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tv   Closing Bell With Maria Bartiromo  CNBC  May 4, 2010 4:00pm-5:00pm EDT

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close here but look at rest of the world here. spain, much worse. russia, brazil also down 3.5%. and germany down 2.6%. so what we may not be decoupling we're not quite down as much of the rest of the world has been. how about the european banks? the story is very simple here. the spanish issue, if there is really an issue, is an altogether different problem than greece. orders magnitude different. the big european banks reflect in that santander european bank down about 9%. some of the other ones equally weak here. how about the banks here in the united states? story's pretty simple, the senate's voting on parts of that financial reform bill, we're finally getting it. the first amendment from barbara boxer set to add line saying that no taxpayer money will be used to fund any bailout of any financial institutions. it looks like we've got some kind of deal here that $50 billion bailout fund it looks like it may be dead. we'll get news on that. certainly, there are some the banks, the other ones, commodities, for the commodities end because i want you to see this was a general puke-out of stocks today. look at them, all of these ended at lows of the day and they closed a couple of hours ago.
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how about the dow transports, my biggest story in the last two days, up yesterday, all 20, up 135 points. today, all 20 down, down better than 160 points. you try trading on that, it's a very, very tough market. basically, become a momentum trader. take a look at the retailer. same situation. all of them up two, three, four points. yesterday your jcpenney, your abercrombies, down, just completely other direction the next day. same situation with another high-bate group and that's the homebuilders, all of them up yesterday, three or four points and you can see here all down same amount. tough to trade in this environment. maria, but quite exciting. back to you. >> yeah it sure is. bob, thanks very much. we've got breaking right now and news corp just out with third quarter earnings. right down to julia boorstin she's breaking down the numbers. julia, how does the quarter look? >> thanks, maria it looks like a very, very strong quarter. helped out by the ukses of "avatar." 32 cents per sure. revenue increasing $1.4 billion
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or 18%. these numbers are higher than expectation. our expectations were earnings of 23 cents per share on $8.1 billion in revenue. these numbers are also up significantly over last year where the quarterly earnings were 15 cents per share and $7.73 billion in revenue. the strength here is we expect to hear a lot about the strength of the advertising markets. looking at breakdown of operating income filmed entertainment, the film entertainment operating income nearly doubled from the year-ago quarter. that's really going to be on the strength of "avatar." we're seeing strength also in cable network programming. we expect to hear how that's really driven by higher advertising rates and also higher retransmission fees. so, maria, we're seeing a lot of the same things from news corp that we've heard from viacom last week as well as comcast and time warner news. cable networks are strong because of that dual revenue stream and that huge hit "avatar" made a big difference to huge corp's bottom line. i'll be lift sboeng that conference call and more of a breakdown of these strong fiscal
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third quarter numbers. >> julia, we want to point out that we're seeing a real reaction here. news corp's stock is up 4% in the extended hours. thanks for the details here. take a look at chart here and news corp at $16.08 a share on the head of these earnings, that's ahead of the conference call. julia will be listening and of course she'll bring us the headlines. the stock up 4.5%. try to make sense of this massive move here in the markets to join me, break it all down is a cnbc all-star program, sue herera, david faber, david neto. tyler mathisen and cnbc contributor ron insana joins me from mobile, alabama. ty, speak with you. i've been watching you on the air. nice seeing you with franklin rains, also newsworthy there but what are you hearing in terms of the risk trade, this market down 225 from all of those big hitters and managers of money? >> well, you would have to say that they all had one eye on the market, on the dow and the s&p 500 today but the other eye on their bottom lines of their companies and on that score
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they're feeling quite good so i sense a bit of a disconnect here. yes, there's more to get scared about today maybe than there was last week or two weeks ago. more to be scared about them to be exuberant about, but they have a kind of controlled exuberance about their business results. whether you're talking of wbb or the head of eaton corp, these guys are seeing their business results turn around very nicely. they're not unworried about greece in europe. >> right. >> but they're not overly worried about either. >> well, that's interesting because sue herera, we could have guessed that because the corporate sector is doing well. corporations are doing well. it's consumer though that we're worried about. >> exactly and i think that headline risk in this market really can't be underestimated, maria, when we look at breakdown that we saw in the euro today, we moved below the 130 mark on the euro, and a lot of people were predicting that that was the case. the question is how much further to the downside do we have to
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go? and those currency differentials for corporate america are extremely important. the dollar was very strong today. commodities got crushed, as bob mentioned. and i do agree with him ishlgs think that we're at an inflexion point. the question is for those who are looking to perhaps continue to go short the euro, it's a really crowded trade at this point. i'm not hearing from too many sources to stick out their neck aggressively on that particular trade but it is still pretty much expected that the euro will continue to decline until the europeans make a strong and definitive statement that they do not think that greece's worries will stillover into other countries. they missed an opportunity do that which is why spain had to come out and say no, really, we're okay, we're okay. >> it was really interesting. >> a difficult day to say the vest. >> david faber, get your take that eight ipos are scheduled this week. really an interesting story to look at eight companies wanting to go public in an environment where the sentiment is changing. >> yeah. >> what are you hearing in terms of the reception there.
