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tv   Closing Bell  CNBC  August 1, 2012 3:00pm-4:00pm EDT

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do, and the final hour with "closing bell" is bring it to you, next. . >> hi, everybody, we enter the final stretch, welcome to "closing bell," i'm maria bartiromo, the market seesawing following the latest fed meeting. >> so far not giving back any huge gains from the late rally of late last week, but it is it really the european central banks that could boom the markets big. we'll see where we stand with less than an hour to go. you see the light sell off on the announcement from the fed. we have been going side ways since then. the nasdaq is down a third of a percent at 29.28 and the s&p is down a point. that's it, at 1377. >> yeah, it was volatile after
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the fed's decision, but recovered to break even. with that ecb happening tomorrow, and the big job's numbers out on friday. >> in today's closing bell exchange, we have steve least man, ronan -- >> i'm just going to let you say that. rick santelli. steve, we do have it backwards. i think the fed would love to know what jobs number is and the ecb because they do anything, right? >> we were talking before we came on, and is there anything the fed will really learn in the friday job report that will change their view of the kind of assistance that's needed?
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i'm not sure there is, i know they may get a piece earlier in the week, but they don't know what's in it until thursday. what's important is the new fed language where they say they will closely monitor the markets. a potential intermediary action if there should be a overwhelming case for it. that kind of language is unusual. i think that's the kind of language and the fed is indeed closer to action but we didn't take it today as predicted. >> closely monitoring, right away those jobs numbers take on, ron, what do you think? do we get the stimulus now at any time before the next meeting or does it happen in september? >> i thought it was all going to come today, 200% wrong on that. i think the fed has all of the
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justification it needs. both in structural and economic terms. it's not a strong global economy. we had manufacturing below 50 for months. that would be the type of thing to get the fed to act. >> what i think is going on at the fed, is they know the stronger growth did not correctly symbolize the economy. the weakness we're having right now is not correct either, they want to know where the balance is. >> maria and i are reading a note we just got. the white house releasing a readout, the president just got off a call with the president of france as they discuss the situation before the ecb meeting, and president obama welcoming the recent declarations by mario draghi, and it's going on from not only
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an economic standpoint but a political one as well. >> that's not a place obama wants to be. >> but he is mentioning the ecb. let alone job owning the fed here, the ecb. >> exactly, absolutely right. to come out and say we welcome what they're doing on the need -- >> the day after action, maria, that might be acceptable, on the verge but acceptable. >> rick santelli, i bet you're thrilled about that. >> i think they did the right thing, but i'm more interested in what you said about the job owning going on, because in my opinion that's the most scary thing of all. i would hate to think that somebody way at the top of the administration thinks that mario draghi has a special pill that he has not administered yet because it's that kind of thinking that will prolong -- >> he does, he has that pill. there is very little doubt the
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action by the european central bank could go a long way to resolving the near term instability in markets. >> i agree, instability, no solutions, and the white house doesn't understand a solution is not a stabilization. >> we don't agree as much as the producers would like us to at this moment, i'm saying in solving the stability is critical to any medium and long-term solutions. >> actually, to call out the ecb, welcoming new action tomorrow when the meeting has not happened yet, is extraordinary. let's talk about what we might learn tomorrow from the ecb, what kind of action might we see from draghi, and we want to bring in our guest as well, cynthia, what do you think? >> the economy is are mired at this time. it will be important they signal continued action and willingness
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to act. >> you have to invest other people's money, what are you doing. serve running for safety right now. they're going to treasuries and dividend payers, is that what you're doing or doing something else? >> no, we're focused on dividends. honestly we're going into seasonal weakness for commodities and the markets. we think with the equities we've seen from a lot of u.s. companies by 14% this year, we think getting paid to wait along the way to see what policy maker wills be doing in terms of further action is the place to be for investors. >> sdooef, is there any way we get a statement tomorrow that has to do with a program that controls where the weights are. every time they break, the markets sell off and it's
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becoming difficult for spain to pay it's bills when borrowing costs keep rising. is there any program that can be done that does not include markets just leading where we go that draghi could come out with. that would go a long way. >> an existing program where they have gone out and purchased sovereign bonds in the secondary market, it has been dormant for about four months, and if they were so signal reactivation -- the central bank doesn't have to do a whole lot if the market is convinced of the plan to do something. it never ready had to do any action in the market, it just had to say it, and markets would go there. ecb doesn't have that credibility. if it were to step in and say it's a limit that we won't
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september between certain sovereign bonds, it could go a long way. >> that would be the most powerful i think. >> the stock market is holding up here, i thought the market would have just tanked on the fed not doing anything at all. steve eluded the fact of a possibility of an intermediate move seems to be the preoccupying -- >> the wait and see continues. don't you think we're now waiting for what happens tomorrow? >> yes, and then friday with the unemployment. >> and i want to point out that we had this right and other media had it wrong. >> i would like to bring up one point, we see the dollar getting very strong. >> it's probably a lot of uncertainty. this market is not sure how to read this lack of action today from the fed ahead of a very important meeting tomorrow, so we're back and forth here.
