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tv   Closing Bell  CNBC  June 13, 2012 3:00pm-4:00pm EDT

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thanks for watching "street signs," "closing bell" coming up next. hi everybody, welcome to the closing bell, i'm maria bartiromo coming to you live today. jamie dimon acquitted himself today after testimony, a strong day, bill. >> if you look at the dow or jpmorgan chase, a selloff for the first half hour until jamie dimon took his place before the senate banking committee, and then the market recovered those losses, how bizarre is that? >> as you mentioned, wall street
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getting the sense that jamie dimon held his own in front of the senate banking committee, financials among the standouts in a lackluster market today. that's where the money is moving today, in the financials, even with the market losing steam. the dow down about 55 points. >> watch this last hour though. this is an expiration week, and i hear from traders that market on close orders will move this market, and it's starting to happen as you see. lows of the day for all of the major averages, there is the nasdaq down 15 points now, and the s&p 500 index just off the lows at 1517. so with this expiration and market on close orders, this could be an interesting hour, maria. >> all right, let's get more on the big story everybody is covering today.
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that is kajamie dimon's testimo. >> just within the last 20 minutes or so, jim crammer was on our air saying he thought dimon was a loser. in capitol hill terms, he emerged a winner. there was an expectation he would get a bloody lip here, he really did not. the senator ds not lay a glove on him at all. the one bit he might regret from this testimony today this was coming soundbyte where he talked about proprietary trading and it might play into the hands of others. >> you can look at almost anything we do and call it one or the other. every loan we make it proprietary. if we lose money the if you remember loses money. if we buy treasury bonds and we
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lose money, we lose money. so i have a hard time distinguishi distinguishing. >> if you have any doubt about how he met. jamie dimon playful dodging cnbc cameraman here. he felt he had a very good day today, maria. >> thank you so much, let's get more on the closing bell exchange right now. >> yes with us is steve rapner, and mary thompson who interviewed jamie dimon. you pressed him on the still undisclosed size of the loss from this trade. let's listen. >> tell us how bad it can get? some estimates say the loss could total $5 billion. >> i consistently told youly not tell you. on july 13th, we'll tell
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shareholder what it was in the quarter. in the testimony today we said the risk has been reduced such that it could still lose money, but it will be the probability is less and the magnitude is less. here is the way to say it. we say we will be solidly profitable in this quarter and in the third and fourth quarter unless something else goes wrong. but it won't be because of this. >> so it could be -- >> you can ask 100 times, i'm not going to tell you. >> good try, mary. and she would have asked a million times too. >> i would, but we were running out of time. >> steve rapner, where is the transparency on that? is he obligated to tell us? >> i think he is on july 13th to give you a full update on the financials for the second quarter. he is obligated to disclose
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materials. i think he told you all he needs to tell you. he is just trying to protect his position. they have to unwind these positions and he has to be careful about what he says until that's done. >> steve, how come we don't know or understand the severity. is it because we're in the middle of the quarter? we're trying to trade our way out of it? make it as minimal as they can, but there is expectations out there that there is a range of $2 billion to $5 billion. why don't we know a specific number? >> for the reason you said, maria. they're still trying to close out of it. each day it will be a different number. i think he wants to get out of these positions before he says to. i'm sympathetic to that. my guess is their loss will be at the lower end of the range than the higher end, but we'll
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find out. >> how did he seem today? we saw him coming out euphoric, but it you sense at all that he was nervous about this? >> no, i don't think he was nervous at all. defensive at times maybe, but even at that point middlely so. we worked, years ago he said he needed to work with his relationship in washington. he was on the cool seat today. he was a little defensive for a couple questions, but all in all he is very competent in how he runts his business and he kept going back to that. he admits mistakes, he's up front about that, so he was the jamie dimon that we have all come to know over the last couple years, upfront and very confident. >> why did the market recover as soon as he sat down? >> i'm not sure i would give it entirely to jamie dimon, but
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jpmorgan moved up, financials moved up, jpmorgan's volume is twice the normal volume. people thought he would get beaten up terribly and he didn't. he was confident without being cocky. he was contrite without hiding under the table, and a lot of the discussions was on policy issues, which is his forte, rather than the company. >> rick s, can jump in here. >> we didn't see much of an impact on treasuries. we hat 1.622, lowest rate in a year. we dipped blow 160. we're down seven basis points on the day. it continues to be the ping-pong back and forth, the french had a