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>> well, we'll see as you all know underwriters will certainly gauge the sentiment like today. the capital markets, maria, as we've seen many, many times made extraordinaryarium strong for debt issuance and high-yield and investment grade and for equity issuance and we have plenty of private equity firms and others lining up to try to take their company public. you have another day like this, and you certainly may start to see some of these things pulleda least for a short time. >> yeah or prices change. >> yes. yes, exactly. >> the fear creeping back into this market at this point, we don't know if it's going to be long lasting. we don't know if this is the beginning of a correction but even if you look at where we are in the market in terms of valueuation you think have expected some kind of a weak period at some point given the fact that this market has been going up purely on anticipation of a recovery. >> yeah. maria, can you just point out one thing, maria when you look
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at that intraday chart of the s&p 500 just late in the session about 15 minutes before the close, we hit the low of the day at 1168, which is exactly where the 50-day moving average is. i mean that's technically very important that we did bounce off of there. if we break through 1168 tomorrow and then maybe go from the 50 to the 100-day moving average, which is about another 2.5% lower and then 200 days and then the march 5th low. the march 5th low is 1044, that's about 11% down. and i think this is a baste stealth correction. it started a week and a half ago, seven sessions ago that we've seen both the s&p and the nasdaq shedding, what 3.5%, 4.5% a piece those days that we've seen two-plus percent decline. a way of creeping, not one day-events. >> catalyst ahead, ron insana, we've got a pretty good economic report coming out end the week, we're look at jobs, obviously looking at gdp. what are you hearing in terms of what to expect?
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>> i don't think that people are going short ahead of the jobs numbers. i don't know, people are talking about growth in jobs but -- >> you know, maria, what's interesting to me is that a couple of things. number one that this is, as sue indicated, kind of a headline-driven market which leads me to believe that it's more of a correction than an inflexion point, because inflexion points occur when people are least expecting them and the markets when they're anticipate something really either great or something truly devastating usually start to creep down and they don't have this type of reaction to bad thus, they have this type of reaction to ongoing good news so i think that is more of a correction at best for now. and i also think that you know, with respect to what happened today, if you have a 1% move on the dollar, you also have to be cognizant of the fact that there are a lot of hedge funds out there who had emassive carry trades on and if the dollar goes up 1 percent in the single day they are, as bob pisani so elegantly stated later in the day they will puke out commodities. the australian hike tax china,
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all of the problems all day long in europe are any kind of catalyst for any kind of sell-off, all of that said trading between what, 10700 to 11200 on the dow. it's not yet anything to get excited about, but it's something we have to watch. >> so as far as the euro and what catalysts come next, i'm just surprised that the fear comes back in such a big way today. what was the catalyst today, sue? i mean you know, maybe it was the euro. >> i think part of it was the euro, maria, and i also think that everybody got a chance to take a look at that bailout package, and the question that we were posing late yesterday was, it may cure the disease, but it may kill the patient. and that brought into question whether or not the viability of the euro zone remains intact. and most people think it does. however, if you're greece and you're looking at a complete change in your society and your social structure, are there those who would suggest that
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perhaps greece would be better off on its own. and the analysts that i'm talking to say it only takes one to defect from the euro zone to trigger that sort of contagion. i'm not suggesting that that would happen, that's just the talk. but once you get a lot of people doing that sort of talk you know it brings a lot of momentum with it. >> and marksia, the honeymoon was short-lived for greece. the honeymoney was very short-lived. it was 24 hours and of course those -- the two-year bond blew out quite again. credit defaults across europe and blew out. spains, yield across the board there, going up significantly. because of the concern about, is it really the way to heal a debt crisis by adding more debt to the balance sheet of this country? >> right. >> and ultimately the question amongst investors, you know at what point is there going to have to be a hammering down restructuring here as opposed to simply adding more debt? and remember europe was closed yesterday and we were able to ignore and focus on other things. we didn't have as many
