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tv   Fast Money  CNBC  October 16, 2012 5:00pm-6:00pm EDT

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directly that, he's denying that. >> it's always about the money, mar maria. it's always about the money. >> they don't want to harp on the fact that that drove the ceo under. >> we have got more on "fast money." live coverage around the debate. i'll see you then. live for the nasdaq markets, i'm michelle cabrera, in for melissa lee. we're monitoring that phone call from citi group. let's get straight to the markets because it is the rally that will not quit. joe, how are you trading it today? >> adding to positions, we
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challenge on the down side some tactical support. now the market bounces back today. adding to some existing positions that i already have, adding to the technology space, to corning, i think they're going to report and do well. added to some of the semis. scan disk, i think they're going to do well. and establishing a position once again in starbucks, the ultimate question is do you go for what has been working or do you look at this rebound and say not only am i going to buy what has been working but i'm going to go after some of the performers which today are the leaders in the market. >> i do the same thing, i added to risk as well. i stayed long my wind, that's my casino play. i thought the market was going to break down, it didn't. so i was forced to partake in some of this action. i bought the beta, i bought the
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high risk. we came from 1474 in the s&p cash, we traded down 3%. it looked like the best efforts in selling the market. we cracked the 1429, we cracked the 15-day moving average. it looked like we were going to test 1400 in the s&p. >> it was a pretty classic setup last week when you talk about being there, you had this preannouncement proceeding. dating back 11 years ago. i think people got kind of beared up. especially when you consider the multiyear high. you had five of the six down days for the rest of the week, all of a sudden these guys aren't what they were thinking. to me, i think you have to add to things that you think make it through this cycle and close hyalea. we have talked about the rotation out of some of these winners.
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>> not only is momentum or is risk aversion back on, but why is risk aversion back on? when you think of what happened today, you had -- but you also have industrial production numbers in the states that are much better. you had chinese hong kong stocks, property stocks, banks in a part of the world that has really been -- the fact that the market trades okay, after the bell, we had no great numbers out of intel and ibm. that's key, the market needed to hold yesterday's levels and close above them. >> tim and i were talking about iron ore, cliffs natural traded up 7% today. people are making individual
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bets, but that is the high beta as well. >> what are the options market telling you. >> they certainly are believing a lot more than they had in the past. we're seeing a lot more volume today, a little of that related to dividend playing. about $7.5 million contracts, versus about $13.5 which is approximately where we have been. we're seeing some of that bullish sentiment is in places like consumer discretionary items. it's interesting, we could go from one week to the next and all of a sudden all of these names are going to come up. i don't think we should say everything's fine, jump back in. >> we would be welcoming
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michelle because we missed you. at the top of the show you called it a -- the market is in a range, that does not mean that i think you go short. i think a lot of short-term traders got turned around short thinking you were going to bust through that 1420 support level. >> td points it out, there's some good fundamental news today. you look at this market as a market that's in a range and you're just trying to find the stocks you think are going to work here into earnings more than anything else. last year i pointed out the 10-year treasury. i think that's your ultimate indicator. you got to get the treasury back over 190 and see reallocation
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funds out of bonds. >> michelle, the call just ending just moments ago and the big question on everyone's mind, what happened, why now and chairman of the board mike o'neal says that vicrim put in his resignation and they responded by putting in mike corbett as the ceo. this is a succession process that's been two years in the making and they had prepared in that way. why now why is vicrim not staying on. that was a chairman o'neal said, as vikram said it yourself, once you decide you want to leave, there's no sense in sticking around. the process has started for three specific proezs.
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also the three-year long-term strategy process that is also upcoming and finally the ccaring are lagss. those are three processes that will take place between now and then and according to o'neal, pandit wanted to clear the way for corbat. what led to vikram actually tendering his resignation, this is something that had been weeks in the making. corbat said let me spend a few weeks in the chair before i set those targets. we're going to be holding mike accountable so we want him to be setting those targets. >> thank you so much.
