tv Whatd You Miss Bloomberg December 1, 2015 4:00pm-5:01pm EST
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>> u.s. stocks closing higher. the s&p has nine out of the main 10 groups rising. "what diduestion is you miss." >> we asked the momentum questions. joe: the heated debate over social media stocks. what is the real value of companies like twitter and facebook? us,obots, the future, and the fascinating new report on the robot revolution. we talked to its author. we begin with the markets. it was a pretty banner day in terms of the rally. dow up triple digits and held onto its rally. joe: it is surprising. the data was mediocre.
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you would not have expected such a rocket ship. was an unexpected rally. the dollar was down, money flowing into treasuries, all signaling a safety trade, made fed trade good. something is happening at the end of the year. the stocks are going up. >> joy global caught my eye. down to an 11 year low. bank of america downgrading to underperform, saying the route we have seen in capital expenditure is not over.
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10% of revenue from china, 15% from australia. this is continuing. the commodity rally is not over. joe: that was a very grim chart, wasn't it? >> it is a grim chart. all the guys have been hammered over the last month. emerging of these markets, cyclical assets, bounced a little bit, including industrial metals. >> that is a santa claus rally. i was confused by the rally today. ity.nt through the seasonal the blue line is where we are. the green line is the average from 2010-2014. wound uper, we managing having a rally to the end of the year.
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why? who knows. you have to answer to investors. what caught my eye is that you , we are tracking like we did in 2014, which means we could see some selling over the minor pullback, and rally into the year in. that rally was about 5%. tensionwould make the over the fed decision exciting. as i mentioned, we got some bad data, i is him manufacturing report. it is the lowest level in six years. manufacturing report. what they are paying for stuff, and it is much lower. if you're looking for signs of inflation, don't look for it in areas where manufactures are
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buying. manufacturing is a relatively small part of the economy, but services are seeing inflation and strength. this is one grim area. >> is it like an oil chart at the end of the day? joe: it is basically the same, yeah. >> i want to bring in our guest, cofounder of stock twits. joe: are we going to keep rallying? >> it depends on what stocks you on. it doesn't look like commodities will ever rally. google and amazon never stop rallying. it depends on what you own, as usual. amazon, but how long can you survive with the stocks leading the market? paid to manage what i manage.
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it is a good question. it is the question. this last with the leadership as thin as it is? the market capitalization of these companies is so huge that you can't put them in a bucket. etf's inpanies are themselves, their own countries. we need more leadership. there are fused to choose from. companies are going public later. -- there are few to choose from. say do look at charts and they are going down so i should get out. >> i haven't added amazon in 300 points. and google, i haven't been adding here. i don't know. it is hard to buy things when you know it is hard to understand the underlying growth. these are companies investing in human capital writing code,
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which is hard to put a value on because no one has seen this before. before you had metrics you could andure, things slow down, you could measure those metrics and say it is slowing down based on this metric, but these things are so viral, broad, that it is hard to put any metric on them. wall street does not know how to value these. joe: i started paying attention to you because of twitter. that you haven't braced social media, but twitter is not in this category of red hot social stocks. what you think about this co mpany? do you think it is a platform worth investing their time in for people? >> it is an acquired taste. if you like saying silly, interesting things all day, twitter is an interesting place
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to be. the reason it does not have the -- and it is an amazing valuation -- but it struggles with the question of, where could this go if executed flawlessly. it is a financial information business. humanr became more of a behavior type of thing. every economist, trader, talk to them and see what they're thinking. twitter went the route of advertising and brand management , and right now you are seeing the stress in the system. brands spend money on the biggest places, lazy like every other person in the world can get lady, and they spend their money where there are comfortable. twitter is in that next bucket down, not the bucket. >> if you were 25 and starting
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your business now, would you want to be on twitter? with that be where you want to put your platform out there? or would there be another type of user interface you prefer? >> good question. my kids only use snapshot. every day i go on and tried to do something, can't figure it out. instagram is the one platform globally,body uses easy to understand, but it seems like snapshot is interesting for young people. -- snap chat is interesting for young people. i am into what i am into. i'm racist,t anti-women, hate kids or giraffes.
