tv Bloomberg Markets Bloomberg July 9, 2015 3:00pm-4:01pm EDT
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, optimism for nuclear deal is beginning to fade. betty: subway cuts ties with longtime spokesperson jerod fogle who put the company in a serious bind. but jerod is in subways only problem. betty: good afternoon. alix: let's look at the markets at this hour. it was a vary confusing day for traders as we see this relative strength in the s&p. we are near the lows of the session, but we are still up about 10 points. yesterday, traders were waiting for a cell singer -- sell single -- sell signal today.
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leading to some upside in stock. betty: i like the pieces that make up for this rally. market into the bond though, we had some data and jobless claims not so great. 2.3%, a0 year yield at little bit of selling going on. in the currency market, we have been watching the euro continued to fall. but at least it wasn't as bad as we have seen in days past, given all that volatility. alix: yesterday, the euro was definitely up. at stories making headlines at this hour. if you want to buy oil come i can do that. oil is having a rally.
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betty: the highest in one month or something? alix: i don't have that stat yet. go, betty. the iran deal may not be working out. that is why you are seeing the oil rally. the greek prime minister has until midnight to come up with economic reforms in exchange for another bailout. no specifics as of yet, but proposals will be sent to creditors in the next hour and to parliament by tomorrow. earlier, we spoke with olivier blanchard. mr. blanchard: we are working on an agreement between greece and the european creditors. i think we have played an important role. we basically made clear it is possible to ask less of the greeks than was in the original program. we understand there has been a democratic election and referendum. so i think this has to be taken into account. which means the greeks should be
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asked to do less than was originally intended. alix: european leaders insist there must be spending cuts. greece has on a promise to implement reforms on pensions and taxes. betty: the imf has downgraded forecast for global growth. much of the downgrade is driven by the u.s. the imf cut its forecast of u.s. growth to 2.5%. both greece and china were highlighted as potential trouble spots. alix: the new york stock exchange now knows what caused a computer malfunction that knocked off trading for more than three hours yesterday. investigators were looking at a faulty software update. it will rub the details to regulators. traded,ugh shares were shareholders still traded on other venues like the nasdaq. betty: in china, stocks bounce
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back after losing more than a third of their value in less than a month. the shanghai composite index rose 5.8%, its biggest gain since 2009. guest: china, for a decade, was really the driver of world oil demand. half of the increase of demand over 10 years came from china. so the slowdown we see. in china, the rebalancing of isir economy, lower demand important to the market. betty: in the last two weeks, chinese regulators have included a number of measures to instill confidence in the market. alix: secretary of state john kerry spoke a short time ago in vienna. secretary kerry: we are here because we believe we are making real progress toward a competence of deal. but as i have said many times
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and as i discussed with president obama last night, we are not going to sit at the negotiating table forever. alix: that echoes comments from iran's foreign minister. he says he will stay in vienna for as long as it takes to get a deal. u.s. and other global powers say they will ease sanctions if iran agrees to limit nuclear develop meant. betty: four plans to move production of two small cars out of the country. the focus and see max production to mexico. ford is scheduled to begin contract talks with the auto debts with the united auto theers union -- talks with united auto workers union. earlier, steve ratner gave
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stephanie ruhle and scarlet rule fu trouble spots. ratner: first, greek secession is worse than the great recession. comparison to the the u.s. in 1929, you can see the declines are there similar. but the u.s. began to move up within four years because of the new deal. greece is still bouncing along the bottom. fact 2 -- stephanie: say one more time. unemployment in greece is higher than it was in the united states. mr. ratner: yes. and youth unemployment is 50%. stephanie: how many years did it
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take in the u.s. to reverse that? ratner: we started to recover in 1934 and 1935, but there was another dip down because we tightened to quickly and then there was world war ii. it was a long fight to get out of it. and it will be along pfeifer agrees, just as it is for spend another countries. they: i want to get back to imf headlines. china tog risks from greece, are they just playing catch-up at this point? mr. reiner: i think the new market -- the markets and those who invest in things like that have been pessimistic or concerned about the global growth rate for some time. you do have this whole secular stagnation feeling around the world. --ther you look at europe the u.s. is what i call the best house in a bad neighborhood. we are doing ok but only because everybody else is not doing well. and you have china, the hundred pound gorilla with all the problems it is showing.