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>> he wants to sit in the chair a little bit. it's obviously a lot of noise coming out of it. he mismanaged the company in their minds, he set back a lot of the regulators, so they think that corbat has a better relationship with the regulat regulators. sheila beren has a book out. >> she was on cnbc today and she was extremely tough on vikram. >> i just don't understand why anyone really from a tradeable standpoint is really surprised by this, this is yes, two years in the making, you've got almost a $3 million make -- you've got a cut from moody's on the credit rating. the timing of it, this is the first quarter that actually was a really good quarter. look at the price action in citi
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after the announcement. >> that was a 24-hour decision, we know something happened and there's intrigue there and we all want to know what it is. >> i don't think anything happened, i think this was planned, they finally got a good market that they were looking for. the quarter absorbed the good news. if this happened in a prior quarter, you would have had a reaction. >> this is a guy that was named in december of 2007 so he rode through some very choppy waters and he was deemed to be the guy that had the right mocksy. if you listen to corporate on that call. with a debt of gratitude, it's that flower i kind of language that says bye-bye and it was not his decision. we can speculate all we want. but what's been clear, i think it's been alluded to on this desk is that this is the company that lacks the vision.
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this is what it's all about, what is this company? i have loved citi bank for years because they have been a major market player. but then they started selling off some of their key latin-american holdings. >> the only one thing i would add here is i have no idea who is right for the job, vikram did a good enough job steering us through this environment. the complacency, in not only the equity market five years, citi was waiting for some good news. >> they asked him when he got a good quarter.
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despite the fact that this has gone -- back to precrisis days, as excited as you get, you are bumming hard, this was a $550 stock that's trading somewhere around $40. that's not vikram's fault. but it's certainly something you have to consider. >> could there be ripple effects for all of wall street? stick around, because we're going to have jeff sonnenfeld talking about why other banks should be shaking in their suites. we're going to bring you all the action, give you the trades right after the break. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.
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shares of ibm sharply lower in the afternoon hours. hi there, let's take a look at ibm, it's beating the street by a penny, but it's revenue of $25.6 billion. michelle, it's hardware division has been a source of weakness for the company, as you know, posting a year over year revenue decline for four straight quarters. >> one of the things that cfo is pinting to is a couple of big deals that fell off at the end of the quarter. he's saying if those had come through, overall the revenue number would have been better
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and the software number would have been better too. so overall, the tone is a little bit more positive than we were getting just from the opening numbers. growth markets continue to do pretty well, 35 growth market countries grew at a double digit rate. we mentioned that hardware continues to be down. buddy also said 250 takeouts, they took out deals where hp or oracle sun were going to get. they feel good about the shares they're going to be getting. also they have a mainframe that they're going to sell attend of the quarter. >> john fort, thank you very much. do you agree, not as much doom and gloom? >> you and i talked about this would be a difficult quarter to kind of interpret, you've got the retail store solutions, going into toshiba.
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markets are okay, when you look inside what we're hearing from the u.s. business, that looks like it slowed down in the last few weeks. i think the hardware side of it is troubling. not so much for ibm but for others in hardware. >> you're not buying the stock? >> let me finish. you've got a company that has performed very, very well. so i would suspect around $200, $203 somewhere in there, there are going to be buyers that remain in place. >> i don't disagree with anything you're saying, here's a stock that was trading a percent or two above the market high. it's not like one of those juicy fields.
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>> you can tell sean as the lagger. it was a service company and now it's trying to get into the cloud. >> i'm so glad you brought up intel. intel popping on better than expected earnings. guidance was nowhere near as some were expecting. the revenue number on an absolute basis doesn't look too bad, sequentially the comparison's not great, but it is a little bit learn q-3.
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but the commentary on the call is kind of leading us to believe that maybe it taking a lot of pain in q-4, in other words they're taking under utilization charges so they can simulate new technology that potentially comes out of that phase a little bit early and look a little bit better in 2013. >> do you believe that new technology is coming or that they're going to be able to come and compete. so you're talking about growth tablets. i'm not that worried about the gross margin, i'm worried about this company's ability to compete in mobile. they're going to see part of the refresh of windows. people want to see them really involved in tablets, i'm not worried that this is a broken company. we talked about hp versus intel. i think it's a very, very different story. i think this country is priced
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with a good dividend yield. >> i will tell you, i do think intel is moving pretty aggressively in mobile. mobile is ultimately a critical mass game. they have already a $500 million a quarter base business. they're in mobility in a fairly big way. they're trying to put an ad application based on that business. whatever adoption there is of windows 8 tablets is going to help there. consensus seems to be telling me that it thinks the pc market is -- a little bit of disarray ahead of the windows 8 launch. they don't want to build too much inventory. i think people are taking that
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and concluding pc is dead. we saw linear down, a very broad-based industrial automotive communication, the problem is not just pcs, fundamentals are good across the states. >> i don't think you can touch intel, i think it all right now about the street and management that's not recognizing the deterioration. you got buys on the stock, only 6 are actually setting to sell the stock here, so until you see those margins trough and i don't think management's recognizing that margins have not troughed. i don't think the analysts saw it ethier. >> the pop will be sold. >> it has been sold $21.67 after hours. >> ibm, the dip will be bought.