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distractions today. so it was back in full force and in our face and that's why we saw a disproportionately large night go ahead, ron. >> and the history -- >> maria, if i may -- >> the imf have been that they haven't always worked out and stuck. think back to argentina where they really had do a full restructuring after some these initial plans. i would like to throw one other thing on the table and that is the realize, this morning and overnight, that the bomb that was found in times square was not a homegrown wacko american-style. but someone who has some connections back, evidently, to cells or to some operatives in pakistan. and that put a level of fear right in the belly of the beast, times square. >> yeah that's true and you know they came to talk about it so quickly and the knee-jerk reaction is this a won-off this is a won-off and in fact have not heard from the actual people, the security people walking on the ground of it being a won off and not being a won off. >> i agree with him about the
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new york situation, if i could go back to what tyler said about the international monetary fund. they practice something either called an austerity program or shock therapy which as tyler very kaurptly points out, whether it was argentina, russia, poland's the only country in which shock therapy has worked in the modern era to massively reduce the country's budget deficit and go through that austerity. it is an inherently deflationary program. makes the recession worse and if they're going to try that on the pan-european basis that's why we saw commodities go down as well. that's why we saw stock price come down. the great irony of course is that, while everybody complains that the united states has the very same problems, when they say "flight to quality," quality is identified as the u.s. dollar and the u.s. bond market. >> guys, let me just throw this one more issue into the mix here because we haven't discussed at all. australia's raising rates again six times in a row. just getting an e-mail from a viewer who was actually right, australia rate hike on inflation concerns in six months you've had several rate hikes.
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obviously, the first central bank to raise rates but this is where things are going. >> i think a lot of that -- i think that's very true, maria, and it's a very valid point. the question is whether or not australia's situation is so vastly different than the rest the world because it's a commodity-based currency. much like canada's is. >> right. >> but canada doesn't have the debt issues, certainly, and some of the other overhang that other currencies, like the australian dollar have. so i do think that some of that is the currency play. some of that is the commodity play and a lot of that is linked to china as well. so it's a complicated formula, if you will. >> yeah, and it's a unique story. >> maria -- >> thanks, everybody. point out one thing there is a lot of money moving into canada. i've been honoring a lot about canada. the banking system is underleveraged. we're going to do a big segment on canada later on in the week on "closing bell" because we're followings money. see you, everybody, thanks so much. a lot of people have been predict a correction for some today but is today's sell-off a beginning of a market pullback?
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is this just a great opportunity to get back into the market?
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today's sell-off helping fuel fears that a major correction could be coming on wall street. should investors be looking at time to put money to work or taking money off of the table? joining me to talk about that is jeff stout, chief investment strategist with raymond james. and president ceo and cio. good to have you on the program. welcome. jeff, how are you viewing this sell-off. >> i've wrongly lookad that the sell-off in the past few weeks. a level not seen since august of '0 sech and you saw what happened after that and then you've got a 90% downside day and a distribution day on april 16th. you've got another one on april 27th. you've got a third one on
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friday. so i think the topping process for an intermediate term correction, nothing big but an intermediate term correction has been in the works for the past four weeks. >> what do you want to do in that environment, wait, get on the sidelines unchill ends? >> well the investment account's still pretty fully engaged because i think that we're okay on the upside into the midterm elections but on the trading side we've layered in some downside hedges, both on volatility and on the s&p 500 to try to hedge the near-term downside which could be anywhere between 3% and 10%. >> and do you agree with that dan? how are you doing this? >> well, i think the surprise in this, maria, is not so much today but actually looking at yesterday. the fact that this market's continued to go up unabated with all of these headwinds that we're have, really been a surprise. i think so for us to expect to have anywhere from a 5% to 6% correction in here would almost be a forgone conclusion and maybe down to nine or ten which