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grand plan, wall street journal and dow jones picked it up, so we continue to see yields fall, and by the way, retail sales last month and this month both negative now. not a good metric for the economy today. >> all right, thanks everybody, we'll keep watching. our next guest was a member of the senate banking committee. it is bob corker from tennessee, and he joins us now. good to have you on the program. how would you characterize the hearing today? >> i thought it was a good hearing. i think what it pointed out is that dodd-frank, a bill i did not support, was a compassioned response to a structural issue. people will realize it's not
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going to withstand the test of time like jamie dimon eluded to, and i think hopefully we'll have an opportunity to look at real financial reform, and we really look at the markets and not just an institution. i think that what we have done is you know, drilled down, and a lot of regulators at these institutions, but we have not looked at some of the shadow markets, and i thought it was a very good hearing. >> the only other thing is that what jamie dimon said about now being able to differentiate and acting on behalf of the client. you called it a blip, but you looked at the whole story from what we did and didn't learn from dodd-frank. >> yeah, this is the first time many dived into -- >> do you think most senators understand what proprietary trading is? >> i think they do. we should have had these before we passed a financial regulation
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bill. jamie was never brought in and asked these questions. we should have done all of this work in advance, and i thought it was a very good hearing. what i hope will happen is it will lead to policies that calls our financial system to be ready and be able for this globalization and this economy that we'll continue to confront and one that is safe for our taxpayers, and i think people are beginning to realize that dodd-frank missed the mark. >> what should dodd-frank or the new legislation look like? we're going to focus on capital or something else? >> i think you should look at capital. you have to look at how the capital is composed, and was the bank engaging in it. different banks and financial institutions have different capital needs because of the risk and the behavior their conducting. i think we ended up with a one
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size fits all thing. community banks are under the same time of regime that jpmorgan and others are. i think we need to look at markets across the spectrum. a big part of what happens in these markets is not happening. i think it pointed out the frailties of dodd-frank today. that's what i hoped we would do. i'm here wanting us to have good policy as a nation. and i know a lot of media thought that jamie dimon wasn't beat up enough, i could have beaten him with a rubber hose, but -- >> i agree, it was a stockholder loss, they took the hit, there was no affect on us. so to me this was again, an opportunity to engage in a policy discussion, and i think we're going to have that policy discussion and i think we will end up with much better financial regulation down the
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road that's safer for our country. >> mr. dimon made the point that when you have a big banking super market, and there is a loss like this, others will offset it. where are you on this too big to fail issue where the masses will say this is exactly the reason that this bank is too big to manage? >> it's interesting. he was talking about the loss, you know $30 billion in loan loss reserves this year. it's a much bigger number than this. the most risky thing that a bank does is make loans. they have $700 billion worth of loans out there. why are we focused on the amount of money they will lose on loans because we all think that is a good thing. i do think that what we don't want to have happen is institutions not being able to hedge risk, but i think obviously this was one that was done the wrong way. i think it started as a head and
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morphed into a real trade. i think they were doubled down, and i think they learned a lot and the senate learned a lot. i don't think what we want to do -- he said it's a dumb move, it cost the stockholders $2 billion, and i doubt they will make this dumb move in the next couple weeks. >> where are you on doing an investigation or testimony from john corzi. >> we had some hearings on it, i think the regulators are on top of this and obviously laws were broken and i'm sure they're going to take appropriate action, and i'm sure that as their taking that action, we'll monitor it. i don't know if there is a real ro role for us now. >> thank you for being on the
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program, i appreciate your time. we're in the final stretch of trading for the day, bill. >> yeah, here we go again. the expirations occurring the rest of this week, the dow now near the lows of the session down 75 points, maria. >> how big was the position, and the real question is how could it be so large without coming to the attention of management, of regulators, and ultimately shareholders? >> we'll be looking at those questions. will jpmorgan's big loss. kay hagan will join me next, and thenly be speaking to another senator, the senator from vez, bernie sanders. >> you will not want to miss that. how do you think jamie dimon did today? tweet us your thoughts on how it all went.