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>> i don't think anybody expected much today. rick, what is the floor expecting tomorrow do you think? >> i think it's changed dramatically. the interpretation on the floor is show a chart of the indx. the other half is people thinking that the euro is being told because they're looking at this as a good premier view of what we're going to see tomorrow which is less. >> is this a lochte-phelps handoff here. >> it's all heres, exactly. >> not to use an olympic metaphor, here. >> it should have come the other way around, what they do, and the fed may know this argue day,
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may dictate the future fed events. very quickly steve, we have to go. >> the fed did a good job at telegraphing their actions, and we'll find out tomorrow. >> why did they do such a good job, they said today or next week. >> the lack of action, maria, the lack of action is a sign that the fed correctly telegraphed to the market what it was going to do. >> thank you for joining us, appreciate it. meanwhile, in another corner of the market, we have social media stocks selling today. >> a quick check on the markets, moving lower and then rebounding. the dow and s&p back in the green, let's get to the big movers today, some are calling today a social media selloff
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with facebook hitting a new low. analyst saying there is no major catalyst between the earnings report and the next lock up expiration which is august 15th when insiders can sell more than $270 million in stock. tell come outperforming with frontier communications leading the pack. the stock up better than 11%, a good day for shares of allergin, betting estimates, the company also lifted the lower end of the 2012 profit view. that's why that stock is up, a different story for dream works. second quarter earnings falling. it got a strong boost from kung fu panda 2. and avon has also been hit hard.
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guys, back to you. >> there are about 50 minutes left in this trading session, anything can happen. right now the dow is down 5 points, but we're back above 13,000. >> stick around, everybody. it's a big day on "closing bell." >> coming up, big hitters with big opinions weigh in on today's fed decision. ceo's give their insight on housing, the economy, and the looming fiscal cliff. >> getting taxes lower with cutting spending, if we don't do that, all of the qe's in the world won't solve our problems and we will destroy our currency. >> he's no fan of the fed, and he's first on with maria. ron paul pulls no punches on the outcome of the federal reserve's
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latest meeting. what's ahead for his controversial audit the fed bill. hang tight for all of this on this hour of "closing bell." n of investing technology is now within your grasp with the e-trade 360 investing dashboard. e-trade 360 is the world's first investing homepage that shows you where all your investments are and what they're doing with free streaming quotes, news, analysis and even your trade ticket. everything exactly the way you want it, all on one page. transform your investing with the e-trade 360 investing dashboard.
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welcome back, the big story we're following today, a computer glitch leading to a massive wave of buy and sell orders when the market hoped this morning. it involved 100 stocks, and night trading really affected. >> they're still investigating trying to figure out what it was, but knight shares are down sharply and being punished by the result. and we have two guests here to help us sort this out, first, what happened? >> well, right at the open something went strange. we had a massive series of buy and sell orders that came on the floor, much bigger than
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expected. a number of stocks were halted, and by 10:00 we had 300 million shares on the floor, and normally it's 80 million or 100 million. and it went on not just for 30 seconds, but it went on for 30 minutes some people notes. the big question was number one, what happened, night trading said it was a technology issue, and number two, why did it go on for so long? one would think there would be an off switch somewhere. >> let me read the statement, an initial review indicates that a technology issue occurred related to the routing of shares to the new york stock exchange. they were to rout listed orders away, and the other businesses are not affected, they're still reviewing internally.