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is where we've seen support in the past but i think that the key underlying factor here is that the fundamentals really haven't changed as we look out towards the remainder of the year so i really view this as, be a little cautious, we may have more to run on the downside, but then it's really, probably, a buying opportunity you know really look at more towards a 1250 to 1275 towards the end of the year. >> well, let's talk about those fundamentals, they may not have changed but are they necessarily so vibrant? i mean, the market has certainly been trading up in anticipation of a real recovery. we're getting it on the corporate sector. it's much more of a mixed situation when you look at consumer sector. >> well, i think you're right but the consumer sector what we're starting to see is a little bit of sign to life. now you're not really going to see that recover significantly, obviously, until we see some reduction in the unemployment rate. and that's going to be a trailing indicator. so i would expect to see that come back very, very slowly. but it's going to be driven on the -- both the top line and the bottom line from corporations and i think that positive aspect is we are seeing that we're probably going to experience about 7% top line on the
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corporate side, and clearly, earnings and even valuations rights now, we're hugging that 15 p/e area, so coming in at about 78, 79 this year and close to 88 next year, you know still gives us quite a bit of upside in here. >> okay. and upside after we get through the selling period. i mean, jeff, you just said, you would not be surprised to see 6%, 7% on the downside. >> yeah. >> so able to get into this market at better prices. >> yeah, i think that you are. there was a lot of talk among the hedge funds i talked to today that this might just prove another one-day wonder and that we'll recapture the upside tomorrow. i don't really think that's case now that we've broken near near-term want. okay and if you want to be trying to make some opportunities, put some opportunities in target once the selling subsides, what areas are musts, in terms of being exposed to? >> i still like technology. i think there's two kinds of companies -- volume monetizing companies, price monetizing companies, volume monetizing
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companies do better when they get just incremental pickups in volume. volume tends to be monetizing-type companies. okay we'll leave it there. gentlemen, great. thanks so much. appreciate your time. thank you, dan. thank you, jeff. up next the outlook for oil. a sizable sell-off in oil today. is the dollar rally driving oil, or is there something else beneath surface?
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welcome back. bp is preparing to deploy the first of three massive concrete domes aimed at containing the oil leakings in the gulf of mexico. currently about 210,000 gallons of oil are leaking into the gulf every day. it's a situation that peak oil theorists say is the result of oil companies pushing the limits on drilling but is peak oil driving price or simply moofing with the dollar? joining the debate. walter zimmerman chief technical analyst with united icap. gentleman, great to have you on the program. welcome. >> thank you. >> thank you. >> matt, let me begin with thwith you. you have been such a fantastic and astute student of oil and investing around oil so many years you're a longtime
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believer -- explain the position and how do you view this disaster? >> well, the -- first of all the data is still fuzzier than it needs to be but it is so totally clear. if you look at the collapse of production in just the north sea and the bay of compeache in mexico, we'd are to basically in the last five years we'd have to find a new north sea in the year or two to make up for it and that's not in the cards. what's also clear is we really basically finished off all of the easy things. and one of the problems we had in the gulf of mexico with the that conda well is it's in ultradeep water. down to formation water depths where the reservoir pressures were so high that we don't have the proper equipment to actually handle a kick which created the blowout. >> how long in your view matt is this going to take to get contained? >> well, if the tower's don't work and i think that the odds of that happening are maybe 10%,
