buyout would be a bad idea for facebook? why? >> i think we need to look at the problems that facebook currently faces there are two
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problems that facebook currently has. first, about two to three years back, about 70% came from microsoft ad center. i think investors would want to know how much is coming from existing shareholders, including microsoft and others. the second, 50% of user base is shifting to mobile and facebook does not have technology. >> david, you also think that it would be a risky move? >> right. their return on investment is going to be negative because there's no immediate gain in revenue. the reason they need to do something is that the shift to mobile users is a real challenge for them with a lot of negative connotations. mobile users spend less time on facebook than desktop users. and there's less screen space to
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put advertising revenue or gains, and this is one of the reasons that zynga is making their own games for phones out of facebook. so it's harder to monetize mobile users. >> julia, it's clear that everybody is feeling that they need to find a way to grow this company and some of their ad revenue is slowing down. where are they going to find growth right now? >> i would point to what mark, the ceo of zynga said a couple of hours ago. he said that zynga is port when it comes to the platform of the web. but it's not important to mobile growth. zynga is not sure that facebook is going to be able to pull off the mobile transition. everyone i've talked to here said whether it's through acquisitio acquisitions through growth,
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that's how people are accessing facebook and how to keep them engaged on games on the mobile platform which is what zynga is worried about. >> what about the criticism that the phone -- the screen is too small. they are not going to be able to do just that, julia. they are not going to be able to monetize all the 900 million users. >> i think that right now when you compare the web interface, the mobile interface, they certainly cannot serve the same kind of ads in the same way. the screen is too small. facebook is going to have to figure out a new way to figure out the ads. google adds to the platform and they are not going to be ads and the experience and big question
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is whether or not that turns off users. >> trip, it is clear that the stock is looking for a bottom still. it's dangerously close to $28. would you buy at these levels here? >> no, i don't think so. the reasons are many. first, facebook will need to do a few things. they need to link monday tie zags to mobile action, such as linking, sharing, bulking, launching an application or shutting down an application and this is the social action that i just mentioned are less intrusive. secondly, the reason that i don't think it's a good century point at these levels because the facebook stock has been totally mispriced. >> gentlemen, thank you for
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joining us. julia, thanks. kayla tausche has new developments involving kayak. kayla, over to you. >> the initial public offering of kayak is delayed in the wake of facebook's flop. investors are licking their wounds from the facebook deal. it doesn't help that the salespeople are going to be roughly the same, also leading kay kayak's deal. it would be an offering of $150 million. that would value and facebook traded above its issue price for all of last week. the delay doesn't come as a surprise since we know how the facebook story ended. kayak ipo in the second quarter still a possibility because
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after all the company has been on file for nearly a year and a half at this point and finally has one good quarter of good earnings in its back pocket. this is a story where we need to stay tuned. maria? >> kayla, for sure. thank you so much. >> yesterday we looked back over the last 18 years and found whether the lead underwriter has stayed in the lead regardless of what happened. even though morgan stock has taken a hit, it doesn't look like they are losing share on these technology ipos yet or so far. you just don't have that evidence. >> and you just saw there. facebook breaking below $28. we'll take it on another dollar level there at 2786 moments ago coming off those lows. >> where is the bottom on this stock? extraordinary to watch. 12 minutes to go before the "closing bell" sounds. after dismal first quarter sales, jcpenney's new ceo is blinking when it comes to having
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there are facebook shares. you can see it's dropping to $28. again, today the low is 2786. now we're at 2793. another 3% decline on the session for facebook. the price is at $38 a share. >> priced a little high, i guess. >> yes. >> according to trip. >> $100 billion right out of the gate. >> jcpenney is another one. let's all recall that when ron johnson came over from apple, he's the man who created the wildly popular apple stores. his first strategy at jcpenney was to end the special sales that they would have. the black friday sales and everything else, it was going to be every day low pricing at jcpenney and it's been a disaster. but bill ackman said yesterday -- well, let's let him tell us what he was saying.