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twitter is where i spend quality time to learn more about what i'm interested in. and stock on twitter twits to talk about stocks. joe: instagram, i remember when butbook bought instagram, obviously that was one of the acquisitions of the century. it has done well. do you think facebook investors are fully appreciating instagram right now? ofthey are just -- what part facebook's success are the acquisitions, and the board works for mark zuckerberg, and not the other way around. he calls the shots, king of the throne. any deal gets shown to mark zuckerberg. if you are king, you see the est deals before they go to another bidder.
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the intensity of facebook continues and they make good -- buy the right companies, then they are in control, calling the shots. betsmade some bold that have paid off. twitter -- to get out of the funk of the valuation or the stock is drifting, they will thatto make valuations disrupt the whole business. apple has done it. >> what does that mean? >> to make a bet. twitter has told twitter what it is worth. facebook has doubled, google is -- so in that social world, twitter is boxed, whether they like it or not. they are in it. they will have to surprised evil in a good way to break out of
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and i think fair-minded who have looked at the situation would say that the situation has not changed significantly. >> the united states has not dropped its insistence that the sharp al-assad can play no role in series future. the russian president is painting a rosy picture of his paris meeting with president obama, but the white house does not see it that way. mr. putin says the leaders have an understanding of what needs to be done in syria and the fight against terrorism, but the white house says the president stressed that the syrian leader cannot stay in power. he also says russia is still attacking legitimate opposition forces. africa, an appeals court will rule this week on whether to overturn a manslaughter conviction against oscar pistorius. he could be found guilty of murder for killing his girlfriend.
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he was released from prison in october after serving one year of a five-year sentence. he is now under house arrest. a 15-yeared, he faces prison sentence. the chicago mayor fired the cities top cop. mccarthyssal of gary follows the release of video showing a white officer shooting a black teenager 16 times. community leaders and protesters have called for mccarthy's termination. they also want an investigation into why it took more than a dyke,o indict jason van the officer who fired the fatal shots. on these andore other stories 24 hours a day at bloomberg.com. i am mark crumpton. alix: thank you, mark. , just on the break, we heard mark zuckerberg announced
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that he and his wife will give away 99% other facebook shares to charity. he will maintain a majority of shares. point, that is how successful facebook is that you can do that. ruleskeeps breaking the as you say. i'm not saying rules in a bad way, but i think it is hard to figure out what these companies will do. the government gets bigger, people complain, but what it takes is people like this. we may not be happy with how, but in the end they are giving it away. in startups.st when you see mark zuckerberg giving away his fortune, is he an inspiration to a lot of founders who want to emulate him and give back
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because they see how successful he is. >> great question. mark benioff at salesforce does this. a lot of companies do this. the last thing a founder needs to hear is that they're going to make so much money that they will give away their stock. risks,taking high looking for high returns. there are many things that are different. the fact is that he has executed, put a team around him. the product is fantastic. to the victor go the spoils. alix: you are a professional. this is what you do, look for opportunities. fidelity invested in snapchat, had to write down 24%. that begs the question of should they be invested in it at all. take a listen. >> i don't think an outfit like
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fidelity has any business being in the space. i don't think they know how to play the pricing game. when you get these public company investors in private spaces, you are asking for trouble. joe: is this a huge mistake? countries behuge dabbling in these unicorn companies? >> they are not dabbling. fidelity has bought shares of mine, goldman, and others. withnto doing business people you can't stand doing business with in a boom. company gets, the big enough, certain certain name is involved. boomn-depth in a long investing with people you can't stand sometimes. he is wrong. is an incredible
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long-term-thinking brand. the rules of the game have changed. company stay private longer. taste on the last 10 years, these are great fightments, the way these rations have grown and have become global so fast. let's face it, they are overpaying. we know that. on a portfolio basis, they only need one of these to work. --could be cloud, snapchat yu n it is a portfolio based approach. you need me on the wall. fidelity needs to be in this business to help bail out the bubble, dodd frank, and all the junk we had to put into say the last generation. this is how it works. it is part of the business. alix: the bloomberg ipo has not done well. the idea that you put money in now and get paid later is not
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working. is it broken? >> i definitely agree that things are different. i will not say it is broken. the market always seems to say it is broken. focus on the next generation. use robin hood, to think mobile apps about nike, under armour -- why do they have to be diluted? why can't they learn the language in an english way and put $50 in the stocks they like? there are concerns about late-stage valuations and the a late that there is stage part of the markets that have gone crazy. sometimes a month goes by and everything looks the same, two months, three months, but this
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is an incredible time to the investing in startups. ,ust like public markets anything else, there are times when people -- things look the same and sloppy. in the early stage mode, we are in a good time. you have to have domain experience, know what you are investing in, just like a public stock, but there is a lot of opportunity, and i say that being in this space, of course, so i am biased, but there is a lot of opportunity. alix: good stuff. good to have you. coming up, strange things happening in the markets, specifically in the credit world. we will explain one phenomenon after the break. ♪
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alix: i am alix steel. "what'd you miss?" strange things happening across financial markets, distortions in repo markets, and now in the currency to markets. how much it cost to trade one currency in u.s. dollars. tracy is joining us. what does that mean? break it down. the easy thing. a cross currency swap allows , to swap onenks currency into another currency. in this case, u.s. dollars.