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probably being generous and then the slant hold well doesn't work and what they're talking about doing is drilling -- drilling down 35,000 feet vertical for a seven-inch target. so this is really high-risk. then i think we'd just have to wait until the reservoir depletes itself and it could be a billion-barrel oil field. >> so -- >> so if that's the case we'll poison the gulf of mexico and turn it into a dead sea. >> oh my god. so you're talking about -- >> it's probably the worst -- >> yeah. >> -- it's probably the worst in you know the environmental catastrophe we've ever had. >> walter, you're not worried about peak oil? you don't think this is not a long-term concern. >> absolutely not. peaking action in crude oil as popularity was a great assist to the self-signal that we got back in crude oil in 2008 and now here we are again in may, the old proverb sell by may and then go away, applies to the s&p 500,
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applies to crude oil, applies to gasoline. here we are right in the peaking window. the seasonal time for a concern with peak oil which tells me oil's about to take a nosedive. we think that crude oil could easily pullback to the $55 area later this year. just as the seasonal retreat. and there's two factors we see conspiring here against oil. one is, we're still ultra bullish on the u.s. dollar. we think it could go to 9030 easily go not parity with the euro. secondly we're very bearish on the stock market. the whole rally -- i think the real risk in the stock market is not, we going to get a correction, but did a correction just end? because the whole move up from last year's lows, had the shape of a bear market correction. it stopped right where a bear market correction should have stopped. now, either stock market weakness or u.s. dollar strength
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are poison to crude oil price. you get them both at the same time, it's fatal to crude oil prices. witness the $3 plus down today on crude oil. obviously the market is not concerned about peak oil. it's concerned about further dollar strength and further stock market weakness. >> it's interesting that you would expect oil to go to $55. you're talking about oil right now at $82.58 a barrel, you've got a disaster in the gulf and worries about peak oil. you think oil prices go down on a seasonality. >> there is ample crude and this is the most dangerous time. year to be long crude oil, late april, early may. it's a very seasonal peaking window. >> huh. matt, are you long crude? >> yeah. because the prices could go through the roof. no spare capacity, maria, we have zero spare capacity. there's a widespread belief that we have 5 to 7 million barrels a
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day of spare capacity taken all resides in saudi arabia and that is not true. and now we have -- with the spill in the gulf of mexico, we're going to have a shortage. >> well, that's what i was thinking, but walter's talking about the seasonalality. i mean does the seasonality, matt, worry you in any way? >> no, it's not at all, but what walter is expressing is you know very heavy conventional wisdom by a lot of people so i'm not surprised. i hear this all of the time. dan thinks that demand has peaked. >> yeah, and walter, what about the spare capacity issue? >> crude oil fell from $147 to $132 on u.s. dollar strength and stock market weakness and if the same thing happens, where was peak oil back there? where was the support for crude oil back there? the news follows the trend. >> well, that's an interesting point went all the way down to 32, matt. what do you say to that? >> the financial system collapsed and the oil traders had to basically sell all of
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their -- >> matt, you have to say some of this is dollar related though, right? >> i don't think so. there are a lot of people who believe that but you know over a decade oil prices went from $8 to $145 a barrel, and didn't have anything to do with -- it was demand grew far faster than supply. >> and yeah it certainly feels like demand has been moving prices -- >> well, demand is now dangerous. demand has now become a runaway train. china is basically using too much oil now. >> and they're stockpiling it. >> and can't supply it. >> gentlemen -- >> china's at risk of being a bubble itself. >> right. >> so -- >> hm. if china collapses in terms of the stock market, in terms of the economy moving lower because that's what the government's trying to do matt, does that change your scenario? >> maybe by a month or two. first of all, i'm a big believer, i think that one of the big mistakes the economists have made the last deck sad thinking china was a bubble. >> hm. >> and it's interesting that the
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auctioneer technology conference this week enormous amount of chinese companies that are there with very impressive equipment, and the export show is starting this week in shanghai. >> a good point. one reason that they're buying africa, by the way. gentlemen, great conversation. >> yeah, they're buying africa. their oil is growing by double digits, year over year. >> yeah. and the stockpiling you mean. gentlemen, thank you. great conversation. we appreciate your insights on this important topic. matt simmons, we appreciate your time. walter zimmerman, thank you so much. up next my one on one with xerox ceo ursula burns.