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what happened? >> as bob said it, it clearly looked like a technology glitch. it was a victory for the humans. we got very close to a negative feedback loop that affected the option volatility and that started feedback at the stocks, and luckily the circuit breakers and the humans intervened -- >> we could have gotten a flash crash again. >> yes, you can get into those feedback loops and it looks like things -- like the options are moving too. >> one computer talks to another computer and talks to another computer and it just feeds. >> we had the bats ipo was a mess, the facebook mess, and now technology issues we don't even exactly know what it means. there is a common thread here,
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is there not? it all relates to technology issues and the way they interact with each other, they complicated. stuff happens between them and we need to make them more robust. >> and there was a new system implemented here at the big board today? >> yes, but that did not play a factor. i think some of the competitors wanted to nail that on that, but it did not appear to be the case. >> okay, so what's the take away for a small investor. is this another troubles issue for them, they should be afraid of the role that technology plays? >> and are we sacrificing for security here? >> that's far older than in trading, years and years ago, when they were around, starting doing program trading. to make things easier, they took the zero-zero off of the
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machine, instead of typing 100, and when the intern game in, they said sell 1700 shares and it turned out to be 170,000. >> one other thing i suggest, a big technology improvement, an off switch. i want to know why did it run for so long. there was a massive series of orders to buy and sell, and it just kept running. i would like to use the answer. >> we could use a please verify switch as well. >> the investigation is on going. let's get more on this, we have hamen jabers. >> it's raising eyebrows here in
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washington. we have a statement from committee chairman spencer baucus saying the committee staff is awaiting a update on what has transpired during today's trading. he says while the committee staff is alert to extraordinary or abnormal market events, it's important for us to gather all of the facts before determining a course of action. members of congress here in washington are looking at this but they don't have all of the information they need just yet. back to you. >> hang on, they cancelled trades here on the big board? >> there was 148 stocks they're looking at, and six are being cancelled for a specific time period from 9:30 to 10:15. only trades are 30% or more above or below the opening price today. >> thank you, so much. we're in the final stretch here of trading for the day, the dow jones down about 12 points or so
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postthe federal reserve statement today. no extra stimulus, the fed watching the data closely. we'll watch this markt trade with about 40 minutes before the closing bell. >> what about foreign awe tuto makers, should you be driving away? >> and is there love for facebook and zynga? you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. in here, every powerful collaboration is backed by an equally powerful and secure cloud.
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auto sales dp not shift into high gear last month. >> the big number that we just received a few moments ago is the buy sales pace, it needs to be at least 14 million comes in at 14.09 million. the two big ones that stand out here gm and ford declined year over year, toyota and honda didn'ts from supply because of the earthquake and tsunami. so what do you see when you look into the show rooms. the sales pace is critical, the transaction prices were strong, and incentives relatively in check. pickup truck sales showed modest growth in july. the best july since '07. on the luxury side a bit uneven,
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mercedes had a nice gain, but bmw was down. stocks were all over the board, bmw at the bottom there down almost 3%. the first quarterly decline. and tomorrow we'll have the gm earnings from the second kaurder and we will be speaking with dan amman, that's tomorrow morning. >> ford shares lower today as well, they are reporting a 4% decline for sales in the month of july. talking numbers today about a stock that lost a quarter of the value in six months. is there another automaker you would rather own right now? with have ennis tanner, and ryan johnson covers us. thanks for joining us, brian,
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let me start on the fundamental side of things, what do the numbers tell us about where ford is right now. >> they had 16% share, lighter than what we were looking for. it was difficult year over year. so there is still pretty much online. they held flat in pickup trucks, a important category for them, gm was down. overall the sales look like they're in okay shape, certainly not going to bloom any time soon. >> okay shape, ennis, what does this chart tell us? >> ford has a very class rosic chart pattern called a head and shoulders chart patter. it made a left shoulder, a head, and then a right shoulder, $10 was the neckline, and it broke it in july. it looks like ford stock is antipating future sales that
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will continue to be weak. if we go to toyota, they are stronger and the numbers reflect that. the chart is more neutral. the only negative here is it is a lower low in november 2011, and it made a lower high. having said that i would rather own toyota than ford. >> brian, what about you, do the charts say what fundamentals say in your view? >> what's really dragging ford down is not just the slow recovery in the u.s., it's the mounting losses in europe that we got a taste of last quarter. we think it's cheap for about a year out. we think that the u.s. will continue to recover and european losses -- and it's about seven times a conservative number.