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what we have seen lately is that trends havecurrency been dipping into negative territory, people are paying more to swap currency into dollars. in there he, the cross currency basis should be closer to zero because it is a weird dislocation. there should be people who are but trot it away. that is not happening. -- people who are but trot -- arbitrage it away. why? >> a bunch of reasons, but the major one is were heading into the year in. people want to hedge their dollar liabilities. massive post
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financial crisis changes that have constrained bank talents sheets. they are not a trade -- to trade for their own accounts anymore. can we go back a second to the first answer. can you walk us through the mechanics? companya hypothetical that might want to engage in swaps and why it is negative? >> you are so mean to me. say you are a u.s. company, investment-grade, like apple, you look at the euro and it looks cheap. you can sell corporate bonds denominated in year old's -- to convertyou need those into dollars to get them on your balance sheet. au need to enter into cross-currency swap.
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the cost of doing that will always very. havering, we should not , wes this far -- in theory shouldn't have these kinds of swaps. alix: what are the bigger rent -- ramifications? while negative basis would be like japan or the 2008 global crisis, when banks were desperate for dollar funding. in fact, we had a bunch of central banks and the imf initiate free-flowing emergency dollars. alix: we also saw that in the chart. this has been a dislocation in the market. thank you so much. before we take a break, let's take a look at mark zuckerberg and his wife's new baby girl. she is so cute.
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for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. alix: i am alix steel. "what'd you miss?" the white house and kremlin have different views on a meeting between president obama and vladimir putin on the sidelines of the global climate talks in paris. president putin says he and president obama have an understanding of what needs to be done in syria and the fight against terrorism. the white house says president obama stressed that syrian leader bashar al-assad, a russian ally, cannot stay in power. the u.s. also says the russians are still attacking legitimate opposition forces in syria.
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french police have detained a man they suspect helped secure a hideout for the person believed to have planned the paris terror attacks. the 25-year-old is believed to have been an intermediary with the only person facing pulmonary charges in the attacks. officials did not provide details on the new arrests. in beijing, the worst pollution of the year force parents to keep their kids home from classes will but attendance was optional at primary and middle schools. city officials in beijing imposed limits on factory outputs. anipe bomb on a highway near istanbul subway station exploded, wounding five people. it caused some panic in the city , which is on at following the recent deadly bombings in turkey. there was no immediate claim of responsibility. mark zuckerberg says he and his wife had decided to give 99% of their shares in the social media site to charity over their lifetimes.
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the shares are currently worth more than $45 billion. the facebook ceo of along with donationannounced the in a letter today to his newborn daughter. these andt more on other breaking stories 24 hours a day at bloomberg.com. back to you. alix: we do want to get a quick recap on how the market has ended. it was a big day. the nasdaq closed at its highest level since of july. a triple digit rally on the dell . it was broadly based. all groups in the green. joe: really impressive given the mediocre day, given that yields were down, so not a clear-cut risk on day. there you have it. i had my eye on some data that came out of germany. the one hand, you have the
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german unemployment rates, the white line, hitting a record low, 6.3%. the yellow line is the german two-year yield, -.4%. that was confusing to me. moreoes your need imitative easing when you have yields so low in germany, unimportant great low, you could argue that quantitative easing will only help companies, so why bother doing it at all? joe: the hope is that it doesn't just help germany. there are other parts of the eurozone that needed. like it goes to the main drivers first, so why bother? also, data across the eurozone was pretty good. alix: exactly. look at theto citigroup economic surprise
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index for emerging markets. the economic surprise index is a measure of how the data is coming against expectations. you see this huge rise in recent weeks as assigned that people have gotten too pessimistic and the data is now surprising. that is just one way to look at it. alix: that is impressive. to discuss more, portfolio manager over at blackrock. joe: do you think the data in emerging markets is turning around? >> there is a marginal improvement, particularly in the expectations. everyone was extremely pessimistic about emerging evaluationlowing the of the chinese currency. it permeated all across the investors face, and that had repercussions on the whole year. are better.ions
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alix: what does that mean as we head into a possible fed hike? i was interested in a chart from credit squeeze that talked about what the emerging market index has done in relation to a rate hike in japan? they have rallied. tohas been anywhere from 15% 37% in six months. could this be a buying opportunity? there will be growth in 2016, but there will be headwinds that we have to get over. prices, theity continuation of the china slowdown, tighter fed -- i think the most important thing is there is no one emerging market. there are many different parts. there has been a high dispersion from returns.