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hi, folks. welcome back to "closing bell." i'm matt nesto at breaking newsdesk. we just have a letter out from dollar thrifty and they're essentially rebutting another letter that was written to them by avis budget saying how come
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we were left out of these acquisition talks? we made advances to you. well, they have said look, we're willing to entertain offers as long as they're substantially higher. they also go on to correct some of the language in avis' letter, trying to break-up the existing acquisition offer of $41 a share made by hertz about a week and a half ago. but they point out that there were some errors in that letter in terms of the break-up fee, et cetera. but big picture, maria, they say we will entertain substantially higher offers. the bid on the table as i say is at $41 as we stand right now. >> all right, thanks so much. matt nesto with the latest there. xerox holding its investor meeting here at the new york stock exchange today. the company announces that it expects foull-year earnings to come at the end of the 2010 forecast. i spoke with ursula burns and asked her about the economy and the agenda at that meeting. >> this is the first investor conference that we've had since
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we bought affiliated computer services and since actually november of 2008 so it's been a long time that we spoke to analysts in this form. we speak to them all of the time and shareholders in this form and basically the story that we try tell them is that xerox is a new company. that xerox has transformed itself. we're now the largest company in business processing and document management. we have continued to invest in areas that are growth areas for us, in technology it's all about color, it's all about printing, production printing or what we call a new business of printing and then it's about our services business, in document outsourcing business which is fwhoon we've had and lead-in and also adding two very important -- synergistic and transformative lines of business to us. one is in business process outsourcing and the other one is in information technology outsourcing. these two additions, plus our base business, actually repositions us in the marketplace and it's all about growth and we're growing first quarter results were good. actually made us feel a little bit more confident about the
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economy because we wanted to get the story out, tell people that things are -- xerox is a new xerox and you should pay attention to it. >> let me get your take on this market sell-offane t and the wo throughout wall street and get your take on europen what you're seeing around the world. why do you think that we're seeing such a severe reaction? is this because of the debt in greece and the oil spill. what's your take? >> i am sure a lot of it has to do with the unisn't europe. because it's been so back and forth, right? so it's greece and then we think that greece is -- we have a process or the european community and then the united states has a process to get through that and it's settled for a couple of days and then we found that there is more uncertainty in the same place and then portugal comes up. and right now around european economy and so how does this all work when you have a european union and you have independent companies that have huge gaps.
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>> and the same currency. >> and the same currency. so i think it's really a lot of uncertainty about this new structure that we have in europe and how the structure actually works vis-a-vis individual countries, individual culture, everything i think that's a big issue and i also do believe because i have heard this from a couple of people, this oil spill thing is actually it just adds another level of uncertainty so what does it mean for oil prices, what does it mean for bp and bp, what does it mean for other oil companies? a level of uncertainty combined with other uncertainty that we have that i think is just -- and the market is very sensitive right now. i mean it goes up and goes down in -- at little indication -- little movements in the world causes it to grow and to -- or to shrink significantly and when you have this happening, i think that we're just wait fog settle down a bit. >> yeah, people are scared. >> people are squared. >> how how do these events affect xerox? you've got businesses around the
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world. what are you seeing there. >> fortunately we are extremely diverse neid business segments and geographically which is really good so we're not seeing a big impact. you wouldn't be able to notice it in our numbers or our guidance or any of our earnings like that which is good. what we're seeing in the economies around the world, though, the united states, we are seeing signs of hope, which is probably the first time i've said publicly said that statement in developing markets, russia, eurasia, brazil, mexico, you know these economies, noted and noticeable significant improvement in business there. europe as i said is generally okay. it's not trailing the u.s. too far behind and they've been able to produce, the xerox europe have been able to produce despite the downward pressure from the southern european countries. >> and asia, obviously, has been -- >> we cover asia through our partner. and so we don't see the revenues in that numbers but we see a portion of the profit and that's better so we're starting to see uptick in asia as well.
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>> now, would you like to see a change in terms of the mixed shift, how much you derive from asia, versus europe, versus the u.s.? how does that mix change in the next five years? >> yeah i think we'll get more revenue and profit from the least penetrated markets which are our technologies and our service and that's clearly developing markets, so china, which we don't cover but our partner cover, china, india, brazil, russia. these areas of the business will probably grow on a rate basis faster know that the developed economies. >> has the rise in commodities been a negative? how much does it eat away. >> note a whole lot. the good news is that we have multiple spourps we're not a user of pure gold or steel, we don't -- we're not significantly impact by big swings there. which is very good. we do have some proprietary things that we use, but thank goodness we are a major buyer of those things. and they haven't fluctuated a lot in the marketplace. >> and you said in the meeting
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that you're expecting 2010 earns to come in at the high end targets. >> right we stabilized and some upside for us. >> so if you had to pick the best performer around the world right now, what would that be? >> business outsourcing in america grew 8%, our bp services in north america. our color businesses around the world everywhere, the united states and europe and in our developing markets, color, activity grew. pages grew. so color was great. and if you look at a region that was the best, it was probably russia and eurasia. >> my thanks to ursula burns, ceo of xerox. take a look at xerox stock tonight and of course the market was under pressure pretty much across the board, xerox as well. down to $10.60 a share. up next a closer look at dollar's big move today. the euro dropping sharply debunking a popular myth about the dollar that could be costing you money.