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that's the differences there. >> what do you see in the options market when it comes to intel. >> it's not just intel, the most active were the october 22 points over 40,000 of those were trading. i don't think that's surprising. an important point, the market is already discounting this thing significantly. it's talking about a 20% -- it's not like there's a whole lot of optimism embedded in it. the options market has been -- basically for the last several weeks and i don't see why that's going to change. >> intel's kind of like a-rod, and he's on the bench right now. >> he plays baseball? >> he plays baseball. are you saying intel's cheap? we continue to -- find out if other wall street shake-ups might be on deck.
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>> i think it could be a lot of fun as well. that was the last thing he said on "fast money" nearly five years ago. clearly things have changed for the now former citi ceo. are there more bank management shake-ups on the horizon? jeff summenfeld, good to see you, what do you think, is vikram just the beginning, we have seen a lot of changes, not just this bank, a lot of the banks, is there more to come? is. >> in this one case, i want to stay that while the banks aren't managed personally they're doing a pretty good job in dramatic times. we have seen falls in shareholder value, none as big as this, this is 89%, 90% since vikram has been there. only jpmorgan is different.
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all the others had changes in leadership. you look at morgan stanley, james goreman is doing an excellent job there with greg flemming, i actually think that brian moynihan is doing quite a good job. as you go down the list, you see john stump has had some hedge funds, he's been a strong leader at wells fargo. i think we're going to find that the bank has been managed much better. in terms of five reasons why it was right to replace this ceo, but not now, the reason now has nothing to do with those reasons, has nothi reason reasons. >> if you don't know jeff, jeff runs a big conference, he knows everybody in the industry. >> including people on this board and some of the
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lieutenants that we have been talking about. >> yes. >> what's really been clear is eight people on this board were not there when vikram was hired. if you had the time and i know we don't have the time to play maria bartiromo who did an interview in 2007 when he got the job, he was defensive, mercuri mercurial, and he was -- he didn't have a board that -- he had a board that new what he was going through. they were his solid defenders. there's only two or three that were there when he was hired. his pay package, is high by average standards of living for the u.s. but it was proposed around $15 million. in terms of --
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>> so you think it's about money? >> no, it's about, you know, as we just heard, as we -- when we hear o'neal, especially michael o'neal, the chairman talk, it had to do with his disposition, he could be mso this sounds lik beren endorsement, especially as it relates to the business side of business. do you agree with that? >> you know, i think most of the people watching this show shutter when they see sheila and they admire her a great deal. the facts that can't be denied, is that wells fargo which was more antagonistic than citigroup
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was he didn't want his arm twisted to take it to the ceo. they were very antagonistic to regulators. they still got the wachovia deal, which was citigroup and they were the ones that got trashed by the regulators, they weren't near as hostile. and they couldn't close the wachovia deal. >> jeff, let me ask you this question, you're talking about regulators, you're talking aboabout the view that wall street had with d.c., when you look at jamie diamondiamond, if you loo the job that they have done over the last couple of years, successfully leading the business, maybe it's time to acknowledge that we looked at them incorrectly in '09 and
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2010? >> that's part of the job. ken lewis of bank of america, when asked about imputed interest rates, people got thoroughly confused, he won in congress. jamie dimon steps up to the plate and frames the question for her and answers it and holds jpmorgan up to a mixed score card. you can do the same thing at the auto industry and take a look at rick wagoner. the ceo makes a difference. there's a certain symbolic and it's intertwined. the intel role between the swim bollism and the substance of leader ship. and they can deliver that here. they can try to figure out a way, where jamie and i think james goreman, they have a lot
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of ability. this is not a role he was not trained for and it's obviously much better. >> thanks for weighing in on this issue. the secret sauce here and what's happened in the last few hours of citigroup. up next the former treasury insider who's telling you what to watch for and making the call on which candidate will be better for your bottom line. lawrence goodman is up right after the break.