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u.s. may be the best house on a bad block, but we have a problem, children, i.e., puerto rico. ratner: puerto rico is kind of like to greece. they have more debt than they can possibly sustain. they got there by a series of bad management decisions. toy change their tax code attract the pharmaceutical companies and all the pharmaceutical companies left. stephanie: what is your view on china? mr. runner: the stock market is down, still up 70% over a year ago. the chinese have made the worst mistakes you can make. they handled it terribly.
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i was struck by a comment that jack williams said in a speech, which paralleled my own thinking when he said i was thinking housing bubbles, corruption, export-led economy come all these problems. and i left thinking, you know, this economy is still pretty -- still doing pretty well relative to any other place in the world. that is how i feel about china. scarlet: there is this sense of panic, a sense of rushing through whatever reform every single night to stem the stock market collapse. preventingough how market collapse prevents social unrest. the shanghai market is dominated by individuals. it is only 10% institutional. they bought a lot of margin debt. what the chinese government doesn't want for social reasons
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and for economic reasons is they don't want that market to collapse because it would cause social unrest but also have a wallet impact on the chinese when the government's turn to get them to spend more. china is still growing -- if it is not 7%, it is 6%. it is a number a lobby or than greece's. i think it is a question of china try to sustain a reasonably high growth rate, both politically for china, but also for the rest of us in the world economy. stephanie: in europe, there is no growth. mr. draghi is trying to say that an economy that was in danger of sinking into the mud. china, i think, as an incredibly vibrant place come on the move, going to succeed, people who want to better themselves.
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and it is just a question of how fast and question of whether all the do it with genuine problems it has. but it is still a vary vibrant economy -- a very vibrant economy. betty: politics only proving bad business. trump's another business figure is ending their relationship with drop. details -- with trump. details on that next. ♪
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there is a callout for morgan stanley saying that this group looks attractive. one way to look at it is to look x. the os it has been up consistently come almost 2%, for the entire day. analysts say that oil services have been attractive risk-reward outlook for the next nine months. and there is a chance for downside. he recommends slumbers -- slumbers a -- he recommends schlumberger. likes land drillers, like .atterson these stocks are trading higher as well. i want to look at an interesting chart that looks at whether the number of rigs have bottomed.
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as you can see here, the yellow rigs that have slowed up a tiny bit on the right side. so maybe there is a little bit of a bottoming and recovery process. but i also want to look at recent calls on oil services. he already said we have seen a bottom but that has not quite happened yet. in may, he said we were set for a multiyear rally. this does not mean that he is wrong. a just means that he was early on this call. i also wanted to chat with you guys. i know you watch this group mary closely, the oil services group. with analyst calls, there is always a little bit of buyer beware, so to speak, because you
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don't know when the call will pay out. these are wells a have already been drilled and got the oil out. they are going back in and refracking. while we have cutting costs going down, hurting oil is going refracking well for them. julie: that is a new term. how does that affect the rig count? do they use the same rigs for the same well? alix: i actually don't know that. when you do and hence oil recovery, you are dealing with co2, different types of stuff that you are pumping into the oil. i don't know that. somebody tweet me that. betty: we know alex will get the will get thex
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answer. haley will sign the bill to remove the confederate flag from statehouse grounds at the top of the hour. the flag will come down tomorrow morning and be shipped to the confederate relic room. this morning, the house joined the senate to remove the flag after 13 hours of debate. alix: new yahoo! features is bringing sports betting into the mainstream. offering daily and one-way games betting for money. fantasy sports get a pass because pro leagues call wagering a game of skill. this could be a major revenue source for yahoo! 57 million people in north america play fantasy sports. betty: matt and i talked about the story in earlier. he is a sports not. -- a sports nut. a celebrity chef is dumping donald trump.