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this is the third-largest dispersion number following the global financial crisis. repeat inu could 2016, dispersion suggesting that there is no one in emerging market. joe: let's talk about one market that seems to be dismal, brazil. really ugly gdp data today. depression the words and obituary to describe the economy. is there any hope in sight for them? >> we were thinking about brazil and we continue to see more and more downwards in brazil's growth, not only for this year, but for next year as well. 3% for the economy here, an important impact on tax revenues
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come and it will have more impact on current ratings, so there are still too many moving parts. alix: it has been so under own in relation to developing markets. pluso you find the value growth versus getting stuck in a value trap? >> it depends where you are leading. in the european zip code, you have not seen with the guys in new york have seen. if you're sitting in europe, emerging-market currencies have seemed pretty flat. currency specifications coming from those guys seeing negative holland, andmark, other places. it is more,
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difficult because the currency story has to turn around. when we talked to investors the big question was when to get back to the local markets. how to find value? asset location from hard currency into local markets. for that, you need to see more clarity on the fed, commodities -- that will be the moment. how important has exchange-rate flexibility been in this downturn in preventing a systemic collapse. >> good for the economy's, bad for the investors. inon't have liabilities dollars. i can let the currency be the shock absorber. it's good to protect the economies.
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the localk trading in markets, the currency represents 80% of your total return, so you only make money when currencies rise. it has been crucial in terms of some.ting it has been a headache for asset managers. fluctuation has been the move into emerging market yields. what happens when the fed hikes? will we see another mass outflow? 75 to 100 basis points by the end of the year is what we are expecting, and it is already in the price. inflation could be more problematic for emerging markets.
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look at the mexican local currency, pricing in two hikes per one hike in the u.s.. unless you think the u.s. will hike faster, mexico is already placing it into its local currency. ,orp., household, governments they are already living in an environment of raising rates. if they were to start hiking , that could be a buying opportunity for emerging markets. joe: thank you so much. coming up, will robots replace our jobs? look at the rise of automation and what it means for the workforce. ♪
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alix: i am alix steel. "what'd you miss?" it is time for the bloomberg business flash. goldman sachs is sounding the alarm on brazil. the economy is in an after thedepression." gdp contracted in the latest quarter more than expected. rising unemployment and inflation are also weighing on prospects. automakers used holiday deal making to continue the churn. the yield and nissan both exceeded estimates with increases of 3.4%. thatler has seven models set records last month. industry sales will exceed $18
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million for a third straight month. the big emissions and scandal has heard loathes wagon -- vw sales. the automaker has been offering large discounts on gasoline and it has quit selling several vehicle since the scandal broke. that is your bloomberg business flash. will the next industrial revolution be driven by robots? sees the global robotics market growing to $153 billion by 2020. joining us now is one of the authors of the report, head of thematic investing strategy. can you quantify for us the investment opportunity that you will see in robotics? >> we think it will grow significantly. the industrial robot market itself has seen the fastest growth, $30 billion around the world. another $20 billion in terms of
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the systems, software, and peripherals in addition to the $10 million for the robots themselves. we think it will go to $80 billion by 2020. one of the big emerging markets will be artificial intelligence. it will rise to a $70 billion market by 2020. joe: what is a robot? i see these videos and it looks like a machine, but it does not -- how are you defining robot for our purposes and what is the then diagram between robotics and artificial intelligence? >> it is a virtual or electronic agent which is providing labor, mobility, safety, or convenience. think of the stereotypical image you have in your mind, that is what most robots are.