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i would say however until we see a bottom in europe, we agree short-term there is not really a catalyst in sight. >> thank you, bill, over to you. >> ledding into the last half hour of trading here, the averages are slowly creeping higher, all three in positive territory right now with the dow up about 15 points. be the fed need to act again before housing really turns a quarter. we'll ask the ceo of coring. and he is the biggest critic of the fed in the world, we're talking about ron paul. so what did he think about today's nonannouncement. he joins us today from capitol hill. first on cnbc. tdd#: 1-800-345-2550 you should've seen me today. tdd#: 1-800-345-2550 when the spx crossed above its 50 day moving average, tdd#: 1-800-345-2550 i saw the trend. tdd#: 1-800-345-2550 it looked really strong.
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>> i'll prices off their session highs, sharon epperson has details on that for us. >> bill, the oil prices are modestly higher here on a big supply slide, but they have
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paired their gains with the fed statement. we saw a big decline in crude supplies in the weekly report from the nrge department. that helped prices rally. we're of course well off those highs at the moment, but still slightly higher on the day. the big gains in the gasoline market, they rally about 2% and have maintained those gains as we have a number of midwestern refinery issues. some analyst say we could see $4 gasoline for detroit, for the national average, those prices are climbing too after rising 5% in july, we're up again in this session, in this day, and we could see prices top what we had a year ago in august. so we'll look at that 360 has a price we may surpass in the next week or two, back to you. >> owens corning specializes in
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building materials, and for the rest of 2012, they say they're seeing a recovery in housing. >> while profits took a hitting with there could be some bright spots ahead, joins us is theirs ceo, thank you for joining us today. give us a sense of that second quarter, it was a period where we started strong at the beginning of the year, and then we saw softness overall in the second quarter, is that what you experienced as well? >> we offered our earnings report and there was two themes. we're very strong in global industrials and insulation. to get strong improvement in those businesses. and we were able to show that there has been some improvement in u.s. new construction, and that in fact we're starting to
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see improvement in our insulation business, and that is what we're known for. investors are seeing bostive housing come through. the negative was o overall roofing market was off on a comparable basis from last year, so that business was a bit weaker. >> so you're reparting earnings on the day we hear from the federal reserve, what's your take on the economic recovery and what the fed needs to do, do you think the fed should act with more stimulus? >> it's hard for me to see in the markets that we face how a lot more stimulus would help housing, home prices have come down and are affordable, rents are going up, if there were ever a time to buy it is now, and we're dealing with consumer
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confidence. we need consumers to believe that prices are falling, and that they can make a big financial commitment and investment. i think today the confidence in the economy is not as strong as it needs to be to really get a strong recovery in housing although we're seeing the beginnings of what looks like a sustained recovery in housing. we're optimistic that we'll see some recovery, but we're still in a very weak housing market if you compare it to any housing reform. >> how would we break out of that in your view? if it's not the fed, and at this point they can't do much more, what else in terms of stimulus might be helpful? >> well, certainly you know we would look for a constructive policy on the mortgage side. the mortgage market today is not working particularly well. i think there is people with decent credit, not steriling credit, going through a hard
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process, there is obviously an opportunity in the mortgage market, and then i think the policy makers in washington, people are beginning to chatter more about the fiscal cliff. i think that will start to erode confidence and getting a solution on that and giving people some confidence that we have a plan in the united states where we're going to get our house in order. we would think would cause the under lying economy and therefore housing to benefit. >> i was going to ask you about that fiscal cliff. many corporations are holdi back on business investment. we certainly believe consumers may be doing the same thing not noing where the tax stream on investment wills be at the end of the year. do you sense trepidation on committing new dollars in investments waiting for policy makers in washington? >> had. >> we have been dealing with a
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very untern economy for years, and today is the bright spot of the economy. we've been managing expenses very tight, managing hiring very tightly, we have been cautious. we would like to see, you know, a continuous and sustained growth in the u.s. economy before we get more aggressive with investment. these items that erode confidence and stand in the way of the recovery are set back to our confidence and would cause us to wait until a point later in the future when we're ready to take action. >> thank you for joining us today, appreciate it, thank you very much. >> and tomorrow don't look at the day long look at buy, sell, or rent. find out how each market is fairing right now and look at the five most expensive homes, plus we'll be on the closing
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bell. in the final stretch of trading for the day, today the market is flat on the recession. a big come back after the fed's statement earlier. >> if you're on the sidelines waiting for the fed to act, you're missing out on bargains. >> and president obama has been bashing mitt romney for being against the ah toe industry bail out, now romney fights back. >> in 2009 under the bailout of general motors, ohio dealerships were forced to close. >> coming up, former new hampshire governor explain yst he s -- explains why the bailout cost a lot of americans their job. >> before the break, the dividend, which company's stock with earnings out tomorrow is outperforming this year? the dividend pays off after the break.
