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tv   Closing Bell  CNBC  June 12, 2012 3:00pm-4:00pm EDT

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for swearing in public. thank you for watching "street signs." "closing bell" is next. see you tomorrow at the same time. >> hi everybody, welcome to the closing bell, i'm maria bartiromo, another whiplash day. >> yeah, it's might be's guest how we will finish the day. stocks are swinging higher for the moment as investors shrug off bad news about europe. here is where we stand right now. talk about a roller coaster ride, there you go. the chicago fed president coming owl with words of encouragement that the fed will be there, whatever needs to be done. that sent the markets higher, but we have been meandering
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sense. we're up right now. the nasdaq at this hour with a gain of three quarters of a percent, and the s&p 500 is up 10 points at 1318. >> i want to show you jpmorgan shares today. mr. dimon is going to be explaining the trading debacle to lawmakers that cost his firm between $2 and $5 billion dollars. we'll have the latest tomorrow. i hope you will catch my interviews with the senate committee members that will be grilling mr. dimon and other guests tomorrow. >> in the meantime, it's good news out of europe, stocks fall, equities rally, so what's going on right now. >> let's get some inside on where trader's heads are at.
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let me begin right there with you michael, what kind of second half are you expecting? a good rally but is this sustainable? >> no, i maintain my sort positions. charles evans said today he would do some dance and stomp his feet and do everything he can to bring about qe 3 on june 20th, and that's the only solution they have. what they asked the italians to do was borrow in the free market which is $6.21% and loan money to another nation, spain, and get 3% maybe. that's not going to work. that's why you saw cds and the bond yields blow out today. >> spanish yields hit record highs earlier today. any other time that would have been cause for alarm on wall street but it's not the case today. >> it's interesting. a lot of people this morning
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sited the late morning rally of a banking union. i think spain didn't move yesterday on the bailout, but the german banking officials have been out trying to explain this. people think it will make a difference. the germans are just not going for it. they came out a few moments ago saying it's not the way out. they're going to try to fight this the whole way. >> bob and maria, i want to add one thing, this is not a banking crisis. in 2008 the u.s. bailed out our banking situation. we have a 60% debt to gdp ratio. they are 90%. they cannot ask now to borrow more money to loan to banks. >> they have to case capital so how will they do that. >> i assume if the chinese don't do it it will have to be the
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ecb. and then you look at that inflation and higher yields in the long run. when you owe more money than you can ever possibly pay back, you must default on that debt, and you should do it explicitly and not through the central bank. >> rick santelli, i know you must be itching to jump in on something like that. >> when it comes to europe, can if you're being frank, there is two ways to go. you let them default and hit a reset button, and that may be the best solution for a country like greece, it's not necessarily the best solution for italy. in spain there is no solution in my opinion. it's real estate, what could they do? i have heard gold come up more and more, and i did a spot on it as well. just consider, they have 2400 tons of gold in italy. that would have a street value of $123 billion.
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why don't they do a little security on the fixed income side. >> the italians need to hold on to their gold with both hands, it's the best thing they can do. >> why, it's collecting dust, europe is sinking in the water. >> are you advocating a quasi gold standard there? >> i'm thinking yes, do it in terms of the bonds. put a portion of the bonds backed by gold and investors -- >> those bonds not backed by gold will just crater in value. >> they're cratering now! >> is anybody out there embracing free markets? what's wrong with having the free market work here.
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let's let what's going to happen, happen. >> you tell me a single politician that would allow the free markets work and expect to be reelected. why would they let it work. >> you nailed it. >> rick santelli said we should run congress like jury duty. you go there for two years and then throw them out. serve your country and then go home. >> if only it was that easy, right? >> if only it was that easy. >> thanks, guys. we're in the final stretch, about 50 minutes until the market closes. it's moving up about 121 right now. >> we're not done, stick around we have heavy hitters still to come on "closing bell." up next jim rogers gives us his
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welcome back, our next guest says bailouts do not work and greece, spain, and any other nation on the rope should be allowed to go bankrupt. >> guess who said that? no one else be jim rogers, back in the country. how would that work though? as you said yesterday, just let them go bankrupt, smart money will come pick the pieces up. >> new york city went bankrupt, mississippi it once, detroit is bankrupt, the world didn't end. you reorganize and start over.