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too soft, not tough enough, whatever you want to sa say @cnbcclosingbell.
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. 45 minutes left in the trading session, and we have the markets on the move right now. down 85 points. we have market on the close orders hanging over this market. expirations that will occur the rest of the week that will cause volatility and a pick up in volume as well. the dow down to 12448 aiming for the sixth winning session in seven, doesn't look like it will happen. jpmorgan has been leading in the gainers. johnson and johnson and bank of america. but we are heading lower but energy going down to the downside. you see chevron down, the dow down 90 right now. >> we heard from bob corker, now
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we talk to another member of the senate banking committee. kay hagan, let's see your exchange today. >> how could it be so large without coming to the attention of management, of regulators, and ultimately shareholders? >> senator, i will have to decline comment of some of that, my first job is to protect my company. i think certain things could hurt my shareholder, and i don't want to be put in that position. some of the information was accurate, some was not. it was a complex series of trades, not just one single thing. >> and senator hagan joins me right now. i thought that was such a smart question you asked jamie dimon. did you learn anything? he said he would not answer part of it, but where do you come out
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on part of that? how did it go unnoticed? >> the question that we have to ask ourselves is, you know, why was management surprised, why were the regulators surprised? it seems like he knew what was going on. >> absolutely, and you knew it was out there. >> the management and regulators should too. until we know exactly what's in the trade, which we will know sometimes soon, and i certainly respect mr. dimon for not divulging some of that information right now. i think it will help management and shareholders too. when you look at the banks and other institutions with the same trading going on. >> so you were satisfied with that answer even though you could not get more information right now? >> well, i certainly want to
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hear more. >> we just had bob corker on, and he said look, the most important thing that came out today is that dodd-frank is irrelevant. what do you think? >> i think you heard mr. die monosay they have a lot more capital, they went under a tress test, and the banks are more capitalized, and they're able to sustain risk like this and losses like this. and i think some of the regulars have not been written yet. so i would certainly not agree with that statement. and i think you have to look at what happened to consumers. the federal reserve came out and said between 2007 and 2010 people lost 39% of their average net worth. it is a 39% drop. that's real dollars to real
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people. and people who, for that $50,000, it's a huge difference in their lifestyle. so i think we as senators need to understand we need to be looking out for those individuals and we also have a oversight function here in the senate to carry on the kind of oversight that i thought came o out. >> we're seeing net worth drop again today. the market inching towards the lows again, you said something that just struck me, you said look, we don't really know about dodd-frank because it's still being written, this baffles the mind, why is it still being written at this moment in time at this moment in 2012. >> i will say from a capital perfective our banks are better. they have come out in a very positive way, and i think that's good. i think when you look at the number of changes that were
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made, and you know, the sec is involved, the federal reserve is involved and the regulations they have to put forward, and they're listening to citizens and it takes time. >> so you're saying it takes time. >> yes, and i'm with you, the sooner the better, but we want to make sure it's fair and studied broadly. >> based on what you heard today, do you think a large bank like a jpmorgan should be broken up to avoid this kind of loss? >> i do not. i think we need to be competitive on a global basis and we need institutions. i want to make sure we don't have a bank too big to fail to that taxpayers have to come in and bail the bank out like we've seen, but i think that's why we have the living wills that jamie dimon talked about today, more
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capital requirements, all of the other things that we put into place and certainly some of them are being looked at. >> we have to run, but i want to ask you the same thing we asked bob corker. we have not heard much on the john corzine situation, are you going to bring him? >> that's a good question, i would have to speak to chairman johnson, but i think there is a lot of questions unanswered and probably quite a few lawsuits. >> senator kay hagan joining us, thank you. dade vitter will be with me, and then bernie sanders will be here to tell us why he wants jamie dimon to step down. as the market goes lower,
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energy is part of the sell off. >> some of this market movement, bill, downgrading spain, and well get more details on it. when you talk about energy is one of the sectors. all major s&p sectors are in the red. look a exxon mobile. a lot of investors nervous about the opec meeting, chevron the same story. two heavily invested dow 30 companies. many stocks have that same chart, bill, and well get more on the egan-jones and if that's impacting the market. >> as we ahead to the close here, the dow is down 100 points. mcdonalds up today even though goldman downgraded the home of the happy meal.