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when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule.
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talking about the valuations almost 50% on the year. they were out there buying the november up side calls. mike coe, the same stock caught your eye today, so were traders still bullish today? j i think you can say that, we saw a brig institutional buyer
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of the november, 0 calls that traded -- that represents about 5 million shares of stock. they paid 69 cents for that spread which is a layout premium of 2.2 billion. basically the story is that the chemical companies are benefiting from cheap shale gas. these are companies that had low gross profit margins a couple of years ago. >> also the irs ruling on friday that gave a favorable ruling to make some of these companies be able to rule to mlp. >> master limited partnerships, to be die da . >> we don't know if they're going to fit into that box just yet, but that was the pop that you saw in a lot of these. >> how many is the device on
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mlp. >> they get favorable t status and that's why they want to name some of this a lot of this pop was greeted by some cell side today. >> not to be antagonistic -- you can buy mlps rather easily and given this environment, given what we're going to here, mlps are a good investment. >> president obama and governor romney are facing off tonight, the last debate before the election. >> the issues that exist right now are unbelievably complicated. the last five years, we had this financial crisis and the policy response right now has been
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overwhelming in terms of the fiscal impulse, a lot of fiscal debt being created due to these large supersized 8% of gdp budget deficits. >> tell me something i don't already know. you're giving me a history lesson, after tonight, who's better for the markets? >> i think the candidate that goes forward, look, maria, we're an independent, nonpartisan nonprofit organization and it's the candidate that comes one a game plan to address these issues. the policy response has been extraordinarily harsh, both in terms of what the fed's done as well as where we stand with our budget deficit and how it's being funded. so to be sure, which ever candidate comes up with a resoundingly clear plan for the next five years, not just the next year or the next four years, but the president that's going to be most capable of taking the country into the next
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administration. >> i know you can't give your opinion, but it sounds like you voted for the guy that rhymes with it omney. do you think rom any will come out -- >> coal is going to be an issue, energy self-sufficiency is incredibly important for the united states. engineering an energy self sufficient plan in a way that's also friendly to the environment. so to be sure, we do have enormous energy needs, those needs are increasing, especially if the candidate puts together a program that can take growth up. look, growth has been unbelievably pal try in the country for the last five years, this has been an extraordinarily weak recovery. so in any case, we're going to
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need strong fuel, strong energy, a strong policy to literally fuel that economic expansion. and the other issue is china. look, china, people have been calling china dead in the better and actually slowing quite considerably, that's probably not the place. >> hey, larry, i think china is not the issue, i think this is about the fiscal cliff and i think the best thing that could happen is obama's ratings and popularity to go way down before the election and therefore they have to get something done. to me this is all about just tactical calls here. do you think there's any chance this gets done? because i see obama slipping. >> i do see the prospect for a deal to get done. remember what happened with the debt ceiling? these guys were able to engineer a deal and they were able to do it at the very last minute. so there is the prospect of
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actually getting a deal in terms of averting the fiscal cliff. that said, even if we go near the fiscal cliff or approach it to the degree that the candidate that has the right plan to deal with issues in the long-term, if we do bring the deficit down by, look, 3.5% of gdp over a two-year period. that's not extreme. especially if we eliminate a certain economy in this stage, we can go past a fiscal cliff. >> we heard from a lot of the ceos, you're absolutely right, larry, they're tired of the uncertainty, they just want to know what is going to happen. they've got to get something done. thank you for joining us. sorry to be tough on you in the beginning. >> it was a pleasure. >> be sure to tune in on cnbc's special coverage of the debate. >> and by the way, very scary when michelle says don't disappoint many.