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it's been happening, there's nothing new. you know who loses money? the bondholders and the bankers. the whole world remembers that, right? >> and that was wonderful they let lehman brothers to bankrupt. >> how do you protect your money? >> how does an investor? >> yes, if this contagion spreads, we see some of the countries go bankrupt, and the implications are global market selloff. >> sell stocks. i'm short because i think there will be more problems in world economy in the next year or two. they're making the situation worse. maria, too much debt does not solve the problem with more debt. >> tell us your scenario, what do owe see happening?
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>> i see more bailouts, more debt, the world goes into a recession and economic slow down, it will be worse in 2014. we had a recession in 2002, 2007 and 2008 the recession was worse because the debt was higher. the recession is going to be worse, this is not going to be fun. they're getting us all into a terrible, terrible situation. and to bail out some european banks instead of making them take their losses, their trying to win elections. >> they're all down too much. i'm short european indexes, but the banks are down too much. >> so the valuations there, would you be buying them? >> no. banking industry in the west, anyway, has serious problems that will not be resolved for a long time. >> let's go on to other areas
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where you could possibly invest. let's talk about oil. donald trump was on "squawk box" this morning. he has a theory why oil is where it is today. he thinks it would be higher if it wasn't for what saudis are doing for president obama. >> i think he's saying do me a favor, i have to get reelected, you can't keep doing what you've been doing and driving it up. assuming obama got elected, you will see something with oil like you have never seen before. it will go through the roof. >> i think you agree on the price, but the reasons why -- >> i don't take my advice from mr. trump i'm sorry to say. >> the price of oil may go down for awhile, china and india are slowing down, but he is exactly right. over the decade the price of oil
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will go through the roof. the surprise will be how high it stays and how high it goes. it could go to 70 in the meantime, but if it does, you should buy a lot of oil. >> given the supply, should oil prices be where they are right here? >> maria, the international energy agency are saying we're running out of oil. we have a lot of sheal oil, but everyone else has declining reserves. i don't like saying it, but unless someone finds a lot quickly we'll have higher prices. >> what about natural gas then? we have a oversupply now, but if we find ways to convert to natural gas and use that instead here in the united states especially, what would that do? >> the bull market and commodities will come to an end some day, what you just said may
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be the solution, but some day is still a long way away. >> my question really implies would you invest in natural gas right now at these low levels anticipating a higher price. >> if i had to buy energy today it would be natural gas. >> are there any stocks you would buy today? >> not that i can think of. i know it's cnbc. for the most part i'm short stocks. >> what would it take to change that position? >> if stocks collapsed around the world i would buy a lot of stocks again. but i don't see that happening. i told you the economy will be bad next year. why buy stocks in the face of something like that? >> you're just back from china. you're the man, who years ago, was talking about a china as a great investment longer term. we're witnessing a tran sis for them. they're economy is slowing down, they just cut rates, you're just
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getting back, how are they dealing with it right now? >> the chinese have been right to cool things off, they have been for three years. i would stay tight and keep it tighter until the inflation has demolished. but i don't have to answer to mobs in the street in china. they think they need to loosen up now and they seem to be loosening up. >> in terms of the demand story, what do you see in terms of the slow down? >> the slow down in china is still a boom everywhere else in the world. >> we'll take 8% here. >> yeah, we'll take 4% here. >> so you think the commodity story is still in place? >> yes, if everything collapses next year, hopefully my shorts will protect me because commodities will go down too. >> back here the anticipation is
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the fed wills come in with more bond buys and qe 3 they're talking about. i know you don't like it, but is it a necessity at this point to keep the economy from dipping too far into the recession. >> spending more money is not good for anybody. you, the viewers, our children, or anybody else. it's bad for america and the world. it may get mr. obama through the election, but bill, i'm here for longer than just november of 2012, this is not good for the world. >> i don't care whether mr. obama is elected. i know your neutral, but i don't care. >> what are the implications of printing money? >> it's the basement of the currency, weak currency, turmoil, inflation, higher interest rates. maybe it's different this time --