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welcome back, we have 25 minutes left in the trading session. we have a market worsening here. with the dow jones industrial
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average down 109 points. nrge stocks, one of the leadership groups. right now the nasdaq near session lows on concerns about the economy here and in europe. the greek elections happening this sunday. check out the volatility invex, the vix showing a gain of 20%. it has sitled above 20 every day. >> the failure to hit above 25 shows the market was not doing too poorly, but now we're close to that on the volatility invex. mcdonalds was trading higher today despite a downgrade from goldman sachs, goldman says there are better opportunities in the fast food sector. so what do you do with mcdonalds who has had good sales recently. joining me is rob to talk about that, and on the fundamental
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side, steven weiss. what do you say, mcdonalds? >> there's a couple key points here. when you look at mcdonalds from a long standpoint, it's still on track. there's no evidence of longer-term damage. when you look at the weekly data over the last few years, mcdonalds we mcdonald's. the stock is corrected now for six months. it's back in the technical support, getting oversold, and when we talk to larry miller, there is fundamental reasons to own the stock, i like it at these levels. >> steve, you are a tough guy to please, do you like mcdonalds or do you think there is better opportunities? >> chipotle i would not touch, they are nose bleed high, so that stock could be cut in half
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in a two or three month period. i would not buy mcdonalds and here is the number one reason, sales are slowing. they were far below. you have a new ceo coming in. skiner did a great job, but even good companies, like ge, went through a transition period, so i expect to see the same thing here. and finally, 40% of the revenues are in europe, and i have a very negative view of europe and pressure earnings. >> like i said, tough guy to please. maria? >> 20 minutes till the closing bell sounds for the day, a market at the lows. the nasdaq composite weakened. how do you think jamie dimon
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does today? send us a tweet and we will show your responses on air.
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welcome back, with the market sell off, investors like how the jamie dimon hearing went. jpmorgan rallying on the heels of his testimony. we're seaing the group lose steep along with the broader market. jpmorgan itself is up one and a third percent at this hour. >> and did jamie dimon help his company? should investors buy into the banks right now? joining us now is paul miller. paul, it's good to have you on the program. >> thank you. >> let me get your take on what the hearing did for the perception of jpmorgan for investors. >> i think jpmorgan won. a lot of people are looking for with the politicians and senators coming after him. they didn't and they treated him with kid gloves. and he did a great job as he always does.