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outperforming this year. direct tv, general motors, or time warner cable. now the payoff. time warner cable which has climbed over 30% year to date. >> welcome back, meanwhile, facebook is going back the other way. issues around facebook, that's pressure to facebook, bertha coombs with that right now. >> those who got in at the height are really feeling pain, they're looking at social pariahs. they're down 35% and 45% respectively. take a look at groupon today that's at an all-time low. they closed only 10 times. it's down nearly 80% from the all-time high. one of the survivors is yelp. it only traded belowt's ipo
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price once. >> thank you, bertha. the fed announcement earlier today said it will not stimulate any actions, at least not yet. >> one of our next guests says it doesn't mat whaert fed says or does, with us is two guests, great to have you here, gentleman. putting money in the market regardless of what's happening from the federal reserve, why? make the case. >> there's a lot of pretty attractive opportunities out there. we're buying emerging market debt with you know, five year duration that's yielding six or seven percent, and then there is also pretty attractive opportunities. you can buy a global basket that are yielding six or seven
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percent. >> but you have to be careful what you're buying. >> absolutely. >> you're strategicly looking for areas distorted by what's going on. >> absolutely because of what the fed has done and the fear and panic in the markets and people are scared right now and there are a lot of attractive opportunities. >> did anybody expect the fed to do anything today? >> i think they did. they said it could be wednesday or next week, so -- >> there was some expectation, and my expectations are qe to infinity like buzz lightyear. they will examine their options to do something different. one of them was a fun funding for lending scheme. the way it works over there is they loan the banks short-term treasury bills, and the banks use that as collateral, and then they lend that money back out. now the fed for logistical
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reasons cannot enact a program like that, but it's kind of like you can throw open a discount window here. basically the bottom line is they will look for less conventional qe ways to get banks to push out to the economy. that's clearly what we need now. all of this qe and $3 trillion balance sheet stuff is still not stimulating the economy. i think they're starting to get creative here. >> take a step back right here, dave. the fed is continuing to say look, we're still in the dumps and we'll be here if we don't see growth pick up any time soon, does that off set giveen the fact that the economic fundamental landscape of the economy is weak? >> well, i think the fed is going to continue to ease, and they're going to continue, like you said, have qe or whatever into infinity. as lon as they're in their
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floating the market, they're somewhat of a floor under the market, and equities are priced. >> do you worry about inflation? >> yes, we worry about commodities and gold. commodities and gold should be able to benefit from that in terms of inflation. >> what about stocks having no business being where they are right now. they should be sharply below the levels where they're at right now. >> sure if you think about the fundamentals of the economy and look at the valuations on the markets, if you look at the s&p 500, and historically traded like 15, you can argue it's 10% or 15% under value. it's even better in emerging markets. they're trading at like ten times earnings. so they're under valued. >> good to see you. >> thank you so much, ten minutes until the closing bell sounds for the day.