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they were slated to open restaurants in d.c. they join a growing list of business partners of ring ties with trump over his anti-immigrant comments. let's turn our attention to the political arena. donald trump is a force of nature, to say the least, especially these days as a presidential candidate. everything he says seems to make headline news. betty: mark halperin has just the solution for the other guys, the other republican candidates, men and women. flex some muscle against the trump and you might be seen as a party savior. ou wrote about this on bloombergpolitics.com. mark: a lot of concern in the republican party because donald trump has not only set off this
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firestorm with his comets about mexican immigrants but in general his ability to dominate the conversation. what i looked at is this conversation is moments of strength, showing people not just the you can be a good president but that they can envision u.s. president. this is an opportunity for some of the candidates -- does someone want to take on trump, not just criticize him on immigration, but take them on any more fundamental way to say the party from what a lot of people see as a problem if donald trump continues to do well in the polls and dominate the discussion. alix: the other headline is jet bush raising $12 million in 16 days. over $103 million. mark: this guy is the king of the fundraisers, even more in some ways than hillary clinton. raising over a hundred million
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super pac wass aiming to raise more than a hundred million by this point. many scoffed at that. that puts jeb bush in a commanding position with more to come. money doesn't mean everything in politics, but it's important. he compete with hillary clinton with deep pockets? mark: no one has raised in super pac's the way jeb bush did in the cycle. she has campaigned dollars and they are trying to raise both big and small checks. i think the key in the long run is can they keep it up? jeb is more day-to-day but she has been at it longer. they are both the most from edible fundraisers in the campaign. there is no doubt that the brand names bush and clinton, perhaps not surprisingly, are the best
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15-year relationship with fogle. it is a story that you will find in business week. guest: he has been the face of the brand of the company for so long now. he shot his first commercial for them back in 2000. he has been the subway guy ever since. they were thinking about rebranding him is not just the weight loss guide but gerrit family man for subway going forward. guest: they were. he is married and has a child. he would have been the perfect person for that. matt: let's look beyond jared because subways kind of languishing, at least as far as outside estimates are concerned. private companies do not release their figures but what is the problem? guess: it is hard to say.
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as you say, they are a private company. by analysts and experts say they have a lot of stores in the , and probably too many that the stores are cannibalizing sales of other stores. i think they have more than 27,000. comparatively, mcdonald's has 14,000. matt: what are they tried to do to turn that around? the same couple of guys have owned it for a long time but they don't operate the restaurants because they are -- they are franchisees. leslie: we have seen them recently do health-related things. that has been their focus all along, having few that is a little bit healthier than a burger and fries. and they have done some things. they rolled out breakfast. they have avocados now that you can put on sandwiches. they have a new healthy line of sandwiches. but beyond that, they haven't done that much. alix: that was leslie patton speaking with matt miller. avocados, that
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might be a generous assessment. it's like avocado mush. it is not like they are cutting a fresh avocado and putting it on the sandwich. that is part of the problem. betty: it has lost the whole fresh appeal. jareden reading about fogle, even his subway diet has come under attack. it is re-examining how he lost weight and whether that was the healthiest way to go. alix: it was good to have you on set. much more coming up on the bloomberg market day. stocks.china, we are going to hear from the imf chief economists. ♪
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it's a new chip is the first of transistors that are seven nanometers? about oner equals billionth of a meter, which means it would take about 10,000 ibm new chips to equal the width hair?uman the microchip industry has long been able to consistently create smaller and more powerful chips? but this has grown increasingly difficult due to physical and technological limits? gained 2u.s. says a million new users last quarter? guess: every single quarter, we are adding one million, 2 million customers. it is semi-relevant. but in this code -- in this case, we have just under 59 million customers. i'm pretty sure we are bigger than sprint. alix: that was ceo john
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legere. pepsi's second-quarter earnings missed estimates. there is a big transaction in the beauty business. procter & gamble has accepted an offer to merge 40 beauty brands with coty. american express is making it easier to leave home without it. it is offering an online wallet. you just use your account password and the checkout system fills in all of the billing information, down to the billing address. that is a look at the top stories this thursday. greece and china's problems may be a problem for the whole world. the imf today cutting its global
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growth forecast for 2015 from 3.3% to three point -- from 3.5% to 3.3%. much of the downgrade was driven by the u.s. earlier, tom keene spoke with olivier blanchard and asked how the collapse and commodities will change his economic outlook. : the commodity prices are important. what i was struck by was i at oil price for america. revisedr, we have growth down. just having an effect not in america but also to other commodity producers. in the early 2000's, in which commodity prices were always going up, financial conditions were verio loose and they were public -- were very loose and
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they were able to produce more. now how do they adjust to these low commodity prices? clearly, if you look at america, some of them are able to handle it as well and some of them are not. i think that is a berry big challenge. talking aboutf the advantages of a floating exchange rate world. what will the dollar due within your calculations? of thee see a return dollar strength of the late 1990's? mr. blanchard: we are not in the business of predicting exchange rates. we let other people do this. [laughter] theit's clear that fundamentals at this stage are such that the u.s. is in a better technical position than the others.