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i think on the political front, down that path of deregulation and republicans getting more and more crop of the senate and house down the road. that's a positive. >> i have to get into this issue of risk. this is what kay hagan was just talking about and it's this bar model, a mathematical way to measure risk. tell me about the risk measures of j.b. morgan. >> we learned nothing. i think one of the biggest concerns is that jpmorgan changed their risk model. and they changed it under a time table when that division was under a lot of scrutiny. the risk went down in that portfolio, but then we were told after that big loss came through that they changed that model and through it out and went back to the old model. it showed that the risk doubled
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in that portfolio. if we knew that a month ago we could have reassessed that situation. on paper is looks like a "tempest in a teapot." we asked and it would have lead to more questions down the road which we didn't have. >> paul, i'm curious, we talk a lot about the political angle in all of this and how much regulation will come down the pike and what it will do to the bank's bottom line. in light of the trading loss we're talking about which we still don't know the magnitude of, how do you view that company right now? are you concerned about the amount of risk they were taking and what it does to their bottom line? >> yes, a $2 billion or $4 billion loss sunt mean much to me, it's more about how much did they contribute. if it was 20 or 25% of profits,
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a lot of guys have to bring in their earnings at jpmorgan preponderate earnings of that company is $4-$4.50. if it didn't contribute anything, this will pop back up to $40. >> that's why the bar is so important to you? >> yes. >> do you buy it here? >> i'm still on the sidelines because there is not information to pick kwhat true earnings are. we know jamie dimon will make money this year, but i think a lot of people pencilled in $5 to $6. if there is not a lot of earnings coming off of this, you will see more numbers come in, more price come in, and the stock visiting in the mid-30s. >> nothing will go up with a tenure at 160. the full impact will weigh on
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this whole industry. >> for how long? >> as long as it's there. if we wake up tomorrow and it's above 2%, if it's inflation driven, that has a lot to do with it, but it has a lot to do with it. >> thank you, paul miller. >> and it went even lower today, so that will not help the banks bottom line, but we're coming off the lows, the dow down 96 points right now. >> the next guest a very big bear coming up. borrowing in italy and spain are skyrockets, will it be a matter of time before interest rate ex-employed in the u.s.? >> before we go to break, a dividend. what stock is up the most this year? coca-cola, jamb baa, or starbucks.
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just before the break, we asked which stock sup the most this year? coca-cola, jamba, or starbucks? now the payoff, jamba which has
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increased 50%. welcome back, a big move yesterday and things have taken a leg downward in the final hour. >> yeah, those market on close orders we talked about, tom shoneberger is not surprised though, he did not believe in yesterday's rally and he said tomorrow was a good time to sell. and also with us erin gibbs, and todd, but will give you props on that, but what will you do with this market? greek elections or? >> yeah, greek elections this weekend welcome next week is the fed. you want to market to go down even further. you want to force them to do some other accommodation. if they don't announce something next week, it won't be until 2013. so traders are hoping for something, a bit of a selloff
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today, it's expiration week -- >> do you think they will announce something next week? >> i think they have to. i can justify further accommodation, however they need to do something. goldman revised their gdp print. we're on target for another recession by the end of the year. >> what do you think, todd, the chance is of a reversal here, and in fact you expect a stronger market. i know there's a lot you think is negative for stocks. >> yeah, i need to move by the fed right now. last year we at 12%. i know chairman bernanke has been punting that responsibility back to congress which is the right thing to do, however it's clear to me it's up to the federal reserve. so we're looking for action.
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>> the last time you were with us we talked about the fear driven department. would the fed actions help this market? >> it would increase the uncertainty in the market. i am not as bearish as todd. you know, if the payroll numbers come back up, we're at the bottom end of the range, if they came back up i would be more positive, but any action by the fed will decrease that uncertainty. >> i want to know how do you want to invest then, todd. if you're negative on stocks how do you allocate capital right now? >> i would look at treasuries. you will have a sell off in the market. short-term you will see that bump there. on the long term, in six months, it will be great for treasuries because it will see more of a
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demand for those bonds so you're on the winning side there. cash is king, liquidity, and gold is over $2,000 an ounce, so i would stay away from gold as well. >> we're still looking for more defensive high quality dive dent players. those still earning the 4% to 5%. >> are all sectors equal? utilities pay good dividends but people are avoiding them right now. >> there's more types of defensive strategies. >> good to see you both, thank you for joining us, todd i will see you later on the countdown. as we go towards the close, the dow is down 106 points. we see what happens in the next few minutes here. >> senate eor menendez and jami
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dimon had a little heated exchange here. who got it right and who got it wrong? we fact checked the senator and ceo coming up next on "closing bell." and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ high schools in six states enrolled in the national math and science initiative... ...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. let's raise our scores. let's invest in our teachers and inspire our students.