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>> do you think obama wins or no? i know you don't care. >> i would bet he will win because it's difficult to unseat a sitting president. the republicans have only done it once, he will spend a lot of money in the right states. mr. bernanke is printing a lot of the money. >> will the market sell off giving the tax situation? >> he only has to get through november, next year will be bad, they will raise taxes next year, there are many reasons next year will be bad. >> you're waiting to buy gold? >> if it goes downly buy more and you should too. i know you're not allowed to, but i can. >> great to have you on the program. >> thanks for joining us. >> the dow is up 122 points. >> since news of the big trading
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loss brook, some say the stock is right here, we're talking jpmorgan next. and it will not be a good day for jamie dimon tomorrow. we want your thoughts on tomorrow's capitol hill questions of mr. dimon. give us your thoughts. tweet us. jimmy is just now rushing to his computer so he can tweet us. we'll get your responses later in the program.
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a rally in u.s. oil prices helped the energy sector today. a different story overseas though isn't it? >> differently, i love your attention to detail. it is a mixed picture here. we have slightly higher pictures for wti crude. we had a settlement low for present crude in this session, and that continues to be under pressure. we are looking at oil prices for gasoline demand according to the latest report. it was down 3.5% last week over the same period a year ago. we're continuing to see greater decline year over year in gas demand and prices at the pump fall slightly. we're continuing to watch that and a lot of news that could effect oil price direction.
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we have the agency's monthly report tomorrow, and opec on thursday. >> thank you, here is jpmorgan today on the upside. it is getting a good bid today on wall street trading higher ahead of a court day tomorrow for the company and the ceo of course. jamie dimon has the senate testimony. since the loss first broke -- list tyke out what the numbers are saying. we have ennis tanner here. and marty mosby is for us. thank you for joining us, we'll kick it off with ennis. >> what's interesting is what happens with goldman sachs in the doj investigation into the advocacy situation. this is when you have the
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announcement and this is what happened with jpmorgan more recently in may of this year. you see that the falls have resembled each other after the moves, so in goldman sachs case it for more than 14%. if we go to a five year chart, you see jpmorgan is close here. i think goldman sachs since that investigation is down an additional 30%. i think jpmorgan because of the lawmaker scrutiny will follow a similar path. >> goldman sachs is different than the jpmorgan trading loss. >> i think it will clamp down on the proprietary trading. i think that's going to be paired back and hit it's earnings power. >> so you're a seller right
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here? >> yes. >> what should we be focused on the testimony tomorrow? >> we should be looking for the division between this issue on the hedging side, and the complexity of these larger banks and do begin to break them up. as long as it focuses on the hedge issue, we will see that trade out of the stock price, and while we might see sort term technical pressure, this issue will be resolved and we'll see upside potential. >> so you think the near term could be vulnerable, but longer term you see this is a bargain. >> yes, we see about 10% downside and then after we go through that process, we get back to the earnings level, being able to generate excess return to the capital costs they have which would be a 20% premium and seeing growth in
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tangible premium and you will be able to repurchase shares again. >> thank you so much, if this stock goes lower over the near term. thank you, join us tomorrow for a special show. we're coming to you live from the capital where mr. dimon faces those questioners. several of those questioning him will be with me. i will also be talking with the always outspoken senator from virginia, bernie sanders, he has a lot to say and will be vetting it here. that's tomorrow for "closing bell live." heading towards the close, facebook still well below that $38 ipo price of a few weeks ago. now a new study commissioned in part by facebook suggest that advertisers get a big bang for
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their buck on facebook. and was goldman sachs saying even the threat of driving off the fiscal cliff is already hurting the economy? >> i don't know what i'm going to have, what my net will be after taxes, regulations, or what result is except that it will be very consequential so i think i'll wait. >> gene sperling coming up. 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. tdd# 1-800-345-2550 that's a deal in any language. tdd# 1-800-345-2550 open an account