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welcome back. new segment here on the "closing bell." we're talking about the numbers. we're focusing on the dollar in today's "talking numbers report." it is a common belief that when stocks go up, the dollar goes down. that's what we want to look at today and my next guest says that buying into that philosophy is actually costing you money and a lot of money. we're going to demystify the
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dollar's relationship with the stock market. we know that the dollar has a real relationship with oil. but what about the relationship with the stock market? brian belski, chief investment strategist with oppenheimer is with us to "talk numbers." brian, what's behind this idea that the dollar goes down when the stocks go up. >> well, no one's talking about this today, maria. we're not talking about how great the u.s. looks, we're talking about how bad europe looks, and in particular, how bad greece looks. our view on the dollar is very simple as it is with all currencies. the currency is tied to the underlying economy, period. and our underlying economy continues to recover. that's why the dollar is in such great shape and why u.s. stocks anti-u.s. economy looks so great. clearly investors have made tons of money the last seven to ten years with respect to exiting the u.s. and really focusing on non-u.s. assets. we think that day in the sun is clearly over. and it's time on come back to the u.s. >> yeah, but i want to see the evidence here. what is the proof?
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how do you know this? i mean i know that you have a chart that shows the correlation between the dollar and the s&p 500. let's have it. >> right. i mean when you look at currencies and you look at markets you have to do so over a long time frame. again, remember, what i like to say is in the '90s it was a great time to be an american, stocks were going up and the dollar was going up. how much better could it get? well the answer was it couldn't get any better so the investors left the u.s. after the u.s. stopped issuing the 30-year treasury and after the euro came out and after stronger growth prospects began to come about in eastern europe and china. now we think that that cycle has run full circle and it's time to come back where the stability is and where the strength is longer term after we have self-corrected ourselves over the last ten years. >> all right, give me actionable information here. how do investors act on this news, how do i make money on this scenario? >> well, we think that you still buy those sectors that are more u.s. domestic focused number one but strong growth attributes
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going forward and that's why we are overweight areas like industrious -- and however as that chart shows you that you have up on the screen right now other areas like health care, consumer staples that do very well under these scenarios just like they did in the '90s. remember health care and consumer staples aren't just defensive assets, they're pretty strong growth assets. '90s was a pretty good during the '90s. >> but how much longer are we going to see this friend sflas you're looking for the dollar to remain strong for how long? because at some point doesn't the deficit become an issue once again? >> well the strong dollar and the improving economy will actually help the deficit, number one. number two, we're going to see higher interest rates which will help support the dollar. we think this is a very early on with an one- to three-year time frame where the dollar will continue to rally. remember this is a very contrarian trade. nobody is on this trade. everybody is being very reactionary the last couple of days jumping on the dollar. in the last few weeks remember the market's going up, and oh by
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the way, the dollar's been going up. so people don't believe in this trade because of all the nonexposure with respect to the non-u.s. exposure, i'm sorry that investors made all of their money. and remember, investors are very short-term oriented. where have they made money in, emerging markets and non-u.s. exposure we think that time is right on come back to the u.s. >> but come back to the u.s., the quality names to the engineering markets. i'm looking at a list of equities and what happened today down across the board, even those companies like the coca-colas of the world that actually have great exposure to international markets where the growth is happening. >> right. 40% of revenues in the u.s. in the s&p 500 come from non-u.s. areas. however, what about the other 60%? guess what? they come right from here in the u.s. and if the u.s. economy's going to be one of the more stable and more stronger areas that will help benefit that revenue mix greatly. i think that's where people are missing. >> all right. we'll leave it there. brian, great to talk with you as always. thanks very much for your great insights as always.
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>> thanks, maria. >> take a short break. when we come back, goldman sachs is not playing around. the company gets real vocal on a toymaker. back in a moment on "closing bell."
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welcome back. we're learning more about the man formally charged today with saturday's attempted bombing in new york city's times square. affinion group, a marketing company owned by the private equity firm apollo management says it employed faisal shahzad as a junior-level financial analyst until last year. affinion says it hasn't had any further contact with shahzad since then. a look at the other stories we're following on the "closing bell" ticker tonight. drug maker pfizer reporting a 26% decline in first quarter profits. the company made $2 billion in the quarter. largely due to expenses related to its acquisition of wyeth. when you strip out those expenses it easily beat wall street expectations due to a 54% increase in revenue. pfizer stock today up 2% in the face of weakness elsewhere.