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let's solve this.
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>> welcome welcome back, 10 minutes left in the day, the dow down 118 points. ja jamie dimons day of reckoning was calm compared to other ceos. >> robert menendez asked about his efforts to require banks to have more cash on hand were "un-american." >> you railed against us when we were trying to pursue greater capitalization of these banks, is that a regret you have of those comments then. >> i don't think what you said
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is true. when i mentioned the un-american thing, i was talking about dodd-frank and duzell. >> did you not specificly say that the requirement for barngs to hold more unwas un-american. >> i did not. >> i would be happy to look at that again. i any you might want to review that. >> what actually what he did say in the interview, was that the 7% capital core holdings they would have to raise it to, there would be an additional surcharge of 2.5% of the big banks which jamie said was anti-american. >> right, he was saying it was the u.s. banks relative to the other banks around the world because the u.s. banks are facing higher capital rules verses their pcompetitors. so it will go to places
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elsewhere. i don't know that senator menendez understood that is the point he was making. he was saying it was relative to the competitors. >> something was lost in translation for sure. so i hope they did review that again and they understand what jamie was trying to say there. we want to switch gears because we have exciting announcement. beginning today, cnbc and yahoo is joining forces. this is a big deal because of all of the eyeballs on yahoo finance. >> you will notice big changes to the website where cnbc videos and articles are featured prominently. it gives yahoo a broadcast platform. you will see original programs on cnbc.com and on yahoo
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finance. it is clear we all know everybody watching us right now get their financial news from a network like us, but they also get it from the internet, and that is where the growth is right now in our industry, so we need to go where the industry is. >> i love yahoo finance. and one of the reasons we're joining forces, is because yahoo finance has nearly 40 million users. >> they will find when they go there is a market down 102 points right now. and we're highlighting that it's an expiration week, all kinds of contracting going off the boards the next three days that will cause this volatility and pick up in volume. when we come back, the closing count down for this wednesday. >> moments from the close, and
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then said having jamie dimon on the board is like having the fox guard the hen house. we will ask him also about the current state of the economy. how do you think dimon did in front of the senate today? tweet us and we'll show some of your answers.
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. >> okay, three minutes left, the dow has not had three digit moves since last december. we're down right now about 94 points, and in this last hour, i'm going to ask about this, as we head towards the close, right now we're down 94 points. as the stock market was going lower, bond prices were going higher still for that 10 year note down to 1.6%. we saw that move continuing to go lower. the yield on that is 2.71%.
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so it might be a little rich for some of the traders out there. i was going to show you how strong the financials were. look how things changed. all ten sectors are lower and the financials are down here with a decline of .5%. my guru of all things markets, explain to us what will happen over the next few days here? >> i think you're going to, first of all, the attorneys over the last three weekends had we wonder fg they're running a hedge fund here. there will be a rewaiting on friday that will distort markets over the next two days. this afternoon we had a one-two punch between downgrading spain, and al greenspan s.
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>> i can't imagine anyone would want to be that long going into the greek election this week. >> it's hard for bulls and bears right now because there's no conviction on either side. but with greek elections it will be treacherous territory. >> this is all headline driven right now, isn't it? >> nothing very heavy, but europe is still driving this bus, and to the greek election after what they gave spain, they believes whoever wins grease, a renegotiation is in order. >> is there anything you're buying? you're showing the sectors here. energy is still a leader. >> now you're running into a problem, we heard from aaron gibbs, talking about dividend plains. going into next year, nothing is done on capitol hill,

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