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. wall street capable that facebook can monetize advertising long term. it is well below the ipo price. today the technology marketing firm released a study claiming advertising on the social network does impact consumer behavior. >> it was partially commissioned
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by facebook. those that lick -- click on like are more likely to buy that product. beyond paid advertising, the report found that sharing posts about a brand was equally as effective. >> joining us now to talk about the studies highlight is jan, and julia. thank you for being on the program. your finding seems to be in contrast with a survey cnbc did with the associated press shortly before the ipo of facebook which cast questions on how much bang advertisers are getting for the buck. and advertising on the mobile part of the business. >> we mentioned the way in which a brand marketer can leverage the persuasion of fact that a
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person has on their friends. it's clear with f a brand communicates a message to the fans, and it is building rapidly, as that is disseminated to their friends, it has a persuasion impact that is significant. so the message is coming from somebody you know is more persuasive than if it comes from the brand itself. >> how many of those -- what percentage is that of facebook users? the survey found that 80% of those surveyed don't pay much attention at all to the adds. so of those that do day attention they buy more. >> here is what is tricky. if you can people if any kind of advertising has an effect on them, most people say it doesn't. they like to think of themselves as rational decision makers.
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so the only way to measure it is with controlled experiments. and you measure their behavior, and that's what we did. >> what about the behavior on mobile devices, this was a big issue around facebook. do people pay attention? >> the work done shows that maybe it's part of the novelty of fact that advertising on mobile devices since it's relatively new, it captures more people's attention. i think the issue that is more relevant with mobile is if you can monetize mobile traffic the way you can with a large screen pc access. and i think that's an issue. at the same time, i think there are many ways to monetize that mobile traffic. you know where these people are, you can send them price and promotional information. it's very relevant. >> julia? >> i want to ask you about the
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fact that your study really focused on the fact of unpaid messag messages, what they call earned media. if facebook marketers can get so much for free, why should they spend money? will they go the way of general motors that dropped their paid advertising and decided to focus on unpaid on facebook? >> that's a good question. what we have proven now is this persuasion effect works in a strong effective manner. if you want to really amplify the reach of your message. i think that's where paying facebook to get better placement of that message works pretty well. i think it's probably possible to dramatically increase the number of people that you reach by having a better placement, as i said, in much the same way of the search engine marketing. so to have your ad appear on the
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top of the search query answers. so i suspect that is pretty capable. >> are there other areas you see revenue potential? away from the advertising part of the business? or is this the business model we will be looking at for facebook from here on out? >> i would be astonished if advertising was the only way to monetize this massive amount of traffic. >> could they do a better job of monetizing the advertising revenue? >> giving what we have seen, the persuasion impact is really, really powerful and brings a very new and unique dimension for the targeted effectiveness of advertising. and beginning to monetize -- >> i have to ask, facebook is giving a lot away for free, do you think facebook should charge
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marketers to have such a significant brand presence and maintain the pages they use to communicate with users? >> that's a question that i'm not sure i'm in the right position to answer. i mean it is a very interesting question, but clearly at this point what they're trying to do is to monetize the capability of facebook by charging for paid advertising on top of that naturally occurring influence and amplification that happens with friends and friends of friends. >> thank you for joining us today. >> thanks so much, appreciate it. 20 minutes until the market closes for the day. up 128 points, better than 1%. >> so are you in or out? one of our next guests say if you're just a spectator, you will miss out on big money make f making opportunities. >> at 4:00 p.m. what is going on inside the west
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wing to keep us from falling off the fiscal cliff at the end of the year. we'll talk about what bill clinton said last week about extending those bush tax cuts. >> love the graphics by the way. holy cow. >> love it. >> first, before we go to break, a dividend, which russell 2,000 stock is outperforming this year? the dividend pays off after the break.