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increasest rates will earlier in the u.s. than elsewhere. we know that. we think the markets have understood this and that has strengthen the dollar in the last year or so, six months. but sometimes the markets are a bit slow to adjust. so some people predict further appreciation of the dollar. that doesn't strike me as impossible. tom: professor bill about her, fromis an important quote citigroup. christine lagarde is working on this 24/7. what leadership can the imf give greece as they try to repair their economy, come out of
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depression and stay part of europe? blanchard: in the short run, what we are working on is an agreement between greece and the european creditors. i think we have played an important role. we basically made clear that it is possible to ask less of the greeks than was in the original program. and we understand that there has been a democratic election, the referendum. so i think this has to take -- has to be taken into account, which means the greeks should be asked to do less than originally intended. that thede clear europeans have to provide more financing and debt relief. to -- takehave varies serious measures. you do it, we don't,
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it is not going to happen. tom: hope is the critical moment right now, professor. what is the difference in this crisis versus the ones we have seen previously with stan fisher 1998 and other crises throughout our modern history? mr. blanchard: i think there are two things. there are many more players at the table. it is not just the country and the imf. it is the country, the eurozone as a whole, the europeans, and the imf. they complicate things in many ways. side ofr is the other the coin, which is that we have to have an adjustment program on the exchange rates within the current currency area. in the past, morph -- most of the crises came, resolution came with adjustment in the exchange rate. that was not an option. that makes the adjustment much harder than say the asian crisis
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or even argentina. alix: that was olivier blanchard speaking with tom keene. after 13 days of talks between iran and world powers come optimism for nuclear agreement is beginning to fade. indira, thank you for joining us. say negotiators will miss the congress deadline. why is that so important? indira: honestly, it is almost certain. for you guys, it will be midnight new york time. here, it will be six akaka the morning vienna. but it is almost certain that they will not be able to get it finalized a deal to commerce by then. automatically, the way the review act is written by congress is it will double the amount of time that congress has to pick over this deal and potentially reject it. the other thing is that it will double the amount of time at
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least for iran to get the sanctions relief it so desperately wants. if they had gotten the deal tonight, it would have been a 30-day review period with a hold on sanctions. now it will be a 60-day hold on sanctions and congressional review. alix: that has a direct impact on them. it will delay any sanction relief. is there any pushback from iran on that? indira: iran has basically told us, diplomats have told us this is there one shot at this negotiation. they get that and they want to get the best possible deal they can get. the same as the position of the united states, europe, russia, and china. everybody wants to get the best deal they can get right now so there is a lot of gamesmanship going on. we had federica marina -- federica marini saying, if there is no deal tonight, she does not see how there is going to be a deal. we had john kerry come out and
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say that he thinks they need to keep working on it. they don't have the deal they want yet but this is not open-ended and it will not go on forever. he also told everyone that president obama told him last night, when the time comes, if he feels that no decision is being made, he has to leave the table. so we will keep a close eye on that. iraniancording to the state-run news agency, they had to tell a shouting john kerry and iran minister to keep it down because everybody heard them yelling. what part of that is true and what part of that is bring in ship -- brinkmanship? indira: we broke that story yesterday. kerry as a reef -- carrie and zarif were yeley so loud that they could be heard outside of the room -- were yelling so loud that they could be heard outside of the room. alix: thank you so much.
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off the has of the session. julie: for me, i ate was more surprising that the rally did not sustain itself as the day went on. yesterday, we did have that deep selloff in the major averages. today, initially, it looked like we would come running back but that has not held. now the major averages are about .4%. something i have been talking about is the 200-day moving average of the s&p 500. it is the a line here. we are sitting right at that line. we dropped below it yesterday. it is a momentum indicator that some technical traders watch. if you're trying to keep score at home, that is what you want to look at the see if we close above or below. the last time we had two consecutive closes for the s&p below the intraday moving average, was last year. there we had a rebound after
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that. it does not mean that we will rebound again, but it is something to look at. something to leaders higher still today, you got the financials that have been doing well throughout the day. these stocks are sensitive to both interest rates, which we see higher today, and also to the situation in greece. in terms of the major averages, we have been watching the dow. the dow having entered are miss swaying right at the open and then falling. apple has been weak today. it is nearing a so-called correction from its highs until now. it is down more than 9%. we have been monitoring that movement. intel looks like it might be lower in relation to a report that it's acquisition of altera may be facing real a tory scrutiny. -- caterpillar is down also facing regulatory scrutiny. and caterpillar is down
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also. we have some selling in treasuries. alix: apple, s&p, i was with you. i love that. now to look at some of the top stories making headlines this afternoon. the u.s. office of personnel says hackers stole personal millionion from 21 employees last week. the u.s. has blamed chinese hackers. there is reports say lebron james has agreed to a deal with the cavaliers. the agreement is not a surprise since james says he intends to finish his career with cleveland. he re-signed as a free agent with the cavaliers last month after four years in miami. serena williams defeated area sure, today to move in --
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defeated maria sharp over today teense into her eight final. final. facebook says it is not joining the streaming music bandwagon. that is a look at the top stories this thursday. a ventureartners is capital firm behind some of tech's biggest names. emily started by asking if companies are taking on too much risk right now in silicon valley. : i think there is a lot
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of money in the system and optimism that is causing pricing to be higher, causing expectations to be higher, and i think we are asking to take high-risk probably since 1999-2000 timeframe. on the flipside, mobile is a fundamental shift and is probably only in the third inning right now still. you can see how that is changing where businesses would have been terrible businesses. uber, airbnb, and previous generations are now facilitated. you can also take a look at public companies right now as a benchmark and say it could lend companies in the public, it is not clear of their values and the multiples. there are mixed signals that lead to an environment, i think, where there is a huge price for us. emily: would you say there is a bubble?