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he was back pedalling for -- >> i actually played it the way i just said to larry, i ended up buying because i do think we're going to hear a lot about the coal space tonight, i think we're going to hear a lot about clean coal. look at how many jobs the coal industry is responsible for creating, i think you're going to hear some of that come up tonight and to's why i bought it. >> i would say the level of concern has been raised that essentially one candidate does win the popular vote and the other candidate wins the electoral college, i think that would be a problem in getting any sort of compromise. >> so that's bad for the markets? >> that's bad for the markets and also what's bad for the markets is seeing an electoral college draw and those are distinct possibilities given how close these two candidates are. next we're getting the
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welcome back to "fast money," taking a look at some of the after hour movers, t a look at csx, its revenue coming in light at $2.8 million. the u.s. railroad firm has had to deal with weak, domestic coal and that's why we're seeing the stock move higher by around 1%. michelle? >> all right, thanks so much. let's trade csx here, blue eyes? >> they reaffirmed the operating margin, so they think it's going to be a lot more difficult. you know, the intermodal bonds have increased. this to me is a technical call. >> let's underline the fact that
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this is also debate play, right? because i always think coal and the train stock they move in tandem because trains carry coal. >> these names are moving, volley just paid a dividend after hours, but i think to the entire space is ready to make the move, and again, if you look where the index closes. >> institutional investment revealing it's all important research team this morning. it ranks the nation's top analyst. that is one stunning cover. among them chuck grommet, whose coverage leads from retail names to high end names. so you're the best guy according to institutional investors, tell me what should i be doing in
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retail right now? i think through the end of the year, you go for the winners, we take a balanced approach and own names like costco and macy's and nordstrom on the other end. there's pretty good balanced approach makes sense at this point. >> whole foods, why? there's definitely a paradigm shift, we just left the analyst a couple of hours ago at the stock exchange and they talk about organics up 12%. and whole foods stands for organic. >> obviously you like a wal-mart here when you talk about winners.
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we haven't seen much mna, are there many targets out will? >> that's a good question. i think if there's one name that could get poked here through the end of the year would be big lots. the stock is juniunderperformed. it's a model that needs to get fixed as a private company more than a public company. >> what are the other names that you would avoid? >> i think jcpenney, it's very unclear to me how they're going to move a more affluent customer into their storm which is part of their strategy. that's one name we would avoid. we would also avoid some of the more traditional grocery stores. i tell you what, as i look to the help of the year , i
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think consumer spending remains aligned with the housing market. i think it's more of an industrial call where americans are buying durable goods. you're going to see fourth quarter big volume and ford is another play. but the housing stocks, home depot, again they reaffirm. >> you mentioned costco sticking with what's working. walmart's clearly working and on on those days last week where things look ugly, costco didn't, they reported the stock reversed. so to me, again, this is a roll up your sleeves sort of market here, i don't think you can just close your eyes and buy them. but something's going on at costco. >> you have heard of high frequency trading, but i bet you don't know what it means to bang the beehive. >> is this a family show? >> not anymore. we're going to explain what banging the beehive means and how it's affecting the market.
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high frequent si trading
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practices have caused a number of problems. now the buzz is generating about a tactic called banging the beehive. a lot of buzz around that, you get it? which could be impacting the way gas futures are traded. with more on banging the beehive, they have written it like eight times into the coffee. let's bring in the man who coined the phrase, a senior analyst on the fast line. define banging the behive for us please. >> hi, michelle, wow, what a lead in. let me see, this is -- you know, this is a situation where you have a known piece of data, typically and it's coming out, you know the time that it's going to come out and you also have some precedent for other automated trading methods lining up to try and make some hay with the data, when it comes out on the time. and what happens is somebody
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yells fire in the theater or, you know, makes these algos flinch by moving the market around, you know, a little bit before -- >> we know that the nat gas is going to come out so somebody floods the market with trades right before and leads to volatility. >> we know what we should do with quad during the summer. how does it impact or really in essence, what does it matter? who cares that they do this? it doesn't really impact anyone on the retail side. i traded natural gas futures for quite some time, unsuccessfully i would say. but nobody puts in -- this is really in essence, we're going after hft, i don't think this
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matters in the grand scheme of things. >> i think there's some truth to what you say, it's really in the gray area, i'm not aware that there's any legal issue here, and certainly the retail investor is not all that active, maybe some hedge funds are active here. i might add, you know, the tactic can, you know, you can create some momentum or some volatility because if you have direct feeds to these products, you can actually observe were there's a concentration of stopgap orders, you can actually the move the market. if it's the time of day where there's not much activity, you can get a boost from this kind of a play. >> all right, paul, thanks so much for defining banging the behive for us. we have your first move tomorrow when we come back, don't move.
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