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just before the break, we asked which russell 2,000 stock is outperforming this year? now, the payoff, sketchers usa has risen about 67% year to date. >> all right, we want to get to the market flash desk with a update. >> thank you, the biggest driver in the dow today is boeing and it's pretty much at the highs of the day. they're targeted 1,000 orders in 2012. today they were upgrated to
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overperform. as you see, a good climb up that chart today, about 3.5%. >> not bad. facebook doing all right today, but another social media stock getting hammered. jackie is at the nasdaq with details. >> yes, a tough day for zynga. this on the back of a report saying that facebook gaming is on a quick decline at this point. their daily active users fell 8.2% in may. the shift seems to be from social to mobile games. ann list saying it may have reached a negative inflection point. and speaking of facebook, you talked about the come scores study before. thank you, the last time one of our guests was on "closing
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bell" she raised her nasdaq closing price to 14,000. we had our worst week of the year, and she is back today, and she is boosting her year end target once again. >> yes she is, here to tell yus she is so bullish on the markets. we also have steven hammers with us. so, we can kick it off with you. we had a rough month, and you're still bullish? >> yes, sentiment is more negative than it's been in the last 15 years. generally that's a better buy signal than a sell signal. we measure the equity allocation to equities in a balanced fund and they're at 50% instead of a normal range of 60 to 65%.
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>> so you're taking a contrary play, basically. >> yes, so yes, buy. >> i read that one of your indicators is pointing to growth. what's one indicator that's not. >> one is the fair model value which is based on a cost of equity capital assumption, but it's suggesting reasonable upside maybe 13070 by year end. so the next signal is that we could see more reasons to buy and sell equities at this point. a lot of investors likened today to heading into last year. the sentiment is more negative. none of this is new information. valuations are cheaper, and investors are more conservatively positioned today. >> and we should point out that the market now, back to the highs of the day with a gain of 154 points on the day, which
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groups do you want to be exposed to, and steven i want to bring you into this, do you agree with the bullishness? >> actually we're bearish. we began shorting u.s. equities a couple months ago, international equities a few months ago as well as commodities. we follow the price for our investors rather than looking at the fundamentals. >> you think it's going lower from here? >> yeah, you will have some up days and down day days, but our correlation is low to the u.s. stock mark. >> are you talking two different time frames though here? >> we're looking at near to intermediate term range. >> i'm thinking in 12 months from now. i think it could be dangerous between now and then, i'm not
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saying load up on risky investments, but i think we could end up in a better place than we are today, let's say 12 months from now. leadership i think will be in the higher return types. >> anything you would buy here? >> no i have wouldn't. >> unless it's an ultra short atf. >> i would not go 100% short, we're about net 30% short. an investor needs to look at cash or alternative options to get the return somewhere else. >> why are you so negative? >> it's certainly not the fundamentals of companies, companies look great in general. it's the macro problem, the luggish economy, and the demand for risk is really what it is. >> so the private sector looks fine to you? >> it does, it looks great, but it's all about the price. >> he's making fun of something yesterday when the president
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said the private sector looked fine and then back pedalled. >> that's me again, the jokester. where we were now? >> we're in the final stretch, 15 minuting until the closing bell sounds. >> so was jpmorgan's big trading loss a mistake? donald trump thinks so. we'll wear what donald trump things. >> send us a tweet @cnbcclosing bell.