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goldman sachs added toymaker hasbro to its conviction buy list with a price target of $56 a share. the analyst telling clients hasbro is in the early stages of a renewed revenue growth cycle which will be helped by strong brands including transformers and sesame street. hasbro stock tonight nonetheless down 3%. let's head over to the nasdaq marketsite. melissa lee is standing by with a preview of what's coming up, "fast money" top of the hour. hi, melissa. >> hi there, maria. big show at the top of the hour on "fast money." first of all, we will trade the fear. the trades you want to have on long and short in light of this european contagion. and we'll also go through the trades you might want to have on if you believe the euro zone is destined to break up. and of course our traders will also give you their best ideas for opportunities amidst the sell-off here in the united states in terms of stocks you want to buy on the dip. and then joe terranova has his ear to the wall when it comes to the oil insiders out there. the trades off of the bp oil spill. some of them will shock you. all that and much more top of the hour on "fast money." maria. >> we'll see you in less than five minutes.
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investors will be paying close attention to the big hearing on capitol hill tomorrow. we'll get you set up for the opening bell. you're watching cnbc, first in business worldwide. ♪
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throughout our lives, we encounter new opportunities. at the hartford, we help you pursue them with confidence.
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by preparing you for tomorrow. while protecting what you have today. you've counted on us for 200 years. let's embrace tomorrow. and with the hartford behind you, achieve what's ahead of you. here's what to watch for tomorrow. >> i'm julia boorstin in los
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angeles. time warner reports before the bell. investors looking for higher earnings on an ad recovery and strong cable while its magazines are expected to drag on results. and after the bell cbs reports. all eyes on its advertising performance and outlook. >> i'm mary thompson. this is what i'll be watching for on wednesday. the financial crisis inquiry commission holds a hearing on investment banks and the shadow banking system. among the five former bear stearns executives set to testify, the company's former chairman and ceo, jimmy cayne. >> and let's take a look at the day on wall street as we say good night. the market under pressure for much of the day today. in fact, ending near the lows of the afternoon. on worries about the debt in greece and the ripple effects throughout the euro zone. the dow jones industrial average down 2%. 225 points lower at 10,926. volume heavy, as was volatility higher. 1 1/2 billion shares traded here at the big board. nasdaq gave up 75 points, nearly 3%, and that wasn't even the low of the day. 2424 is where the nasdaq settles
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out. and the s&p 500 tonight down 2%. you had commodities also weaker across the board. and a number of financials and technology leading the decline to 1173 on the standard & poor's. thanks so much for being with us tonight on "closing bell." i'll see you manana. "fast money's" up next. good night. live from the nasdaq marketsite, this is "fast money." fear spreading as the euro zone region implodes. is this the time get greedy and buy into the fear? how far will this go? gary, is this the end of the euro? >> well, it may not be the end of the euro, but it's certainly the beginning of the next leg down. and as the euro continues to move toward parity with the dollar, the real focus here is what's happening. and i go back to an old friend, billy ray valentine. when asked about pork bellies in that great film which guy of course knows, why is it going to keep going down? pork bellies have been dropping all morning, which means that everybody's waiting for it to hit rock bottom so they can buy low. which means that the people who own the pork bellies are saying, we're looking at all the damn
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money going away and we're not going to have money to buy that g.i. joe with the kung fu grip. in all seriousness, the euro is falling because the euro is falling. and that may sound silly, but the fact is there's nothing that's happening on the continent and it's been going on for two weeks, that makes one think that you're going to see in a euro strength. the fact is as you pointed out, melissa, what's been happening, there's been a lot of noise away from what's going on in europe. so it's taking people away from what's happening. the euro is on its next leg down. >> and i'll say this. 1983 jamie lee curtis, i tell you what, she was on my radar screen as well. that's a great movie. billy ray valentine, he makes a great point. a lot of people say it can't fall any further. it can. i think the euroti's going to 1.25. we're about to enter the neck leg down. today was a very interesting day on that front. >> we talked about it last night. the math just doesn't add up on the bailout. they're short here. they're going to have to come one a way to have growth. if the contagion spreads, and it looks like that it is going to continue to spread, you then have to ask yourself here


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