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listen. >> i would say the bottom for sales on jcpenney, down 89 is going to be the bottom. you'll start to see real progress and jcpenney has abandoned that strategy. they are going to go back to typical retail sales to try and draw that. >> is that the problem? i mean, this stock has been destroyed year to date and can you really say that's the only issue, the fact that they didn't have the different sales strategy? >> and how would you like to be ron johnson? he just got there basically. i mean, there is the rally that the stock is on in the early part of the year when he came aboard. everybody has all of these high expectations. >> when was the last time that you shopped for jcpenney? >> i don't even know where jcpenney is. how about you? >> i don't think i've ever shopped at jcpenney. >> ever? >> i asked you first.
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>> that's dangerous. >> i don't know. i can't remember. >> don't do that to me on the air, bartiromo. >> show me the spanish ten-year yield. this number has been spooking our market lately. 6.7% on the ten-year in spain. right? >> they are rising. they are rising. >> i know what you're going to ask me now. i can already tell. we've worked together long enough that i know what you're going to ask me. >> what am i going to ask you? >> when is the last time that ten-year notes yielded 10% in the united states? show me the chart. you would have have to go back to 2000. here's the difference. they are scared about that in spain because they don't feel that they are growing fast enough. they were covering that yield. we were growing fast enough back in 2000 to pay off a 6% yield on ten-year notes. >> every tick up that we see out
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of spain is making it so expensive for them, tougher to create that and causing more stress. everything is so related and unfortunately that's driving the u.s. market as well. >> one last indicator. this one from greece. we all have our market indicators. we watch it very carefully. apparently over there they have the oozo indicator. have you heard this before? one proprietor said that when the traders would finish and the good times in greece, when they finished their day of trading, they would come in and buy three jugs of oozo per guy. >> what exactly is an oozo? >> maria, you're always doing this to me. i don't know. it's a drink that they drink in greece. i don't know. >> fine. no problem. >> here's the point. in good times they would buy three jugs at a time. now they are down to two jugs. okay? so it's a two-jug crisis. >> all right. >> in greece right now. >> well, there you go. >> what is oozo?
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that's what you asked me? >> i'm trying to figure out if this is a hard liquor? >> apparently it is. i suspect the gentlemen standing around here would know what it is and whether it's a hard liquor. just a hunch. we're coming back with the closing countdown, i think. >> we have the market down 140 after a selloff on wall street. also, this story. new york state has sky high taxes and people are leaving the state at a sky-high rate. higher taxes means lower tax revenues. and then there's our twitter question of the day. do you think it's realistic to expect cuts to medicare in order to shrink big government? give us your thoughts on that. tweet us @cnbcclosingbell. nbccl. ...which helped students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them.
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well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. okay. coming up on the closer, let's get to jackie who is here with us for the market flash. what is going on? >> we are watching shares of
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osiris taking a nice pop. they are up 6% on the day and as much as 15% intraday. a big pop there. one of the few bright spots as we go into what seems to be a pretty bad day for the markets. back over to you, bill. >> thanks again. down 149 points right now. here's what i want to show you, though. this is -- it's stunning, some of the developments that we're seeing here. look at the yield on the ten-year note. 1.62% is the yield on the ten-year note. but good news for home borrowers, you would think, or is it? we'll talk about that next hour. the price of oil continues lower. big hit today on new york crude down 3.5% to $87.60. then the euro. this is a two-year low down to $1.23. you wonder if $1.20 is far away. is the market trying to signal deflation right now, do you think? >> i think right now the market is telling you that there's a lot of uncertainty and it's
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piling over into the united states and with regard to deflalgs, we have energy prices coming down and that's actually very good. for every penny with the price of gasoline, you're throwing more than $1 billion of purchasing power for consumers and that will be the force that will regenerate the whole system. >> that will be good news. there was a time when lower energy prices would be good for stocks but lately stock and energy have been going in lock step. >> they certainly are now. gold was doing that for a while, too. we saw a massive reversal? gold. today we're seeing the markets rally. maybe energy comes to that going forward. we come to this employment number on friday. the more we look ahead, the more we're missing. >> next big data point? >> i would think so. i think that's what the market is looking for. greece and italy and spain, too big of a factor. >> thank you both for joining us. we have a lot more to come with the dow down 150 points.

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