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make ourwe don't decisions on that basis. yes, i think the prices we are paying or higher and we are asked to take on risk, but we are finding great entrepreneurs, to come and we are excited about what they are doing. much if't matter too you overpay, but you had to keep an i out what your target is. emily: it doesn't matter if you overpay? guess: not in the early stages. did you talk about the unicorn valuations? emily: we did. there are more unicorns here in the silicon valley everyday. they say valuations are just valuations on paper, what investors are willing to pay.
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and whether they are able to live up to those valuations, that is a story that will be told over several years. -- gos companies go cup public, can they go public -- will these companies go public, can they go public? they say there is too much money in the system. a lot of companies are spending too much money to fast. but there is a nether google to be billed, another microsoft to be built, and it is a matter of finding those companies. and it is their job to find those companies. alix: you also talked about uber. what are their views on the company? emily: greylock is not an uber investor. they said, look, we have not seen the financials in a long time. it is not sure where they would put their night -- there money now. john lilly said he thinks this
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can be a $500 billion company. thatspite the lawsuits luber is facing around the world and some of the challenges, regulatory challenges that uber is running into, they still think it is a hugely innovative company it is just not where they would put their dollars now because they want to get more for their money. alix: be sure to check emily's .nterview wit chinese stocks may have done a slight reprieve today, but they still face some of the major meltdown cap what does that mean for u.s. markets? ♪
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explain what jonathan phillips said in his note. main he looked at the sectors of the s&p 500 and how they correlate to chinese stocks. companies,ell technology companies, and industrial companies appear to be the most heavily correlated to the chinese market. obviously, it is a big manufacturing economy that consumes a lot of raw materials. and industrial, bulldozers and stuff like that. on the flipside, the less rs, thesed secto are more domestic, u.s.-focused sectors.
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he did find these correlations, but they are not superstrong. 11% correlation with raw materials -- alix: that's it? and that's they correlation with the shanghai composite. does that correlate more to the chinese economy rather than the stock market percent? -- stock market per se? mike: he found that the s&p 500 and the shanghai composite are the most correlated they have been since 2013. it is clear that we are moving a little bit more in lockstep with china but far from 100 percent correlation. as you point out, the real question is how much damage will this stockmarket crash due to the actual chinese economy? which arguably, the u.s. market could be more heavily correlated to that.
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they are still looking for a lot of trickle-down, barry pessimistic -- there he bank pessimistic. if the government can't stop the flood, we don't see a lot of government put. mike: they were vary supportive chinas equity market and was above 14% per year in 2007. now it is forecasted below 7% for this year. the question is, well, if they can't keep the stock market propped up the way they wanted to, does that make you lose faith in that? putpeople's bank of china is now in question. there is a crash in the shanghai composite, a real
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cross, we cannot be completely immune. mike: the big question is how much will this reduce the economy? -- the chinese economy? there are a lot of interesting stories written about -- the direct exposure to the chinese economy is ready low. alix: but we expect lower growth, greater risk of a financial crisis. mike: right. it's not good. coming up, breaking it down, what you need to know about today's session and what happened in stocks today, what happened to the s&p rally. ♪
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alix: u.s. stocks rose today. markets seem to be letting out a sigh of relief. is "what'd youon miss?". alix: the greeks maxed out their credit cards while they still can. speak to the ceo of a giant american ethanol producer. what has the plummet in oil prices down to his business. alix: we have to begin with stocks. s&p has close below is moving average of the first time since october. we did have a rally. we didn't run out.
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