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increasingly, they are being indicted with the level of machine learning, deep learning, and signs of artificial intelligence. this whole concept of intelligent machines is becoming a reality. alix: i feel like a lot of the conversation about robots is them over taking jobs and we will see the employment rates spike, sucking out jobs in the industrial services and there will be all these people unemployed. do you see that happening when you forecasted your model? longer-term, that will be a risk or do we have to be cognizant of the time horizon, 1-3 years there is massive room. only 66 industrial robots per 10,000 employees. sector, 1520auto -- 10% of jobs have been automated. alix: to your point, it shows the rise of robots in germany
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with the unemployment rates falling. >> markets like germany and south korea, which have some of the highest rates of robot penetration have not seen that. arrives 5-10 years out when we see the potential for robots to take a lot of the jobs at the bottom of the economic pyramid. one third of american jobs are retail, people working in restaurants, waiters and waitresses, and low level administrative clerks. there is growing potential for those people to be displaced 5-10 years out, and that's where some of those issues are located and you become a potential risk. the big do you see as industries that will benefit from using robots day to day to reduce costs or become more efficient. >> the auto industry has been at the form front -- forefront. they are able to implement large-scale machine vision.
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it costs about eight dollars an hour to use one of these machines. we will see a decrease in price with eight -- an increase in performance. robots are working in tandem with human beings and are reclaimable. , electricalctronics goods, food industry, and even textiles have not seen the robots. alix: you want to invest in companies that have the ability to buy in other companies -- into other companies. >> we are already seeing consolidation. companies are becoming big leaders in the robotics and artificial intelligence space. acquisitions, the people who are making -- signing the patents, and it tends to be the tech actors.
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increasingly be commoditized, software connecting all this -- that is the stuff we are moving towards. we talk about these emotion-reading robots marketed in japan. workspace, intricately industrials, it will be humans working with thinking machines. alix: great stuff. bank of america merrill lynch. you are sticking with us. world leaders are meeting in paris to address climate change. our guest has a note saying it is real, now, scary, and he knows how to invest. ♪
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alix: i am alix steel. "what'd you miss?" president obama spoke at the climate conference in paris. here is what he had to say. >> climate change is a massive problem. it is a generational problem. that byproblem definition is just about the hardest thing for any political system to absorb. with us, bank of america merrill lynch, head of thematic investing strategy. you say this is one of the most of finding issues of our time. as the costs mount for climate change, this says it all, co2 levels over 400,000 years are soaring. joe: we seem to have broken a key resistance level.
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alix: a little bit. what happens to portfolios and returns? >> we have entered uncharted territory in terms of climate change. you can see it has broken 400 parts per million in terms of historical co2 levels in the atmosphere. also, temperature increases, for the first time we have seen a one degree rise celsius in temperatures compared to preindustrial times. we are halfway to the point where we start to see catastrophic impacts of climate change being felt. , we a financial perspective can see this in action. extreme weather covers 10% of the globe. $4 trillion in losses over the last 25 years. anywhere fromen 200-2 and $50 billion for the last five years, four times more than the 1980's. into anuming they come
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agreement in paris and put in new commitments, who will be the bake winners from the effort that will be expended in coming years? >> the focus is on the low-carbon economy, wind, solar, and energy efficiency. the cheapest and easiest way to reduce energy use and emissions. we have reached the tipping point. billion,ion to $350 50% of new capacity added onto the grid, wind and solar. over the next 15 years, that will rise to 70% to 80%, a fundamental shift in the underlying energy mix, where by 2030, renewables account for 60%, and fossil fuels decline to 40% or less. what about the assets that get left behind?
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what other asset classes and industries will suffer? >> we need to be cognizant of this concept of stranded assets, the fostering -- fossil fuel reserves we will never get out of the ground, coal. assets have been divested. to achieve that target, the next line will be oil and gas. alix: this comes from your report. markets,ee developed global equity getting hit, investment-great credit -- investment-grade credit. cognizant of be the risks on offer, not just physical risks him of the regulatory risks. the risk of certain types
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due respect mark zuckerberg, if you are looking for someone to give away billions to, we have always liked you. ♪ this looks like a battery gummy bear. john: cap the national high day. in our curriculum tonight's psychology with donald trump, forensics with ted cruz annexed to credit with chris christie. but first a book report by jeb bush. in the ama
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