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the market is down, lots of back and forth around. >> now that the fed has shown it's hand for now, what can we expect tomorrow? president obama is calling leaders in europe hoping for some action. why the real market reaction may be coming tomorrow. that's coming up. >> that's the big report, and a big meeting, speaking of the fed, the man who wants to end the fed will be joining me. of any small business credit card! pizza!!!!! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! put it on my spark card! [ high-pitched ] nice doin' business with you! [ garth ] why settle for less? great businesses deserve the most rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet?
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so the fed holding off on implementing any new efforts to support the economy. >> we could get a move from the fed, they say they're continuing to monitor the data, but of course the big meeting now that we're focused on is the european central bank meeting. we have word in the last hour that president obama was working the phones to get them to move in terms of action. i think what's really going to move the action tomorrow, bill, is that we'll get some kind of acknowledgment that it's really the interest rates that keep spiking, the ten year in spain going above 7% that is hurting spain's ability to pay it's bills, finance it's debt, in a real practical manner. if he can do something, say
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something, about keeping rating in check, that's going to create a huge rally in my opinion. >> this is still a huge learning process as people get to know mario draghi, saying he will do whatever it takes to preserve the euro, now he has to do something to back up that comment, and we'll learn, you know, how he rolls, as we say here in the states, he can say what he does, but is he going to do something that's going to preserve the euro at this point. if they don't get that tomorrow, there's no thing of substance out of that ecb meeting, who knows what markets will do tomorrow. >> and then the jobs numbers out of friday, in terms of the ecb, he did say we're going to be there. when you're coming out of being so aggressive, expectations rise. >> what does it mean? what do they have at their disposal they can do. and i think that's partly why
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our own fed deferred to them until tomorrow. they'll stand back and not complicate things by changing the landscape in our own monetary policy. let them make the next move and then we'll decide what to do. >> the program so far, what the ecb has done so far has been very helpful, it's been universal that they've been needed. so we'll see what they come out with. >> take a break and we'll come back with the dow down ten points right now. ron paul is waiting for the fed to go away, why he thinks the central bank is doing serious harm to the economy. [ male announcer ] we've been through waterbeds,
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and we'll throw in up to $600 when you open an account. welcome back, inside the four minute market here as we ahead toward the close of the trade and we start with a happy thought. this being the first day of the month of august, for the last 20 years, the month of august has been the worst month for the s&p in performance. for today, as we try to read the market response to the fed's nonannouncement, it's complicated because now we're
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waiting for the ecb meeting tomorrow. the dollar has a big response today. the euro is going lower because they maying something to push rates lower in europe tomorrow. for our markets, if the euro goes lower, so does the stoke. the dow down with a decline of about 32 points with three minutes of trading left. here is the interesting thing. what the fed would ideally like to see is longer term yields go lower, and it inverts the yield curve a little more. look at the two year note, the yield going up today, we're at almost a quarter percent. then you go to the ten-year note, and what it did. initially a stutter step here and then it moved higher to 1.25%, and then the 30-year bond
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and what it did there today is also a little higher. we'll talk about that in just a second here. what do the sectors look like here today? energy was a later and materials was a gainer. peter costa, what happens tomorrow? >> i think there is more expected from it. every i have spoken to wasn't expecting anything other than what we got today. tomorrow one i think there will be some surprises, that will be the focus of the market for the last eight months. i think that we should get something positive out of them tomorrow. >> do you agree, jeff cox? >> i think that is a good observation. the jobs number tomorrow, a lot of people will be focussing on that. big beat, huge surprise, and no market reaction, nobody believes it. >> i think they're still waiting for other pieces to fall into place here. >> absolutely, the friday number
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is coming up, people anticipating that thinking we might get a little positive surprise there, but there is still a lot of intrepidation. i think the economy is really dictating matters here. >> if you're looking for a happy note on this, at least we have not given back the big gains wes go last week on the mario draghi comments that they'll do whatever it takes to preserve the euro. >> yes, i'm expecting a more positive tone to what they're saying tomorrow. i'm a glass half full guy. i think they should come through with something positive tomorrow because it's probably more warranted than what u.s. is. >> i think the job's numbers will be another disappointment on friday, it will be a let down, investors will be shaken. you pointed out before the bill gross comment about the equities, i did the report, got a lot of feedback, they were likening it to

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