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okay, so all eyes on capitol hill tomorrow when jamie dimon testifies about his firm's big trading losses. >> and this morning, donald trump weighed in on the hearing and why he thinks dimon made
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major mistakes since the story broke. >> i think he played into the hands of his enemies. they made a lot of money this way too and we don't talk about that. this could have been we make and win some and lose some and not made such a big deal and quietly fire people. but the fact was that it was -- i think it's been handled very poorly. >> there was an interesting point made today, and she said we're missing the point on this debate. it's not about how much they made or lost, it's the fact that they couldn't get to the bottom of what caused the losses in a timely manner, and it pointed to what paul said, that maybe jpmorgan chase is too big to manage at this point. that could be an issue for them tomorrow. >> there's another side of this that says if you have one risk part of the bank there are other
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parts of the bank for super markets that offset risk in another part of the bank. of course this testimony is bringing up the debate of whether or not to break up the big banks again. why do we continue focussing on this when it was jpmorgan's money, tax money was not involved, and it was a losing trade that happens everyday. >> because we're talking politics, that's why. >> because it's a political year. we're coming to you live tomorrow from capitol hill. i'll be talking to them after the meeting and we'll get their takes of what happened after the meeting, and bernie sanders says why he thinks jamie dimon should retire. that's tomorrow on the losing bell.
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why this could indicate why he should resign from the board of the fed will be tomorrow. >> meantime, the rally continues here, the dow up 151 points, the industrial average at 12561. i think they're sensing that they will do whatever they have to to prop up the market. >> or they are sensing a change in the white house and it's a romney rally, we'll see. up next we'll be back with the closing bell. verizon wireless unveiling a new data plan. is it good news for shareholders and bad news for smart phone users? ♪ [ male announcer ] ok, so you're no marathon man. but thanks to the htc one x from at&t,
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minutes left in the trading today today. this is the ten year yield on the spanish debt. right after the open is was getting precariously close to that magic 7% level that is so unsustainable, and then it backed away completely. and the euro moved in tandum with that. it was at that point that our market started to take off as well. so the dow you see finished higher and we're finishing near the highs of the session. also the oil market very interesting as well. the spread between the high end, and wti oil here in new york very high right now. the cost of new york data going up.
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less supply and price going up. with present oil, the expectation is for slower growth over there, less demand, more supply, and that spread is narrowing right now. it's about $13 between the two. energy, materials, and financials were among the leaders today. so why the rally today? you know, they haven't solved the crisis in europe. there is no federal reserve, qe action at this point, why the rally? >> why not. it was carry at the end of the day how we closed to weak. i think it's just an absence of news right now. i think we will rally to the end of the week, provided there is nothing coming out of europe. >> an exper ration date on friday, will that be big? >> yes, we should see a rally
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right until then. >> you were nodding your head, you don't pay attention to the short term, you're a long-term investor, why the volatility like this right now? >> i think it's just macro, and the markets are responding more than that corporations have tons of cash. valuations are low, i think the macro overhang is ruling the market. >> so as they continue to trade on headline risk, you will trade on fundamentals and at some point count on them following those fundamentals. >> yes, they may not matter in the short term, but in the long-term you should get paid. one of the best ways to invest in the last couple years, the most consistent strategies have been companying returning cash to shareholders. it's been about dividend growth, companies buying back stock, anyone signaling i have cash and
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i'm comfortable spending it has been outperforming. so i would stick with those. >> speaking of headline risk, does it make sense to you that the market would rally. i get the idea that we have expiration and all of that. do you think anybody will be along this market going into that weekend? >> i think you can take a shot, yes. conclusions will come out, rumors will go out, it will not happen sunday night, it will be forecasted before. take a risk on friday night, not a bad time to do it. there will be plenty of volume. trade on our off that day. >> so you like this market through the end of the year, what sectors will take us there? >> may favorites are tech and staples. they've got a lot of cash, they're starting to outperform. staples is a good hedge against the end of the world, so there yo g

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